THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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

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

The circular appears for information purpose only and does not constitute an invitation or offer to acquire, purchase or subscribe for the securities of Wing Hong (Holdings) Limited.

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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WING HONG (HOLDINGS) LIMITED 榮康（控股）有限公司 * (Incorporated in the Cayman Islands with limited liability)

(Stock code: 745)

VERY SUBSTANTIAL ACQUISITION

Financial adviser to Wing Hong (Holdings) Limited

Grand Vinco Capital Limited

A notice convening an EGM of the Company to be held at Room 901, 9th Floor, Hong Kong Scout Centre, Scout Path, Austin Road, Kowloon, Hong Kong on Monday, 19 November 2007 at 9:00 a.m. is set out on pages 137 to 138 of this circular. Whether or not you are able to attend the EGM, you are requested to complete the accompanying form of proxy, in accordance with the instructions printed thereon and deposit the same to the Company’s share registrar, Tricor Investor Services Limited at 26th Floor, Tesbury Centre, 28 Queen’s Road East, Hong Kong, as soon as possible and in any event not less than 48 hours before the time appointed for the holding on EGM or any adjournment thereof. Completion and return of the form of proxy will not preclude you from attending and voting in person at the EGM or any adjournment thereof should you so wish.

* the Chinese name of the Company is for identification purpose only

2 November 2007

			Page
DEFINITIONS	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		1
LETTER FROM	THE BOARD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		3
APPENDIX I	–	FINANCIAL INFORMATION ON THE GROUP. . . . . . . . . . . . . . . . . . . .	11
APPENDIX II	–	ACCOUNTANTS’ REPORT ON THE TARGET. . . . . . . . . . . . . . . . . . . . .	86
APPENDIX III	–	UNAUDITED PRO FORMA FINANCIAL INFORMATION
		ON THE ENLARGED GROUP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	110
APPENDIX IV	–	VALUATION REPORT ON THE TARGET. . . . . . . . . . . . . . . . . . . . . . . . .	121
APPENDIX V	–	GENERAL INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	128
NOTICE OF EGM		. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	137

DEFINITIONS

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

Expression

Meaning

“Acquisition”

the proposed investment of RMB312 million by the Investor to the Target under the Agreement (as amended by the Supplemental Agreement) and upon the Completion, the Target will be 65% owned by the Investor

“Agreement”

an agreement dated 24 September 2007 made between the Investor and the Vendors in relation to the Acquisition (as amended by the Supplemental Agreement)

“Announcement”

the announcement made by the Company in relation to the Acquisition dated 5 October 2007

“associate”

has the meaning ascribed to it under the Listing Rules

“Board”

the board of Directors

“BMI”

BMI Appraisals Limited, an independent valuer

“Business Day”

a day (excluding Saturday and other general holidays in Hong Kong and any day on which a tropical cyclone warning number 8 or above is issued or remains issued between 9:00 a.m. and 12:00 noon and is not discontinued at or before 12:00 noon or on which a “Black” rainstorm warning is issued or remains in effect between 9:00 a.m. and 12:00 noon and is not discontinued at or before 12:00 noon) on which licensed banks in Hong Kong are generally open for business

“Company”

Wing Hong (Holdings) Limited, a company incorporated in the Cayman Islands with limited liability and the issued ordinary shares of which are listed on the main board of the Stock Exchange

“Completion”

completion of the transaction pursuant to the Agreement

“connected person” has the same meaning ascribed to it under the Listing Rules
“Directors”

the directors of the Company

“EGM”

extraordinary general meeting of the Company to consider and, if thought fit, approve the Agreement (as amended by the Supplemental Agreement) and the transactions contemplated thereafter

“Enlarged Group”

the Group as enlarged by the Acquisition

“Group”

the Company and its subsidiaries

“Hong Kong”

the Hong Kong Special Administrative Region of the PRC

DEFINITIONS

“Independent Third Party(ies)”
an independent third party, to the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, who is not connected with the Company and its connected persons (as defined under the Listing Rules)
“Investor” Top Asian Limited, being a wholly-owned subsidiary of the Company, is an investment holding company incorporated on 27 August 2007 in the British Virgin Islands with limited liability
“Latest Practicable Date” 31 October 2007, being the latest practicable date prior to the printing of this circular for ascertaining certain information contained herein
“Listing Rules” the Rules Governing the Listing of Securities on the Stock Exchange
“PRC” the People’s Republic of China, excluding Hong Kong, the Macau Special Administrative Region and Taiwan for the purpose of this circular
“PRC GAAP” the generally accepted accounting principles of the PRC
“Shareholders” the shareholders of the Company “Stock Exchange” The Stock Exchange of Hong Kong Limited
“Supplemental Agreement” the supplemental agreement dated 23 October 2007 entered into between the Investor and the Vendors to amend certain terms of the Agreement
“Target” 北京鐵聯通達廣告傳媒有限公司 , a company incorporated in the PRC with limited liability
“Valuation” the business valuation of the Target as at 31 August 2007 prepared by BMI
“Vendors” Mr. Wang Xue Qin and Mr. Wu Qi, both being Independent Third Parties
“HK$” Hong Kong dollars, the lawful currency of Hong Kong “RMB” Renminbi, the lawful currency of the PRC “%” per cent

For the purpose of this circular,

(i) the English translation of the Chinese name is for identification only; and
(ii) the conversion of RMB into HK$ is based on the approximate exchange rate of RMB1 to HK$1.03. No representation is made that any amounts in RMB or HK$ have been, could have been or could be converted at the above rate or at any other rates or at all.

LETTER FROM THE BOARD

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WING HONG (HOLDINGS) LIMITED 榮康（控股）有限公司 *

(Incorporated in the Cayman Islands with limited liability)

(Stock code: 745)

Executive Directors: Mr. Hui Chi Yung (Chairman) Mr. Yiu Kai Yeuk, Raphael Mr. Hui Kau Mo

Independent non-executive Directors: Mr. Liu Kwong Sang Mr. Sit Hing Wah Dr. Hu Chung Kuen, David

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

Head office & principal place of business in Hong Kong: 13th Floor, OTB Building 259-265 Des Voeux Road Central Hong Kong

2 November 2007

To the Shareholders

Dear Sir or Madam,

VERY SUBSTANTIAL ACQUISITION

INTRODUCTION

It was announced by the Company on 5 October 2007 that, pursuant to the Agreement (as amended by the Supplemental Agreement), the Investor, being a wholly-owned subsidiary of the Company, entered into the Agreement with the Vendors and the Target, pursuant to which, the Investor conditionally agreed to invest an aggregate of RMB312 million (equivalent to approximately HK$321.4 million) by (i) subscribing for the new registered capital of the Target in the amount of RMB88 million (equivalent to approximately HK$90.6 million); (ii) providing a shareholders’ loan to the Target in the amount of RMB176 million (equivalent to approximately HK$181.3 million); and (iii) the Investor will acquire an additional 10% shareholding interest in the Target at a consideration of RMB48 million (equivalent to approximately HK$49.4 million) from the Vendors within a period of 2 years commencing from the date of the signing of the Agreement. The Vendors will not invest further capital into the Target in proportion to their shareholdings. The RMB264 million (equivalent to approximately HK$271.9 million) of capital injection and shareholders’ loan from the Company to the Target will be used for (1) acquiring the LCD display system; (2) expanding the business operation; (3) general administration expenses; and (4) general working capital.

The purpose of this circular is to provide you with, among other things, further details about the Acquisition, the valuation report on the Target prepared by BMI, the notice of EGM and the proxy form.

* the Chinese name of the Company is for identification purpose only

LETTER FROM THE BOARD

THE AGREEMENT (as amended by the Supplemental Agreement)

Date: 24 September 2007

Parties:

Vendors: Mr. Wang Xue Qin and Mr. Wu Qi (as Vendors), to the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, the Vendors are third parties independent of the Company and connected persons of the Company and the Vendors are not connected with each other

Investor: Top Asian Limited, a limited company incorporated in the British Virgin Islands, a whollyowned subsidiary of the Company (as Investor)

Summary of the Acquisition:

There is no prior transaction and relationship between the Vendors and the Company, and each of their respective associates and ultimate beneficial owners which require aggregation under Rule 14.22 of the Listing Rules.

Pursuant to the Agreement (as amended by the Supplemental Agreement), the Investor conditionally agreed to (i) subscribe for the new registered capital of the Target of RMB88 million (equivalent to approximately HK$90.6 million); (ii) provide a shareholders’ loan to the Target of amount RMB176 million (equivalent to approximately HK$181.3 million); and (iii) the Investor will acquire an additional 10% shareholding interest in the Target at a consideration of RMB48 million (equivalent to approximately HK$49.4 million) from the Vendors within a period of 2 years commencing from the date of the signing of the Agreement.

The Vendors will not invest further capital into the Target in proportion to their shareholdings. The RMB264 million (equivalent to approximately HK$271.9 million) of capital injection and shareholders’ loan from the Company to the Target will be used for (1) acquiring the LCD display system; (2) expanding the business operation; (3) general administration expenses; and (4) general working capital.

Upon the completion of the Acquisition, the Target will be owned as to 65% (including the additional acquisition of 10% shareholding interest in the Target) by the Investor and as to 35% by the Vendors (in which Mr. Wang Xue Qin and Mr. Wu Qi will be interested in 17.85% and 17.15% equity interest in the Target respectively). Upon Completion and subject to the approval of the relevant PRC regulatory authorities of the Agreement and the articles of association of the Target, the Target will become a sino-foreign joint venture company under the laws of the PRC.

The investment plan into the Target:

Pursuant to the Agreement, an initial investment amount of RMB264 million (equivalent to approximately HK$271.9 million) is to be injected into the Target by cash in the following manner:

RMB10 million (equivalent to approximately HK$10.3 million) payable by the Investor to the Vendors within 5 Business Days upon the signing of the Agreement. Such amount together with interest shall be refunded to the Investor if the Vendors do not hold 100% of the shareholding interests of the Target as at 30 November 2007; however, if the Investor

LETTER FROM THE BOARD

fails to complete the payment for the increase in the registered capital of the Target, such amount will not be refunded to the Investor;

RMB20 million (equivalent to approximately HK$20.6 million) payable by the Investor to the Target within 5 Business Days upon the completion of legal and financial due diligence by the Investor;
RMB17.6 million (equivalent to approximately HK$18.1 million) payable by the Investor to the Target within 10 Business Days upon the issue of the investment approval for foreign investors from the relevant PRC regulatory authority and the opening of the foreign currency account; and RMB70.4 million (equivalent to approximately HK$72.5 million) payable by the Investor to the Target in accordance with the terms of the new articles of association of the Target within 1 year upon the issue of the new business license of the Target. Pursuant to the Agreement, a minimum of RMB50 million (equivalent to approximately HK$51.5 million) shall be paid to the registered capital of the Target by the Investor before January 2008 if the Target has obtained the relevant government regulatory authority for its conversion into a sino-foreign joint venture;
a minimum of RMB150 million (equivalent to approximately HK$154.5 million) shall be payable by the Investor to the Target (including the payments in stages 1, 2 and 3 abovementioned), by the end of September 2008; and
the remaining balance shall be payable by the Investor to the Target by the end of September 2009.

Pursuant to the Agreement (as amended by the Supplemental Agreement), the Company will acquire an additional 10% shareholding interest in the Target at a consideration of RMB48 million (equivalent to approximately HK$49.4 million) from the Vendors within a period of 2 years commencing from the date of the signing of the Agreement. Therefore, the maximum investment amount made towards the Target will be RMB312 million (equivalent to approximately HK$321.4 million) and the Target will be owned as to 65% (including the additional acquisition of 10% shareholding interest in the Target) by the Company and as to 35% by the Vendors.

The investment amount of RMB312 million (equivalent to approximately HK$321.4 million) will be satisfied by a combination of internal cash resources, bank borrowings, shareholders’ loan, convertible notes, placing of new shares and other possible means of financing. First payment of RMB10 million upon signing the Agreement was settled by internal cash resources. Second payment of RMB20 million (equivalent to approximately HK$20.6 million) payable by the Investor to the Target within 5 Business Days upon the completion of legal and financial due diligence by the Investor will be settled by bank borrowings. The balance of the consideration will be satisfied by a combination of internal cash resources, bank borrowings, convertible notes and other possible means of financing. The investment amount was determined after arm’s length negotiations between the Company and the Vendors with reference to the preliminary estimation on the market value of 100% equity interest in the Target as at 31 August 2007 being RMB487 million by BMI, an independent valuer, using the market approach. Details of which are set out in Appendix III to this circular.

LETTER FROM THE BOARD

Conditions of the Agreement:

Completion of the acquisition is subject to the following conditions precedent having been met:

(a) the Investor having been satisfied with the results of the financial, legal and business due diligence review exercise conducted on the Target on or before 31 October 2007, to confirm that, among other things, (i) the Target is entitled to the absolute exclusivity for media advertising broadcasting in the LCD display placed in front of tickets selling counters in the transit rail stations in the PRC; (ii) the Target is a valid legal entity with all necessary power and authority to own, lease and operate its business; (iii) information provided by the Vendors in relation to the Target remains true, accurate and complete; and (iv) there are no material adverse events which may affect the completion of the Acquisition;
(b) the registration of the Vendors as holder of 100% shareholding interest in the Target on or before 30 November 2007;
(c) all parties having signed the approval of relevant agreements and documents in relation to the Acquisition on or before 30 November 2007;
(d) the Target having obtained the relevant government regulatory authorities for its conversion into a sino-foreign joint venture and the registration of the Investor’s investment on the Target’s equity record;
(e) no representation or warranties having been breached as at the date of the Agreement that may have material impact to the value of the Target; and
(f) the Shareholders’ approval at the EGM having been obtained.

None of the conditions listed above is fulfilled as at the Latest Practicable Date.

The Directors (including independent non-executive Directors) consider that the terms of the Agreement are fair and reasonable and the entering into of the Agreement (as amended by the Supplemental Agreement) is in the interests of the Company and the Shareholders as a whole.

Composite of board of directors of the Target

The board of directors of the Target will comprise seven directors, of which four will be appointed by the Investor and three will be appointed by the Vendors. The managing director and the authorized representative of the Target will be appointed by the Investor.

SUPPLEMENTAL AGREEMENT DATED 23 OCTOBER 2007

The Supplemental Agreement

On 23 October 2007, the Supplement Agreement was entered into between the Investor and the Vendors to amend certain terms of the Agreement as follows:

Pursuant to the Supplemental Agreement, the Investor conditionally agreed to (i) subscribe for the new registered capital of the Target in the amount of RMB88 million (equivalent to approximately

LETTER FROM THE BOARD

HK$90.6 million) instead of RMB88.5 million as stated on the Agreement; and (ii) provide a shareholders’ loan to the Target in the amount of RMB176 million (equivalent to approximately HK$181.3 million) instead of RMB175.5 million as stated on the Agreement.

Reasons for entering into the Supplemental Agreement

The reason for entering into the Supplemental Agreement is for the rectification of errors on the proportion of investment into the Target as stated in the Agreement.

INFORMATION ON THE TARGET

The Target was established and commenced business on 16 December 2005 under the PRC laws to engage in media sales and management services for the multi-media business and the operation of media advertising spaces together with the provision of rail transit value-added services through LCD displays located at the ticketing offices of each station in the PRC. As at the Latest Practicable Date, the Target is owned as to 27.5% by Mr. Wang Xue Qin, as to 23.5% by Mr. Wu Qi, as to 24.5% by Mr. Yin Can Qiang and 24.5% by Mr. Huang Han Wen with a registered capital of RMB500,000 (equivalent to approximately HK$515,000). To the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, the Vendors, Mr. Yin Can Qiang and Mr. Huang Han Wen are independent of the Company and its connected persons (as defined under the Listing Rules).

As at the Latest Practicable Date, the Target has obtained absolute nationwide exclusive rights for media advertising broadcasting in the LCD display placed in front of tickets selling counters in the transit rail stations in the PRC for 5 years and such rights will be automatically renewed every 5 years and up to a period of 15 years. The Target is entitled to the entire amount of advertising profit under such right. However, the Target is obliged to, including but not limited to, use a specific LCD display system for RMB10,000 per display system under the said right and to share a quarter of the LCD screen for displaying details of ticket sale, e.g. origin, destination and price of each ticket, etc.

Upon Completion and subject to the approval of the relevant PRC regulatory authorities of the Agreement (as amended by the Supplemental Agreement) and the articles of association of the Target, the Target will become a sino-foreign joint venture company under the laws of the PRC.

The Directors are aware that the Vendors do not hold 100% of shareholding interest in the Target as at the Latest Practicable Date; however, it is one of the conditions to the Agreement that the Vendors have to become the holder of 100% shareholding interest in the Target on or before 30 November 2007 and the Acquisition will not proceed if the Vendors fail to become the holder of 100% shareholding interest in the Target as well as if the Company is not satisfied with the financial, legal and business due diligence performed by them on the Target.

The Target was established on 16 December 2005 and is located in Beijing, the PRC. Upon Completion, the Target will become an indirectly 65% (including the additional acquisition of 10% shareholding interest in the Target) owned subsidiary of the Company and the financial results will be consolidated into the Company’s financial statements. As far as the Company is aware, the principal assets of the Target are the advertising rights in the rail transit stations in the PRC. The total investment in the Target is RMB312 million (equivalent to approximately HK$321.4 million) and will be satisfied in cash.

LETTER FROM THE BOARD

As set out in Appendix II to this circular, the Target’s financial statements were prepared under the Hong Kong Financial Reporting Standards which also include Hong Kong Accounting Standards and Interpretations. The aggregate net profit/loss attributable to the Target for the year ended 31 December 2006 is as follows:

	2006
	RMB
Audited net profit/(loss) before taxation and extraordinary items	(2,290,000)
Audited net profit/(loss) after taxation and extraordinary items	(2,290,000)
Audited net assets/(liabilities) of the Target	(1,790,000)

The Group and the Vendors will share all profit and loss, costs and risk in proportion to their respective interest in the registered capital of the Target.

INFORMATION ON THE INVESTOR

The Investor is an investment holding company incorporated on 27 August 2007 in the British Virgin Islands with limited liability, and is a wholly-owned subsidiary of the Company.

REASONS FOR AND BENEFITS OF ENTERING INTO THE AGREEMENT

The Group is principally engaged in a broad spectrum of construction works, including building construction, renovation and fitting out works for both public and private sectors in Hong Kong.

The Directors have been seeking investment opportunities to broaden the Group’s income base and to expand the Group’s business operation. The Board has considered the following factors, including but not limited to (i) according to National Bureau of Statistics of China, in the first six months of 2007, the per capita disposable income of urban households in China reached RMB7,052, representing an increase of 14.2% over the same period in 2006; (ii) for the year ended 31 December 2006, the total railway in the PRC covered approximately 77,000 kilometers and the total passengers turnover in the PRC reached 1.3 billion, representing an increase of 8.7% when compared to 2005; and (iii) for the year ended 31 December 2006, the total revenue generated by the advertising industry reached RMB157.3 billion, representing an increase of 11.1% when compared to 2005.

Based on the foregoing, the Directors are of the view that the consumer market is growing in the PRC. Given the strong turnover in railway and the growing revenue in the PRC advertising industry, the Directors are of the view that the prospect of the advertising market in the PRC is positive. As such, the Directors (including independent non-executive Directors) are of the view that the Acquisition and the entering into the Agreement (as amended by the Supplemental Agreement) are fair and reasonable and are in the interests of the Company and the Shareholders as a whole. The Directors will also look into the possibility for the Group to expand the media sales business in the PRC if the management is convinced that the investment will provide a reasonable return to the Group.

The Target has obtained an absolute nationwide exclusive right for media advertising broadcasting in the LCD display placed in front of tickets selling counters in the transit rail stations in the PRC for 5 years and such rights will be automatically renewed every 5 years and up to a period of 15 years. The Target is entitled to the entire amount of advertising profit under such right. However, the Target is obliged to, including but not limited to, use a specific LCD display system for RMB10,000 per display

LETTER FROM THE BOARD

system under the said right. Thus, the Target does not have sufficient cash flow to run this advertising project and decided to introduce strategic investor into its company.

The value of the 15-year exclusive right for media advertising broadcasting in the LCD display placed in front of tickets selling counters in the transit rail stations in the PRC and its coverage of all transit rail stations in the PRC are the main reasons for investing into the Target. Going concern is a short term problem of the Target caused by the initial substantial capital investment in its preliminary stage. With the ongoing and increasing pace in setting up more LCD display systems in the transit rail stations, its earnings will grow significantly that will exceed its capital investment. Hence, the Company proceeds the Acquisition.

Upon Completion, the Target will become an indirectly 65% (including the additional acquisition of 10% shareholding interest in the Target) owned subsidiary of the Company and the financial results will be consolidated into the Company’s financial statements.

FINANCIAL EFFECT OF THE ACQUISITION

Net assets

The audited consolidated net asset value of the Group as at 31 March 2007, as extracted from the annual report 2007 of the Company, was approximately HK$115.1 million.

As set out in Appendix III to this circular, assuming Completion had taken place on 31 March 2007, the proforma net assets of the Enlarged Group would have been approximately HK$142.8 million. As stated on the unaudited pro forma financial information on the Enlarged Group in Appendix III to this circular, the total assets and total liabilities are expected to change by an increase of approximately HK$65,279,000 and an increase of approximately HK$37,549,000 respectively. Therefore, the Acquisition will enhance the Group’s net assets position.

Working capital

The audited working capital of the Group as at 31 March 2007, as extracted from the annual report 2007 of the Company, was approximately HK$147.5 million.

As set out in Appendix III to this circular, assuming Completion had taken place on 31 March 2007, the proforma working capital of the Enlarged Group would have been approximately HK$79.4 million. Therefore, the Acquisition will decrease the Group’s working capital.

Earnings

The audited net loss of the Group as at 31 March 2007, as extracted from the annual report 2007 of the Company, was approximately HK$21.1 million.

As set out in Appendix III to this circular, assuming Completion had taken place on 31 March 2007, the proforma net loss of the Enlarge Group would have been approximately HK$23.5 million which the earnings of the Enlarged Group will deteriorate by approximately HK$2.4 million. Therefore, the Acquisition will decrease the Group’s earnings.

LETTER FROM THE BOARD

EGM

The Acquisition constitutes a very substantial acquisition under Rule 14.49 of the Listing Rules. Completion of the Agreement is therefore subject to, inter alia, Shareholders’ approval at the EGM.

A notice convening the EGM to be held at Room 901, 9th Floor, Hong Kong Scout Centre, Scout Path, Austin Road, Kowloon, Hong Kong on Monday, 19 November 2007 at 9:00 a.m. is set out on pages 137 to 138 of this circular.

The EGM will be convened and held to consider and, if thought fit, to approve, among other things, the ordinary resolution to approve the Agreement (as amended by the Supplemental Agreement) and the transactions contemplated thereunder.

To the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, the Vendors are Independent Third Parties and no Shareholders or any of their associates are interested in the Agreement (as amended by the Supplemental Agreement). Therefore, no Shareholder is required to abstain from voting at the EGM.

A form of proxy for use at the EGM is enclosed with this circular. Whether or not you are able to attend the EGM, you are requested to complete the accompanying form of proxy in accordance with the instructions printed thereon and deposit the same at the office of the Company’s branch share registrar in Hong Kong, Tricor Investor Services Limited as soon as possible and in any event not less than 48 hours before the time appointed for the holding of the EGM or any adjournment thereof. Completion and return of the form of proxy will not preclude you from attending and voting in person at the EGM or any adjournment thereof should you so wish.

RECOMMENDATION

The Directors consider that the terms of the Agreement (as amended by the Supplemental Agreement) are fair and reasonable and are in the interest of the Company and the Shareholders as a whole. Accordingly, the Directors (including independent non-executive Directors) recommend the Shareholders to vote in favour of the ordinary resolution to be proposed at the EGM to approve the Agreement (as amended by the Supplemental Agreement).

ADDITIONAL INFORMATION

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

By Order of the Board Wing Hong (Holdings) Limited Hui Chi Yung Chairman

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

1. SUMMARY OF AUDITED FINANCIAL INFORMATION

Summary of the audited annual results of the Group for the year ended 31 March 2005 (as extracted from the annual report of the Group for the year ended 31 March 2005) and the audited annual results of the Group for the two years ended 31 March 2006 and 2007 (as extracted from the annual report of the Group for the year ended 31 March 2007) is set out below:

Consolidated Income Statement

For the year ended 31 March 2005, 2006 and 2007

Turnover – contract revenue Contract cost Gross profit/(loss) Other revenue Other income Administrative expenses Other operating expenses Loss from operating activities Finance costs Loss before tax Taxation Loss for the year Attributable to: – Equity holders of the Company – Minority interest Dividends Loss per share attributable to equity holders of the Company – Basic – Diluted	2005 HK$’000 (Restated) 344,937 (333,246) 11,691 2,681 1,131 (20,665) (5,654) (10,816) (343) (11,159) – (11,159) (11,326) 167 (11,159) – (HK11.77 cents) N/A	2006 HK$’000 (Restated) 152,701 (145,469) 7,232 1,873 36 (21,777) (4) (12,640) (1,851) (14,491) 78 (14,413) (15,004) 591 (14,413) – (HK14.10 cents) N/A	2007 HK$’000 64,368 (64,508) (140) 2,024 1,223 (21,759) (4) (18,656) (2,528) (21,184) 48 (21,136) (20,411) (725) (21,136) – (HK18.47 cents) N/A

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

Consolidated Balance Sheet

At 31 March 2005, 2006 and 2007

ASSETS Non-current assets Property, plant and equipment Goodwill: Goodwill Negative goodwill Available-for-sale financial assets Interest in a jointly-controlled entity Current assets Amount due from customers for contract work Accounts receivable Prepayments, deposits and other receivables Loan to a shareholder Tax recoverable Pledged time deposits Cash and cash equivalents Non-current assets classified as held for sale Total assets EQUITY Capital and reserves attributable to equity holders of the Company Share capital Reserves Minority interests Total equity	2005 HK$’000 2,933 1,810 (1,647) – 1,184 4,280 57,064 153,939 17,950 200 762 9,000 25,486 264,401 – 268,681 10,640 128,586 139,226 2,703 141,929	2006 HK$’000 567 1,810 – – 1,143 3,520 41,571 129,275 15,310 200 674 5,100 51,590 243,720 2,200 249,440 10,640 115,529 126,169 3,294 129,463	2007 HK$’000 357 1,810 – 1,596 1,247
			5,010
			38,020 121,507 14,915 200 606 5,100 32,239
			212,587
			–
			217,597

			12,108 100,430
			112,538 2,569
			115,107

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

LIABILITIES Non-current liabilities Loan from shareholders Deferred tax Current liabilities Amount due to customers for contract work Accounts payable Tax payable Other payables and accruals Amount due to a director Amounts due to minority shareholders Interest-bearing bank borrowings Liabilities directly associated with non-current assets classified as held for sale Total liabilities Total equity and liabilities Net current assets Total assets less current liabilities Net assets	2005 HK$’000 22,991 130 23,121 25,057 72,358 24 2,216 3,873 4 99 103,631 – 103,631 126,752 268,681 160,770 165,050 139,226	2006 HK$’000 44,840 130 44,970 14,152 56,981 24 3,639 – – – 74,796 211 75,007 119,977 249,440 170,913 174,433 126,169	2007 HK$’000 37,372 18
			37,390
			10,064 50,455 20 4,561 – – –
			65,100 –
			65,100
			102,490
			217,597

			147,487

			152,497

			112,538

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

Ernst & Young, being the Company’s former auditors, has issued modified opinion on the Group’s financial statements for the year ended 31 March 2005. HLB Hodgson Impey Cheng, being the Company’s auditors, has issued qualified opinion on the Group’s financial statements for the years ended 31 March 2006 and 2007. The full text of which are set out on pages 14 to 22.

REPORT OF THE AUDITORS FOR THE YEAR ENDED 31 MARCH 2005

To the members

Wing Hong (Holdings) Limited

(Incorporated in the Cayman Islands with limited liability)

We have audited the financial statements on pages 35 to 105 which have been prepared in accordance with accounting principles generally accepted in Hong Kong.

RESPECTIVE RESPONSIBILITIES OF DIRECTORS AND AUDITORS

The Company's directors are responsible for the preparation of financial statements which give a true and fair view. In preparing financial statements which give a true and fair view it is fundamental that appropriate accounting policies are selected and applied consistently. It is our responsibility to form an independent opinion, based on our audit, on those financial statements and to report our opinion solely to you, as a body, and for no other purpose. We do not assume responsibility towards or accept liability to any other person for the contents of this report.

BASIS OF OPINION

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

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

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

FUNDAMENTAL UNCERTAINTY RELATING TO RECOVERABILITY OF ACCOUNTS RECEIVABLE AND GOING CONCERN BASIS OF PRESENTATION OF FINANCIAL STATEMENTS

In forming our opinion, we have considered the adequacy of the disclosures made in note 2 to the financial statements concerning the recoverability of certain accounts receivables due from two contract customers and the going concern basis of presentation.

As detailed in note 2 to the financial statements, included in the accounts receivable balance under current assets in the consolidated balance sheet as at 31 March 2005, are accounts receivable, recorded based on architects' certificates, of approximately HK$138.7 million in aggregate (collectively the "Receivables Under Dispute") currently withheld by two major customers (collectively the "Customers") of the Group with respect to disputes on claims arising from liquidated damages and alleged environmental related damages in relation to main contract works in a residential development project carried out in Hong Kong, and the counter claiming of extension of time entitlement by the Group. As at the date of approval of the financial statements, the Group has initiated arbitration proceedings to recover the outstanding amount due and negotiations with the Customers are still in progress. Although the directors of the Company, after consultation with their legal advisors, are of the view that the Customers' claims are without sufficient grounds and that their counter claim of extension of time entitlement is valid, the outcome of such arbitration cannot be determined as at the date of approval of the financial statements.

The directors of the Company are currently unable to determine with reasonable certainty the outcome of the arbitration and hence the recoverability of the Receivables Under Dispute. The directors are also unable to determine the time required to recover the Receivables Under Dispute and whether a provision, if any, is required against such receivables at this stage. Further details of the nature and potential impact to the financial statements arising from the Receivables Under Dispute are set out in note 2 to the financial statements. The financial statements do not include any adjustments that might be necessary should the Group fails to recover the Receivables Under Dispute from the Customers. We consider that appropriate disclosures regarding the above fundamental uncertainty have been made by the directors and our opinion is not qualified in this respect.

As a result of the settlement of accounts receivable being withheld by the Customers, which has affected the working capital of the Group, the Group reported a net cash outflow from operating activities of approximately HK$50,393,000 and an overall decrease in cash and cash equivalents by approximately HK$39,720,000 for the year, before taking into account of the shareholders' loans as stated below and in note 30(b) to the financial statements. As detailed in note 2 to the financial statements, a major shareholder of the Company has agreed to provide continual financial support to the Group in the form of shareholder's loan, of which approximately HK$21.2 million of shareholder's loan had been made to the Group as at 31 March 2005, and a further HK$18.5 million was made subsequent to the balance sheet date on 26 July 2005.

The financial statements have been prepared on a going concern basis, the validity of which depends upon the continual financial support from the Company's major shareholder until the settlement of the Receivables Under Dispute by the Customers as set out in note 2 to the financial statements. The financial statements do not include any adjustments that might be necessary if the Company fails to obtain: (1) continual financial support from the Company’s major shareholder; or (2) subsequent settlement of the Receivables Under Dispute. We consider that appropriate disclosures regarding the above fundamental uncertainty have been made in the financial statements and our opinion is not qualified in this respect.

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

FUNDAMENTAL UNCERTAINTY RELATING TO RECOVERABILITY OF RECEIVABLE FROM A SUBCONTRACTOR

As detailed in note 22 to the financial statements, included in the deposits and other receivables under current assets in the consolidated balance sheet as at 31 March 2005, is a receivable of approximately HK$10.8 million due from a subcontractor (the "Receivable") representing the costs incurred on behalf the subcontractor arising from the execution of a civil engineering works contract in Hong Kong. As at the date of approval of the financial statements, the Group has initiated arbitration proceedings to recover the outstanding amount due from the subcontractor. After consultation with their legal advisors, the directors of the Company are of the view that the Group has valid grounds to recover the amount due from the aforesaid subcontractor.

The directors of the Company are currently unable to determine with reasonable certainty the outcome of the arbitration and hence the recoverability of the Receivable. The directors are also unable to determine the time required to recover the Receivable and whether a provision, if any, is required at this stage. Further details of the nature of the Receivable are set out in note 22 to the financial statements. The financial statements do not include any adjustments that might be necessary should the Group fail to recover the Receivable. We consider that appropriate disclosures regarding the above fundamental uncertainty have been made by the directors and our opinion is not qualified in this respect.

OPINION

In our opinion the financial statements give a true and fair view of the state of affairs of the Company and of the Group as at 31 March 2005 and of the loss and cash flows of the Group for the year then ended and have been properly prepared in accordance with the disclosure requirements of the Hong Kong Companies Ordinance.

Ernst & Young

Certified Public Accountants

Hong Kong 28 July 2005

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

REPORT OF THE AUDITORS FOR THE YEAR ENDED 31 MARCH 2006

==> picture [160 x 60] intentionally omitted <==

31/F Gloucester Tower The Landmark 11 Pedder Street Central Hong Kong

TO THE SHAREHOLDERS OF WING HONG (HOLDINGS) LIMITED

(incorporated in the Cayman Islands with limited liability)

We have audited the financial statements on pages 22 to 73 which have been prepared in accordance with accounting principles generally accepted in Hong Kong.

RESPECTIVE RESPONSIBILITIES OF DIRECTORS AND AUDITORS

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

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

BASIS OF OPINION

We conducted our audit in accordance with Hong Kong Standards on Auditing issued by the Hong Kong Institute of Certified Public Accountants except that the scope of our work was limited as explained below.

An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements. It also includes an assessment of the significant estimates and judgments made by the directors in the preparation of the financial statements, and of whether the accounting policies are appropriate to the Company’s and the Group’s circumstances, consistently applied and adequately disclosed.

We planned our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance as to whether the financial statements are free from material misstatement. However, the evidence available to us was limited as set out below.

FUNDAMENTAL UNCERTAINTY AND LIMITATION OF AUDIT SCOPE RELATING TO THE RECOVERABILITY OF ACCOUNTS RECEIVABLE AND ARBITRATION

As described in Note 2 to financial statements, the Company commenced arbitration against a major customer (“Case 1”) to recover the accounts receivable of the Group, representing an amount recorded based on architects’ certificate, of approximately HK$120,459,000 (the “Receivable Under Dispute”). Subsequently a counter claim was made by the major customer against the Group in relation

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

to the disputes on claims arising from liquidated damages and alleged environmental related damages in relation to main contract works in a residential development project carried out in Hong Kong (“Case 2”) in the amount of approximately HK$122,480,000. In respect of Case 1 and Case 2, the parties are undergoing an arbitration and negotiation process and the outcome of the arbitration has not been finalised as of the date of approval of these financial statements.

As a result of the uncertainty of the timing and the outcome of Case 1, we are unable to ascertain as to how much and when the accounts receivable of the major customer would be recoverable or whether the full amount might be recoverable. There were no other practical satisfactory audit procedures that we could adopt to assess the carrying value of the accounts receivable of the major customer. Any adjustments to the carrying value of the accounts receivable of the major customer that might have been necessary should evidence become available to us may have a consequential significant effect on the net assets of the Company and the Group as at 31 March 2006 and the loss of the Group for the year then ended.

As a result of the uncertainty of the timing and the outcome of Case 2, we are unable to ascertain the possible result of Case 2 against the Group in relation to the disputes on claims arising from liquidated damages and alleged environmental related damages in relation to main contract works in a residential development project carried out in Hong Kong. The future settlement of Case 2 could result in additional liabilities of the Group. Any adjustments to the additional liabilities of Case 2 that might have been necessary should evidence become available to us may have a consequential significant effect on the net assets of the Company and the Group as at 31 March 2006 and the loss of the Group for the year then ended.

FUNDAMENTAL UNCERTAINTY AND LIMITATION OF AUDIT SCOPE RELATING TO RECOVERABILITY OF OTHER RECEIVABLE AND ARBITRATION

As described in Note 23 to financial statements, the Company commenced arbitration against a subcontractor (“Case 3”) to recover the other receivable of the Company in the amount of approximately HK$10,800,000 (the “Receivable”). Case 3 is in respect of costs incurred on behalf of the subcontractor arising from execution of a civil engineering works contract in Hong Kong. Although the directors of the Company, after consultation with their legal advisors, are of the view that Group has valid grounds to recover the Receivable, the outcome of such arbitration cannot be determined as at the date of approval of these financial statements.

As a result of the uncertainty of the timing and the outcome of Case 3 we are unable to ascertain as to how much and when the other receivable of the subcontractor would be recoverable or whether the full amount might be recoverable. There were no other practical satisfactory audit procedures that we could adopt to assess the carrying value of the other receivable of the subcontractor. Any adjustments to the carrying value of the other receivable of the subcontractor that might have been necessary should evidence become available to us may have a consequential significant effect on the net assets of the Company and the Group as at 31 March 2006 and the loss of the Group for the year then ended.

In forming our opinion we also evaluated the overall adequacy of the presentation of information in the financial statements. We believe that our audit provides a reasonable basis for opinion.

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

FUNDAMENTAL UNCERTAINTIES RELATING TO THE GOING CONCERN BASIS OF THE GROUP

In forming our opinion we have considered the adequacy of the disclosures made in Note 2 to financial statements concerning the adoption of the going concern basis on which the financial statements have been prepared. As explained in Note 2 to financial statements, the directors are currently undertaking measures to satisfy its working capital needs and improve the liquidity position of the Group.

The financial statements have been prepared on a going concern basis, the validity of which depends upon the outcome of Case 1, Case 2 and Case 3 and the recoverability of Receivable Under Dispute, the Receivable and the successful outcome of the Group’s measures to satisfy its working capital needs and improve the liquidity position. The financial statements do not include any adjustments that would result from the Group fail to recover the Receivable Under Dispute and the Receivable as stated above and a failure as to the successful outcome of the working capital and liquidity position of the Group. If the Receivable Under Dispute and the Receivable were not to be recovered or there was a failure as to the successful outcome of the working capital and liquidity position of the Group, adjustments would have to be made to the financial statements to reduce the value of the Group’s assets to their recoverable amounts, to provide for any further liabilities which might arise and to reclassify non-current assets and liabilities as current assets and liabilities, respectively. We are uncertain whether the financial statements of the Group should be prepared under the going concern basis due to the matters as mentioned in preceding paragraph.

QUALIFIED OPINION: DISCLAIMER ON OPENING BALANCES IN RELATION TO THE RECEIVABLES UNDER DISPUTE AND THE RECEIVABLE AND DISCLAIMER ON VIEW GIVEN BY THE FINANCIAL STATEMENTS

The Receivable Under Dispute and the Receivable were originally included in the consolidated balance sheet as at 31 March 2005. Because of the significant of the possible effects of the limitation in evidence available to us concerning the recoverability of the Receivable Under Dispute and the Receivable and the pending arbitrations referred to in the preceding paragraphs, we are unable to form an opinion as to whether the corresponding consolidated financial statements for the year ended 31 March 2005 and consequently the opening balances as of 1 April 2005 of the financial statements are free from any material misstatement.

Because of the significance of the possible effects of the limitation in evidence available to us relating to the matters referred to the above paragraphs, we are unable to form an opinion as to whether the financial statements give a true and fair view of the state of affairs of the Company and of the Group as at 31 March 2006 or of the loss and cash flows of the Group for year then ended and as to whether the financial statements have been properly prepared in accordance with the disclosure requirements of the Companies Ordinance.

In respect alone of the limitation on our work relating to the matters described above, we have not obtained all the information and explanations that we considered necessary for the purposes of our audit.

HLB Hodgson Impey Cheng Chartered Accountants Certified Public Accountants

Hong Kong, 25 July 2006

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

REPORT OF THE AUDITORS FOR THE YEAR ENDED 31 MARCH 2007

==> picture [160 x 60] intentionally omitted <==

31/F Gloucester Tower The Landmark 11 Pedder Street Central Hong Kong

TO THE SHAREHOLDERS OF WING HONG (HOLDINGS) LIMITED

(incorporated in the Cayman Islands with limited liability)

We were engaged to audit the consolidated financial statements of Wing Hong (Holdings) Limited (the “Company”) and its subsidiaries (collectively referred to as the “Group”) as set out on pages 21 to 73, which comprise the consolidated balance sheet and the Company balance sheet as at 31 March 2007, and the consolidated income statement, the consolidated statement of changes in equity and the consolidated cash flow statement for the year then ended, and a summary of significant accounting policies and other explanatory notes.

DIRECTORS’ RESPONSIBILITY FOR THE CONSOLIDATED FINANCIAL STATEMENTS

The directors of the Company are responsible for the preparation and the true and fair presentation of these consolidated financial statements in accordance with Hong Kong Financial Reporting Standards issued by the Hong Kong Institute of Certified Public Accountants and the disclosure requirements of the Hong Kong Companies Ordinance. This responsibility includes designing, implementing and maintaining internal control relevant to the preparation and the true and fair presentation of the consolidated financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

AUDITORS’ RESPONSIBILITY

Our responsibility is to express an opinion on these consolidated financial statements based on our audit and to report our opinion solely to you, as a body, and for no other purpose. We do not assume responsibility towards or accept liability to any other person for the contents of this report.

Except for the limitation in the scope of our work as explained below, we conducted our audit in accordance with Hong Kong Standards on Auditing issued by the Hong Kong Institute of Certified Public Accountants. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance as to whether the consolidated financial statements are free from material misstatement. However, because of the matter described in the basis of disclaimer of opinion paragraph, we were not able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion.

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

BASIS FOR DISCLAIMER OF OPINION

Significant uncertainty and limitation of audit scope relating to the recoverability of accounts receivable and arbitration

As described in Note 3 to the financial statements, the Group commenced arbitration against a major customer (“Case 1”) to recover the accounts receivable of the Group, representing an amount recorded based on architects’ certificate, of approximately HK$120,459,000 (the “Receivable Under Dispute”). Subsequently a counter claim was made by the major customer against the Group in relation to the disputes on claims arising from liquidated damages and alleged environmental related damages in relation to main contract works in a residential development project carried out in Hong Kong (“Case 2”) in the amount of approximately HK$122,480,000. In respect of Case 1 and Case 2, the parties are undergoing on arbitration and negotiation process and the outcome of the arbitration has not been finalised as of the date of approval of these financial statements.

As a result of the uncertainty of the timing and the outcome of Case 1, we are unable to ascertain as to how much and when the accounts receivable of the major customer would be recoverable or whether the full amount might be recoverable. There were no other practical satisfactory audit procedures that we could adopt to assess the carrying value of the accounts receivable of the major customer. Any adjustments to the carrying value of the accounts receivable of the major customer that might have been necessary should evidence become available to us may have a consequential significant effect on the net assets of the Company and the Group as at 31 March 2007 and the loss of the Group for the year then ended.

As a result of the uncertainty of the timing and the outcome of Case 2, we are unable to ascertain the possible result of Case 2 against the Group in relation to the disputes on claims arising from liquidated damages and alleged environmental related damages in relation to main contract works in a residential development project carried out in Hong Kong. The future settlement of Case 2 could result in additional liabilities of the Group. Any adjustments to the additional liabilities of Case 2 that might have been necessary should evidence become available to us may have a consequential significant effect on the net assets of the Company and the Group as at 31 March 2007 and the loss of the Group for the year then ended.

Significant uncertainty and limitation of audit scope relating to recoverability of other receivable and arbitration

As described in Note 24 to the financial statements, the Group commenced arbitration against a subcontractor (“Case 3”) to recover the other receivable of the Group in the amount of approximately HK$10,400,000 (the “Receivable”). Case 3 is in respect of costs incurred on behalf of the subcontractor arising from execution of a civil engineering works contract in Hong Kong. Although the directors of the Company, after consultation with their legal advisors, are of the view that the Group has valid grounds to recover the Receivable, the outcome of such arbitration cannot be determined as at the date of approval of these financial statements.

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

evidence become available to us may have a consequential significant effect on the net assets of the Company and the Group as at 31 March 2007 and the loss of the Group for the year then ended.

In forming our opinion we also evaluated the overall adequacy of the presentation of information in the financial statements. We believe that our audit provides a reasonable basis for opinion.

Significant uncertainties relating to the going concern basis of the Group

In forming our opinion we have considered the adequacy of the disclosures made in Note 3 to the financial statements concerning the adoption of the going concern basis on which the financial statements have been prepared. As explained in Note 3 to the financial statements, the directors are currently undertaking measures to satisfy its working capital needs and improve the liquidity position of the Group.

The financial statements have been prepared on a going concern basis, the validity of which depends upon the outcome of Case 1, Case 2 and Case 3 and the recoverability of the Receivable Under Dispute, the Receivable and the successful outcome of the Group’s measures to satisfy its working capital needs and improve the liquidity position. The financial statements do not include any adjustments that would result from the Group fail to recover the Receivable Under Dispute and the Receivable as stated above and a failure as to the successful outcome of the working capital and liquidity position of the Group. If the Receivable Under Dispute and the Receivable were not to be recovered or there was a failure as to the successful outcome of the working capital and liquidity position of the Group, adjustments would have to be made to the financial statements to reduce the value of the Group’s assets to their recoverable amounts, to provide for any further liabilities which might arise and to reclassify non-current assets and liabilities as current assets and liabilities, respectively. We are uncertain whether the financial statements of the Group should be prepared under the going concern basis due to the matters as mentioned in preceding paragraph.

DISCLAIMER OF OPINION: DISCLAIMER ON VIEW GIVEN BY THE FINANCIAL STATEMENTS

Because of the significance of the possible effects of the limitation in evidence available to us relating to the matters referred to the above paragraphs, we are unable to form an opinion as to whether the financial statements give a true and fair view of the state of affairs of the Company and of the Group as at 31 March 2007 or of the loss and cash flows of the Group for the year then ended and as to whether the financial statements have been properly prepared in accordance with the disclosure requirements of the Companies Ordinance.

HLB Hodgson Impey Cheng

Chartered Accountants Certified Public Accountants

Hong Kong, 26 July 2007

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

In the year ended 31 March 2006, the Group adopted the following new and revised HKFRSs which are relevant to its operations. The 2005 comparatives have been amended as required, in accordance with the relevant requirements.

HKAS 1 Presentation of Financial Statements HKAS 7 Cash Flow Statements HKAS 8 Accounting Policies, Changes in Accounting Estimates and Errors HKAS 10 Events after the Balance Sheet Date HKAS 12 Income Taxes HKAS 14 Segment Reporting HKAS 16 Property, Plant and Equipment HKAS 17 Leases HKAS 21 The Effects of Changes in Foreign Exchange Rates HKAS 23 Borrowing Costs HKAS 24 Related Party Disclosures HKAS 27 Consolidated and Separate Financial Statements HKAS 28 Investments in Associates HKAS 31 Investments in Joint Ventures HKAS 32 Financial Instruments: Disclosure and Presentation HKAS 33 Earnings per Share HKAS 36 Impairment of Assets HKAS 38 Intangible Assets HKAS 39 Financial Instruments: Recognition and Measurement HKAS 40 Investment Property HKAS-Int 15 Operating Leases - Incentives HKAS-Int 21 Income Taxes - Recovery of Revalued Non-Depreciated Assets HKFRS 2 Share-based Payments HKFRS 3 Business Combinations HKFRS 5 Non-current Assets Held for Sale and Discontinued Operations

The adoption of new and revised HKASs 7, 8, 10, 12, 14, 16, 17, 23, 27, 28, 32, 33, 39 and HKAS-Int 15 did not result in substantial changes to the Group’s accounting policies. The impact of adopting the other HKFRSs is summarised as follows:

HKAS 1 has affected the presentation of minority interest, share of net after-tax results of associates and other disclosures. In the consolidated balance sheet, minority interests are now shown within total equity. In the consolidated income statement, minority interests are presented as an allocation of the total profit or loss for the year.
HKAS 21 had no material effect on the Group’s accounting policy. The functional currency of each of the consolidated entities has been re-evaluated based on the guidance to the revised standard. All the group entities have the same functional currency as the presentation currency for respective entity financial statements.
HKAS 24 has affected the identification of related parties and some other related-party disclosures.
The adoption of revised HKAS 40 has resulted in a change in the accounting policy of which the changes in fair values are recorded in the income statement as part of other gains.

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

In prior years, the increases in fair value were credited to the investment properties revaluation reserve. Decreases in fair value were first set off against increases on earlier valuations on a portfolio basis and thereafter expenses in the income statement.

– The adoption of HKFRS 2 has resulted in a change in the accounting policy for share-based payments. With effect from 1 April 2005, the Group recognises the fair value of share options granted as an expense in the income statement over the vesting period with a corresponding increase being recognised in share-based payment reserve. The share-based payment reserve is transferred to share capital and share premium, together with the exercise price, when the option holder exercises its rights. In prior years, no amount was recognised when options were granted. If the option holders chose to exercise the options, the nominal amount of share capital and share premium were credited only to the extent of the option’s exercise price receivable. As a transitional provision, the cost of share option granted after 7 November 2002 and had not yet vested on 1 April 2005 were expensed retrospectively in the income statement of the respective periods.

No share options were granted as at 31 March 2006 and 31 March 2005.

The adoption of HKFRS 3, HKAS 36 and HKAS 38 results in a change in the accounting policy for positive goodwill and negative goodwill and prospective application is required. Until 31 March 2005, positive goodwill was capitalised and amortised on a straight-line basis over its useful economic life of 20 years and was subject to impairment testing when there were indications of impairment.

In accordance with the provisions of HKFRS 3, the Group ceased amortisation of goodwill from 1 April 2005 and the accumulated amortisation as at 31 March 2005 has been eliminated with a corresponding decrease in the cost of goodwill. From the year ended 31 March 2006 onwards, goodwill is tested annually for impairment.

In accordance with the provisions of HKFRS 3, the Group derecognised the carrying amount of negative goodwill on 1 April 2005, with a corresponding adjustment to opening balance of retained earnings.

The adoption of HKFRS 5 has resulted in a change in the accounting policy for non-current assets (or disposal groups) held for sale. The non-current assets (or disposal groups) held for sale were previously neither classified nor presented as current assets or liabilities. There was no difference in measurement for non-current assets (or disposal groups) held for sale or for continuing use.

The Group adopted HKFRS 5 from 1 January 2005 prospectively in accordance with the standard’s provisions. The application of HKFRS 5 does not impact on the prior-year financial statements other than a change in the presentation of the results and cash flows of discontinued operations.

The adoption of HKAS-Int 21 has resulted in a change in the accounting policy relating to the measurement of deferred tax liabilities arising from the revaluation of investment properties. Such deferred tax liabilities are measured on the basis of tax consequences that would follow from recovery of the carrying amount of that asset through use. In prior years, the carrying amount of that asset was expected to be recovered through sale.

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

All changes in the accounting policies have been made in accordance with the transition provisions in the respective standards, wherever applicable. All standards adopted by the Group require retrospective application other than:

HKAS16 - initial measurement of an item of property, plant and equipment acquired in an exchange of assets transaction is accounted at fair value prospectively only to future transactions;
HKAS 21 - prospective accounting for goodwill and fair value adjustments as part of foreign operations; and
HKAS 39 - does not permit to recognise, derecognise and measure financial assets and liabilities in accordance with this standard on a retrospective basis. The Group applied the previous SSAP 24 “Accounting for investment in securities” to investments in securities and also to hedge relationships for the 2004 comparative information. The adjustments required for the accounting differences between SSAP 24 and HKAS 39 are determined and recognised at 1 April 2005.
HKFRS 3 - prospectively after 1 April 2005.
(i) Effect on the consolidated income statement for the year ended 31 March 2005

Increase in provision for impairment loss on accounts receivables Decrease in allowances for bad and doubtful debts	HKAS 39 Financial instruments HK$’000 1,838 (1,838) –

(ii) Effect on the consolidated balance sheet as at 1 April 2005

Assets Goodwill Negative goodwill Accumulated amortisation Equity Retained profits Investment property revaluation reserve	HKAS 40 Investment properties HK$’000 – – – 410 (410) –	HKFRS 3 Business combination HK$’000 (10,880) (2,232) 11,465 1,647 – –	Total HK$’000 (10,880) (2,232) 11,465 2,057 (410) –

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

(iii) Effect on the consolidated income statement for the year ended 31 March 2006

	HKAS 39
	Financial
	instruments
	HK$’000
Increase in provision for impairment loss of trade receivables	4
Decrease in allowances for bad and doubtful debts	(4)
	–
Effect on the consolidated balance sheet as at 31 March 2006
	HKFRS 5
	Non-current assets
	held for sale and
	discontinued operation
	HK$’000
Increase in non-current assets classified as held for sale	2,200
Decrease in property, plant and equipment	(2,200)
Increase in liabilities directly associated with non-current assets
classified as held for sale	211
Decrease in other payables and accruals	(211)
	–

(iv) Effect on the consolidated balance sheet as at 31 March 2006

No early adoption of the following new Standards or Interpretations that have been issued but are not yet effective. Unless otherwise stated, these HKFRSs are effective for annual periods beginning on or after 1 January 2006:

HKAS 1 (Amendment) Capital Disclosures HKAS 19 (Amendment) Employee Benefits - Actuarial Gains and Losses, Group Plans and Disclosures HKAS 21 (Amendment) The Effects of Changes in Foreign Exchange Rates - Net Investment in a Foreign Operation HKAS 39 (Amendment) Cash Flow Hedge Accounting of Forecast Intragroup Transaction HKAS 39 (Amendment) The Fair Value Option HKAS 39 & HKFRS 4 Financial Guarantee Contracts (Amendment) HKFRS 1 (Amendment) First-time Adoption of Hong Kong Financial Reporting

HKFRS 1 (Amendment) First-time Adoption of Hong Kong Financial Reporting Standards HKFRS 6 (Amendment) Exploration for and Evaluation of Mineral Resources HKFRS 7 Financial Instruments: Disclosure HK (IFRIC) - Int 4 Determining whether an Arrangement contain a Lease HK (IFRIC) - Int 5 Rights to Interests Arising from Decommissioning, Restoration and Environmental Rehabilitation Funds

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

HK (IFRIC) - Int 6 Liabilities arising from Participating in a Specific Market - Waste Electrical and Electronic Equipment HK (IFRIC) - Int 7 Applying the Restatement Approach under HKAS 29 Financial Reporting in Hyperinflationary Economies HK (IFRIC) - Int 8 Scope of HKFRS 2 HK (IFRIC) - Int 9 Reassessment of Embedded Derivatives

HKAS 1 (Amendment) – Presentation of Financial Statements - Capital Disclosures introduces disclosures about the level of an entity’s capital and how it manages capital. The Group assessed the impact of the amendment to HKAS 1 and concluded that the main additional disclosures will be the sensitivity analysis to market risk and the capital disclosures required by the amendment of HKAS 1. The Group will apply HKAS 1 from annual periods beginning 1 January 2007.

HKAS 39 (Amendment) – Cash Flow Hedge Accounting of Forecast Intragroup Transactions allows the foreign currency risk of a highly probable forecast intragroup transaction to qualify as a hedged item in the consolidated financial statements, provided that: (a) the transaction is denominated in currency other than the functional currency of the entity entering into that transaction; and (b) the foreign currency risk will affect consolidated profit and loss. This amendment is not relevant to the Group’s operations, as the Group does not have any intragroup transactions that would qualify as a hedged item in the consolidated financial statements as at 31 March 2005 and 2006.

HKAS 39 (Amendment) – The Fair Value Option changes the definition of financial instruments classified at fair value through profit or loss and restricts the ability to designate financial instruments as part of this category. The Group believes that this amendment should not have a significant impact on the classification of financial instruments, as the Group should be able to comply with the amended criteria for the designation of financial instruments at fair value through profit or loss. The Group will comply this amendment from accounting periods beginning on or after 1 January 2006.

HKAS 39 and HKFRS 4 (Amendment) – Financial Guarantee requires issued financial guarantees, other than those previously asserted by the entity to be insurance contracts, to be initially recognised at their fair value, and subsequently measured at the higher of (a) the unamortised balance of the related fees received and deferred, and (b) the expenditure required to settle the commitment at the balance sheet date.

HKFRS 7 – Financial Instruments: Disclosures introduces new disclosures to improve the information about financial instruments. It requires the disclosure of qualitative and quantitative information about exposure to risks arising from financial instruments, including specified minimum disclosures about credit risk, liquidity risk and market risk, including sensitivity analysis to market risk. It replaces HKAS 30 - Disclosures in the Financial Statements of Banks and Similar Financial Institutions, and disclosure requirements in HKAS 32 - Financial Instruments: Disclosure and Presentation. It is applicable to all entities that report under HKFRS.

Except as stated above, the Group expects that the adoption of the other pronouncements listed above will not have any significant impact on the Group’s financial statements in the period of initial application.

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

In the year ended 31 March 2007, the Group has applied, for the first time, a number of new standards, amendments and interpretations (the “new HKFRSs”) issued by the Hong Kong Institute of Certified Public Accountants (the “HKICPA”), which are either effective for accounting periods beginning on or after 1 December 2005 or 1 January 2006. The new HKFRSs adopted by the Group in the consolidated financial statements are set out as follows:

HKAS 21 (Amendment)	Net Investment in a Foreign Operation
HKAS 39 (Amendment)	Cash Flow Hedge Accounting of Forecast Intragroup
	Transactions
HKAS 39 (Amendment)	The Fair Value Option
HKAS 39 & HKFRS 4 (Amendment)	Financial Guarantee Contracts
HKFRS - Int 4	Determining whether an Arrangement contains a Lease

The adoption of the new HKFRSs has resulted in changes to the Group’s accounting policies in the following areas that affected the amounts reported for the year ended 31 March 2007 or prior accounting periods:

Financial guarantee contracts

In the year ended 31 March 2007, the Group has applied Hong Kong Accounting Standard (“HKAS”) 39 and HKFRS 4 (Amendments) Financial Guarantee Contracts which is effective for annual periods beginning on or after 1 January 2006.

A financial guarantee contract is defined by HKAS 39 Financial Instruments: Recognition and Measurement as “a contract that requires the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due in accordance with the original or modified of a debt instrument”.

Prior to 1 January 2006, financial guarantee contracts were not accounted for in accordance with HKFRS 4 Insurance Contract and those contracts were disclosed as contingent liabilities. A provision for financial guarantee was only recognised when it was probable that an outflow of resources would be required to settle the financial guarantee obligation and the amount can be estimated reliably.

Upon the application of these amendments, a financial guarantee contract issued by the Group and not designated as at fair value through profit or loss is recognised initially at its fair value less transaction costs that are directly attributable to the issue of the financial guarantee contract. Subsequent to initial recognition, the Group measures the financial guarantee contract at the higher of: (i) the amount determined in accordance with HKAS 37 Provisions, Contingent Liabilities and Contingent Assets; and (ii) the amount initially recognised less, when appropriate, cumulative amortisation recognised in accordance with HKAS 18 Revenue.

The Company has issued corporate guarantees to banks in connection with facilities granted to its subsidiaries. These guarantees are financial guarantee contracts as they require the Company to reimburse the banks if the subsidiaries fail to make principal or interest payments when due in accordance with the terms of their borrowings.

Previously, financial guarantees issued by the Company to banks in relation to the borrowings by subsidiaries are accounted for as contingent liabilities of the Company and are not recognised in the consolidated financial statements until the Company has an obligation to make payment under the guarantee in accordance with HKAS 37.

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

On 1 April 2006, the Group adopted the amendments to HKAS 39 which requires financial guarantees to be accounted for initially at fair value and subsequently at the higher of: (i) the amount initially recognised, less accumulated amortisation; and (ii) the amount of obligation that arises under the guarantee.

The revised HKAS 39 has been applied retrospectively to financial guarantees existing as at 1 April 2005. The effects of adoption on the financial statements of the Company at 31 March 2007 and 2006 are as follows:

(i) Balance sheet of the Company as at 1 April 2005, 31 March 2006 and 31 March 2007

HKAS 39 and HKFRS 4 (Amendments)

Increase in interest in subsidiaries	5,268
Increase in financial guarantee contracts	(5,268)

–

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

HKAS 1 (Amendment) Capital Disclosures[1] HKAS 23 (Revised) Borrowing Costs[2] HKFRS 7 Financial Instruments: Disclosures[1] HKFRS 8 Operating Segments[2] HK(IFRIC) - Int 8 Scope of HKFRS 2[3] HK(IFRIC) - Int 9 Reassessment of Embedded Derivatives[4] HK(IFRIC) - Int 10 Interim Financial Reporting and Impairment[5] HK(IFRIC) - Int 11 HKFRS 2 – Group and Treasury Share Transactions[6] HK(IFRIC) - Int 12 Service Concession Arrangements[7]

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

2 Effective for annual periods beginning on or after 1 January 2009

3 Effective for annual periods beginning on or after 1 May 2006

4 Effective for annual periods beginning on or after 1 June 2006

5 Effective for annual periods beginning on or after 1 November 2006

6 Effective for annual periods beginning on or after 1 March 2007

7 Effective for annual periods beginning on or after 1 January 2008

The directors of the Company anticipate that the application of these standards or amendments will have no material impact on the financial statements of the Company.

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

2. AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR THE YEAR ENDED 31 MARCH 2007

The following is the audited consolidated income statements, audited consolidated balance sheets, audited consolidated statement of changes in equity and audited consolidated cash flow statement of the Group for the two years ended 31 March 2006 and 2007, together with the accompanying notes to the accounts extracted from the annual report of the Company for the year ended 31 March 2007:

CONSOLIDATED INCOME STATEMENT

At 31 March 2007

Note Turnover – contract revenue 7 Contract cost Gross (loss)/profit Other revenue 7 Other income 8 Administrative expenses Other operating expenses Loss from operating activities 8 Finance costs 9 Loss before tax Taxation 12 Loss for the year Attributable to: – Equity holders of the Company – Minority interest Dividends 14 Loss per share attributable to equity holders of the Company – Basic 15 – Diluted 15	2007 HK$’000 64,368 (64,508) (140) 2,024 1,223 (21,759) (4) (18,656) (2,528) (21,184) 48 (21,136) (20,411) (725) (21,136) – (HK18.47 cents) N/A	2006 HK$’000 (Restated) 152,701 (145,469) 7,232 1,873 36 (21,777) (4) (12,640) (1,851) (14,491) 78 (14,413) (15,004) 591 (14,413) – (HK14.10 cents) N/A

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

CONSOLIDATED BALANCE SHEET

At 31 March 2007

Note ASSETS Non-current assets Property, plant and equipment 16 Goodwill 17 Available-for-sale financial assets 19 Interest in a jointly-controlled entity 20 Current assets Amount due from customers for contract work 22 Accounts receivable 23 Prepayments, deposits and other receivables 24 Loan to a shareholder 30(a) Tax recoverable Pledged time deposits 25 Cash and cash equivalents 25 Non-current assets classified as held for sale Total assets EQUITY Capital and reserves attributable to equity holders of the Company Share capital 32 Reserves 34(a) Minority interests Total equity	2007 HK$’000 357 1,810 1,596 1,247 5,010 38,020 121,507 14,915 200 606 5,100 32,239 212,587 – 217,597 12,108 100,430 112,538 2,569 115,107	2006 HK$’000 567 1,810 – 1,143
		3,520
		41,571 129,275 15,310 200 674 5,100 51,590
		243,720
		2,200
		249,440

		10,640 115,529
		126,169 3,294
		129,463

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

CONSOLIDATED BALANCE SHEET

At 31 March 2007

Note LIABILITIES Non-current liabilities Loan from Shareholders 30(b) Deferred tax 31 Current liabilities Amount due to customers for contract work 22 Accounts payable 26 Tax payable Other payables and accruals 27 Liabilities directly associated with non-current assets classified as held for sale 27 Total liabilities Total equity and liabilities Net current assets Total assets less current liabilities	2007 HK$’000 37,372 18 37,390 10,064 50,455 20 4,561 65,100 – 65,100 102,490 217,597 147,487 152,497	2006 HK$’000 44,840 130
		44,970
		14,152 56,981 24 3,639
		74,796 211
		75,007
		119,977
		249,440

		170,913

		174,433

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the year ended 31 March 2007

	Attributable to equity holders of the Company	Attributable to equity holders of the Company	Attributable to equity holders of the Company	Attributable to equity holders of the Company		Total HK$’000 141,929 – 1,647
Issued share capital HK$’000 10,640 – – 10,640 – – – 10,640 – – 1,468 – – 12,108 12,108 – – 12,108 10,640 – – 10,640	Share premium account HK$’000 29,535 – – 29,535 – – – 29,535 – – 4,551 – – 34,086 34,086 – – 34,086 29,535 – – 29,535	Capital reserve HK$’000 (Note (a)) 9,800 – – 9,800 – – – 9,800 – – – – – 9,800 9,800 – – 9,800 9,800 – – 9,800	Available- for-sale financial assets fair value reserve HK$’000 – – – – – – – – – – – 273 – 273 273 – – 273 – – – –	Investment property revaluation reserve HK$’000 410 (410) – – – – – – – – – – – – – – – – – – – –	Exchange translation reserve HK$’000 – – – – 300 300 – 300 488 488 – – – 788 788 – – 788 300 – – 300
						143,576
						300
						300 (14,413)
						129,463
						488
						488 6,019 273 (21,136)
						115,107

						115,401 – (294)
						115,107

						129,757 – (294)
						129,463

Note:

(a) The capital reserve of the Group represents the difference between the nominal value of the shares of the subsidiaries acquired pursuant to the group reorganisation in 2004, over the nominal value of the Company’s shares issued in exchange therefor.

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

CONSOLIDATED CASH FLOW STATEMENT

For the year ended 31 March 2007

Note Cash flows from operating activities Loss before tax Adjustments for: Finance costs Interest income Depreciation Exchange difference Property, plant and equipment written off Loss on disposal of investment properties Gain on disposal of property, plant and equipment Gain on disposal of a subsidiary Gain on disposal of financial assets at fair value through profit or loss Reversal of accounts payable Provision for impairment loss on accounts receivable Operating loss before working capital changes (Increase)/decrease in amount due from a joint-controlled entity Decrease in accounts receivable Decrease in prepayments Decrease in deposits and other receivables Decrease in amount due from customers for contract work Decrease in accounts payable Increase in other payables and accruals Decrease in amount due to customers for contract work Decrease in amount due to a Director Cash (utilised)/generated from in operations Interest received Interest paid Hong Kong profits tax refunded Net cash (outflow)/inflow from operating activities	2007 HK$’000 (21,184) 2,528 (1,539) 171 429 26 229 (49) – (79) (1,095) 4 (20,559) (104) 7,768 148 247 3,551 (5,431) 711 (4,088) – (17,757) 1,539 – 68 (16,150)	2006 HK$’000 (14,491) 1,851 (1,249) 121 302 – – (32) (4) – – 4 (13,498) 41 24,660 463 2,177 15,675 (15,377) 1,634 (10,905) (3,873) 997 1,249 (2) 166 2,410

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

CONSOLIDATED CASH FLOW STATEMENT

For the year ended 31 March 2007

Note Cash flows from investing activities Purchase of property, plant and equipment Purchase of available-for-sale financial assets Purchase of financial assets at fair value through profit or loss Proceeds from disposal of financial assets at fair value through profit or loss Proceeds from disposal of property, plant and equipment Proceeds from disposal of investment properties Decrease in pledged time deposits Net cash inflow from investing activities Cash flows from financing activities Proceeds from issue of shares Loans from Shareholders Repayment of loan from Shareholders Net cash (outflow)/inflow from financing activities (Decrease)/increase 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 Analysis of balances of cash and cash equivalents Cash and bank balances 25	2007 HK$’000 (38) (1,323) (368) 447 58 2,000 – 776 6,019 4 (10,000) (3,977) (19,351) 51,590 32,239 32,239	2006 HK$’000 (246) – – – 139 – 3,900 3,793 – 20,000 – 20,000 26,203 25,387 51,590 51,590

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

BALANCE SHEET

At 31 March 2007

Note ASSETS Non-current assets Interest in subsidiaries 18 Available-for-sale financial assets 19 Current assets Cash and bank balances 25 Total assets EQUITY Capital and reserves attributable to equity holders of the Company Share capital 32 Reserves 34(b) Total equity LIABILITIES Non-current liabilities Loan from Shareholders 30(b) Current liabilities Other payables and accruals 27 Amounts due to subsidiaries Financial guarantee contracts 29 Total liabilities Total equity and liabilities Net current (liabilities)/assets Total assets less current liabilities	2007 HK$’000 206,844 229 207,073 2,777 209,850 12,108 142,306 154,414 37,372 822 11,974 5,268 18,064 55,436 209,850 (15,287) 191,786	2006 HK$’000 (Restated) 184,663 –
		184,663
		13,928
		198,591

		10,640 137,007
		147,647
		44,840
		769 67 5,268
		6,104
		50,944
		198,591

		7,824

		192,487

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

NOTES TO FINANCIAL STATEMENTS

31 March 2007

1. CORPORATE INFORMATION

The Company was incorporated as an exempted company with limited liability in the Cayman Islands on 27 August 2002 under the Companies Law, Cap. 22 (Law 3 of 1961, as consolidated and revised) of the Cayman Islands. The registered office of the Company is Cricket Square, Hutchins Drive, P.O. Box 2681, Grand Cayman, KY1-1111, Cayman Islands. The principal place of business of the Company in Hong Kong is located at 13th Floor, OTB Building, 259 - 265 Des Voeux Road Central, Hong Kong.

The Group was principally involved in building constructions, renovation and related services and property investment.

In the opinion of directors, the Company’s ultimate holding company is Rich Place Investment Limited (“Rich Place”), which is incorporated in the British Virgin Islands (the “BVI”) with limited liability.

2. APPLICATION OF NEW AND REVISED HONG KONG FINANCIAL REPORTING STANDARDS (“HKFRSs”)

HKAS 21 (Amendment) Net Investment in a Foreign Operation HKAS 39 (Amendment) Cash Flow Hedge Accounting of Forecast Intragroup Transactions HKAS 39 (Amendment) The Fair Value Option HKAS 39 & HKFRS 4 (Amendment) Financial Guarantee Contracts HKFRS - Int 4 Determining whether an Arrangement contains a Lease

The adoption of the new HKFRSs has resulted in changes to the Group’s accounting policies in the following areas that affected the amounts reported for the current or prior accounting periods:

Financial guarantee contracts

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

(i) Balance sheet of the Company as at 1 April 2005, 31 March 2006 and 31 March 2007

HKAS 39 and HKFRS 4 (Amendments) Increase in interest in subsidiaries 5,268 Increase in financial guarantee contracts (5,268)

–

The Group has not early applied the following new standard, amendment or interpretations that have been issued but are not yet effective. The Directors anticipate that the application of these new standard, amendment or interpretations will have no material impact on the results and the financial position of the Group.

HKAS 1 (Amendment) Capital Disclosures[1] HKAS 23 (Revised) Borrowing Costs[2] HKFRS 7 Financial Instruments: Disclosures[1] HKFRS 8 Operating Segments[2] HK(IFRIC) - Int 8 Scope of HKFRS 2[3] HK(IFRIC) - Int 9 Reassessment of Embedded Derivatives[4] HK(IFRIC) - Int 10 Interim Financial Reporting and Impairment[5] HK(IFRIC) - Int 11 HKFRS 2 - Group and Treasury Share Transactions[6] HK(IFRIC) - Int 12 Service Concession Arrangements[7]

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

2 Effective for annual periods beginning on or after 1 January 2009

3 Effective for annual periods beginning on or after 1 May 2006

4 Effective for annual periods beginning on or after 1 June 2006

5 Effective for annual periods beginning on or after 1 November 2006

6 Effective for annual periods beginning on or after 1 March 2007

7 Effective for annual periods beginning on or after 1 January 2008

The directors of the Company anticipate that the application of these standards or amendments will have no material impact on the financial statements of the Company.

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The financial statements have been prepared in accordance with Hong Kong Financial Reporting Standards (“HKFRSs”) (which also include Hong Kong Accounting Standards (“HKASs”) and Interpretations) issued by the HKICPA, accounting principles generally accepted in Hong Kong and the disclosure requirements of the Hong Kong Companies Ordinance and applicable disclosure provisions of The Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Listing Rules”). These financial statements are presented in Hong Kong dollars and all values are rounded to the nearest thousand (HK$’000) except otherwise indicated.

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

The preparation of financial statements in conformity with HKFRSs requires management to make judgments, estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believe to be reasonable under the circumstances, the results of which form the basis of making judgments about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. The estimates and assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

Judgments made by management in the application of HKFRSs that have significant effect on the financial statements and estimates with a significant risk of material adjustments in the next year are discussed in Note 5 to the financial statements.

A summary of the significant accounting policies followed by the Group in the preparation of the financial statements is set out below:

Basis of preparation

The measurement basis used in the preparation of the financial statements is historical cost as modified for the revaluation of investment property and available-for-sale financial assets as explained in the accounting policies set out below.

The financial statements have been prepared on a going concern basis, the validity of which depends upon the outcome of the arbitrations and recoverability of accounts receivable, the other receivable as stated below in Note 24 to the financial statements and the successful outcome of the Group’s measures to satisfy its working capital needs and improve the liquidity position. The financial statements do not include any adjustments that would result from the Group fail to recover the accounts receivable and other receivable. If the accounts receivable and other receivable were not to be recovered or there was a failure as to the successful outcome of the working capital and liquidity position of the Group, adjustments would have to be made to the financial statements to reduce the value of the Group’s assets to their recoverable amounts, to provide for any further liabilities which might arise and to reclassify non-current assets and liabilities as current assets and liabilities, respectively.

Included in the consolidated balance sheet as at 31 March 2007 is an account receivable of approximately HK$120,459,000 (2006: HK$120,459,000) (the “Receivable Under Dispute”), recorded based on architect’s certificates, currently withheld by a major customer of the Group with respect to disputes on claims arising from liquidated damages and alleged environmental related damages in relation to main contract work for a residential development project carried out in Kowloon Tong, Hong Kong, and the claim made by the Group on extension of time (the “EOT Claim”) entitlement by the Group. The Receivable Under Dispute were certified by the architects of the residential development project.

As at the date of approval of these financial statements, the Group has initiated arbitration proceedings to recover the outstanding amount due and negotiations with the customer are still in progress. Despite that the full amount of the accounts receivable balance is being withheld by the major customer, a counter claim was made by the major customer against the Group in relation to claims arising from liquidated damages and alleged environmental related damages in relation to main contract works in a residential development project carried out in Hong Kong in the amount of approximately HK$122,480,000. In the opinion of the directors, based on legal advice, the major customer does not have sufficient grounds to their entitlement of the EOT Claim, and as a result, the resultant liquidated damages, if any, would not be significant to the Group’s financial statements. The directors also considered that the Group has valid grounds to defend against the alleged environmental related damages claimed by the major customers and that the final amount being claimed, if any, would not have a material impact to the Group’s financial position.

Based on the foregoing, the directors of the Company are currently unable to determine the reasonable certainty of the outcome of the arbitration. The directors also unable to determine the time required to recover the Receivable Under Dispute and whether a provision, if any, is required against such receivable at this stage.

As a result of the withholding of settlement of accounts receivable by the customer, the working capital of the Group has been affected. In order to maintain the working capital of the Group, two major Shareholders of the Company provided continual financial support to the Group in the form of shareholders’ loan, of which approximately HK$37,372,000 of the loan had been made to the Group as at 31 March 2007 (2006: HK$44,840,000). Further details of the Shareholders’ loan are disclosed in Note 30(b) to the financial statements.

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

In the opinion of the Directors, in light of the continual financial support from the major Shareholders, the Group would have sufficient financial resources to satisfy its working capital needs for the foreseeable future. Accordingly, the Directors are satisfied that it is appropriate to prepare the financial statements on a going concern basis.

Basis of consolidation

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

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

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

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

Minority interests in the net assets of consolidated subsidiaries are presented separately from the Group’s equity therein. Minority interests in the net assets consist of the amount of those interests at the date of the original business combination and the minority’s share of changes in equity since the date of the combination. Losses applicable to the minority in excess of the minority’s interest in the subsidiary’s equity are allocated against the interests of the Group except to the extent that the minority has a binding obligation and is able to make an additional investment to cover the losses.

Subsidiaries

Subsidiaries are all entities (including special purpose entities) over which the Group has the power to govern the financial and operating policies generally accompanying a shareholding of more than one half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity.

Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases.

The purchase method of accounting is used to account for the acquisition of subsidiaries by the Group. The cost of acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any minority interest. The excess of the cost of acquisition over the fair value of the Group’s share of the identifiable net assets acquired is recorded as goodwill. If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognised directly in the income statement.

In the Company’s balance sheet, the investments in subsidiaries that are stated at cost less provision for impairment losses. The results of subsidiaries are accounted for by the Company on the basis of dividends received and receivable.

Joint venture companies

A joint venture company is a company set up by contractual arrangement, whereby the Group and other parties undertake an economic activity. The joint venture company operates as a separate entity in which the Group and the other parties have an interest.

The joint venture agreement between the venturers stipulates the capital contributions of the joint venture parties, the duration of the joint venture and the basis on which the assets are to be realised upon its dissolution. The profits and losses from the joint venture company’s operations and any distributions of surplus assets are shared by the venturers, either in proportion to their respective capital contributions, or in accordance with the terms of the joint venture agreement.

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

A joint venture company is treated as:

(i) a subsidiary, if the Company has unilateral control, directly or indirectly, over the joint venture company;
(ii) a jointly-controlled entity, if the Company does not have unilateral control, but has joint control, directly or indirectly, over the joint venture company;
(iii) an associate, if the Company does not have unilateral or joint control, but holds, directly or indirectly, generally not less than 20% of the joint venture company’s registered capital and is in a position to exercise significant influence over the joint venture company; or
(iv) a long term investment, if the Company holds, directly or indirectly, less than 20% of the joint venture company’s registered capital and has neither joint control of, nor is in a position to exercise significant influence over, the joint venture company.

Jointly controlled entity

A jointly controlled entity is a contractual arrangement whereby the Group and other parties undertake an economic activity which is subject to joint control and none of the participating parties has unilateral control over the economic activity.

Investments in jointly controlled entities are accounted for by the equity method of accounting. The consolidate income statement includes the Group’s share of the results of jointly controlled entities for the year, and the consolidated balance sheet includes the Group’s share of the net assets of the jointly controlled entities and goodwill (net of any accumulated impairment loss) on acquisition.

Associated companies

Associates are all entities over which the Group has significant influence but not control, generally accompanying a shareholding of between 20% and 50% of the voting rights. Investments in associates are accounted for by the equity method of accounting and are initially recognised at cost. The Group’s investment in associates includes goodwill (net of any accumulated impairment loss) identified on acquisition.

The Group’s share of its associates’ post-acquisition profits or losses is recognised in the income statement and its share of post-acquisition movements in reserves is recognised in reserves. The cumulative post-acquisition movements are adjusted against the carrying amount of the investment. When the Group’s share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the associate.

Unrealised gains on transactions between the Group and its associates are eliminated to the extent of the Group’s interest in the associates. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.

Foreign currency translation

(i) Functional and presentation currency

Items included in the financial statements of each of the group’s entities are measured using the currency of the primary economic environment in which the entity operates (the “functional currency”). The consolidated financial statements are presented in Hong Kong dollars, which is the Company’s functional and presentation currency.

(ii) Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement.

Translation differences on non-monetary items, such as equity instruments held at fair value through profit or loss, are reported as part of the fair value gain or loss. Translation difference on non-monetary items, such as equities classified as available-for-sale financial assets are included in the fair value reserve in equity.

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

(iii) Group companies

The results and financial position of all the group entities (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

(a) assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet;
(b) income and expenses for each income statement are translated at average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the dates of the transactions); and
(c) all resulting exchange differences are recognised as a separate component of equity.

On consolidation, exchange differences arising from the translation of the net investment in foreign entities, and of borrowings are taken to shareholders’ equity. When a foreign operation is sold, such exchange differences are recognised in the income statement as part of the gain or loss on sale.

Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate.

Goodwill

Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the net identifiable assets of the acquired subsidiary at the date of acquisition. Goodwill is tested annually for impairment and carried at cost less accumulated impairment losses. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold. Goodwill is allocated to cash-generating units for the purpose of impairment testing.

Property, plant and equipment

Property, plant and equipment, other than investment properties, are stated at cost less accumulated depreciation and any impairment losses. The cost of an asset comprises its purchase price and any directly attributable costs of bringing the asset to its working condition and location for its intended use. Expenditure incurred after property, plant and equipment have been put into operation, such as repairs and maintenance, is normally charged to the consolidated profit and loss account in the period in which it is incurred. In situations where it can be clearly demonstrated that the expenditure has resulted in an increase in the future economic benefits expected to be obtained from the use of the property, plant and equipment, the expenditure is capitalised as an additional cost of that property, plant and equipment.

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

Leasehold improvements Over the terms of lease or 3 years, whichever is shorter Machinery 10% Motor vehicles 20% Furniture, fixture and office equipment 20% Tools and equipment 20%

The gain or loss on disposal or retirement of a property, plant and equipment recognised in the consolidated profit and loss account is the difference between the net sales proceeds and the carrying amount of the relevant asset.

Investment properties

Property that is held for long-term rental yields or for capital appreciation or both, and that is not occupied by the companies in the consolidated Group, is classified as investment property.

Investment property is measured initially at its cost, including related transaction costs.

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

After initial recognition, investment property is carried at fair value. Fair value is based on active market prices, adjusted, if necessary, for any difference in the nature, location or condition of the specific asset. If this information is not available, the Group uses alternative valuation methods such as recent prices on less active market or discounted cash flow projections. These valuations are performed in accordance with the guidance issued by the International Valuation Standards Committee. These valuations are reviewed annually by external valuers.

The fair value of investment property reflects, among other things, rental income from current leases and assumptions about rental income from future leases in the light of current market conditions.

The fair value also reflects on a similar basis, any cash outflows that could be expected in respect of the property. Some of those outflows are recognised as a liability, including finance lease liabilities in respect of land classified as investment property, others, including contingent rent payments, are not recognised in the financial statements.

Subsequent expenditure is charged to the asset’s carrying amount only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. All other repairs and maintenance costs are expensed in the income statement during the financial period in which they are incurred.

Changes in fair values are recognised in the income statement.

Impairment of assets (other than goodwill, intangible assets with indefinite lives)

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.

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.

Construction contracts

Contract revenue comprises the agreed contract amount and appropriate amounts from variation orders, claims and incentive payments. Contract costs incurred comprise direct materials, the costs of subcontracting, direct labour and an appropriate proportion of variable and fixed construction overheads.

Revenue from fixed price construction contracts is recognised on the percentage of completion method, measured by reference to the percentage of certified value of work performed to the contract sum for each contract.

Revenue from cost plus construction contracts is recognised on the percentage of completion method, by reference to the recoverable costs incurred during the period plus the related fee earned, measured by the proportion of costs incurred to date to the estimated total cost of the relevant contract.

Provision is made for foreseeable losses as soon as they are anticipated by management.

Where contract costs incurred to date plus recognised profits less recognised losses exceed progress billings, the surplus is treated as an amount due from customers for contract work.

Where progress billings exceed contract costs incurred to date plus recognised profits less recognised losses, the surplus is treated as an amount due to customers for contract work.

Trade and other receivables

Trade and other receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. A provision for impairment of trade and other receivables is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of receivables. The amount of the provision is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the effective interest rate. The amount of the provision is recognised in the income statement.

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

Borrowings

Borrowings are recognised initially at fair value, net of transaction costs incurred. Transaction costs are incremental costs that are directly attributable to the acquisition, issue or disposal of a financial assets or financial liability, including fees and commissions paid to agents, advisers, brokers and dealers, levies by regulatory agencies and securities exchanges, and transfer taxes and duties. Borrowings are subsequently stated at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the income statement over the period of the borrowings using the effective interest method.

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

Cash and cash equivalents

Cash and cash equivalents include cash in hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities on the balance sheet.

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 consolidated 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 taxation profit nor the accounting profit.

Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and associates, and interests in joint ventures, 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 realised. 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.

Employee benefits

(i) Employment Ordinance long service payments

Certain of the Group’s employees have completed the required number of years of services to the Group in order to be eligible for long service payments under the Hong Kong Employment Ordinance (the “Employment Ordinance”) in the event of the termination of their employment. The Group is liable to make such payments in the event that such a termination of employment meets the circumstances specified in the Employment Ordinance. Long service payments are recognised when they accrue to employees. A provision is made for the estimated liability for the long service payments as a result of services rendered by employees up to the balance sheet date.

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

(ii) Retirement benefits schemes

The Group operates defined contribution retirement benefits schemes in Hong Kong, including a Mandatory Provident Fund Scheme (the “MPF Scheme”), for those employees who are eligible and have elected to participate in the schemes. Contributions are made based on a percentage of the participating employees’ basic salaries and are charged to the consolidated income statement as they become payable in accordance with the rules of the schemes. The assets of the schemes are held separately from those of the Group in independently administered funds. When an employee leaves the schemes, with the exception of the MPF Scheme, prior to his/her interest in the Group’s employer contributions vesting fully, the ongoing contributions payable by the Group may be reduced by the relevant amount of any forfeited contributions. In respect of the MPF Scheme, the Group’s employer contributions vest fully with the employees when contributed into the scheme.

The Group also operates a Mandatory Provident Fund Exempted ORSO retirement benefits scheme for those employees who are eligible to participate in the scheme. This scheme operates in a way similar to the MPF Scheme, except that when an employee leaves the scheme prior to his/her interest in the Group’s employee contributions vesting fully, the ongoing contributions payable by the Group was reduced by the relevant amount of forfeited employer’s contributions.

The employees of the Group’s subsidiary which operates in the PRC are required to participate in a central pension scheme operated by the local municipal government. The subsidiary is required to contribute certain percentage of its payroll costs to the central pension scheme. The contributions are charged to the consolidated income statement as they become payable in accordance with the rules of the central pension scheme.

(iii) Share-based compensation

The Group operates an equity-settled, share-based compensation plan. The fair value of the employee services received in exchange for the grant of the options is recognised as an expense. The total amount to be expensed over the vesting period is determined by reference to the fair value of the options granted, excluding the impact of any non-market vesting conditions (for example, profitability and sales growth targets). Non-market vesting conditions are included in assumptions about the number of options that are expected to become exercisable. At each balance sheet date, the entity revises its estimates of the number of options that are expected to become exercisable. It recognises the impact of the revision of original estimates, if any, in the income statement, and a corresponding adjustment to equity over the remaining vesting period.

The proceeds received not of any directly attributable transaction costs are credited to share capital (nominal value) and share premium when the options are exercised.

Provisions

Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation, and a reliable estimate of the amount can be made. Where the Group expects a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain.

Revenue recognition

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

(i) from construction contracts, based on the percentage of completion basis as further explained in above;
(ii) work orders from contracts for alterations, additions, repairs and maintenance, based on the value of individual work order certified by relevant employers;
(iii) from the sale of properties, upon the execution of formal sales and purchase agreement;
(iv) management fee income and tender services income, when the services are rendered;
(v) rental income, on a time proportion basis over the lease terms;

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

(vi) interest income, on a time proportion basis taking into account the principal outstanding and the effective interest rate applicable; and
(vii) dividend income, when the shareholders’ right to receive payment has been established.

Dividends

Final dividends proposed by the directors are classified as a separate allocation of retained profits within the capital and reserves section of the balance sheet, until they have been approved by the shareholders in a general meeting. When these dividends have been approved by the shareholders and declared, they are recognised as a liability.

Interim dividends are simultaneously proposed and declared, because the Company’s and its subsidiaries’ memorandums and articles of association grant the directors the authority to declare interim dividends. Consequently, interim dividends are recognised immediately as a liability when they are proposed and declared.

Financial instruments

Financial assets and financial liabilities are recognised on the consolidated balance sheet when a group entity 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.

(i) Financial assets

The Group’s financial assets are classified into one of the four categories, including financial assets at fair value through profit or loss, loans and receivables, held-to-maturity investments and available-for-sale financial assets. 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.

(ii) Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss has two subcategories, including financial assets held for trading and those designated as at fair value through profit or loss on initial recognition. A financial asset other than a financial asset held for trading may be designated as at fair value through profit or loss upon initial recognition if:

such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise; or
the financial asset forms part of a group of financial assets or financial liabilities or both, which is managed and its performance is evaluated on a fair value basis, in accordance with the Group’s documented risk management or investment strategy, and information about the grouping is provided internally on that basis; or
it forms part of a contract containing one or more embedded derivatives, and HKAS 39 permits the entire combined contract (asset or liability) to be designated as at fair value through profit or loss.

At each balance sheet date subsequent to initial recognition, financial assets at fair value through profit or loss are measured at fair value, with changes in fair value recognised directly in profit or loss in the period in which they arise.

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

(iii) 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 receivables, loan receivables, other receivables, pledged bank deposits 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.

(iv) Held-to-maturity investments

Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturities that the Group’s management has the positive intention and ability to hold to maturity. At each balance sheet date subsequent to initial recognition, held-to-maturity investments are measured 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 estimated future cash flows discounted at the effective interest rate computed on initial recognition. Impairment losses are reversed in subsequent periods when an increase in the investment’s recoverable amount can be related objectively to an event occurring after the impairment was recognised, subject to the 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.

(v)

Available-for-sale financial assets

Available-for-sale financial assets are non-derivatives that are either designated or not classified as financial assets at fair value through profit or loss, loans and receivables or held-to-maturity investments. At each balance sheet date subsequent to initial recognition, available-for-sale financial assets are measured at fair value. Changes in fair value are recognised in equity, until the financial asset is disposed of or is determined to be impaired, at which time, the cumulative gain or loss previously recognised in equity is removed from equity and recognised in profit or loss. Any impairment losses on available-for-sale financial assets are recognised in profit or loss. Impairment losses on available-for-sale equity investments will not reverse in profit or loss in subsequent periods. For available-for-sale debt investments, impairment losses are subsequently reversed if an increase in the fair value of the investment can be objectively related to an event occurring after the recognition of the impairment loss. For available-for-sale equity investments that do not have a quoted market price in an active market and whose fair value cannot be reliably measured and derivatives that are linked to and must be settled by delivery of such unquoted equity instruments, they are measured at cost less any identified impairment losses at each balance sheet date subsequent to initial recognition. An impairment loss is recognised in profit or loss when there is objective evidence that the asset is impaired. The amount of the impairment loss is measured as the difference between the carrying amount of the asset and the present value of the estimated future cash flows discounted at the current market rate of return for a similar financial asset. Such impairment losses will not reverse in subsequent periods.

(vi) Financial liabilities and equity

Financial liabilities and equity instruments issued by a group entity 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 Group’s financial liabilities are generally classified into financial liabilities at fair value through profit or loss and other financial liabilities. The accounting policies adopted in respect of financial liabilities and equity instruments are set out below.

(vii) Financial liabilities at fair value through profit or loss

Financial liabilities at fair value through profit or loss has two subcategories, including financial liabilities held for trading and those designated as at fair value through profit or loss on initial recognition.

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

A financial liability other than a financial liability held for trading may be designated as at fair value through profit or loss upon initial recognition if:

such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise; or
the financial liability forms part of a group of financial assets or financial liabilities or both, which is managed and its performance is evaluated on a fair value basis, in accordance with the Group’s documented risk management or investment strategy, and information about the grouping is provided internally on that basis; or
it forms part of a contract containing one or more embedded derivatives, and HKAS 39 permits the entire combined contract (asset or liability) to be designated as at fair value through profit or loss.

At each balance sheet date subsequent to initial recognition, financial liabilities at fair value through profit or loss are measured at fair value, with changes in fair value recognised directly in profit or loss in the period in which they arise.

(viii) Other financial liabilities

Other financial liabilities (including bank and other borrowings, trade payables and other payables) are subsequently measured at amortised cost, using the effective interest method.

(ix) Financial guarantee contracts

A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due in accordance with the original or modified terms of a debt instrument. A financial guarantee contract issued by the Group and not designed as at fair value through profit or loss is recognised initially at its fair value less transaction costs that are directly attributable to the issue of the financial guarantee contract. Subsequent to initial recognition, the Group measures the financial guarantee contact at the higher of: (i) the amount determined in accordance with HKAS 37 Provisions, Contingent Liabilities and Contingent Assets; and (ii) the amount initially recognised less, when appropriate, cumulative amortisation recognised in accordance with HKAS 18 Revenue.

(x) Derecognition

Financial assets are derecognised when the rights to receive cash flows from the assets expire or, the financial assets are transferred and the Group has transferred substantially all the risks and rewards of ownership of the financial assets. On derecognition of a financial asset, the difference between the asset’s carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss that had been recognised directly in equity is recognised in profit or loss.

Financial liabilities are derecognised when the obligation specified in the relevant contract is discharged, cancelled or expires. The difference between the carrying amount of the financial liability derecognised and the consideration paid is recognised in profit or loss.

Leases

(i) Operating leases

Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are expensed in the income statement on a straight-line basis over the period of the lease.

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

(ii) Finance leases

Leases of assets where the Group has substantially all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalised at the lease’s commencement at the lower of the fair value of the leased property and the present value of the minimum lease payments. Each lease payment is allocated between the liability and finance charges so as to achieve a constant rate on the finance balance outstanding. The corresponding rental obligations, net of finance charges, are included in current and non-current borrowings. The interest element of the finance cost is recognised in the income statement over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The investment properties acquired under finance leases are carried at their fair value.

Contingent liabilities

A contingent liability is a possible obligation that arises from past events and whose existence will only be confirmed by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Group. It can also be a present obligation arising from past events that is not recognised because it is not probable that outflow of economic resources will be required or the amount of obligation cannot be measured reliably.

A contingent liability is not recognised but is disclosed in the notes to the financial statements. When a change in the probability of an outflow occurs so that the outflow is probable, it will then be recognised as a provision.

A contingent asset is a possible asset that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Group. A contingent asset is not recognised but is disclosed in the notes to the financial statements when an inflow of economic benefits is probable. When inflow is virtually certain, an asset is recognised.

Related party

Parties are considered to be related if one party has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Parties are also considered to be related if they are subject to common control or common significant influence. Related parties may be individuals or corporate entities. A transaction is considered to be a related party transaction when there is a transfer of resources or obligations between related parties.

4. FINANCIAL RISK MANAGEMENT

Financial risk factors

The Group’s activities expose it to a variety of financial risks: market risk (including currency risk and fair value interest risk), credit risk, liquidity risk and cash flow interest-rate risk. The Group’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group’s financial performance.

(a) Market risk

Foreign exchange risk

The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the Hong Kong dollar and Renminbi. Foreign exchange risk arises from future commercial transactions, recognised assets and liabilities and net investments in foreign operations. The Group currently does not have a foreign currency hedging policy. However, the management monitors foreign exchange exposure and will consider hedging significant foreign currency exposure should the need arise.

(b) Credit risk

The Group has no significant concentrations of credit risk. It has policies in place to ensure that transactions are made to customers with an appropriate credit history. For construction transaction, back-to-back arrangements are made with the sub-contractors where applicable to minimise the credit risk.

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

(c) Liquidity risk

The Group manages liquidity risk through continuous monitoring and matching of the funding requirement and position. It maintains sufficient cash and availability of funds through an adequate amount of undrawn committed credit facilities.

(d) Cash flow and fair value interest rate risk

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

5. CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS

Estimates and judgments 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.

The Group 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.

(a) Income taxes

The Group is subject to income taxes in numerous jurisdictions. Significant judgment is required in determining the worldwide provision for income taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. The Group recognises liabilities for anticipated tax audit issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made.

(b) Impairment of assets

The Group tests annually whether the assets have suffered any impairment. The recoverable amount of an asset or a cash generating unit is determined based on value-in-use calculations which require the use of assumptions and estimates.

(c) Fair value estimation

The carrying amounts of the Group’s financial assets, including cash and bank balances, trade and other receivables, amount due from shareholders, and financial liabilities, including trade and other payables and, approximate their fair values due to their short maturities. The face values less any credit adjustments for financial assets and liabilities with a maturity of less than one year are assumed to approximate their fair values.

(d) Provision for impairment loss on trade and other receivables

The provision for impairment loss on trade and other receivables of the Group is based on the evaluation of collectability and aging analysis of accounts and on management’s judgment. A considerable amount of judgment is required in assessing the ultimate realisation of these receivables, including the current creditworthiness and the past collection history of each account. If the financial conditions of the debtors were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required.

(e) Estimated impairment for goodwill

Determining whether goodwill is impaired requires an estimation of the value in use of the cash generating units to which goodwill has been allocated. The value in use calculation requires the Group to estimate the future cash flows expected to arise from the cash-generating unit and a suitable discount rate in order to calculate the present value. As at 31 March 2007, the carrying amount of goodwill was approximately HK$1,810,000 (2006: HK$1,810,000). Details of the recoverable amount calculation are disclosed in Note 17.

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

6. SEGMENT INFORMATION

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 products and services which are subject to risks and returns that are different from those of other business segments. Summary details of the business segments are as follows:

(a) the building construction segment engages in construction and foundation contract works as a main contractor or subcontractor for building construction in the private and public sectors;
(b) the renovation, repairs and maintenance segment engages in site formation, civil engineering works, repairs, maintenance, renovation and fitting out works in the private and public sectors; and
(c) the corporate and others segment comprises the Group’s management services and property holding businesses, which includes rental income and gain on disposal of investment properties, together with corporate income and expense items.

Business Segments

The following table presents revenue and loss for the Group’s business segments.

The Group

Building construction 2007 2006 HK$’000 HK$’000 Segment revenue: Contract revenue from external customers 14,233 93,467 Other revenue and other income 110 1,029 Total 14,343 94,496 Segment results (2,602) 3,059 Interest and unallocated gains Loss from operating activities Finance costs Loss before tax Taxation Loss for the year Segment assets 153,822 205,366 Interest in a jointly- controlled entity 1,247 1,143 Unallocated assets Total assets Segment liabilities 50,668 62,138 Unallocated liabilities Total liabilities Other segment information: Depreciation 11 84 Capital expenditure 5 63 Provision for impairment loss on accounts receivable – –	Renovation, repairs and maintenance 2007 2006 HK$’000 HK$’000 50,135 59,234 1,195 156 51,330 59,390 3,763 5,354 21,623 25,263 – – 12,677 10,939 101 194 2 183 4 4	Corporate and others 2007 2006 HK$’000 HK$’000 – – – – – – (21,759) (21,777) 1,164 3,238 – – 1,735 824 107 25 31 – – –	Consolidated 2007 2006 HK$’000 HK$’000 64,368 152,701 1,305 1,185 65,673 153,886 (20,598) (13,364) 1,942 724 (18,656) (12,640) (2,528) (1,851) (21,184) (14,491) 48 78 (21,136) (14,413) 176,609 233,867 1,247 1,143 39,741 14,430 217,597 249,440 65,080 73,901 37,410 46,076 102,490 119,977 219 303 38 246 4 4	Consolidated 2007 2006 HK$’000 HK$’000 64,368 152,701 1,305 1,185 65,673 153,886 (20,598) (13,364) 1,942 724 (18,656) (12,640) (2,528) (1,851) (21,184) (14,491) 48 78 (21,136) (14,413) 176,609 233,867 1,247 1,143 39,741 14,430 217,597 249,440 65,080 73,901 37,410 46,076 102,490 119,977 219 303 38 246 4 4
				153,886

				(13,364) 724
				(12,640) (1,851)
				(14,491) 78
				(14,413)

				233,867 1,143 14,430
				249,440

				73,901 46,076
				119,977

				303 246 4

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

Geographical Segments

Segment revenue Total segment assets Capital expenditure	Hong 2007 HK$’000 32,817 205,843 36	Kong 2006 HK$’000 106,373 236,906 189	The People’s Republic of China (“PRC”) 2007 2006 HK$’000 HK$’000 31,551 46,328 11,754 12,534 2 57	Total 2007 2006 HK$’000 HK$’000 64,368 152,701 217,597 249,440 38 246	Total 2007 2006 HK$’000 HK$’000 64,368 152,701 217,597 249,440 38 246

					249,440

					246

7. TURNOVER AND REVENUE

Turnover represents the appropriate proportion of contract revenue of construction contracts.

An analysis of turnover and other revenue is as follows:

Turnover: Contract revenue Other revenue: Bank interest income Bad debt recovered Handling income from subcontractors Other interest income Refund of provident fund unvested benefit Rental income Sundry income Total revenue	2007 HK$’000 64,368 1,462 – 127 77 55 225 78 2,024 66,392	2006 HK$’000 152,701
		1,179 200 47 70 150 54 173
		1,873
		154,574

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

8. LOSS FROM OPERATING ACTIVITIES

The Group’s loss from operating activities is arrived at after charging/(crediting):

Auditors’ remuneration Depreciation Amount capitalised as contract costs Provision for impairment loss on accounts receivable Staff costs (excluding directors’ remuneration)(Note 10) – wages and salaries – pension scheme contributions Less: Amount of staff costs capitalised as contract costs Minimum lease payments under operating leases: – Land and buildings Loss on disposal of investment properties and after crediting: Other income:* Gain on disposal of property, plant and equipment Gain on disposal of a subsidiary Gain on disposal of financial assets at fair value through profit or loss Reversal of accounts payable	2007 HK$’000 500 219 (48) 171 4 10,196 385 10,581 (1,236) 9,345 1,368 229 (49) – (79) (1,095) (1,223)	2006 HK$’000 500 303 (182)
		121
		4 16,649 614
		17,263 (1,977)
		15,286
		1,244 –

		(32) (4) – –
		(36)

As at 31 March 2007, the Group had no material forfeited contributions available to offset future pension scheme contributions to the scheme (2006: Nil).

9. FINANCE COSTS

Interests on bank overdrafts and bank loans Interest on shareholders’ loans	The Group 2007 2006 HK$’000 HK$’000 – 2 2,528 1,849 2,528 1,851	The Group 2007 2006 HK$’000 HK$’000 – 2 2,528 1,849 2,528 1,851
		1,851

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

10. DIRECTORS’ REMUNERATION

The remuneration of every director for the year ended 31 March 2007 and 2006, disclosed pursuant to the Listing Rules and Section 161 of the Hong Kong Companies Ordinance, is as follows:

Fees 2007 2006 HK$’000 HK$’000 Executive Directors Mr. Hui Chi Yung – – Mr. Hui Kau Mo – 413 Mr. Yiu Kai Yeuk, Raphael – – – 413 Independent Non-Executive Directors Dr. Hu Chung Kuen, David 20 20 Mr. Liu Kwong Sang 20 20 Mr. Sit Hing Wah 20 20 60 60 60 473	Salaries and other benefits 2007 2006 HK$’000 HK$’000 895 895 – – 1,817 1,817 2,712 2,712 – – – – – – – – 2,712 2,712	Performance related incentive payments 2007 2006 HK$’000 HK$’000 – – – – – – – – – – – – – – – – – –	Retirement benefits scheme contributions 2007 2006 HK$’000 HK$’000 12 12 – – 12 12 24 24 – – – – – – – – 24 24	Total 2007 2006 HK$’000 HK$’000 907 907 – 413 1,829 1,829 2,736 3,149 20 20 20 20 20 20 60 60 2,796 3,209	Total 2007 2006 HK$’000 HK$’000 907 907 – 413 1,829 1,829 2,736 3,149 20 20 20 20 20 20 60 60 2,796 3,209
					3,149
					20 20 20
					60
					3,209

The number of directors whose remuneration fell within the following bands is as follows:

Nil – HK$1,000,000 HK$1,500,001– HK$2,000,000	Number of directors 2007 2006 5 5 1 1 6 6	Number of directors 2007 2006 5 5 1 1 6 6
		6

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

During the year, no emoluments were paid by the Group to the directors as an inducement to join or upon joining the Group or as compensation for loss of office (2006: Nil).

11. FIVE HIGHEST PAID EMPLOYEES

The five highest paid employees during the year included two (2006: two) directors. Details of whose remuneration are set out in Note 10 to the financial statements. The details of the remuneration of the remaining three (2006: three) non-director, highest paid employees are as follows:

Salaries, allowances and benefits in kind Pension scheme contributions	The Group 2007 2006 HK$’000 HK$’000 2,069 2,131 36 36 2,105 2,167	The Group 2007 2006 HK$’000 HK$’000 2,069 2,131 36 36 2,105 2,167
		2,167

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

The number of non-director, highest paid employees whose remuneration fell within the following band is as follows:

	Number of employees	Number of employees
	2007	2006
Nil – HK$1,000,000	3	3

During the year, no emoluments were paid by the Group to the five highest paid employees as an inducement to join or upon joining the Group or as compensation for loss of office (2006: Nil).

12. TAXATION

No provision for Hong Kong profits tax has been made as the Group has no estimated assessable profits arising in Hong Kong during for year ended 31 March 2007 (2006: Nil). Taxes on profits assessable elsewhere have been calculated at the rates of tax prevailing in the countries in which the Group operates, based on existing legislation, interpretations and practices in respect thereof.

Current taxation: (Under)/overprovision in prior years – Hong Kong Deferred taxation: Reversal during the year_(Note 31)_	The Group 2007 2006 HK$’000 HK$’000 (64) 78 112 – 48 78	The Group 2007 2006 HK$’000 HK$’000 (64) 78 112 – 48 78
		–
		78

A reconciliation of the tax expense applicable to loss before tax using the statutory rates for the countries in which the Company and its subsidiaries, jointly-controlled entity and associate are domiciled to the tax expense at the effective tax rates, and a reconciliation of tax at the applicable rates (i.e., the statutory tax rates) to the effective tax rates, are as follows:

The Group

Loss before tax Tax at applicable tax rate Expenses not deductible for tax purposes Non-taxable income Tax losses not recognised Under provision in previous year Tax effect of reversal of temporary differences previously recognised Tax charge at the Group’s effective rate	Hong HK$’000 (18,498) (3,237) 65 (644) 3,816 64 (112) (48)	Kong % (17.5) 0.4 (3.5) 20.7 0.3 (0.6) (0.2)	2007 PRC HK$’000 % (2,686) (886) (33.0) – – – – 886 33.0 – – – – – –	Total HK$’000 % (21,184) (4,123) (19.5 65 0.3 (644) (3.0 4,702 22.2 64 0.3 (112) (0.5 (48) (0.2	Total HK$’000 % (21,184) (4,123) (19.5 65 0.3 (644) (3.0 4,702 22.2 64 0.3 (112) (0.5 (48) (0.2
					(19.5 0.3 (3.0 22.2 0.3 (0.5
					(0.2

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

Profit/(Loss) before tax Tax at applicable tax rate Expenses not deductible for tax purposes Non-taxable income Tax losses not recognised Over provision in previous year Tax losses utilised Tax charge at the Group’s effective rate	Hong HK$’000 (16,680) (2,919) 5,737 (3,984) 1,166 (78) – (78)	Kong % (17.5) 34.4 (23.9) 7.0 (0.5) – (0.5)	2006 PRC HK$’000 % 2,189 722 33.0 – – (624) (28.5) – – – – (98) (4.5) – –	Total HK$’000 % (14,491) (2,197) (15.2) 5,737 39.6 (4,608) (31.8) 1,166 8.0 (78) (0.5) (98) (0.6) (78) (0.5)

13. NET PROFIT FROM ORDINARY ACTIVITIES ATTRIBUTABLE TO EQUITY HOLDERS OF THE COMPANY

The net profit from ordinary activities attributable to equity holders of the Company for the year ended 31 March 2007 dealt with in the financial statements of the Company is HK$695,000 (2006: HK$314,000) (Note 34(b)).

14. DIVIDENDS

The directors do not recommend the payment of any dividend in respect of the year ended 31 March 2007 (2006: Nil).

15. LOSS PER SHARE ATTRIBUTABLE TO EQUITY HOLDERS OF THE COMPANY

The calculation of basic loss per share amounts is based on the loss for the year attributable to equity holders of the Company of approximately HK$20,411,000 (2006: HK$15,004,000) and the weighted average number of ordinary shares in issue during the year of 110,503,195 (2006: 106,400,000 (restated)) after adjusting for the effects of the share consolidation approved on 27 April 2007 (Note 38). The basic loss per share for 2006 had been adjusted accordingly.

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

16. PROPERTY, PLANT AND EQUIPMENT

The Group

Cost or valuation: At 1 April 2005 Additions Write off Disposals Exchange difference Reclassified as non-current assets held for sales At 31 March 2006 and 1 April 2006 Additions Write off Disposals Exchange difference At 31 March 2007 Analysis of cost or valuation: At cost At valuation At 31 March 2007 Accumulated depreciation: At 1 April 2005 Provided during the year Written off Written back on disposal Exchange difference At 31 March 2006 and 1 April 2006 Provided during the year Written off Written back on disposal Exchange difference At 31 March 2007 Net book value: At 31 March 2007 At 31 March 2006	Investment Leasehold properties improvements HK$’000 HK$’000 2,200 823 – – – – – – – – (2,200) – – 823 – – – (736) – – – – – 87 – 87 – – – 87 – 823 – – – – – – – – – 823 – – – (736) – – – – – 87 – – – –	Machinery HK$’000 4,219 – – – – – 4,219 – – – – 4,219 4,219 – 4,219 4,214 1 – – – 4,215 1 – – – 4,216 3 4	Motor vehicles HK$’000 1,456 125 – (320) – – 1,261 – – (378) 6 889 889 – 889 1,164 95 – (259) – 1,000 82 – (373) 4 713 176 261	Furniture, fixture and office equipment HK$’000 3,171 121 (98) (118) 6 – 3,082 38 (1,281) (37) (14) 1,788 1,788 – 1,788 2,822 146 (98) (72) 3 2,801 122 (1,256) (33) (18) 1,616 172 281	Tools and equipment HK$’000 785 – – – – – 785 – (538) – – 247 247 – 247 698 61 – – 5 764 14 (537) – – 241 6 21	Total HK$’000 12,654 246 (98) (438) 6 (2,200) 10,170 38 (2,555) (415) (8) 7,230 7,230 – 7,230 9,721 303 (98) (331) 8 9,603 219 (2,529) (406) (14) 6,873 357 567

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

17. GOODWILL

The amounts of the goodwill arising from the acquisition of subsidiaries are as follows:

Cost: At 1 April 2004 and at 31 March 2005, as previously reported Elimination of accumulated amortisation upon adoption of HKFRS 3 At 31 March 2006 and at 31 March 2007 Accumulated amortisation and impairment/ recognition as income: At 1 April 2004 Amortisation provided during the year Impairment provided during the year At 31 March 2005, as previously reported Elimination of accumulated amortisation upon adoption of HKFRS 3 At 31 March 2006 and at 31 March 2007 Net book value: At 31 March 2007 At 31 March 2006	The Group Goodwill HK$’000 12,690 (10,880)
	1,810
	(7,489) (625) (2,766)
	(10,880) 10,880
	–
	1,810

	1,810

In prior years, goodwill was amortised on a straight-line basis over its estimated useful economic life of 20 years. Following the adoptions of HKFRS 3 with effect from 1 April 2005, the Group no longer amortised goodwill. In accordance to the transitional provisions set out in HKFRS 3, the accumulated amortisation of goodwill as at 1 April 2005 has been eliminated against the cost of goodwill as at that date.

Goodwill is allocated to the Group’s cash-generating units (“CGU”) identified according to the location of operation and business segment as follows:

	2007	2006
	HK$’000	HK$’000
Renovation works	1,810	1,810

The recoverable amount of CGU is determined based on a value-in-use calculations which uses cash flow projections based on financial budgets approved by management covering a five-year period, and a discount rate of 14.79% per annum (2006: 15.38% per annum). Management believes that any reasonably possible change in the key assumptions on which recoverable amount is based would not cause the aggregate carrying amount to exceed the aggregate recoverable amount of this CGU.

Key assumptions used for value-in-use calculations:

Discount rate 14.79%

Management determined the budget gross margin based on average gross margins achieved in the period immediately before the budget period, increased for expected efficiency improvements.

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

18. INTEREST IN SUBSIDIARIES

Unlisted investments, at cost Financial guarantee granted to subsidiaries Amounts due from subsidiaries	The Company 2007 2006 HK$’000 HK$’000 (Restated) 107,848 107,848 5,268 5,268 93,728 71,547 206,844 184,663	The Company 2007 2006 HK$’000 HK$’000 (Restated) 107,848 107,848 5,268 5,268 93,728 71,547 206,844 184,663
		184,663

Amounts due from Wing Hong Construction Limited and Wing Hong Interior Contracting Limited are unsecured, bear interest at prime rate plus 3% per annum and have no fixed terms of repayment. The directors consider that the amounts due from Wing Hong Construction Limited and Wing Hong Interior Contracting Limited approximates to its fair value.

Amounts due from subsidiaries, other than the three subsidiaries stated above, are unsecured, interest-free and have no fixed terms of repayment. The directors consider that the amounts due from subsidiaries approximate to its fair value.

Particulars of the principal subsidiaries are as follows:

	Place of	Nominal value of	Percentage of	Percentage of
	incorporation/	issued and fully	equity	interests
	registration	paid-up share/	attributable to
Name	and operations	registered capital	the Company		Principal activities
			Direct	Indirect
Wing Hong	British Virgin	US$1 Ordinary	100%	–	Investment holding
Investment Limited	Islands
Shing Tak Construction	Hong Kong	HK$10,000,000	–	100%	Investment holding
Company Limited		Ordinary
Wing Hong Contractors	Hong Kong	HK$17,750,000	–	100%	Building construction
Limited		Ordinary			and maintenance works
Wing Hong Construction	Hong Kong	HK$10,000 Ordinary	–	100%	Building construction
Limited					and renovation works
Wing Hong (China)	Hong Kong	HK$100 Ordinary	–	100%	Investment holding
Limited (“WH (China)”)
Shanghai Jinjiang	PRC	RMB12,000,000	–	73%	Renovation works
Wing Hong
Contracting Co. Ltd.*
(“Jinjiang Wing Hong”)
Wing Hong Interior	Hong Kong	HK$100 Ordinary	–	100%	Renovation works
Contracting Limited
Good Busy International	Hong Kong	HK$100 Ordinary	–	100%	Dormant
Limited
Cotak Enterprises Limited	Hong Kong	HK$2 Ordinary	–	100%	Dormant
Power Pond Limited	Hong Kong	HK$2 Ordinary	–	100%	Dormant
Wealth Money Limited	Hong Kong	HK$1,000 Ordinary	–	100%	Dormant
Kofit Properties Limited	Hong Kong	HK$1,000 Ordinary	–	100%	Property holding

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

	Place of	Nominal value of	Percentage of	Percentage of
	incorporation/	issued and fully	equity	interests
	registration	paid-up share/	attributable to
Name	and operations	registered capital	the Company		Principal activities
			Direct	Indirect
Wing Hong Engineering	Hong Kong	HK$10,000 Ordinary	–	100%	Dormant
and Construction Limited
Wing Hong	Macau	MOP100,000	–	100%	Building construction
(Macau) Limited					and renovation works

* Jinjiang Wing Hong is registered as a Sino-foreign joint venture under the PRC Law.

The above table lists the subsidiaries of the Company which, in the opinion of the directors, principally affected the results for the year or formed a substantial portion of the net assets of the Group. To give details of other subsidiaries would, in the opinion of the directors, result in particulars of excessive length.

19. AVAILABLE-FOR-SALE FINANCIAL ASSETS

Listed investments: – Equity securities listed in Hong Kong Market value of listed securities	The Group 2007 2006 HK$’000 HK$’000 1,596 – 1,596 –	The Company 2007 2006 HK$’000 HK$’000 229 – 229 –	The Company 2007 2006 HK$’000 HK$’000 229 – 229 –

			–

20. INTEREST IN A JOINTLY-CONTROLLED ENTITY

Unlisted shares, at cost Share of net assets Amount due from a jointly-controlled entity Provision for impairment loss of an amount due from a jointly-controlled entity	The Group 2007 2006 HK$’000 HK$’000 – – – – 1,755 1,651 (508) (508) 1,247 1,143	The Group 2007 2006 HK$’000 HK$’000 – – – – 1,755 1,651 (508) (508) 1,247 1,143
		1,143

The amount due from a jointly-controlled entity is unsecured, interest-free and has no fixed terms of repayment. The directors consider that the amount due from a jointly-controlled entity approximates to its fair value.

Particulars of the jointly-controlled entity are as follows:

		Place of
		incorporation/		Percentage of
	Business	registration	Ownership	Voting	Profit
Name	structure	and operations	interest	power	sharing	Principal activities
WH-SCG JV Limited	Corporate	Hong Kong	50	50	50	Building construction
(“WH-SCG”)						and renovation works

The above investment in a jointly-controlled entity is indirectly held by the Company.

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

The summarised financial information in respect of the jointly-controlled entity, extracted from its management accounts, is set out below:

Current asset Non-current asset Current liabilities Non-current liabilities Income Expenses INTEREST IN AN ASSOCIATE Share of net assets	2007 2006 HK$’000 HK$’000 380 675 25 12 (2,609) (2,535) – – – 73 355 1,166 The Group 2007 2006 HK$’000 HK$’000 – –

21. INTEREST IN AN ASSOCIATE

Particulars of the associate are as follows:

			Percentage
		Place of	of ownership
		incorporation/	interest
		registration	attributable
Name	Business structure	and operations	to the Group	Principal activities
Beatrice Construction	Corporate	Hong Kong	30.625%	Manufacture and trading of
Limited				pre-cast building materials

The above investment in an associate is indirectly held by the Company.

The summarised financial information in respect of the Company’s associate, extracted from its management accounts is set out below:

Total assets Total liabilities Group’s share of net liabilities of the Company Turnover Loss for the year Loss attributable to the Company	2007 HK$’000 734 (907) (173) (53) – (6) (2)	2006 HK$’000 748 (915) (167) (51) – (17) (5)

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

22. AMOUNT DUE FROM/(TO) CUSTOMERS FOR CONTRACT WORK

Amount due from customers for contract work Amount due to customers for contract work Contract costs incurred plus recognised profits less recognised losses to date _Less:_Progress billings ACCOUNTS RECEIVABLE Within 30 days 31 – 90 days 91 – 180 days Over 180 days _Less:_Provision for impairment loss on accounts receivable	The Group 2007 2006 HK$’000 HK$’000 38,020 41,571 (10,064) (14,152 27,956 27,419 3,053,902 5,009,377 (3,025,946) (4,981,958 27,956 27,419 The Group 2007 2006 HK$’000 HK$’000 96 6,182 158 2,122 6 155 121,255 120,820 121,515 129,279 (8) (4 121,507 129,275	The Group 2007 2006 HK$’000 HK$’000 38,020 41,571 (10,064) (14,152 27,956 27,419 3,053,902 5,009,377 (3,025,946) (4,981,958 27,956 27,419 The Group 2007 2006 HK$’000 HK$’000 96 6,182 158 2,122 6 155 121,255 120,820 121,515 129,279 (8) (4 121,507 129,275
		129,279 (4
		129,275

23. ACCOUNTS RECEIVABLE

Notes:

(a) The directors consider that the carrying amounts of accounts receivable approximate to their fair values.
(b) The carrying amounts of accounts receivable is reduced to their recoverable amounts which are determined by reference to the estimation of future cash flows expected to be generated.

At 1 April Provision for impairment losses for the year At 31 March	The Group 2007 2006 HK$’000 HK$’000 4 – 4 4 8 4	The Group 2007 2006 HK$’000 HK$’000 4 – 4 4 8 4
		4

Interim applications for progress payments for contract works are normally made on a monthly basis. The Group allows an average credit period of 60 days to its contract customers. For retention money receivables in respect of contract works, the due dates are usually not more than three months after the issue of statements of the final accounts of the contract works. As at 31 March 2007, no retentions held by customers for contract work were included in accounts receivable (2006: Nil).

Included in the Group’s accounts receivable balance as at 31 March 2007 and 2006 were amounts of approximately HK$120,459,000 withheld by a major customers of the Group in respect of disputes between the Group and the customers. Further details of the receivables under dispute are disclosed in Note 3 to the financial statements.

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

24. PREPAYMENTS, DEPOSITS AND OTHER RECEIVABLES

Prepayments Deposits and other receivables	The Group 2007 2006 HK$’000 HK$’000 44 192 14,871 15,118 14,915 15,310	The Group 2007 2006 HK$’000 HK$’000 44 192 14,871 15,118 14,915 15,310
		15,310

Included in the Group’s deposits and other receivables as at 31 March 2007 is an amount of approximately HK$10.4 million, due from a subcontractor (the “Subcontractor”) of the Group, representing the costs incurred on behalf of the Subcontractor in relation to a civil engineering works contract (the “Contract”) granted by the Civil Engineering Department of the HKSAR Government to the Group. Due to the unsatisfactory performance of the Subcontractor, and pursuant to a supplemental agreement signed between the Group and the Subcontractor in December 2002, the Group had incurred additional costs to engage other subcontractors to rectify the defects, to complete the incomplete subcontracted works of the Subcontractor and to pay on behalf of the Subcontractor’s material, labour and related expenses, in order to proceed and complete the subcontracted works. According to the aforesaid supplemental agreement, the Group is entitled to recover from the Subcontractor the aforesaid costs incurred. During the year ended 31 March 2005, the Subcontractor denied the amount payable to the Group and the Group has commenced arbitration proceedings against the Subcontractor to recover the amount due. After consultation with the Group’s legal advisors, the directors consider that the Group has valid grounds to recover the amount due from the Subcontractor. However, it is uncertain at this stage as to the outcome of the arbitration and hence the recoverability of the receivable due from the Subcontractor and the time required in relation thereto.

25. CASH AND CASH EQUIVALENTS AND PLEDGED TIME DEPOSITS

Cash and bank balances Time deposits Less: Pledged time deposits for performance bond facilities (Note 28) Cash and cash equivalents	The Group 2007 2006 HK$’000 HK$’000 17,407 15,826 19,932 40,864 37,339 56,690 (5,100) (5,100) 32,239 51,590	The Company 2007 2006 HK$’000 HK$’000 2,777 2,863 – 11,065 2,777 13,928 – – 2,777 13,928	The Company 2007 2006 HK$’000 HK$’000 2,777 2,863 – 11,065 2,777 13,928 – – 2,777 13,928
			13,928 –
			13,928

26. ACCOUNTS PAYABLE

An aged analysis of the accounts payable as at the balance sheet date, is as follows:

Within 30 days 31 – 90 days 91 – 180 days Over 180 days	The Group 2007 2006 HK$’000 HK$’000 1,275 2,213 958 4,443 1,536 20 46,686 50,305 50,455 56,981	The Group 2007 2006 HK$’000 HK$’000 1,275 2,213 958 4,443 1,536 20 46,686 50,305 50,455 56,981
		56,981

Note: The directors consider that the carrying amounts of accounts payable approximate to their fair values.

As at 31 March 2007, no retentions payable are included in accounts payable under current liabilities (2006: Nil).

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

27. OTHER PAYABLES AND ACCRUALS

Other payables and accruals Amounts due to related companies Liabilities directly associated with non-current assets classified as held for sale	The Group 2007 2006 HK$’000 HK$’000 4,543 3,621 18 18 4,561 3,639 – 211 4,561 3,850	The Company 2007 2006 HK$’000 HK$’000 822 769 – – 822 769 – – 822 769	The Company 2007 2006 HK$’000 HK$’000 822 769 – – 822 769 – – 822 769
			769 –
			769

The amounts due to related companies are unsecured, interest-free and have no fixed terms of repayment. The directors consider that the amounts due to related companies approximate to their fair values.

28. PLEDGED OF ASSETS

The Group’s banking facilities (including performance bond facilities) as at 31 March 2007 were secured by the following:

(a) the pledge of the Group’s time deposits amounting to approximately HK$5,100,000 (2006: HK$5,100,000);
(b) corporate guarantees executed by the Company up to the extent of HK$43,050,000 (2006: HK$55,050,000) as at 31 March 2007; and
(c) corporate guarantees executed by certain of the Company’s subsidiaries.

29. FINANCIAL GUARANTEE CONTRACTS

	The Company	The Company
	2007	2006
	HK$’000	HK$’000
		(Restated)
Guarantees given to certain subsidiaries for banking facilities	5,268	5,268

30. LOAN TO/FROM SHAREHOLDERS

(a) Particulars of the loan to a shareholder, disclosed pursuant to Section 161B of the Hong Kong Companies Ordinance, are as follows:

		The Group
	2007	2006
	HK$’000	HK$’000
Rich Place Investment Limited (“Rich Place”)	200	200

The maximum outstanding balance for the loan to Rich Place during the year ended 31 March 2007 amounted to HK$200,000 (2006: HK$200,000).

The loans to Rich Place are unsecured, interest-free and have no fixed terms of repayment.

The entire issued share capital of Rich Place is held by RBTT Trust Corporation, a company established in Barbados, acting in its capacity as the trustee of The Wing Hong Trust. The Wing Hong Trust is a discretionary trust whose beneficiaries are the family members of Mr. Hui Kau Mo and include Mr. Hui Chi Yung, both are directors of the Company.

The directors consider that the loan to a shareholder approximate to its fair value.

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

(b) As at 31 March 2007, shareholders’ loan amounting to approximately HK$33,749,000 and HK$3,623,000 were granted to the Group by Rich Place and Million Honest Limited (“Million Honest”), respectively.

As at 31 March 2006, shareholders’ loan amounting to approximately HK$41,419,000 and HK$3,421,000 were granted to the Group by Rich Place and Million Honest, respectively.

The loans from Rich Place and Million Honest are unsecured, bear interest at prime rate minus 2% per annum and repayable in October 2008.

The entire issued share capital of Million Honest is held by Mr. Yiu Kai Yeuk, a director of the Company.

The directors consider that the loan from shareholders approximate to their fair values.

31. DEFERRED TAX

The movements in deferred tax liabilities during the year are as follows:

Deferred tax liabilities: Balance brought forward Transfer to income statement_(Note 12)_ Balance carried forward	The Group Accelerated tax depreciation 2007 2006 HK$’000 HK$’000 130 130 (112) – 18 130	The Group Accelerated tax depreciation 2007 2006 HK$’000 HK$’000 130 130 (112) – 18 130
		130

There were no deferred tax assets and liabilities recognised by the Group for the year ended 31 March 2007 (2006: Nil).

There were no deferred tax assets and liabilities recognised by the Company for the year ended 31 March 2007 (2006: Nil).

The Group has tax losses arising in Hong Kong and PRC of approximately HK$39,064,000 (2006: HK$16,316,000). Tax losses arising in Hong Kong are available indefinitely for offsetting against future taxable profits of the companies in which the losses arose. Tax losses arising in PRC may be carried forward for a maximum for four years. Deferred tax assets had not been recognised in respect of these losses as they have arisen in subsidiaries that have been loss-making for some time, or it is not probable that sufficient taxable profits will be available to allow all or part of the deferred tax assets to be utilised.

32. SHARE CAPITAL

Changes in authorised capital and issued capital of the Company took place during the period from 1 April 2005 to 31 March 2007 are summarised as follows:

Notes Authorised (ordinary shares of HK$0.01 each): At 1 April 2005 Increase in authorised share capital (a) At 31 March 2006 and at 31 March 2007 Issued (ordinary shares of HK$0.01 each): At 1 April 2005 and at 31 March 2006 Issue of shares (b) At 31 March 2007	Number of ordinary shares 10,000,000 1,990,000,000 2,000,000,000 1,064,000,000 146,830,000 1,210,830,000	Nominal value of ordinary shares HK$’000 100 19,900
		20,000

		10,640 1,468
		12,108

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

During the period from 1 April 2005 to 31 March 2007, the movements in the share capital of the Company were as follows:

(a) Pursuant to the written resolutions of all the shareholders of the Company passed on 6 September 2004, the authorised share capital of the Company was increased from HK$100,000 to HK$20,000,000 by the creation of an additional 1,990,000,000 shares of HK$0.01 each.
(b) On 20 December 2006, 146,830,000 ordinary shares of HK$0.01 each were issued at an issue price of HK$0.041 each for a total cash consideration of approximately HK$6,019,000 through a share placing.

Share options

Details of the Company’s share option scheme are included in Note 33 to the financial statements.

33. SHARE OPTION SCHEME

The Company operates a share option scheme (the “Scheme”) for the purpose of providing incentives and rewards to eligible participants for their contributions to the Group. Eligible participants of the Scheme include the parttime or full-time employee, executive or officer of the Group (including the executive and non-executive directors of the Company), business consultants, agents, financial or legal advisers who the board of directors of the Company considers, in its sole discretion, will contribute or have contributed to the Group.

The Scheme became effective on 6 September 2004 and, unless otherwise cancelled or amended, will remain in force for 10 years from that date.

The maximum number of unexercised share options currently permitted to be granted under the Scheme is an amount equivalent, upon their exercise, to 10% of the shares of the Company in issue immediately after the listing of the Company on the Stock Exchange. The maximum number of shares issuable under share options to each eligible participant in the Scheme within any 12-month period, is limited to 1% of the shares of the Company in issue as at the date of grant. Any further grant of share options in excess of this limit is subject to shareholders’ approval in general meeting.

Share options granted to a director, chief executive or substantial shareholder of the Company, or to any of their associates, are subject to approval in advance by the independent non-executive directors. In addition, any share options granted to a substantial shareholder or an independent non-executive director of the Company, or to any of their associates, in excess of 0.1% of the shares of the Company in issue on the date of offer and with an aggregate value (based on the closing price of the Company’s shares at the date of the offer) in excess of HK$5 million, within any 12-month period, are subject to shareholders’ approval in advance in a general meeting.

The offer of a grant of share options may be accepted within 28 days from the date of the offer, upon payment of a nominal consideration of HK$1 in total by the grantee. The exercise period of the share options granted is determinable by the directors and, commences after a certain period and, ends on a date which is not later than 10 years from the date of grant.

The exercise price of the share options is determinable by the directors, but may not be less than the highest of (i) the Stock Exchange closing price of the Company’s shares on the date of grant of the share options; (ii) the average Stock Exchange closing price of the Company’s share for the five business days immediately preceding the date of grant; and (iii) the nominal value of a share of the Company.

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

As at the date of approval of these financial statements, the total number of shares available for issue under the Scheme is 106,400,000 shares representing 10% of the total issued share capital of the Company on that date.

No share option was granted, exercised, cancelled or lapsed under the Scheme during the year ended 31 March 2007.

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

34. RESERVES

(a) The Group

The amounts of the Group’s reserves and the movements therein for the current and prior year are presented in the consolidated statement of changes in equity of the financial statements.

(b) The Company

At 1 April 2006 Profit for the year At 31 March 2006 and at 1 April 2007 Premium arising from issue of new shares Fair value gains in respect of available-for- sale financial assets Profit for the year At 31 March 2007	Share premium account HK$’000 29,535 – 29,535 4,551 – – 34,086	Capital reserve HK$’000 107,648 – 107,648 – – – 107,648	Available- for-sale financial assets fair value Accumulated reserve losses HK$’000 HK$’000 – (490) – 314 – (176) – – 53 – – 695 53 519	Total HK$’000 136,693 314
				137,007 4,551 53 695
				142,306

The capital reserve of the Company represents the excess of the fair value of the shares of the subsidiaries acquired pursuant to the Group Reorganisation in 2004, over the nominal value of the Company’s shares issued in exchange therefore.

Under the Companies Law (2004 revision) of the Cayman Islands, the Company’s share premium account and capital reserve may be distributed to the shareholders of the Company, provided that immediately following the date on which the dividend is proposed to be distributed, the Company will be in a position to pay off its debts as and when they fall due in the ordinary course of business.

35. CONTINGENT LIABILITIES

(a) At the balance sheet date, contingent liabilities not provided for in the financial statements were as follows:
(i) Guarantees given to financial institutions in respect of performance bonds by the Group of approximately HK$5,102,000 (2006: HK$5,102,000).
(ii) Guarantees given to banks in connection with facilities granted to subsidiaries by the Company of approximately HK$43,050,000 (2006: HK$55,050,000).

As at 31 March 2007, the guarantees given to banks in connection with facilities granted to subsidiaries by the Company were utilised to an extent of approximately HK$5,100,000 (2006: HK$5,100,000).

The carrying amount of the financial guarantee contracts recognised in the Company’s balance sheet in accordance with HKAS 39 and HKFRS 4 (Amendments) was approximately HK$5,268,000 (2006: HK$5,268,000). The financial guarantee contracts were eliminated on consolidation.

(b) In the normal course of business, the Group is subject to claims of liquidated damages by relevant employers due to a delay in completion of certain phases of construction contracts. The Group has filed extension of time claims with the relevant employers and the directors, based on legal advice, consider that the Group has valid reasons for the extension of time claims. As at the date of approval of these financial statements, and save as disclosed in Note 3 to the financial statements, the directors are of the opinion that the amount of the ultimate liquidated damages, if any, cannot be ascertained, however, any resulting liability would unlikely materially affect the financial position of the Group.

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

(c) On 7 August 2002, a High Court action had commenced by a subcontractor against a subsidiary of the Group in respect of (i) a claim of subcontracting fees and material costs of approximately HK$31,300,000; and (ii) a compensation claim of approximately HK$191,200,000 for the improper termination of a subcontacting contract. On 13 September 2002, an agreement was reached between the subsidiary of the Group and the subcontractor that the High Court action was withdrawn and all the disputes between the parties relating to this action were referred to arbitration. In the statement of claim for the arbitration, the subcontractor revised the claim of subcontracting fees and material costs and compensation claim to approximately HK$42,600,000 and HK$84,400,000, respectively. On 9 July 2005, a writ of summons was issued and the proceedings were transferred to the Court of First Instance. The subcontractor further revised the claim of subcontracting fees and material costs and compensation claim to approximately HK$56,000,000 and HK$278,100,000 respectively.

As at the date of approval of these financial statements, no decision had been made in the arbitration and court proceedings. In the opinion of the directors, based on legal advice, the subsidiary of the Group has valid defences, against such claims and any resulting liabilities would not have any material adverse impact on the Group’s financial position. Therefore, no provision in respect of such claims was made in the financial statements.

(d) On 31 May 2004, 19 August 2004, 23 August 2005, 7 February 2006, 14 August 2006, 4 September 2006 and 19 July 2007, two District Court actions and five High Court actions had commenced by seven employees against subsidiaries of the Group and the other respondents in respect of claims for employees’ compensation under the common law for personal injuries sustained by the employees in accidents arising in and out of the course of their employments and personal injury, loss and damage arising out of the negligence.

No settlements have been reached and no judgments have been made against the subsidiaries of the Group in respect of the above actions. In the opinion of the directors, the above actions with seven employees were either covered by insurance or indemnified by a subcontractor and would not have any material adverse impact on the Group. Therefore, no provision in respect of such claim was made in the financial statements.

(e) On 13 September 2004, a subsidiary of the Group received a notice of arbitration from a nominated subcontractor in respect of a claim against the subsidiary of the Group in respect of subcontracting works performed in a residential development project in Kowloon Tong, Hong Kong. The amount of claim was approximately HK$26,000,000.

On 5 May 2005, the subsidiary of the Group and the nominated subcontractor agreed to enter into a moratorium period of six months to the arbitration. On 13 April 2006, the subsidiary of the Group and the nominated subcontractor further agreed to suspend the arbitration proceeding for three months subject to the rights to re-active the proceedings upon a three day written notice to the subsidiary of the Group. Since this date and up to the date of approval of these financial statements, the arbitration has been dormant and there has been no activity arisen by the parties.

In the opinion of the directors, based on legal advice, the claim was related to a payment being withheld in respect of subcontracting work delays and defects caused by the nominated subcontractor, and the resulting liabilities, if any, would not have material adverse impact on the Group’s financial position.

(f) On 26 July 2005, a High Court action was commenced by a subcontracted party of a subcontractor of the Group (the “Subcontracted Party”) against a subsidiary of the Group and the subcontractor, which is in liquidation, in respect of a claim of subcontracting fees and material costs of approximately HK$20,500,000 relating to a maintenance term contract. On 25 April 2006, the Subcontracted party substantially revised its statement of claim and the total amount of claim was revised to approximately HK$14,241,000. In the opinion of the directors, based on legal advice, the subsidiary of the Group has valid defences against such claims and any resulting liabilities would not have any material adverse impact on the Group’s financial position. Therefore, no provision in respect of such claims was made in the financial statements.
(g) On 7 December 2006, a subsidiary of the Group received a notice of arbitration from a subcontractor in respect of a claim against the subsidiary of the Group in respect of subcontracting works performed in a residential development project in Kowloon Tong, Hong Kong. The amount of claim was approximately HK$5,629,000. On 24 February 2007, the subsidiary of the Group sought to counterclaim against the subcontractor of approximately HK$8,062,000.

As at the date of approval of these financial statements, no decision had been made in the arbitration. In the opinion of the directors, based on legal advice, the subsidiary of the Group has valid defences, against such claims and any resulting liabilities would not have any material adverse impact on the Group’s financial position. Therefore, no provision in respect of such claims was made in the financial statements.

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

(h) On 28 March 2007, a subsidiary of the Group received a notice of arbitration from a nominated subcontractor in respect of a claim against the subsidiary of the Group in respect of subcontracting works performed in a residential development project in Kowloon Tong, Hong Kong. The amount of claim was approximately HK$3,253,000. On 29 June 2007, the subsidiary of the Group sought to counterclaim against the subcontractor of approximately HK$232,000 together with an order for indemnity for a sum amounting to approximately HK$4,389,000.

Saved as disclosed above and elsewhere in the financial statements, as at 31 March 2007, the Group and the Company had no other material contingent liabilities.

36. OPERATING LEASE COMMITMENTS

(a) Operating lease commitments

The Group leases a warehouse and office premises under operating lease arrangements, with leases negotiated for terms ranging from one to two years.

The Group had total future minimum lease payments under non-cancellable operating leases falling due as follows:

Within one year In the second to fifth years, inclusive	The Group 2007 2006 HK$’000 HK$’000 819 406 1,549 924 2,368 1,330	The Group 2007 2006 HK$’000 HK$’000 819 406 1,549 924 2,368 1,330
		1,330

(b) Capital commitments

As at 31 March 2007, the Group and the Company did not have any material capital commitments.

37. MATERIAL RELATED PARTY TRANSACTIONS

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

(a) Key management personnel

Remuneration for key personnel management, including amount paid to the Company’s directors and certain of the highest paid employee, as disclosed in Note 10 and 11, is as follows:

		The Group
	2007	2006
	HK$’000	HK$’000
Salaries and other short-term employee benefits	4,840	4,838

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

(b) Transactions carried out with related parties

			The Group
		2007	2006
	Note	HK$’000	HK$’000
Office rental expense paid to First Win
(Asia) Limited	(i)	436	654
Management fees received from
WH-SCG, a jointly-controlled entity	(ii)	97	13
Renovation fees received from Shanghai
Jinjiang International Investment Co. Ltd
(“Jinjiang”) and its subsidiaries and associates	(iii)	4,757	7,706
Operating leases receivable from
Maximizer Asia (Shanghai) Ltd	(iv)	27	–

In the opinion of the directors, the above transactions arose in the ordinary course of business of the Group.

(c) As at 31 March 2007, shareholders’ loans amounting to approximately HK$33,749,000 and HK$3,623,000 were granted by two shareholders of the Company, Rich Place and Million Honest, respectively. The terms of the shareholders’ loans are included in Note 30(b) to the financial statements.
(d) As at 31 March 2007, a loan in the amount of HK$200,000 was made to a shareholder. The terms of the loan are included in Note 30(a) to the financial statements.

Notes:

(i) First Win (Asia) Limited is controlled by Mr. Hui Chi Yang and Ms. Chu Yuen Lam, the wife of Mr. Hui Kau Mo. Mr. Hui Chi Yang is a director of certain subsidiaries of the Group. Mr. Hui Kau Mo is a director of the Company. The rental expense was charged based on the floor area occupied by the Group at rates mutually agreed between the two parties.
(ii) The management fees were charged at cost based on the salary of staff assigned to a project of WH-SCG and were mutually agreed between the two parties.
(iii) Jinjiang is the minority shareholder of Jinjiang Wing Hong. The renovation fees were received in accordance with the terms of the renovation agreements signed between Jinjiang Wing Hong and Jinjiang and its subsidiaries and associates.
(iv) Monthly Shanghai office rental fee receivable from Maximizer Asia (Shanghai) Ltd, Mr. Hui Kau Mo and Mr. Liu Kwong Sang are the non-executive director and the independent non-executive director of abc Multiactive Limited respectively, which is the ultimate holding company of Maximizer Asia (Shanghai) Ltd.

38. SUBSEQUENT EVENTS

Pursuant to an ordinary resolution passed in the special general meeting held on 27 April 2007, every ten issued and unissued shares of the Company of HK$0.01 each were consolidated into one consolidated share of HK$0.1 each.

39. COMPARATIVES

As further explained above, due to the adoption of the new and revised HKFRSs during the current year, the accounting treatment and presentation of certain items in the financial statements have been restated to confirm with the current year presentation.

40. AUTHORISATION FOR ISSUE OF FINANCIAL STATEMENTS

The financial statements were approved and authorised for issue by the Board of Directors on 26 July 2007.

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

3. MANAGEMENT DISCUSSION AND ANALYSIS ON THE GROUP

The following is the management discussion and analysis as extracted from the annual report of the Company for the year ended 31 March 2005, 2006 and 2007:

For the year ended 31 March 2005

FINANCIAL REVIEW

For the fiscal year ended 31 March 2005, the Group recorded a turnover of approximately HK$344.9 million, representing a decrease of 59.0% compared to HK$842.0 million of the previous year. Gross Profit dropped to HK$11.7 million from HK$50.5 million of the previous year while gross profit margin decreased to 3.4% for fiscal 2005. During the year under review, the volume of construction works in Hong Kong from both public and private sectors had shrunk substantially. As a well-recognized main contractor in the industry, the Group has fell victim to fierce price competition among private sector and serious shrinkage of Government’s construction work. As a result, the Group reported a consolidated loss attributable to shareholders of HK$11.3 million for fiscal 2005. The loss per share of the Group was HK1.18 cents.

BUSINESS REVIEW

(1) Project completion

The Group is principally engaged in a broad spectrum of construction works for both public and private sectors in Hong Kong. In fiscal 2005, the Group’s building construction and foundation projects accounted for approximately HK$232.5 million, representing about 67.4% of the Group’s total turnover.

The Group’s other civil engineering work not involving construction of building accounted for approximately HK$112.4 million, representing about 32.6% of the Group’s total turnover.

During fiscal 2005, the Group substantially completed the following projects:

(1) Building Construction and foundation projects

			Date of
Location		Brief description of works	Completion
(i)	NKIL 6277	Construction of substructure and	May 2005
	Beacon Hill Road	superstructure for car parks
	Kowloon	at basement and podium and
	One Beacon Hill	16 residential towers
(ii)	Church development	Construction of a 13-storeys high	March 2005
	118 Gloucester Road	building with pitch roof and metal
	Wanchai	spire including car parks, chapels,
	Hong Kong	offices and staff quarters

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

Date of Location Brief description of works Completion (iii) Footbridge Construction of two pedestrian January 2005 861-879 footbridges, one across Lai Chi Kok Road Lai Chi Kok Road and one across Sham Shing Road together with associated foundation works, mechanical and electrical services and finishings.

Included in the accounts receivable balance under current assets in the consolidated balance sheet as at 31 March 2005, are accounts receivable, recorded based on architects’ certificates, of approximately HK$138.7 million in aggregate (collectively the “Receivables Under Dispute”) being currently withheld by two major customers of the Group (collectively the “Customers”) with respect to disputes with one of the aforesaid customers (the “Kowloon Tong Customer”) on claims arising from liquidated damages and alleged environmental related damages in relation to main contract works for a residential development project carried out in Kowloon Tong, Hong Kong, and the counter claiming of extension of time (the “EOT Claim”) entitlement by the Group.

(2) Other civil engineering work not involving construction of building

		Date of
Location	Brief description of works	Completion
Tsuen Wan and	Demolition of existing structures,	June 2004
Fung Shue Wo Road,	stormwater drainage and sewage,
Tsing Yi	waterworks, access road, footpaths
	and car parking spaces; slope
	stabilization works; earth retaining
	structures and refuse collection points

Included in the Group’s deposits and other receivables as at 31 March 2005 is an amount of approximately HK$10.8 million, due from a subcontractor (the “Subcontractor”) of the Group, representing the costs incurred on behalf of the Subcontractor in relation to a civil engineering works contract (the “Contract”) granted by the Civil Engineering Department of the HKSAR Government to the Group.

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

(2) Market expansion in the PRC

In September 2003, the Group has acquired Jinjiang Wing Hong’s 73% equity from Pacific Marble & Granite Ltd. and Shanghai Jinjiang which as a Sino-foreign equity joint venture has obtained a requisite license to perform renovation work in the PRC with contract sum not exceeding RMB12 million, and is engaged in renovation business for private projects, such as the renovation of residential estates and hotels in PRC. As the Group’s new arm in the PRC for developing its domestic construction and renovation market, Jinjiang Wing Hong in fiscal 2005 contributed to the Group about RMB35.5 million revenue. Leveraging on the Jinjiang Wing Hong’s concrete experience in residential estates and hotels renovation in Shanghai and the Group’s extensive construction experience in Hong Kong, the Group endeavors to tap the fast growing market opportunities of small-to-medium size renovation projects in the PRC.

(3) Development on various sections

Owing to the Government’s support for environmentally friendly construction methods and exemption of accountable floor area for the pre-cast facade, in order to seize opportunity arising from such trend, the Group in the reviewing year has commenced in developing precast building material such as pre-finished modular for bathroom and kitchen units for repetitive construction. The Group continually reinventing itself with new competitive edges as to maintain its competitiveness in the ever-changing market.

There was no future plans of the Group for any material investments or capital assets for the next financial year. There was no new products or services introduced or announced by the Group. There was no significant investments held by the Group and no material acquisition or disposal of subsidiaries and associated companies for the year ended 31 December 2005.

PROSPECTS

In view of the recovery of the Hong Kong economy, it is anticipated that local investment and capital markets will be able to sustain its growth continually, which in turn become one of the main forces of fueling growth for HK property market. In addition, the signing of the Closer Economic Partnership Arrangement (CEPA), Hong Kong contractors and services providers can enjoy benefits in setting up wholly-owned enterprise in the PRC. Under this favorable condition, the Group has submitted CEPA application and is under processing now. It is expected that through CEPA, the Group can establish a stronger foothold in the PRC.

In order to enlarge the Group’s profit margins, the management of the Group has committed to developing cost effective construction techniques and materials that enable minimization of construction cost and time for completion of contract in the future. Looking forward, the Group will look for more collaboration and investment opportunities in Hong Kong and the PRC as to develop new clientele and disperse business risks.

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

USE OF PROCEEDS

The net proceeds from the issue of new shares of the Company at the time of its listing on the Mainboard on 13 October 2004 through a public offering of 31,920,000 new shares and a placement of 287,280,000 ordinary shares (comprising 159,600,000 new shares and 127,680,000 sale shares) at the price of HK$0.25 per share, after deduction of the related issue expenses were approximately HK$40 million. During the period from the listing of the Company’s shares on 13 October 2004 to 31 March 2005, the Group utilized a total of HK$34.8 million for the following purposes:

			Proposed amount	Actual amount
			of proceeds	of proceeds
			utilized up to	utilized up to
			31 March 2005	31 March 2005
		Notes	HK$ million	HK$ million
•	Modification and adoption of	1	1.2	0
	the latest construction methods
	and equipment to improve
	cost-effectiveness
•	Hire of staff and new construction	2	4	0
	projects
•	Working capital for bidding tenders		33.8	33.8
	of future construction projects and
	to finance the construction costs
	for the projects of the Group
•	Additional working capital		1	1

Notes:

The modification of construction methods and equipment are still under preliminary development and therefore capital investment has not been implemented yet
The plan of hiring of staff is deferred as a result of having insufficient new projects

LIQUIDITY, FINANCIAL RESOURCES AND CAPITAL STRUCTURE

As at 31 March 2005, the Group’s bank borrowings amounted to HK$99,000 (2004: Nil).

The gearing ratio decreased to 8.6% as at 31 March 2005 from 10.8% as at 31 March 2004. The liquidity of the Group as at 31 March 2005, the Group’s cash and bank deposits were approximately HK$25.5 million (2004: HK$42.1 million).

The current ratio increased to 2.6 and the debt to equity ratio decreased to 16.6% as at March 2005 (2004: 1.6 and 27.7%).

Accounts receivable increased to approximately HK$153.9 million as at 31 March 2005 from HK$74.5 million as at 31 March 2004.

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

TREASURY POLICY

Cash and bank deposits of the Group are either in HK dollars or RMB.

The Group conducts its core business transaction mainly in HK dollars and RMB such that the Group did not use any derivative instruments to hedge its foreign currency exposure as the Group considered its foreign currency exposure is insignificant.

PLEDGE OF ASSETS

At 31 March 2005, the Group had approximately HK$9 million of certain time deposits pledged for performance bond facilities.

EMPLOYMENT INFORMATION

As at 31 March 2005, the Group had 94 full time employees (31 March 2004: approximately 99 employees) and remuneration of approximately HK$22,629,000, the majority of whom are employed in Hong Kong. They are remunerated at market level with benefits such as medical, retirement benefit and share option scheme.

CONTINGENT LIABILITIES

At 31 March 2005, the Group had contingent liabilities in respect of performance bond, liquidated damages and other litigations.

For the year ended 31 March 2006

BUSINESS REVIEW

Building construction industry

It was undoubted that the local construction industry cannot benefit too much from the recent recovery of Hong Kong economy. The continuing decline in the building construction contracts for tender both in the private sector and public sector affects the whole construction industry. Fierce competition in the market and low demand of building construction works are the main reasons for our reduced turnover and gross margin.

To maintain the competitiveness of the Group in the building construction industry, some measures of cost control were adopted that include regular review on manpower, improve the efficiency and effectiveness of each division and downsize the cost centre.

Renovation and fitting out works

Although the PRC government executes various plans to cool down the property market, it seems that nothing has been affected in such market. These were many properties built up during the year under review, and the Group targeted for the renovation and fitting out works for these sites.

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

FINANCIAL REVIEW

Liquidity and financing

There were no bank borrowings as at 31 March 2006 (2005: HK$99,000). The Group’s cash and bank deposits were approximately HK$56.7 million (2005: HK$34.5 million) The Group’s gearing ratio, calculated by aggregate of interest-bearing borrowings, loans from shareholders and other non-current liabilities over total assets, increase to 18.0% at 31 March 2006 from 8.6% at 31 March 2005.

Treasury policy

Cash and bank deposits of the Group are either in HK dollars or RMB.

Pledge of assets

As at 31 March 2006, the Group had approximately HK$5.1 million (2005: HK$9.0 million) of certain time deposits pledged for performance bond facilities.

Employees and emolument policy

On 31 March 2006, the Group had 67 full time employees (31 March 2005: approximately 94 employees) and remuneration of approximately HK$15,286,000, the majority of whom are employed in Hong Kong. They are remunerated at market level with benefits such as medical, retirement benefit and share option scheme.

The emolument policy regarding the employees of the Group is based on their merit, qualifications and competence. The emoluments of the directors are reviewed by the Remuneration Committee, having regard to individual performance and comparable market statistics. No Director, or any of his associates, and executive is involved in deciding his own remuneration. The Company has a share option scheme as an incentive to directors and eligible employees.

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

For the year ended 31 March 2007

BUSINESS REVIEW

Building construction industry

Although the Hong Kong economy is booming than ever before, the building construction industry cannot benefit much. The continuing increase in material costs and the ongoing reduction in building construction contracts in the market are the main reasons for the depression in the industry. It was undoubtedly that most of the companies in the construction business are surviving hardly.

To maintain a reasonable level of safety at site, some essential costs cannot be reduced. Thus, the Group may not be the one with the lowest tender, but we are the one with quality services.

Renovation and fitting out works

There were lots of small scale renovation works in the market, however, it was not appropriate for our company to step into this market.

There were no future plans of the Group for any material investments or capital assets for the next financial year, yet the Group may seek for strategic partners to explore any business opportunities to improve the capital structure. There were no new products or services introduced or announced by the Group. There were no significant investments held by the Group and no material acquisition or disposal of subsidiaries and associated companies for the year ended 31 December 2006. As at 31 August 2007, no existing plan for material investments except for the Acquisition.

FINANCIAL REVIEW

Liquidity and financing

There were no bank borrowings as at 31 March 2007 (2006: Nil). The Group’s cash and bank deposits were approximately HK$37.3 million (2006: HK$56.7 million).

The Group’s gearing ratio, calculated by aggregate of interest-bearing borrowings, loans from shareholders and other non-current liabilities over total assets, decrease to 17.2% at 31 March 2007 from 18.0% at 31 March 2006.

Treasury policies

Cash and bank deposits of the Group are either in HK dollars or RMB.

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

Pledge of assets

As at 31 March 2007, the Group had approximately HK$5.1 million (2006: HK$5.1 million) of certain time deposits pledged for performance bond facilities.

Use of proceeds

On 20 December 2006, 146,830,000 ordinary shares of HK$0.01 each were issued at a price of HK$0.041 each through placing of existing shares and subscription for new shares. The net proceeds from the subscription of new shares were approximately HK$5,900,000. These proceeds intended to be used for general working capital of the Group have been fully utilised to pay general operating and administrative expenses.

Employment information

On 31 March 2007, the Group had 47 full time employees (31 March 2006: approximately 67 employees) and remuneration of approximately HK$9,345,000, the majority of whom are employed in Hong Kong. They are remunerated at market level with benefits such as medical, retirement benefit and share option scheme.

4. MATERIAL ADVERSE CHANGE

As at the Latest Practicable Date, the Directors were not aware of any material adverse change in the financial or trading position of the Group since 31 March 2007, the date to which the latest audited financial statements of the Company were made up.

5. INDEBTEDNESS

Statement of indebtedness

As at 31 August 2007, being the latest practicable date for the purpose of this indebtedness statement prior to printing of this circular, the borrowings and contingent liabilities of the Enlarged Group, apart from intra-group liabilities, are as follows:

(i) Debt securities

As at 31 August 2007, the Enlarged Group did not have any debt securities issued and outstanding, and authorized or otherwise created but unissued.

(ii) Other borrowings, indebtedness, liquidity and financial resources

Funding for the Enlarged Group’s operations during the period mainly come from internally generated cash flows. Any shortfall was financed by unsecured shareholders’ loans and unsecured other borrowings. As at 31 August 2007, the total borrowings outstanding were approximately HK$56,113,000, of which approximately HK$17,840,000 were repayable within one year. The indebtedness comprised mainly shareholders’ loans and other borrowings and were deployed mainly for daily operation.

Borrowings and revenue and cost of the Enlarged Group are generally transacted in Hong Kong Dollar and Renminbi. The exposure in exchange risk was minimal since the exchange rate against Hong Kong Dollar and Renminbi was relatively stable.

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

(iii) Security

As at 31 August 2007, the banking facilities (including performance bond facilities) of the Enlarged Group were secured by the following:

(a) the pledge of the Enlarged Group’s time deposits amounting to HK$5,100,000;
(b) corporate guarantees executed by the Company up to the extent of HK$43,050,000; and
(c) corporate guarantees executed by certain of the Company’s subsidiaries.

(iv) Contingent liabilities

The contingent liabilities of the Enlarged Group as at 31 August 2007 are as follows:

(a) In the normal course of business, the Enlarged Group is subject to claims of liquidated damages by relevant employers due to a delay in completion of certain phases of construction contracts. The Enlarged Group has filed extension of time claims with the relevant employers and the Directors, based on legal advice, consider that the Enlarged Group has valid reasons for the extension of time claims. As at the date of this circular, the Directors are of the opinion that the amount of the ultimate liquidated damages, if any, cannot be ascertained, however, any resulting liability would unlikely materially affect the financial position of the Enlarged Group.
(b) On 7 August 2002, a High Court action had commenced by a subcontractor against a subsidiary of the Enlarged Group in respect of (i) a claim of subcontracting fees and material costs of approximately HK$31,300,000; and (ii) a compensation claim of approximately HK$191,200,000 for the improper termination of a subcontacting contract. On 13 September 2002, an agreement was reached between the subsidiary of the Enlarged Group and the subcontractor that the High Court action was withdrawn and all the disputes between the parties relating to this action were referred to arbitration. In the statement of claim for the arbitration, the subcontractor revised the claim of subcontracting fees and material costs and compensation claim to approximately HK$42,600,000 and HK$84,400,000, respectively. On 9 July 2005, a writ of summons was issued and the proceedings were transferred to the Court of First Instance. The subcontractor further revised the claim of subcontracting fees and material costs and compensation claim to approximately HK$56,000,000 and HK$278,100,000 respectively.

As at the date of this circular, no decision had been made in the arbitration and court proceedings. In the opinion of the directors, based on legal advice, the subsidiary of the Enlarged Group has valid defences, against such claims and any resulting liabilities would not have any material adverse impact on the Enlarged Group’s financial position. Therefore, no provision in respect of such claims was made.

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

(c) On 13 May 2004, 19 August 2004, 23 August 2005, 7 February 2006, 4 September 2006 and 19 July 2007, two District Court actions and four High Court actions had commenced by six employees against subsidiaries of the Enlarged Group and the other respondents in respect of claims for employees’ compensation under the common law for personal injuries sustained by the employees in accidents arising in and out of the course of their employments and personal injury, loss and damage arising out of the negligence.

No settlements have been reached and no judgments have been made against the subsidiaries of the Enlarged Group in respect of the above actions. In the opinion of the Directors, the above actions with five employees were either covered by insurance or indemnified by a subcontractor and would not have any material adverse impact on the Enlarged Group. Therefore, no provision in respect of such claim was made.

(d) On 13 September 2004, a subsidiary of the Enlarged Group received a notice of arbitration from a nominated subcontractor in respect of a claim against the subsidiary of the Enlarged Group in respect of subcontracting works performed in a residential development project in Kowloon Tong, Hong Kong. The amount of claim was approximately HK$26,000,000. On 5 May 2005, the subsidiary of the Enlarged Group and the nominated subcontractor agreed to enter into a moratorium period of six months to the arbitration. On 13 April 2006, the subsidiary of the Enlarged Group and the nominated subcontractor further agreed to suspend the arbitration proceeding for three months subject to the rights to re-active the proceedings upon a three day written notice to the subsidiary of the Enlarged Group. Since this date and up to the date of this circular, the arbitration has been dormant and there has been no activity arisen by the parties.

In the opinion of the Directors, based on legal advice, the claim was related to a payment being withheld in respect of subcontracting work delays and defects caused by the nominated subcontractor, and the resulting liabilities, if any, would not have material adverse impact on the Enlarged Group’s financial position.

(e) On 26 July 2005, a High Court action was commenced by a subcontracted party of a subcontractor of the Enlarged Group (the “Subcontracted Party”) against a subsidiary of the Enlarged Group and the subcontractor, which is in liquidation, in respect of a claim of subcontracting fees and material costs of approximately HK$20,500,000 relating to a maintenance term contract. On 25 April 2006, the Subcontracted Party substantially revised its statement of claim and the total amount of claim was revised to approximately HK$14,241,000. In the opinion of the Directors, based on legal advice, the subsidiary of the Enlarged Group has valid defences against such claims and any resulting liabilities would not have any material adverse impact on the Enlarged Group’s financial position. Therefore, no provision in respect of such claims was made.
(f) An accounts receivable in a subsidiary of the Enlarged Group of approximately HK$120,459,000 recorded based on architect’s certificates, currently withheld by a major customer of the Enlarged Group with respect to disputes on claims arising from liquidated damages and alleged environmental related damages in relation to main contract work for a residential development project carried out in Kowloon Tong, Hong Kong, and the claim made by the Enlarged Group on extension of time entitlement by the Enlarged Group. The receivable was certified by the architects of the residential development project.

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

As at the date of this circular, the Enlarged Group has initiated arbitration proceedings to recover the outstanding amount due and negotiations with the customer are still in progress. Despite that the full amount of the accounts receivable balance is being withheld by the major customer, a counter claim was made by the major customer against the Enlarged Group in relation to claims arising from liquidated damages and alleged environmental related damages in relation to main contract works in a residential development project carried out in Hong Kong in the amount of approximately HK$122,480,000. In the opinion of the directors, based on legal advice, the major customer does not have sufficient grounds to their entitlement of extension of time claim, and as a result, the resultant liquidated damages, if any, would not be significant to the Enlarged Group’s financial statements. The Directors also considered that the Enlarged Group has valid grounds to defend against the alleged environmental related damages claimed by the major customers and that the final amount being claimed, if any, would not have a material impact to the Enlarged Group’s financial position.

(g) On 23 August 2005, a subsidiary of the Enlarged Group commenced arbitration proceedings against a subcontractor of the Enlarged Group to recover an amount of approximately HK$12,886,000 due from the subcontractor, representing the costs incurred by the subsidiary on behalf of the subcontractor due to the subcontractor’s unsatisfactory performance in relation to a civil engineering works contract granted by the Civil Engineering Department of the HKSAR Government to the subsidiary. The subcontractor counterclaimed the subsidiary outstanding payment in the sum of HK$2,531,000. The parties had exchanged claims submission and there has been no further development on this case.
(h) On 7 December 2006, a subsidiary of the Enlarged Group received a notice of arbitration from a subcontractor in respect of a claim against the subsidiary of the Enlarged Group in respect of subcontracting works performed in a residential development project in Kowloon Tong, Hong Kong. The amount of claim was approximately HK$5,629,000. On 24 February 2007, the subsidiary of the Enlarged Group sought to counterclaim against the subcontractor of approximately HK$8,062,000.

As at the date of this circular, no decision had been made in the arbitration. In the opinion of the Directors, based on legal advice, the subsidiary of the Enlarged Group has valid defences, against such claims and any resulting liabilities would not have any material adverse impact on the Enlarged Group’s financial position. Therefore, no provision in respect of such claims was made.

(i) On 28 March 2007, a subsidiary of the Enlarged Group received a notice of arbitration from a nominated subcontractor in respect of a claim against the subsidiary of the Enlarged Group in respect of subcontracting works performed in a residential development project in Kowloon Tong, Hong Kong. The amount of claim was approximately HK$3,253,000. On 29 June 2007, the subsidiary of the Enlarged Group sought to counterclaim against the subcontractor of approximately HK$232,000 together with an order for indemnity for a sum amounting to approximately HK$4,389,000.

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

(v) Guarantees

The guarantees of the Enlarged Group as at 31 August 2007 are as follows:

(i) Guarantees given to financial institutions in respect of performance bonds by the Enlarged Group of approximately HK$5,102,000.
(ii) Guarantees given to banks in connection with facilities granted to subsidiaries by the Company of approximately HK$43,050,000.

(vi) Mortgages

As at 31 August 2007, the Enlarged Group did not have any mortgages.

(vii) Subsequent material changes

Subsequent to 31 August 2007, but prior to the Latest Practicable Date, the Company is authorised by shareholders to issue convertible notes in the principal amount of up to HK$296,000,000, none of which had been issued as at the Latest Practicable Date.

Save as disclosed above, the Directors have confirmed that there is no significant change in indebtedness and contingent liabilities of the Enlarged Group from 31 August 2007 and up to the Latest Practicable Date.

6. WORKING CAPITAL

As at the Latest Practicable Date, after taking into account of the available banking and other borrowing facilities and the internal resources of the Enlarged Group, the Directors were of the opinion that the working capital available to the Enlarged Group is sufficient for the 12-month period from the date of this circular.

7. BUSINESS PROSPECT

Trend of business of the Group

The depression in the construction industry remains in Hong Kong. The continuing increase in material costs and labour costs together with the low construction contract prices from property developers are the main reasons for the difficulties in this industry. In order to reduce its impact to the Group, the Company has reorganized and downsized the construction department. However, to provide a reasonable quality of services with safety, some costs cannot be reduced.

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

Trading and financial prospects of the Enlarged Group

According to the 2007-2008 Policy Address released recently, the Hong Kong Government undertakes ten major infrastructure projects that can achieve significant economic benefits in Hong Kong and economic growth in construction industry. As the Group holds a Hong Kong SAR Government Group “C” licence for building works of unlimited value and is a Registered General Building Contractor of the Buildings Department, it will be a good opportunity for the Group to boom again.

LIQUIDITY, FINANCIAL RESOURCES AND CAPITAL STRUCTURE

There were no bank borrowings as at 31 August 2007 (31 March 2007: nil). The gearing ratio increased to approximately 18.3% as at 31 August 2007 from approximately 17.2% as at 31 March 2007. The liquidity of the Group as at 31 August 2007, the Group’s cash and bank deposits were approximately HK$26.7 million (31 March 2007: approximately HK$37.3 million). The current ratio remain unchanged to approximately 3.26 and the debt to equity ratio increased to approximately 36.4% as at 31 August 2007 (31 March 2007: approximately 3.26 and approximately 33.2% respectively).

TREASURY POLICY

Cash and bank deposits of the Group are either in HK$ or RMB.

The Group conducts its core business transaction mainly in HK$ and RMB such that the Group did not use any derivative instruments to hedge its foreign currency exposure as the Group considered its foreign currency exposure is insignificant.

PLEDGE OF ASSETS

As at 31 August 2007, the Group had approximately HK$5.1 million of certain time deposits pledged for performance bond facilities.

EMPLOYMENT INFORMATION

As at 31 August 2007, the Group had 47 full time employees (31 March 2007: 47 employees), the majority of whom are employed in Hong Kong. They are remunerated at market level with benefits such as medical, retirement benefit and share option scheme.

The Group’s consolidated loss for the period ended 31 August 2007 was approximately HK$8.2 million comparing to the loss of approximately HK$21.1 million for the year ended 31 March 2007. At the same time, loss per share decreased to approximately HK$6.75 cents by comparison with the loss per share amounted to approximately HK$18.47 cents.

8. MANAGEMENT DISCUSSION AND ANALYSIS ON THE TARGET

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

The Target has obtained absolute nationwide exclusive rights for media advertising broadcasting in the LCD display placed in front of tickets selling counters in the transit rail stations in the PRC for 5 years and such rights will be automatically renewed every 5 years and up to a period of 15 years. The Target is entitled to entire amount of advertising profit under such right. However, the Target is obliged to, including but not limited to, use a specific LCD display system for RMB10,000 per display system under the said right and to share a quarter of the LCD screen for displaying details of ticket sale. e.g. origin, destination and price of each ticket etc.

Its major income would be generated from advertisement and its calculation method is based on each advertisement per display machine per day. Currently, there are up to 48 advertisements per day and the recommended listed retail price per advertisement is in the range of RMB16 to RMB20 per display machine per day with discounts offered to customers. A network of approximately 70,000 LCD display systems are expected to be installed at counters in railway stations and city ticketing outlets in 2012 according to its plan subject to cost and benefit evaluation by the Enlarged Group.

As the Target was incorporated in 2005 and started to set up the broadcasting network, significant capital investment should be made towards this project in the start-up stage. Thus, there were losses in the previous two years. However, it is expected that there will be a fruitful return after certain network has been set up.

The Target introduced the Company as strategic shareholder of the Target in order to further develop its business and capital injection.

There was no operation of the Target except for the injection of share capital for the year ended 31 December 2005.

For the eight months period ended 31 August 2007, the Target recorded revenue of approximately RMB57,000 (31 December 2006: approximately RMB15,000) as the Target was still at early development stage.

As at 31 August 2007, there was 29 employees (31 December 2006: 28). All employees are engaged in the PRC and are entitled to benefits of state retirement schemes. As at 31 August 2007, there was no mortgages of the Target (31 December 2006: nil). The remuneration for the staffs was approximately RMB701,000 for eight months ended 31 August 2007 (31 December 2006: approximately RMB625,000).

As at 31 August 2007, the Target had no bank borrowings (31 December 2006: nil). The cash and cash equivalent was approximately RMB542,000 (31 December 2006: approximately RMB13,000).

For the eight months period ended 31 August 2007, the working capital of the Target was mainly sourced from shareholders’ loan and other borrowings in amount of approximately RMB10,182,000 (31 December 2006: nil) and approximately RMB7,138,000 (31 December 2006: nil). The gearing ratio of the Target from dividing interest-bearing borrowings, shareholders’ loan and other noncurrent liabilities from the total assets of the Target, increased from 0.0% as at 31 December 2006 to 188% as at 31 August 2007. There were no charges on the assets of the Target for the eight months period ended 31 August 2007 (31 December 2006: nil).

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

The cash and cash equivalent of the Target is denominated in RMB and the Target uses RMB for settlement of all transactions. As the Target has no exchange rate risk, the Target was not involved in any derivative securities. There was no contingent liabilities of the Target for the eight months period ended 31 August 2007 (31 December 2006: nil).

There was no future plans of the Target for any material investments or capital assets, save as the installment of LCD display system for the next financial year. There were no new products or services introduced or announced by the Group. There were no significant investments held by the Group and no material acquisition or disposal of subsidiaries and associated companies for the year ended 31 December 2006 and eight months period ended 31 August 2007.

As the advertising market in the PRC is maturing, the competition among media services providers is also intensifying. Under this circumstance, the advertising companies sought new media channel for distributing their advertisements in order to expand their business operation. Such demand has promoted several outdoor media channel in becoming a commonly used advertising source and the LCD display system at train station is a unique channel among all. It is expected that the new source of advertising will take up an important role in the future market.

ACCOUNTANTS’ REPORT ON THE TARGET

APPENDIX II

The following is the text of a report, prepared for the sole purpose, of inclusion in this circular, received from the independent reporting accountants, HLB Hodgson Impey Cheng, Chartered Accountants, Certified Public Accountants.

==> picture [182 x 68] intentionally omitted <==

31/F Gloucester Tower The Landmark 11 Pedder Street Central Hong Kong

2 November 2007

The Board of Directors

Wing Hong (Holdings) Limited

13th Floor, OTB Building 259-265 Des Voeux Road Central Hong Kong

Dear Sirs,

We set out below our report on the financial information regarding 北京鐵聯通達廣告傳媒有限公司 (the “Target”) including the balance sheets as at 31 December 2005, 31 December 2006 and 31 August 2007, the income statements, the cash flow statements and the statements of changes in equity for the period from 16 December 2005 (date of incorporation) to 31 December 2005, the year ended 31 December 2006 and the eight months period ended 31 August 2007 (hereinafter collectively referred to as the “Relevant Periods”), and the notes thereto (the “Financial Information”), for inclusion in the circular of Wing Hong (Holdings) Limited (the “Company”) dated 2 November 2007 in connection with the proposed investment in the Target (the “Acquisition”) at a total amount of RMB312,000,000 by (i) subscribing for the new registered capital of the Target in the amount of RMB88,000,000; (ii) providing a shareholder’s loan to the Target in the amount of RMB176,000,000; and (iii) acquiring an additional 10% shareholding interest in the Target at a consideration of RMB48,000,000 from Mr. Wang Xue Qin and Mr. Wu Qi within a period of 2 years commencing from the date of the signing of the Agreement (the “Circular”). The consideration in the amount of RMB312,000,000 payable would be satisfied by a combination of internal cash resources, bank borrowings, shareholders’ loan, convertible notes, placing of new shares and other possible means of financing.

The Target was incorporated in the People’s Republic of China (the “PRC”) on 16 December 2005 with limited liability. The registered office of the Target is located at 北京市海澱區大柳樹路 2號二區焊接樓 301室 . The principal activity of the Target is engaging in media sales and management services for the multi-media business and the operation of media advertising spaces together with the provision of rail transit value-added services through LCD displays located at the ticket offices of each station in the PRC.

As at the date of this report, the Target is owned as to 27.5% by Mr. Wang Xue Qin, as to 23.5% by Mr. Wu Qi, as to 24.5% by Mr. Yin Can Qiang and as to 24.5% by Mr. Huang Han Wen. According to one of the conditions to the agreement, Mr. Wang Xue Qin and Mr. Wu Qi have to become the holder of 100% shareholding interest in the Target on or before 30 November 2007. The financial statements of the Target for the period from 16 December 2005 to 31 December 2005, the year ended 31 December 2006 and the eight months period ended 31 August 2007 were prepared in accordance with the relevant accounting standards and rules of the PRC. The financial statements of the Target for the year ended 31 December 2006 were audited by 北京三乾會計師事務所有限公司. The Target has adopted 31 December as its financial year end date.

ACCOUNTANTS’ REPORT ON THE TARGET

APPENDIX II

BASIS OF PREPARATION

The Financial Information has been prepared by the directors of the Target based on the PRC audited financial statements and the unaudited management accounts of the Target for the Relevant Periods, on the basis as set out in Note 3 below. The Financial Information has been prepared in accordance with Hong Kong Financial Reporting Standards which also include Hong Kong Accounting Standards and Interpretations issued by the Hong Kong Institute of Certified Public Accountants (the “HKICPA”), accounting principles generally accepted in Hong Kong.

DIRECTORS’ RESPONSIBILITY FOR THE FINANCIAL INFORMATION

The directors of the Target are responsible for the preparation and the true and fair presentation of the Financial Information in accordance with Hong Kong Financial Reporting Standards issued by the HKICPA. This responsibility includes designing, implementing and maintaining internal controls relevant to the preparation and the true and fair presentation of Financial Information that is free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. The directors of the Company are responsible for the contents of the Circular in which this report is included.

REPORTING ACCOUNTANTS’ RESPONSIBILITY

Our responsibility is to express an opinion on the Financial Information based on our audit. For the purpose of this report, we have audited the Financial Information for the period from 16 December 2005 to 31 December 2005, the year ended 31 December 2006 and the eight months period ended 31 August 2007 in accordance with Hong Kong Standards on Auditing issued by the HKICPA. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance as to whether the Financial Information is free from material misstatement. We have also carried out additional procedures as necessary in accordance with Auditing Guideline 3.340 “Prospectuses and the Reporting Accountant” issued by the HKICPA.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the Financial Information. The procedures selected depend on the reporting accountants’ judgment, including the assessment of the risks of material misstatement of the Financial Information, whether due to fraud or error. In making those risk assessments, the reporting accountants consider internal control relevant to the entity’s preparation and true and fair presentation of the Financial Information in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the Financial Information.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

ACCOUNTANTS’ REPORT ON THE TARGET

APPENDIX II

For the Financial Information for the eight months ended 31 August 2006, it is our responsibility to form an independent conclusion, based on our review, on the Financial Information for the eight months ended 31 August 2006 and to report our conclusion to you. We conducted our review on the Financial Information for the eight months ended 31 August 2006 in accordance with Statement of Auditing Standard 700 “Engagements to review interim financial reports” issued by the HKICPA. A review consists principally of making enquiries of the management and applying analytical procedures to the financial information and based thereon, assessing whether the accounting policies and presentation have 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 Financial Information for the eight months ended 31 August 2006.

OPINION

In our opinion, for the purpose of this report, the Financial Information for the period from 16 December 2005 to 31 December 2005, the year ended 31 December 2006 and the eight months period ended 31 August 2007 gives a true and fair view of the state of affairs of the Target as at 31 December 2005 and 2006 and at 31 August 2007 and of the results and cash flows of the Target for the year and periods then ended in accordance with Hong Kong Financial Reporting Standards.

Significant uncertainties relating to the going concern basis of the Target

Without qualifying our opinion, we draw attention in Note 3 in the Financial Information which indicates that the Target incurred a net loss of approximately RMB2,290,000 during the year ended 31 December 2006 and a net loss of approximately RMB9,333,000 during the eight months period ended 31 August 2007, and as of 31 December 2006 and 31 August 2007, the Target’s current liabilities exceeded its total assets by approximately RMB1,790,000 and RMB11,123,000 respectively. These conditions, along with other matters as set forth in Note 3, indicate the existence of a material uncertainty which may cast significant doubt about the Target’s ability to continue as a going concern.

REVIEW CONCLUSION

On the basis of our review which does not constitute an audit, for the purpose of this report, we are not aware of any material modifications that should be made to the financial information for the eight months ended 31 August 2006.

ACCOUNTANTS’ REPORT ON THE TARGET

APPENDIX II

A. FINANCIAL INFORMATION

Income statements of the Target

Eight months ended 31 August 2007 2006 Notes RMB’000 RMB’000 (unaudited) Turnover 7 57 – Gross profit 57 – Other revenue 7 3 1 Administrative expenses (9,073) (1,253) Provision for impairment loss on other receivables – (267) Loss from operating activities 8 (9,013) (1,519) Finance costs 9 (320) – Loss before taxation (9,333) (1,519) Taxation 10 – – Loss for the period/year (9,333) (1,519) Attributable to equity holders of the Target (9,333) (1,519)	For the period from 16 December 2005 (date of Year incorporation) ended 31 to 31 December December 2006 2005 RMB’000 RMB’000 15 – 15 – 1 – (2,039) – (267) – (2,290) – – – (2,290) – – – (2,290) – (2,290) –	For the period from 16 December 2005 (date of Year incorporation) ended 31 to 31 December December 2006 2005 RMB’000 RMB’000 15 – 15 – 1 – (2,039) – (267) – (2,290) – – – (2,290) – – – (2,290) – (2,290) –
		– – – –
		– –
		– –
		–

		–

ACCOUNTANTS’ REPORT ON THE TARGET

APPENDIX II

Balance sheets of the Target

As at 31 August 2007 Notes RMB’000 ASSETS Non-current assets Property, plant and equipment 13 6,998 Current assets Prepayments, deposits and other receivables 14 237 Amounts due from related companies 15 1,436 Cash and cash equivalents 542 2,215 Total assets 9,213 EQUITY Capital and reserves attributable to equity holders of the Target Share capital 20 500 Reserves (11,623) Total equity (11,123)	As at 31 December 2006 2005 RMB’000 RMB’000 2,834 – 15 – 240 – 13 500 268 500 3,102 500 500 500 (2,290) – (1,790) 500	As at 31 December 2006 2005 RMB’000 RMB’000 2,834 – 15 – 240 – 13 500 268 500 3,102 500 500 500 (2,290) – (1,790) 500
		– – 500
		500
		500

		500 –
		500

ACCOUNTANTS’ REPORT ON THE TARGET

APPENDIX II

			As at
	31		August	As at 31 December
			2007	2006	2005
	Notes	RMB’000		RMB’000	RMB’000
LIABILITIES
Current liabilities
Other payables and accruals	16		2,596	934	–
Amounts due to shareholders	17		420	3,958	–
Loans from shareholders	18		10,182	–	–
Other borrowings	19		7,138	–	–
Total liabilities			20,336	4,892	–
Total equity and liabilities			9,213	3,102	500

Net current (liabilities)/assets		(18,121)		(4,624) 500

Total assets less current liabilities			(11,123)	(1,790) 500

Statements of changes in equity of the Target
			Share	Accumulated
			capital	losses	Total
		RMB’000		RMB’000	RMB’000
At 16 December 2005			–	–	–
Capital injection			500	–	500
Profit for the period			–	–	–
At 31 December 2005 and 1 January 2006			500	–	500
Loss for the year			–	(2,290) (2,290)
At 31 December 2006 and 1 January 2007			500	(2,290) (1,790)
Loss for the period			–	(9,333) (9,333)
At 31 August 2007			500	(11,623) (11,123)

Uuaudited statement of changes in equity of the Target
for the eight months ended 31 August 2006
			Share	Accumulated
			capital	losses	Total
		RMB’000		RMB’000	RMB’000
At 1 January 2006			500	–	500
Loss for the period (unaudited)			–	(1,519) (1,519)
At 31 August 2006 (unaudited)			500	(1,519) (1,019)

ACCOUNTANTS’ REPORT ON THE TARGET

APPENDIX II

Cash flow statements of the Target

Eight months ended 31 August 2007 2006 RMB’000 RMB’000 (unaudited) Cash flows from operating activities Loss before taxation (9,333) (1,519) Adjustments for: Finance costs 320 – Interest income (3) (1) Depreciation 627 82 Provision for impairment loss on other receivables – 267 Operating loss before working capital changes (8,389) (1,171) Increase in prepayments, deposits and other receivables (222) (294) Increase in amounts due from related companies (1,196) (225) Increase in other payables and accruals 1,662 877 (Decrease)/increase in amounts due to shareholders (3,538) 3,530 Cash (utilised in)/generated from operations (11,683) 2,717 Interest received 3 1 Net cash (outflow)/inflow from operating activities (11,680) 2,718	For the period from 16 December 2005 (date of Year incorporation) ended 31 to 31 December December 2006 2005 RMB’000 RMB’000 (2,290) – – – (1) – 304 – 267 – (1,720) – (282) – (240) – 934 – 3,958 – 2,650 – 1 – 2,651 –	For the period from 16 December 2005 (date of Year incorporation) ended 31 to 31 December December 2006 2005 RMB’000 RMB’000 (2,290) – – – (1) – 304 – 267 – (1,720) – (282) – (240) – 934 – 3,958 – 2,650 – 1 – 2,651 –
		– – – – –
		– –
		–

ACCOUNTANTS’ REPORT ON THE TARGET

APPENDIX II

Eight months ended 31 August 2007 2006 RMB’000 RMB’000 (unaudited) Cash flows from investing activities Purchase of property, plant and equipment (4,791) (3,138) Net cash outflow from investing activities (4,791) (3,138) Cash flow from financing activities Proceeds from capital injection – – Loans from shareholders 10,000 – Other borrowings 7,000 – Net cash inflow from financing activities 17,000 – Increase/(decrease) in cash and cash equivalents 529 (420) Cash and cash equivalents at the beginning of the period/year 13 500 Cash and cash equivalents at the end of the period/year 542 80 Analysis of balances of cash and cash equivalents Cash and cash equivalents 542 80	For the period from 16 December 2005 (date of Year incorporation) ended 31 to 31 December December 2006 2005 RMB’000 RMB’000 (3,138) – (3,138) – – 500 – – – – – 500 (487) 500 500 – 13 500 13 500	For the period from 16 December 2005 (date of Year incorporation) ended 31 to 31 December December 2006 2005 RMB’000 RMB’000 (3,138) – (3,138) – – 500 – – – – – 500 (487) 500 500 – 13 500 13 500
		–
		500 – –
		500
		500 –
		500

		500

ACCOUNTANTS’ REPORT ON THE TARGET

APPENDIX II

Notes to the Financial Information

1. GENERAL INFORMATION

The Target was incorporated in the People’s Republic of China (the “PRC”) on 16 December 2005 with limited liability. The address of the registered office of the Target is 北京市海澱區大柳樹路 2號二區焊接樓 301室 . The principal activity of the Target is engaging in media sales and management services for the multi-media business and the operation of media advertising spaces together with the provision of rail transit value-added services through LCD displays located at the ticketing offices of each station in the PRC.

2. APPLICATION OF NEW AND REVISED HONG KONG FINANCIAL REPORTING STANDARDS (“HKFRSs”)

The following new standards, amendment to standards and interpretations that have been issued but are not effective for the accounting periods commencing on 1 January 2007 have not been early adopted:

	Effective for accounting period
	beginning on or after
HKFRS 8, Operating segments	1 January 2009
HKAS 23 (Revised), Borrowing costs	1 January 2009
HK (IFRIC) – Int 11, HKFRS 2 – Group and treasury share transactions	1 March 2007
HK (IFRIC) – Int 12, Service concession arrangements	1 January 2008
HK (IFRIC) – Int 13, Customer loyalty programmes	1 July 2008
HK (IFRIC) – Int 14, HKAS 19 – The limit on a defined benefit asset, minimum
funding requirements and their interaction	1 January 2008

The directors of the Target anticipate that the application of these standards, amendments or interpretations will have no material impact on the financial statements of the Target.

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The Financial Information have been prepared in accordance with HKFRSs (which also include Hong Kong Accounting Standards (“HKASs”) and Interpretations) issued by the HKICPA, accounting principles generally accepted in Hong Kong. The Financial Information is presented in Renminbi and all values are rounded to the nearest thousand and except otherwise indicated.

The preparation of Financial Information in conformity with HKFRSs requires management to make judgments, estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making judgments about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. The estimates and assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

A summary of the significant accounting policies followed by the Target in the preparation of the Financial Information is set out below:

Basis of preparation

The measurement basis used in the preparation of the Financial Information is historical cost.

The Target incurred losses of approximately RMB2,290,000 and RMB9,333,000 for the year ended 31 December 2006 and the eight months ended 31 August 2007 respectively. Notwithstanding the lack of current profitability and the tight cash flows as at 31 August 2007, the Financial Information has been prepared on a going concern basis, the validity of which is dependent upon the success of the Target’s future operations, future funding being available and its ability to generate adequate cash flows in order to meet its obligations as and when fall due. The Financial Information has been prepared on a going concern basis as the directors of the Target have adopted the following measure in progress at the date of the Financial Information to improve the future profitability and the tight cash flows as at 31 August 2007.

ACCOUNTANTS’ REPORT ON THE TARGET

APPENDIX II

A wholly owned subsidiary of Wing Hong (Holdings) Limited, Top Asian Limited, entered into an agreement with Mr. Wang Xue Qin and Mr. Wu Qi on 24 September 2007. Pursuant to the agreement, Wing Hong (Holdings) Limited had conditionally agreed to invest in the Target, held by Mr. Wang Xue Qin and Mr. Wu Qi in the condition that Mr. Wang Xue Qin and Mr. Wu Qi are the holders of 100% shareholding in the Target on or before 30 November 2007. The proceeds will provide immediate funding for acquiring the LCD display system, expanding the business operation, general administration expenses and general working capital.

In the opinion of the directors, in light of the continual financial support from the major shareholders and the agreement above, the Target would have sufficient financial resources to satisfy its working capital needs for the foreseeable future. Accordingly, the directors are satisfied that it is appropriate to prepare the Financial Information on a going concern basis.

Foreign currency translation

(i) Functional and presentation currency

Items included in the Financial Information of the Target are measured using the currency of the primary economic environment in which the Target operates (the “functional currency”). The Financial Information are presented in Renminbi, which is the Target’s functional and presentation currency.

(ii) Transaction and balances

Property, plant and equipment

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

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

Motor vehicles 20% Furniture, fixture and office equipment 20% LCD display system 20%

The gain or loss on disposal or retirement of a property, plant and equipment recognised in the profit and loss account is the difference between the net sales proceeds and the carrying amount of the relevant asset.

Impairment of assets (other than goodwill, intangible assets with indefinite lives)

At each balance sheet date, the Target 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.

ACCOUNTANTS’ REPORT ON THE TARGET

APPENDIX II

Trade and other receivables

Trade and other receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. A provision for impairment of trade and other receivables is established when there is objective evidence that the Target will not be able to collect all amounts due according to the original terms of receivables. The amount of the provision is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the effective interest rate. The amount of the provision is recognised in the income statement.

Borrowings

Borrowings are recognised initially at fair value, net of transaction costs incurred. Transaction costs are incremental costs that are directly attributable to the acquisition, issue or disposal of a financial assets or financial liability, including fees and commissions paid to agents, advisors, brokers and dealers, levies by regulatory agencies and securities exchanges, and transfer taxes and duties. Borrowings are subsequently stated at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the income statement over the period of the borrowings using the effective interest method.

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

Cash and cash equivalents

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 Target’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 Financial Information 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 negative goodwill) or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.

Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and associates, and interests in joint ventures, except where the Target 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.

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

Employee benefits

The Target are required to make contributions to the state retirement schemes in the PRC based on certain of the monthly salaries of their current employees to fund the benefits. The employees are entitled to retirement pension calculated with reference to their basic salaries on retirement and their length of service in accordance with the relevant government regulations. The PRC government is responsible for the pension liability to these retired staff.

ACCOUNTANTS’ REPORT ON THE TARGET

APPENDIX II

Provision

Provisions are recognised when the Target has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation, and a reliable estimate of the amount can be made. Where the Target expects a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain.

Revenue recognition

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

(i) advertising income, when the services are rendered; and
(ii) interest income, on a time proportion basis taking into account the principal outstanding and the effective interest rate applicable.

Financial instruments

Financial assets and financial liabilities are recognised on the balance sheet when an entity 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.

(i) Financial assets

The Target’s financial assets are classified into one of the four categories, including financial assets at fair value through profit or loss, loans and receivables, held-to-maturity investments and available-forsale financial assets. 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.

(ii) Financial assets at fair value through profit or loss

such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise; or
the financial asset forms part of a group of financial assets or financial liabilities or both, which is managed and its performance is evaluated on a fair value basis, in accordance with the Target’s documented risk management or investment strategy, and information about the grouping is provided internally on that basis; or
it forms part of a contract containing one or more embedded derivatives, and HKAS 39 permits the entire combined contract (asset or liability) to be designated as at fair value through profit or loss.

ACCOUNTANTS’ REPORT ON THE TARGET

APPENDIX II

(iii) 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 amounts due from related companies, 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.

(iv) Held-to-maturity investments

Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturities that the Target’s management has the positive intention and ability to hold to maturity. At each balance sheet date subsequent to initial recognition, held-to-maturity investments are measured 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 estimated future cash flows discounted at the effective interest rate computed on initial recognition. Impairment losses are reversed in subsequent periods when an increase in the investment’s recoverable amount can be related objectively to an event occurring after the impairment was recognised, subject to the 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.

(v) Available-for-sale financial assets

(vi) Financial liabilities and equity

Financial liabilities and equity instruments issued by an entity 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 Target’s financial liabilities are generally classified into financial liabilities at fair value through profit or loss and other financial liabilities. The accounting policies adopted in respect of financial liabilities and equity instruments are set out below.

(vii) Financial liabilities at fair value through profit or loss

ACCOUNTANTS’ REPORT ON THE TARGET

APPENDIX II

A financial liability other than a financial liability held for trading may be designated as at fair value through profit or loss upon initial recognition if:

such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise; or
the financial liability forms part of a group of financial assets or financial liabilities or both, which is managed and its performance is evaluated on a fair value basis, in accordance with the Target’s documented risk management or investment strategy, and information about the grouping is provided internally on that basis; or
it forms part of a contract containing one or more embedded derivatives, and HKAS 39 permits the entire combined contract (asset or liability) to be designated as at fair value through profit or loss.

(viii) Other financial liabilities

Other financial liabilities (including other borrowings, other payables and amounts due to shareholders) are subsequently measured at amortised cost, using the effective interest method.

(ix) Financial guarantee contracts

A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due in accordance with the original or modified terms of a debt instrument. A financial guarantee contract issued by the Target and not designed as at fair value through profit or loss is recognised initially at its fair value less transaction costs that are directly attributable to the issue of the financial guarantee contract. Subsequent to initial recognition, the Target measures the financial guarantee contact at the higher of: (i) the amount determined in accordance with HKAS 37 Provisions, Contingent Liabilities and Contingent Assets; and (ii) the amount initially recognised less, when appropriate, cumulative amortisation recognised in accordance with HKAS 18 Revenue.

(x) Derecognition

Financial assets are derecognised when the rights to receive cash flows from the assets expire or, the financial assets are transferred and the Target has transferred substantially all the risks and rewards of ownership of the financial assets. On derecognition of a financial asset, the difference between the asset’s carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss that had been recognised directly in equity is recognised in profit or loss.

Leases

Operating leases

Contingent liabilities

A contingent liability is a possible obligation that arises from past events and whose existence will only be confirmed by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Target. It can also be a present obligation arising from past events that is not recognised because it is not probable that outflow of economic resources will be required or the amount of obligation cannot be measured reliably.

ACCOUNTANTS’ REPORT ON THE TARGET

APPENDIX II

A contingent liability is not recognised but is disclosed in the notes to the Financial Information. When a change in the probability of an outflow occurs so that the outflow is probable, it will then be recognised as a provision.

A contingent asset is a possible asset that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Target. A contingent asset is not recognised but is disclosed in the notes to the Financial Information when an inflow of economic benefits is probable. When inflow is virtually certain, an asset is recognised.

Related party

Parties are considered to be related if one party has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Parties are also considered to be related if they are subject to common control or common significant influence. Related parties maybe individuals or corporate entities. A transaction is considered to be a related party transaction when there is a transfer of resources or obligations between related parties.

4. FINANCIAL RISK MANAGEMENT

Financial risk factors

The Target’s activities expose it a variety of financial risks: credit risk, liquidity risk and cash flow interest-rate risk. The Target’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Target’s financial performance.

(a) Credit risk

The Target has no significant concentrations of credit risk. It has policies in place to ensure that transactions are made to customers with an appropriate credit history. The exposure to these credit risks are monitored on an ongoing basis.

(b) Liquidity risk

The Target manages liquidity risk through continuous monitoring and matching of the funding requirement and position. The target regularly reviews its major funding positions to ensure that it has adequate financial resources in meeting its financial obligations.

(c) Cash flow and fair value interest-rate risk

Short term borrowings at variable interest rate expose the Target to cash flow interest rate risk. The Target monitors the interest rate risk exposure on a continuous basis and adjusts the portfolio of borrowings where necessary.

Capital management

The Target’s objectives of managing capital are to safeguard the Target’s ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optional capital structure to reduce cost of capital.

In order to maintain or adjust the capital structure, the Target may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debts.

	As at 31 August 2007
	RMB’000
Total borrowings	20,332
Less: Cash and cash equivalents	(542)
Net debt	19,790
Total equity	(11,123)
Total capital	8,667

100

ACCOUNTANTS’ REPORT ON THE TARGET

APPENDIX II

5. CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS

The Target 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.

(a) Impairment of assets

The Target tests annually whether the assets have suffered any impairment. The recoverable amount of an asset or a cash generating unit is determining based on value-in-use calculations which require the use of assumptions and estimates.

(b) Fair value estimation

The carrying amounts of the Target’s financial assets, including cash and cash equivalents, prepayments, deposits, and other receivables and financial liabilities, including other payables and accruals, amounts due to shareholders, loans from shareholders, and other borrowings, approximate their fair values due to their short maturities. The face values less any credit adjustments for financial assets and liabilities with a maturity of less than one year are assumed to approximate their fair values.

(c) Provision for impairment loss on other receivables

The provision for impairment loss on other receivables of the Target is based on the evaluation of collectability and aging analysis of accounts and on management’s judgment. A considerable amount of judgment is required in assessing the ultimate realisation of these receivables, including the current creditworthiness and the past collection history of each account. If the financial conditions of the debtors were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances maybe required.

(d) Income taxes

The Target is subject to income taxes in the PRC. Significant judgment is required in determining the provision for income taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. The Target recognises liabilities for anticipated tax audit issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made.

6. SEGMENT INFORMATION

Business segments

The Target’s operating businesses are structured and managed separately, according to the nature of the operations and the products and services provide. Each of the Target’s business segment represents a strategic business unit that offers products and services which are subject to risks and returns that are different from those of the other business segments. During the Relevant Periods, over 90% of the Target’s revenue, results, assets and liabilities were derived from the media advertising services segment and accordingly, no further detailed analysis of the Target’s business segments is disclosed.

Geographical segments

In determining the Target’s geographical segments, revenues are attributed to the segments based on the location of customers, and assets are attributed to the segments based on the location of assets. During the Relevant Periods, over 90% of the Target’s revenue and assets were derived from customers and operations based in the PRC and accordingly, no further detailed analysis of the Target’s geographical segments is disclosed.

101

ACCOUNTANTS’ REPORT ON THE TARGET

APPENDIX II

7. TURNOVER AND OTHER REVENUE

Turnover represents the income from provision of media advertising services in the PRC during the Relevant Periods.

Turnover: Media advertising income Other revenue: Interest income	Eight months ended 31 August 2007 2006 RMB’000 RMB’000 (unaudited) 57 – 3 1 60 1	For the period from 16 December 2005 (date of Year incorporation) ended 31 to 31 December December 2006 2005 RMB’000 RMB’000 15 – 1 – 16 –	For the period from 16 December 2005 (date of Year incorporation) ended 31 to 31 December December 2006 2005 RMB’000 RMB’000 15 – 1 – 16 –
			–

8. LOSS FROM OPERATING ACTIVITIES

					For the
				period from
				16 December
				2005 (date of
			Year	incorporation)
			ended 31		to 31
	Eight months ended 31 August		December		December
	2007	2006	2006		2005
	RMB’000	RMB’000	RMB’000		RMB’000
		(unaudited)
Loss from operations is stated after charging:
Auditors’ remuneration	–	–	–		–
Depreciation	627	82	304		–
Minimum lease payments under operating
leases	29	23	38		–
Provision for impairment loss on other
receivables	–	267	267		–
Staff costs (excluding directors
remuneration)(Note 11)
– wages and salaries	590	283	510		–
– pension scheme contributions	111	71	115		–

102

ACCOUNTANTS’ REPORT ON THE TARGET

APPENDIX II

9. FINANCE COSTS

Interest on shareholder’s loans wholly repayable within five years Interest on other borrowings wholly repayable within five years	Eight months ended 31 August 2007 2006 RMB’000 RMB’000 (unaudited) 182 – 138 – 320 –	For the period from 16 December 2005 (date of Year incorporation) ended 31 to 31 December December 2006 2005 RMB’000 RMB’000 – – – – – –	For the period from 16 December 2005 (date of Year incorporation) ended 31 to 31 December December 2006 2005 RMB’000 RMB’000 – – – – – –
			–

10. TAXATION

No provision for Hong Kong profits tax has been made as the Target did not generate any income for the Relevant Periods in Hong Kong. Taxes on profits assessable elsewhere have been calculated at the rates of tax prevailing in the countries in which the Target operates, based on existing legislation, interpretations and practices in respect thereof.

					For the
				period from
				16 December
				2005 (date of
			Year	incorporation)
			ended 31		to 31
	Eight months ended 31 August		December		December
	2007	2006	2006		2005
	RMB’000	RMB’000	RMB’000		RMB’000
		(unaudited)
Current taxation for the period/year	–	–	–		–

A reconciliation of the tax expense applicable to loss before taxation using the statutory rates for the countries in which the Target are domiciled to the tax expense at the effective tax rates, and a reconciliation of tax at the applicable rates (i.e. statutory tax rates) to the effective tax rates, are as follows:

Loss before taxation Tax at applicable tax rate Expenses not deductible for tax purposes Tax losses not recognised Tax charge at the effective rate	Eight months ended 31 August 2007 2006 RMB’000 % RMB’000 (unaudited) (9,333) (1,519) (3,080) (33.0) (501) – – 88 3,080 33.0 413 – – –	% (33.0) 5.8 27.2 –	Year ended 31 December 2006 RMB’000 % (2,290) (756) (33.0) 88 3.8 668 29.2 – –	For the period from 16 December 2005 (date of incorporation) to 31 December 2005 RMB’000 % – – – – – – – – –	For the period from 16 December 2005 (date of incorporation) to 31 December 2005 RMB’000 % – – – – – – – – –
					–

103

ACCOUNTANTS’ REPORT ON THE TARGET

APPENDIX II

11. DIRECTORS’ REMUNERATION

The remuneration of every director for the Relevant Periods is as follows:

					For the
				period from
				16 December
				2005 (date of
			Year	incorporation)
			ended 31		to 31
	Eight months ended 31 August		December		December
	2007	2006	2006		2005
	RMB’000	RMB’000	RMB’000		RMB’000
		(unaudited)
Salaries and other benefits:
Name of director
Wang Xue Qin_(note 1)_	32	14	19		–
Wu Qi_(note 2)_	–	18	28		–
Huang Han Wen_(note 3)_	–	–	–		–
Yin Can Qiang_(note 4)_	–	–	–		–
	32	32	47		–

The number of directors whose remuneration	fell within the following band is as follows:
Nil - RMB1,000,000	3	2	2		–

Notes:

Wang Xue Qin was appointed as director on 16 December 2005, resigned on 14 April 2006 and reappointed on 17 November 2006.
Wu Qi was appointed as director on 14 April 2006 and resigned on 17 November 2006.
Huang Han Wen was appointed as director on 30 May 2007.
Yin Can Qiang was appointed as director on 30 May 2007.

12. FIVE HIGHEST PAID EMPLOYEES

The five highest paid employees during the period from 16 December 2005 to 31 December 2005, the year ended 31 December 2006, the eight months period ended 31 August 2006 and 2007 included Nil, 2, 2, Nil directors respectively. Details of whose remuneration are set out in Note 11 to the Financial Information. The details of the remuneration of the remaining non-director, highest paid employees during the period from 16 December 2005 to 31 December 2005, the year ended 31 December 2006, the eight months period ended 31 August 2006 and 2007 are as follows:

Salaries, allowances and benefits in kind Pension scheme contributions	Eight months ended 31 August 2007 2006 RMB’000 RMB’000 (unaudited) 172 61 18 10 190 71	For the period from 16 December 2005 (date of Year incorporation) ended 31 to 31 December December 2006 2005 RMB’000 RMB’000 107 – 15 – 122 –	For the period from 16 December 2005 (date of Year incorporation) ended 31 to 31 December December 2006 2005 RMB’000 RMB’000 107 – 15 – 122 –
			–

104

ACCOUNTANTS’ REPORT ON THE TARGET

APPENDIX II

The number of non-director, highest paid employees whose remuneration fell within the following band is as follows:

Nil - RMB1,000,000 13. PROPERTY, PLANT AND EQUIPMENT Cost: At 16 December 2005 and at 31 December 2005 Additions At 31 December 2006 and at 1 January 2007 Additions At 31 August 2007 Accumulated depreciation: At 16 December 2005 and at 31 December 2005 Provided during the year At 31 December 2006 and at 1 January 2007 Provided during the period At 31 August 2007 Net book value: At 31 August 2007 At 31 December 2006 At 31 December 2005	5 Furniture, fixture and office equipment RMB’000 – 198 198 82 280 – 29 29 33 62 218 169 –	3 Motor vehicles RMB’000 – 270 270 – 270 – 44 44 36 80 190 226 –	3 LCD display screens RMB’000 – 2,670 2,670 4,709 7,379 – 231 231 558 789 6,590 2,439 –	–

				Total RMB’000 – 3,138
				3,138 4,791
				7,929
				– 304
				304 627
				931
				6,998

				2,834

				–

14. PREPAYMENTS, DEPOSITS AND OTHER RECEIVABLES

Prepayments Deposits and other receivables _Less:_Provision for impairment loss on other receivables	As at 31 August 2007 RMB’000 213 291 504 (267) 237	As at 31 December 2006 2005 RMB’000 RMB’000 15 – 267 – 282 – (267) – 15 –	As at 31 December 2006 2005 RMB’000 RMB’000 15 – 267 – 282 – (267) – 15 –
			– –
			–

The directors consider that the carrying amounts of prepayments, deposits and other receivables approximate to their fair values.

The carrying amounts of other receivables are reduced to their recoverable amounts which are determined by reference to the estimation of future cash flows expected to be generated.

105

ACCOUNTANTS’ REPORT ON THE TARGET

APPENDIX II

The movements in provision for impairment loss on other receivables are as follows:

At 1 January Provision for impairment loss on other receivables At 31 August/31 December	2007 RMB’000 267 – 267	2006 RMB’000 – 267 267	2005 RMB’000 – –
			–

15. AMOUNTS DUE FROM RELATED COMPANIES

Highest balance for the period Highest from 16 balance December for the Highest 2005 eight balance (date of Name of months for the year incorporation) directors ended 31 ended 31 to 31 having August December December Name of related company interest 2007 2006 2005 RMB’000 RMB’000 RMB’000 北京鐵科華易科技有限公司 Wu Qi , 866 246 – Wang Xue Qin 北京義群承鳴廣告有限公司 Wu Qi, 2,300 – – Wang Xue Qin	As at 31 August 2007 RMB’000 866 570 1,436	As at 31 December 2006 2005 RMB’000 RMB’000 240 – – – 240 –	As at 31 December 2006 2005 RMB’000 RMB’000 240 – – – 240 –
			–

The amounts due from related companies are unsecured, interest-free and have no fixed terms of repayment.

The directors considered that the carrying amounts of amounts due from related companies approximate to their fair values.

16. OTHER PAYABLES AND ACCRUALS

Other payables Accruals	As at 31 August 2007 RMB’000 2,431 165 2,596	As at 31 December 2006 2005 RMB’000 RMB’000 733 – 201 – 934 –	As at 31 December 2006 2005 RMB’000 RMB’000 733 – 201 – 934 –
			–

The directors considered that the carrying amounts of other payables and accruals approximate to their fair values.

17. AMOUNTS DUE TO SHAREHOLDERS

As at 31 December 2006 and 31 August 2007, the amounts due to shareholders are unsecured, interest-free and have no fixed terms of repayment.

The directors considered that the carrying amounts of amounts due to shareholders approximate to their fair values.

106

ACCOUNTANTS’ REPORT ON THE TARGET

APPENDIX II

18. LOANS FROM SHAREHOLDERS

As at 31 August 2007, loans from shareholders with principle amount of RMB10,000,000 were granted from a shareholder. The loan is unsecured, bear interest at prime rate of People’s Bank of China per annum and repayable in May 2008.

The directors consider that the interest rates represented prevailing market interest rates and, therefore, the fair values of borrowings estimated by discounting their future cash flows at the prevailing market borrowing rates approximate the corresponding carrying amounts.

19. OTHER BORROWINGS

Other borrowings The maturity of the above borrowings is as follows: Within one year	As at 31 August 2007 RMB’000 7,138 7,138	As at 31 December 2006 2005 RMB’000 RMB’000 – – – –	As at 31 December 2006 2005 RMB’000 RMB’000 – – – –

			–

The other borrowings represented a loan from a third party which is unsecured, bears interest at prime rate of People’s Bank of China per annum and repayable in May 2008.

20. SHARE CAPITAL

Registered capital At 1 January/16 December Capital injection At 31 August/31 December Paid up capital At 1 January/16 December Capital injection At 31 August/31 December	As at 31 August 2007 RMB’000 500 – 500 500 – 500	As at 31 December 2006 2005 RMB’000 RMB’000 500 – – 500 500 500 500 – – 500 500 500	As at 31 December 2006 2005 RMB’000 RMB’000 500 – – 500 500 500 500 – – 500 500 500
			500

			– 500
			500

107

ACCOUNTANTS’ REPORT ON THE TARGET

APPENDIX II

21. COMMITMENT

Operating lease commitments:

The Target leases office premises under operating lease arrangements, with leases negotiated for terms of 1 year.

The Target had total future minimum lease payments under non-cancellable operating leases falling due as follows:

Within one year In the second to fifth years, inclusive	As at 31 August 2007 RMB’000 44 – 44	As at 31 December 2006 2005 RMB’000 RMB’000 7 – – – 7 –	As at 31 December 2006 2005 RMB’000 RMB’000 7 – – – 7 –
			–

Capital commitments:

At 31 December 2005, 31 December 2006 and 31 August 2007, the Target had the following commitments which were not provided for in the balance sheet:

	As at
	31 August	As	at 31 December
	2007	2006	2005
	RMB’000	RMB’000	RMB’000
Authorised and contracted for in respect of acquisition
of property, plant and equipment	23,784	5,338	–

22. MATERIAL RELATED PARTY TRANSACTIONS

In addition to the transactions and balances detailed elsewhere in these Financial Information, the Target had the following material transactions with related parties during the Relevant Periods:

(a) Key management personnel

Remuneration for key management personnel, including amount paid to the Target’s directors and certain of highest paid employees, as disclosed in Notes 11 and 12, is as follows:

					For the
				period from
				16 December
				2005 (date of
			Year	incorporation)
			ended 31		to 31
	Eight months ended 31 August		December		December
	2007	2006	2006		2005
	RMB’000	RMB’000	RMB’000		RMB’000
		(unaudited)
Salaries and other short term
employee benefits	206	108	194		–

(b) As at 31 August 2007, a shareholder’s loan amounted to RMB10,000,000 was granted by a shareholder, who is also the director of the Target. The terms of the loans are included in Note 18 to the Financial Information.

108

ACCOUNTANTS’ REPORT ON THE TARGET

APPENDIX II

23. EARNINGS PER SHARE

Earnings per share has not been presented as such information is not considered meaningful having regard to the purpose of this report.

24. SUBSEQUENT EVENTS

No significant subsequent events took place subsequent to 31 August 2007.

B. SUBSEQUENT FINANCIAL STATEMENTS

No audited financial statements have been prepared for the Target in respect of any period subsequent to 31 August 2007. No dividend has been declared by the Target in respect of any period subsequent to 31 August 2007.

Yours faithfully,

HLB Hodgson Impey Cheng Chartered Accountants Certified Public Accountants Hong Kong

109

APPENDIX III UNAUDITED PRO FORMA FINANCIAL INFORMATION ON THE ENLARGED GROUP

==> picture [182 x 68] intentionally omitted <==

31/F Gloucester Tower The Landmark 11 Pedder Street Central Hong Kong 2 November 2007

The Board of Directors

Wing Hong (Holdings) Limited

13th Floor, OTB Building 259-265 Des Voeux Road Central Hong Kong

Dear Sirs,

We report on the unaudited pro forma financial information of Wing Hong (Holdings) Limited (the “Company”) and its subsidiaries (hereinafter collectively referred to as the “Group”), 北京鐵聯通達廣告傳媒有限公司 (the “Target”) (together with the Group hereinafter referred to as the “Enlarged Group”) set out on pages 112 to 120 under the heading of “Unaudited Pro Forma Financial Information on the Enlarged Group” (the “Unaudited Pro Forma Financial Information”) in Appendix III of the Company’s circular dated 2 November 2007 (the “Circular”) in connection with the proposed investment in the Target (“the Acquisition”). The Unaudited Pro Forma Financial Information has been prepared by the directors of the Company, for illustrative purpose only, to provide information about how the Acquisition, which will result in the formation of the Enlarged Group, might have affected the financial information presented, for inclusion in Appendix III to the Circular. The basis of preparation of the Unaudited Pro Forma Financial Information is set out on page 112 of Appendix III to this 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 rule 4.29 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Listing Rules”) and with reference to Accounting Guideline 7 “Preparation of Pro Forma Financial Information for Inclusion in Investment Circulars” issued by Hong Kong Institute of Certified Public Accountants (the “HKICPA”).

It is our responsibility to form an opinion, as required by rule 4.29(7) of the Listing Rules, on the Unaudited Pro Forma Financial Information and to report our opinion to you. We do not accept any responsibility for any reports previously given by us on any financial information used in the compilation of the Unaudited Pro Forma Financial Information beyond that owed to those to whom those reports were addressed by us at the dates of their issue.

110

UNAUDITED PRO FORMA FINANCIAL INFORMATION ON THE ENLARGED GROUP

APPENDIX III

BASIS OF OPINION

We conducted our engagement in accordance with Hong Kong Standard on Investment Circular Reporting Engagement (“HKSIR”) 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 the 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 rule 4.29(1) of the Listing Rules.

The Unaudited Pro Forma Financial Information is for illustrative purposes only, based on the judgments and assumptions of the directors of the Company, and, because of its hypothetical nature, it does not provide any assurance or indication that any event will take place in the future and may not be indicative of:

the financial position of the Enlarged Group as at 31 March 2007 or for any future date; or
the results and cashflows of the Enlarged Group for the year ended 31 March 2007 or for any future periods.

OPINION

In our opinion:

the Unaudited Pro Forma Financial Information has been properly compiled by the directors of the Company on the basis stated;
such basis is consistent with the accounting policies of the Group; and
the adjustments are appropriate for the purposes of the Unaudited Pro Forma Financial Information as disclosed pursuant to rule 4.29(1) of the Listing Rules.

Yours faithfully, HLB Hodgson Impey Cheng Chartered Accountants Certified Public Accountants Hong Kong

111

UNAUDITED PRO FORMA FINANCIAL INFORMATION ON THE ENLARGED GROUP

APPENDIX III

INTRODUCTION TO THE UNAUDITED PRO FORMA FINANCIAL INFORMATION ON THE ENLARGED GROUP

The following is the unaudited pro forma financial information of the Enlarged Group as if the Acquisition has been completed on 31 March 2007 for the pro forma consolidated balance sheet and on 1 April 2006 for the pro forma consolidated income statement and pro forma consolidated cash flow statement. The accompanying unaudited pro forma financial information on the Enlarged Group has been prepared to illustrate the effect of the investment in the Target at a consideration of approximately HK$321,400,000 (equivalent to RMB312,000,000) (the “Acquisition”).

The accompanying unaudited pro forma financial information of the Enlarged Group is based on certain assumptions, estimates, uncertainties and other currently available information, and is provided for illustrative purposes only and because of its hypothetical nature, it may not give a true picture of the actual financial position and financial results of the Enlarged Group’s operations that would have been attained had the Acquisition actually occurred on the dates indicated herein. Further, the accompanying unaudited pro forma financial information of the Enlarged Group does not purport to predict the Enlarged Group’s future financial position or results of operations.

The unaudited pro forma financial information of the Enlarged Group should be read in conjunction with the Accountants’ Report on the Target as set out in Appendix II, the historical financial information on the Group as set out in Appendix I and other financial information included elsewhere in this Circular.

(I) Unaudited Pro Forma Consolidated Balance Sheet of the Enlarged Group

The following is the unaudited pro forma consolidated balance sheet of the Enlarged Group, assuming that the Acquisition has been completed on 31 March 2007. The unaudited pro forma consolidated balance sheet is based on the audited consolidated balance sheet of the Group as at 31 March 2007 as set out in Appendix I to this Circular and the audited balance sheet of the Target as at 31 August 2007 as set out in Appendix II to this Circular, after making pro forma adjustments relating to the Acquisition that are (i) directly attributable to the transactions; and (ii) factually supportable.

As the unaudited pro forma consolidated balance sheet of the Enlarged Group after completion of the Acquisition has been prepared for illustrative purpose only and because of its nature, it may not give a true picture of the financial position of the Enlarged Group after completion of the Acquisition as at the date to which it is made up to or at any future date.

112

UNAUDITED PRO FORMA FINANCIAL INFORMATION ON THE ENLARGED GROUP

APPENDIX III

The Group The Target as at as at Pro forma Pro forma Pro forma 31 March 31 August adjustment adjustment adjustment 2007 2007 # 2 # 3 #5 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 (Note 2) (Note) (Note 5) ASSETS Non-current assets Property, plant and equipment 357 7,208 Goodwill 1,810 – 88,587 (3) Available-for-sale financial assets 1,596 – Investment in the Target – – 90,685 (90,685) (3(i)) Interest in a jointly– controlled entity 1,247 – 5,010 7,208 Current assets Amount due from customers for contract work 38,020 – Accounts receivable 121,507 – Prepayments, deposits and other receivables 14,915 244 Loan to a shareholder 200 – Tax recoverable 606 – Amounts due from related companies – 1,479 Loan to the Target – – 181,315 (181,315) (3(i)) Pledged time deposits 5,100 – Cash and cash equivalents 32,239 559 (49,400) (3(ii)) 16,602 212,587 2,282 Total assets 217,597 9,490	The Enlarged Group HK$’000 7,565 90,397 1,596 – 1,247
	100,805
	38,020 121,507 15,159 200 606 1,479 – 5,100 –
	182,071
	282,876

113

UNAUDITED PRO FORMA FINANCIAL INFORMATION ON THE ENLARGED GROUP

APPENDIX III

The Group as at 31 March 2007 HK$’000 EQUITY Capital and reserves attributable to equity holders of the Company Share capital 12,108 Reserves 100,430 112,538 Minority interests 2,569 Total equity 115,107 LIABILITIES Non-current liabilities Loan from shareholders 37,372 Deferred tax 18 37,390 Current liabilities Cash and cash equivalents – Amount due to customers for contract work 10,064 Accounts payable 50,455 Tax payable 20 Other payables and accruals 4,561 Amounts due to shareholders – Loan from the Group – Other borrowings – Loans from shareholders – 65,100 Total liabilities 102,490 Total equity and liabilities 217,597 Net current assets/(liabilities) 147,487 Total assets less current liabilities 152,497	The Target as at Pro forma Pro forma Pro forma 31 August adjustment adjustment adjustment 2007 # 2 # 3 #5 HK$’000 HK$’000 HK$’000 HK$’000 (Note 2) (Note) (Note 5) 515 90,685 (91,200) (3(iii)) (11,972) 11,972 (3(iv)) (11,457) – 27,730 (3(v)) (11,457) – – – – 16,602 – – 5 2,670 432 – 181,315 (181,315) (3(i)) 7,352 10,488 20,947 20,947 9,490 (18,665) (11,457)	The Enlarged Group HK$’000 12,108 100,430
		112,538 30,299
		142,837
		37,372 18
		37,390
		16,602 10,064 50,455 25 7,231 432 – 7,352 10,488
		102,649
		140,039
		282,876

		79,422

		180,227

114

APPENDIX III UNAUDITED PRO FORMA FINANCIAL INFORMATION ON THE ENLARGED GROUP

(II) Unaudited Pro Forma Consolidated Income Statement of the Enlarged Group

The following is the unaudited pro forma consolidated income statement of the Enlarged Group, assuming that the Acquisition has been completed on 1 April 2006. The unaudited pro forma consolidated income statement is based on the audited consolidated income statement of the Group for the year ended 31 March 2007 as set out in Appendix I to this Circular and the audited income statement of the Target for the year ended 31 December 2006 as set out in Appendix II to this Circular, after making pro forma adjustments relating to the Acquisition that are (i) directly attributable to the transaction; and (ii) factually supportable.

As the unaudited pro forma consolidated income statement of the Enlarged Group after completion of the Acquisition has been prepared for illustrative purpose only and because of its nature, it may not give a true picture of the results of the Enlarged Group after completion of the Acquisition for the year ended to which it is made up to or for any future period.

The Group
The Target
for the
for the
year ended
year ended
Pro forma
31 March
31 December
adjustment
2007
2006
# 4
HK$’000
HK$’000
HK$’000
(Note 4)
Turnover – contract revenue
64,368
16
Contract cost
(64,508)
–
Gross (loss)/profit
(140)
16
Other revenue
2,024
1
Other income
1,223
–
Administrative expenses
(21,759)
(2,100)
Other operating expenses
(4)
–
Provision for impairment loss
on other receivables
–
(275)
Loss from operating activities
(18,656)
(2,358)
Finance costs
(2,528)
–
Loss before tax
(21,184)
(2,358)
Taxation
48
–
Loss for the year
(21,136)
(2,358)
Attributable to:
Equity holders of the Company
(20,411)
(2,358)
825
Minority interests
(725)
–
(825)
(21,136)
(2,358)

The
Enlarged
Group
HK$’000
64,384
(64,508)
(124)
2,025
1,223
(23,859)
(4)
(275)
(21,014)
(2,528)
(23,542)
48
(23,494)
(21,944)
(1,550)
(23,494)

115

UNAUDITED PRO FORMA FINANCIAL INFORMATION ON THE ENLARGED GROUP

APPENDIX III

(III) Unaudited Pro Forma Consolidated Cash Flow Statement of the Enlarged Group

The following is the unaudited pro forma consolidated cash flow statement of the Enlarged Group, assuming that the Acquisition has been completed on 1 April 2006. The unaudited pro forma consolidated cash flow statement is based on the audited consolidated cash flow statement of the Group for the year ended 31 March 2007 as set out Appendix I to this Circular and the audited cash flow statement of the Target for the year ended 31 December 2006 as set out in Appendix II to this Circular, after making pro forma adjustments relating to the Acquisition that are (i) directly attributable to the transaction; and (ii) factually supportable.

As the unaudited pro forma consolidated cash flow statement of the Enlarged Group after completion of the Acquisition has been prepared for illustrative purpose only and because of its nature, it may not give a true picture of the cash flows of the Enlarged Group after completion of the Acquisition for the year ended to which it is made up to or for any future period.

The Group for the year ended 31 March 2007 HK$’000 Cash flows from operating activities Loss before tax (21,184) Adjustments for: Finance costs 2,528 Interest income (1,539) Depreciation 171 Exchange difference 429 Property, plant and equipment written off 26 Loss on disposal of investment properties 229 Gain on disposal of property, plant and equipment (49) Gain on disposal of financial assets at fair value through profit or loss (79) Reversal of accounts payable (1,095) Provision for impairment loss on accounts receivables 4 Provision for impairment loss on other receivables – Operating loss before working capital changes (20,559) Increase in amount due from a jointly-controlled entity (104) Decrease in accounts receivable 7,768	The Target for the year ended Pro forma Pro forma 31 December adjustment adjustment 2006 # 2 # 3 HK$’000 HK$’000 HK$’000 (Note 2) (Note 3) (2,358) – (1) 313 – – – – – – – 275 (1,771) – –	The Enlarged Group HK$’000 (23,542) 2,528 (1,540) 484 429 26 229 (49) (79) (1,095) 4 275 (22,330) (104) 7,768

116

UNAUDITED PRO FORMA FINANCIAL INFORMATION ON THE ENLARGED GROUP

APPENDIX III

The Group for the year ended 31 March 2007 HK$’000 Decrease/(increase) in prepayments 148 Decrease/(increase) in deposits and other receivables 247 Decrease in amount due from customers for contract work 3,551 Increase in amounts due from related companies – Decrease in accounts payable (5,431) Increase in other payables and accruals 711 Decrease in amount due to customers for contract work (4,088) Increase in amounts due to shareholders – Increase in loan to the Target – Cash (utilised in)/generated from operations (17,757) Interest received 1,539 Hong Kong profits tax refunded 68 Net cash (outflow)/inflow from operating activities (16,150) Cash flows from investing activities Purchase of property, plant and equipment (38) Purchase of available-for-sale financial assets (1,323) Purchase of financial assets at fair value through profit or loss (368) Proceeds from disposal of financial assets at fair value through profit or loss 447 Proceeds from disposal of property, plant and equipment 58 Proceeds from disposal of investment properties 2,000 Increase in investment in the Target – Acquisition of subsidiaries – Net cash inflow/(outflow) from investing activities 776	The Target for the year ended Pro forma Pro forma 31 December adjustment adjustment 2006 # 2 # 3 HK$’000 HK$’000 HK$’000 (Note 2) (Note 3) (15) (275) – (247) – 961 – 4,077 – (181,315) 181,315 2,730 1 – 2,731 (3,233) – – – – – – (90,685) 90,685 – (49,400) (3,233)	The Enlarged Group HK$’000 133 (28) 3,551 (247) (5,431) 1,672 (4,088) 4,077 – (15,027) 1,540 68 (13,419) (3,271) (1,323) (368) 447 58 2,000 – (49,400) (51,857)

117

UNAUDITED PRO FORMA FINANCIAL INFORMATION ON THE ENLARGED GROUP

APPENDIX III

Cash flows from financing activities Proceeds from issue of shares Loans from shareholders Repayment of loan from shareholders Loan from the Group Net cash (outflow)/inflow from financing activities Net (decrease)/increase 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 Analysis of balances of cash and cash equivalents Cash and bank balances	The Group for the year ended 31 March 2007 HK$’000 6,019 4 (10,000) – (3,977) (19,351) 51,590 32,239 32,239	The Target for the year ended Pro forma Pro forma 31 December adjustment adjustment 2006 # 2 # 3 HK$’000 HK$’000 HK$’000 (Note 2) (Note 3) – 90,685 (90,685) – – – 181,315 (181,315) – (502) 515 13 13 (49,400)	The Enlarged Group HK$’000 6,019 4 (10,000) – (3,977) (69,253) 52,105 (17,148) (17,148)

118

APPENDIX III UNAUDITED PRO FORMA FINANCIAL INFORMATION ON THE ENLARGED GROUP

(IV) NOTES ON THE PRO FORMA ADJUSTMENT TO THE UNAUDITED PRO FORMA FINANCIAL INFORMATION ON THE ENLARGED GROUP

On 24 September 2007, Top Asian Limited, a wholly-owned subsidiary of the Company entered into an agreement and a supplemental agreement with Mr. Wang Xue Qin and Mr. Wu Qi (the “Vendors”) for investment in the Target. The total consideration for the Acquisition is to be satisfied by a combination of internal cash resources, bank borrowings, shareholders’ loan, convertible notes, placing of new shares and other possible means of financing.

Top Asian Limited agreed to invest an aggregate of approximately HK$321,400,000 (equivalent to RMB312,000,000) by ways of:

(i) subscribing for the new registered capital of the Target in the amount of approximately HK$90,685,000 (equivalent to RMB88,000,000);
(ii) providing a shareholders’ loan to the Target in the amount of approximately HK$181,315,000 (equivalent to RMB176,000,000); and
(iii) acquiring an additional 10% shareholding interest in the Target in the amount of approximately HK$49,400,000 (equivalent to RMB48,000,000) from the Vendors within a period of 2 years commencing from the date of the signing of the agreement.

Upon the completion of the Acquisition, the Target will be owned as to 65% (including the additional acquisition of 10% shareholding interest) by the Group. The Target is, therefore, considered by the Company’s directors as a subsidiary of the Company because the Target will be controlled by the Group after completion.

The pro forma adjustment on investment in the Target and share capital of approximately HK$90,685,000 represented the subscription of new registered capital of the Target as described in Note 1(i) above.

The pro forma adjustment on loan to the Target and loan from the Group of approximately HK$181,315,000 represented the shareholder’s loan to the Target as described in Note 1 (ii) above.

Cash outflow of approximately HK$90,685,000 and HK$181,315,000 was recognised in the unaudited pro forma consolidated cash flow statement, which represented the cash paid for subscription of the new registered capital of the Target and the shareholder’s loan to the Target respectively.

The pro forma adjustment on the unaudited pro forma consolidated balance sheet is to reflect the effect of Acquisition as if the Acquisition had taken place on 31 March 2007. Goodwill of approximately HK$88,587,000 arising from the Acquisition was derived from the aggregate of subscription of new registered capital of the Target and the consideration of acquiring 10% shareholding interest of the Target of approximately HK$90,685,000 and HK$49,400,000 respectively, minus the 65% net assets of the Target of approximately HK$51,498,000. The net assets of the Target was the aggregate of the net liabilities of the Target as at 31 August 2007 of approximately HK$11,457,000 and the subscription of new registered capital of the Target by the Group of approximately HK$90,685,000. For the purpose of preparing the unaudited pro forma financial information, the consideration for Acquisition and the carrying values of the net assets of the Target as per the Accountants’ Report as set out in Appendix II of the Circular are taken to be their fair values. No impairment of goodwill is required.

119

UNAUDITED PRO FORMA FINANCIAL INFORMATION ON THE ENLARGED GROUP

APPENDIX III

(i) The pro forma adjustment on investment in the Target, loan to the Target and loan from the Group of approximately HK$90,685,000, HK$181,315,000 and HK$181,315,000 respectively in the unaudited pro forma consolidated balance sheet represented the elimination of investment in the Target and the loan to the Target upon consolidation.
(ii) The pro forma adjustment on cash and cash equivalents of approximately HK$49,400,000 in the unaudited pro forma consolidated balance sheet represented the consideration of acquiring 10% shareholding interest of the Target.
(iii) The pro forma adjustment on share capital in the unaudited pro forma consolidated balance sheet of approximately HK$91,200,000 represented the elimination of the Target registered capital upon consolidation.
(iv) The pro forma adjustment on reserve in the unaudited pro forma consolidated balance sheet of approximately HK$11,972,000 represented the elimination of pre-acquisition reserve of the Target.
(v) The pro forma adjustment on minority interests in the unaudited pro forma consolidated balance sheet of approximately HK$27,730,000 represented the 35% net assets of the Target attributable to minority shareholders.

On completion, the fair value of the consideration and the net identifiable assets and liabilities of the Target will have to be assessed. As a result of assessment, the amount of goodwill may be different from the 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 may be different from that presented above.

The pro forma adjustments in the unaudited pro forma consolidated cash flow statement included HK$90,685,000 and HK$181,315,000 represented the elimination of investment in the Target and loan to the Target upon consolidation respectively and the cash outflow of approximately HK$49,400,000 for the consideration of acquiring 10% shareholding interest of the Target.

The pro forma adjustment on minority interests in the unaudited pro forma consolidated income statement of approximately HK$825,000 represented the 35% of loss for the year of the Target attributable to minority shareholders.
The adjustment included in the pro form consolidated balance sheet represented the reclassification of the shortfall of cash and cash equivalents to current liabilities.
After making the above adjustments, the unaudited pro forma consolidated balance sheet showed a shortfall cash and cash equivalents of approximately HK$16,602,000. The shortfall will be satisfied by a combination of internal cash resources, bank borrowings, shareholders’ loan, convertible notes, placing of new shares and other possible means of financing.
The exchange rate on translating the financial information of the Target from RMB to HK$ is approximately RMB1 equals to HK$1.03.

120

VALUATION REPORT ON THE TARGET

APPENDIX IV

The following is the text of a letter prepared for the purpose of incorporation in this circular received from BMI Appraisals Limited, an independent valuer, in connection with its valuation of the market value as at 31 August 2007 of a 100% equity interest in 北京鐵聯通達廣告傳媒有限公司 .

BMI Appraisals Limited 中和邦盟評估有限公司

Suite 11-18, 31/F., Shui On Centre, 6-8 Harbour Road, Wanchai, Hong Kong 香港灣仔港灣道6-8號瑞安中心3111-18室 Tel電話：(852) 2802 2191 Fax傳真：(852) 2802 0863 Email電郵：[email protected] Website網址：www.bmintelligence.com

2 November 2007

The Directors

Wing Hong (Holdings) Limited 13th Floor, OTB Building Nos. 259-265 Des Voeux Road Central Hong Kong

Dear Sirs,

INSTRUCTIONS

We refer to the instructions from Wing Hong (Holdings) Limited (referred to as the “Company”) for us to provide our opinion on the market value of a 100% equity interest in 北京鐵聯通達廣告傳媒有限公司 (referred to as the “Target”), a company incorporated in the People’s Republic of China (the “PRC”) with limited liability. The date of valuation is 31 August 2007.

This report describes the background of Target, brief industry overview and the basis of valuation & assumptions. It also explains the valuation methodologies utilized and presents our conclusion of value.

PURPOSE OF VALUATION

We understand that the purpose of our valuation is to express an independent opinion of the market value of a 100% equity interest in Target as at 31 August 2007 for your public documentation purposes only.

BASIS OF VALUATION

Our valuation has been carried out on the basis of market value. Market value is defined as “ the estimated amount for which an asset 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 ”.

121

VALUATION REPORT ON THE TARGET

APPENDIX IV

BACKGROUND OF THE TARGET

The Target was established and commenced business on 16 December 2005 under the PRC laws. The Target engages in media sales and management services for the multi-media business, which includes the operation of media advertising spaces as well as the provision of rail transit value-added services through LCD displays located at the ticketing offices of each railway station in the PRC.

The Target has obtained absolute nationwide exclusive rights for media advertising broadcasting in the LCD displays placed in front of the ticket selling counters in the railway stations in the PRC for 5 years. Such rights will be automatically renewed every 5 years and up to a period of 15 years. The Target is entitled to the entire amount of advertising profit under such rights. However, the Target is obliged to, including, but not limited to, use a specific LCD display system for RMB10,000 per display system and to share a quarter of the LCD screen for displaying details of tickets sold, including the origin, the destination and the price of the ticket, etc.

INDUSTRY OVERVIEW

China has grown to be one of the world’s largest advertising markets under the drive of continued economic growth. The amount spent in advertising in 2004 is more than 1,000 times of that in 1981. Further, the ratio of ad-rate against GDP rose from 0.024% to 0.93% in the said period. China is expected to become the world’s second largest advertising market next to U.S.A. within three years.

In the first half of 2006, China’s advertising revenue climbed to RMB155.5 billion, increased by 18% over the same period in 2005. In particular, cosmetics and bathroom accessories industry continued to top the advertising thrown-in list with RMB25.6 billion spent on advertising, followed by drug, food and beverage industry. Yet, beverage industry showed a highest growth rate with an annual increase of 55%.

From year 2007, the global advertising market is expected to keep an annual growth rate of 5% or so. In particular, the emerging markets and the online advertising market will increase at a double-digit rate. Currently, the online advertising market demonstrates the most spectacular growth with an annual growth rate of 24.5% in 2007. The annual growth rate of the Chinese advertising market, as estimated, will be up to 19% in the coming years. In comparison with the strong momentum shown in the emerging markets like China, there is only a slow growth in the traditional advertising and media markets in the western developed countries.

In addition to the driving force from the sustainable and strong economic growth in China, the advertising industry will also be benefited from the 2008 Olympic Games and the 2010 World Expo. It is expected that there are promising prospects for the Chinese advertising industry.

Since the opening-up of the Chinese advertising market to the world on 10 December 2005, the potential large Chinese advertising market has attracted investments from many multi-national advertising groups. With strong capital, scientific management methods, experienced operation, talented human resources and diversified business portfolio, the multi-national companies have brought great challenges to the domestic advertising companies.

122

VALUATION REPORT ON THE TARGET

APPENDIX IV

SOURCE OF INFORMATION

For the purpose of our valuation, we have been furnished with the financial and operational data related to the Target, which was given by the senior management of the Company.

The business valuation of the Target required consideration of all pertinent factors affecting the economic benefits of the Target and its abilities to generate future investment returns. The factors considered in the valuation include, but are not limited to, the following:

The business nature of the Target;
The forecasted financial information of the Target;
The specific economic environment and competition for the market in which the Target operates or will operate;
Market-derived investment returns of entities engaged in similar lines of business; and
The financial and business risks of the Target, including the continuity of income and the projected future results.

SCOPE OF WORKS

In the course of our valuation work for the Target, we have conducted the following steps to evaluate the reasonableness of the adopted bases and assumptions provided by the senior management of the Company:

Obtained financial and operational information of the Target;
Performed market research and obtained statistical figures from public sources;
Examined all relevant bases and assumptions of both the financial and operational information of the Target, which were provided by the senior management of the Company;
Prepared a business financial model to derive the indicated value of the Target; and
Presented all relevant information on the background of the Target, valuation methodology, source of information, scope of works, major assumptions, comments and our conclusion of value in this report.

VALUATION ASSUMPTIONS

Given the changing environment in which the Target operates or will operate, a number of assumptions have to be established in order to sufficiently support our concluded opinion of value of the Target. The major assumptions adopted in our valuation were:

There will be no major changes in the existing political, legal, and economic conditions in the jurisdiction where the Target operates or will operate;

123

VALUATION REPORT ON THE TARGET

APPENDIX IV

There will be no major changes in the current taxation law in the jurisdiction where the Target operates or will operate, that the rates of tax payable remain unchanged and that all applicable laws and regulations will be complied with;
The financial information in respect of the Target has been prepared on a reasonable basis, reflecting estimates that have been arrived at after due and careful considerations by the senior management of the Company;
Exchange rates and interest rates will not differ materially from those presently prevailing; and
Economic conditions will not deviate significantly from economic forecasts.

VALUATION METHODOLOGY

Three generally accepted valuation methodologies have been considered in valuing the Target. They are the market approach, the cost approach and the income approach.

The market approach provides indications of value by comparing the subject to similar businesses, business ownership interests, and securities that have been sold in the market.

The cost approach provides indications of value by studying the amounts required to recreate the business for which a value conclusion is desired. This approach seeks to measure the economic benefits of ownership by quantifying the amount of fund that would be required to replace the future service capability of the business.

The income approach is the conversion of expected periodic benefits of ownership into an indication of value. It is based on the principle that an informed buyer would pay no more for the project than an amount equal to the present worth of anticipated future benefits from the same or a substantially similar business with a similar risk profile.

We have considered that the income approach is not appropriate to value the Target, as there are insufficient historical and forecasted financial data of the Target. The cost approach is also regarded inadequate in this valuation, as this approach does not take future growth potential of the Target into consideration. Thus, we have determined that the market approach is the most appropriate valuation approach for this valuation.

During the valuation, we have selected four listed companies that had similar business operation with the Target and determined their price multiples including “enterprise value to sales”, “price to earnings” and “price to book value”. Then we have applied these price multiples to the related financial data of the Target and determined our concluded value of the Target. Since the book value and the profit of the Target as at the date of valuation were not available, we have determined that “enterprise value to sales” be the most appropriate price multiple to estimate our concluded value based on the projected sales of RMB1,022 million in 2012.

124

VALUATION REPORT ON THE TARGET

APPENDIX IV

The details of the four listed companies selected are as follows:

Company
(Stock Code)
Business
Clear Channel Outdoor
The company offers advertising
Holdings, Inc.
opportunities through billboards, street
(CCO US)
furniture displays, transit displays, and
other out-of-home advertising displays.
Clear Media Limited
The company operates outdoor advertising
(100 HK)
in China by mainly installing bus shelters
in cities in exchange for the right to sell
advertising space on these bus shelters.
Roadshow Holdings Limited
The company operates out-of-home media
(888 HK)
sales business. The company markets
advertising spaces to the exterior and
interior of transit vehicles, shelters,
and outdoor signage.
Societe Generale D’Affichage
The company offers poster and billboard
(AFFN SW)
advertising at railway stations, post offices,
sports stadiums and shopping centers.
Median:

Enterprise
value to
Sales Ratio
Beta
4.05
0.675
5.61
0.505
1.51
0.404
2.50
0.350
3.28

We considered the “enterprise value to sales” multiple in our samples quite concentrate on the mean. In particular, 50% of our samples fall within one standard deviation of the mean and, further, the most extreme case in our sample is only 1.22 standard deviation from the mean. Practically, there are no outliers in our samples. Besides, our choice of using median has already eliminated the effect of possible outliers, if any. As a result, we considered the “enterprise value to sales” multiple method is an appropriate valuation approach for this valuation.

The “enterprise value to sales” multiple that we have adopted is 3.28, being the median “enterprise value to sales” multiple of the four listed companies listed above. The projected sales in 2012 of the Target were first discounted back to the date of valuation with a calculated discount rate. The market value of a 100% equity interest in the Target was then arrived from multiplying the discounted projected sales by the “enterprise value to sales” multiple.

125

VALUATION REPORT ON THE TARGET

APPENDIX IV

The discount rate is the sum of the risk-free rate and a related beta times the market risk premium. The formula as adopted is as follows for illustration purpose:

E(Ri) = Rf + β im (E(Rm) - Rf)

Where:

E(Ri) = the expected return on capital

R = the risk-free rate of interest f

β im = the sensitivity of the asset returns to the market returns

E(Rm) = the expected return of the market

E(Rm) - Rf = the market premium or risk premium

We have adopted the yield rate of the 5-year Chinese government bond as at the date of valuation as the risk-free rate, which is 3.71%. The beta has been determined as the weighted-average of betas of the four selected listed companies. In working out the weighted-average beta, we have taken into consideration the differences in market capitalization of each selected company. The estimated beta for the Target is 0.641. Besides, the market risk premium adopted is 9.10%.

In respect of non-systematic risks, we have considered the size difference (a company-specific risk) between the Company and the selected comparable companies (with reference to “Risk Premia over Time Report: 2006”, published by Ibbotson Associates). The size premium adopted is 6.36%. Also, since the Target is still at an early stage of its operation, an early stage risk of 12.00% is added. As a result, the discount rate is calculated as 27.90%.

The concept of marketability deals with the liquidity of an ownership interest, that is, how quickly and easily it can be converted into cash if the owner chooses to sell. The lack of marketability discount reflects the fact that there is no ready market for shares in a closely held company. Ownership interests in closely held companies are typically not readily marketable compared to similar interests in publicly listed companies. Therefore, a share of stock in a privately held company is usually worth less than an otherwise comparable share in a publicly listed company. In the valuation, 46% (with reference to “Fair Value”, published by Banister Financials, Inc.) have been used as the discount for lack of marketability.

VALUATION COMMENTS

For the purpose of this valuation and in arriving at our opinion of value, we have referred to the information provided by the senior management of the Company to estimate the value of the Target. We have also sought and received confirmation from the Company that no material facts have been omitted from the information supplied.

To the best of our knowledge, all data set forth in this report are true and accurate. Although gathered from reliable sources, no guarantee is made nor liability assumed for the accuracy of any data, opinions, or estimates identified as being furnished by others, which have been used in formulating this analysis.

126

VALUATION REPORT ON THE TARGET

APPENDIX IV

REMARKS

Unless otherwise stated, all money amounts stated are in Renminbi (RMB).

CONCLUSION OF VALUE

Our conclusion of value is based on accepted valuation procedures and practices that rely substantially on the use of numerous assumptions and the consideration of a lot of uncertainties, not all of which can be easily ascertained or quantified.

Further, whilst the assumptions and consideration of such matters are considered by us to be reasonable, they are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond the control of the Company, the Target or us.

Based on our investigation and analysis outlined in this report, it is our opinion that the market value of a 100% equity interest in the Target as at 31 August 2007 was RMB487,000,000 (RENMINBI FOUR HUNDRED AND EIGHTY SEVEN MILLION ONLY).

We hereby certify that we have neither present nor prospective interest in the Company, the Target or the value reported.

Yours faithfully, For and on behalf of BMI APPRAISALS LIMITED

Marco T.C. Sze

Dr. Tony Cheng

B.Eng(Hon), MBA(Acct), CFA BSc, MUD, MBA(Finance), MSc(Eng), PhD(Econ), Director MHKIS, MCIArb, AFA, SIFM, FCIM, MASCE, MIET, MIEEE, MASME, MIIE Director

Notes:

Mr. Marco Sze holds a Master’s Degree of Business Administration in Accountancy from the City University of New York – Baruch College and is a holder of Chartered Financial Analyst. He has about 3 years’ experience in valuing similar assets or companies engaged in similar business activities as that of the Target in Hong Kong, China and the Asia-Pacific Region.
Dr. Tony Cheng is a member of the Hong Kong Institute of Surveyors (General Practice), a member of the American Society of Civil Engineers, a member of the American Society of Mechanical Engineers and a member of Institute of Industrial Engineers (U.K.). He has about 16 years’ experience in valuing similar assets or companies engaged in similar business activities as that of the Target worldwide.

127

GENERAL INFORMATION

APPENDIX V

1. RESPONSIBILITY STATEMENT

This circular includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Group. The Directors jointly and severally accept full responsibility for the accuracy of the information with regard to the Group contained in this circular and confirm, having made all reasonable enquiries, that to the best of their knowledge, opinions expressed in this circular have been arrived at after due and careful consideration and there are no other facts the omission of which would make any statement with regard to the Group contained in this circular misleading.

2. DISCLOSURE OF INTERESTS

(a) Director’s interests and short positions in Shares and underlying shares of the Company and its associated corporations

As at the Latest Practicable Date, the interests or short positions of the Directors in the shares and 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 or short positions which they were taken or deemed to have under such provisions of the SFO), or the Model Code for Securities Transactions by Directors of Listed Companies or which were required to be entered into the register required to be kept under Section 352 of the SFO were as follows:

Long position in the Shares and underlying Shares:

				Total number
	Company/			of Shares
	name of			interested	Approximate
	associated			or deemed	percentage of
Name of Director	corporation	Capacity		to be interested	shareholdings
					(Note 1)
Mr. Hui Chi Yung	Company	Settlor/Founder		60,811,856	50.22% (L)
		of the Wing		Shares
		Hong Trust
		(Note 2)
	Rich Place	Settlor/Founder		1 ordinary	100% (L)
	Investment	of the Wing		share
	Limited	Hong Trust
		(Note 3)
Mr. Yiu Kai	Company	Corporate	6,805,344 Shares		5.62% (L)
Yeuk Raphael		interest
		(Note 4)
	Beatrice	Beneficial		96,000	10% (L)
	Construction	owner		ordinary shares
	Limited

128

GENERAL INFORMATION

APPENDIX V

Total number Company/ of Shares name of interested Approximate associated or deemed percentage of Name of Director corporation Capacity to be interested shareholdings (Note 1) Mr. Hui Kau Mo Company Settlor/Founder 60,811,856 50.22% (L) of the Wing Shares Hong Trust (Note 2) Rich Place Settlor/Founder 1 ordinary 100% (L) Investment of the Wing share Limited Hong Trust (Note 3)

Notes:

The letter “L” denotes the Directors’ long position in each securities.
These shares are held by Rich Place Investment Limited which is wholly owned by RBTT Trust Corporation (“RBTT”). RBTT is the trustee of the Wing Hong Trust, a discretionary trust whose beneficiaries are the family members of Mr. Hui Kau Mo, Mr Hui Chi Yung is one of the beneficiaries of the Wing Hong Trust and a son of Mr. Hui Kau Mo.
The share is held by RBTT. RBTT is the trustee of the Wing Hong Trust, a discretionary trust whose beneficiaries are the family members of Mr. Hui Kau Mo.
These shares are held by Million Honest Limited, the entire issued share capital of which is held by Mr. Yiu Kai Yeuk, Raphael.

Save as disclosed above, as at the Latest Practicable Date, none of the Directors had any interests or short positions in any securities of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) which were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests or short positions which they were taken or deemed to have under such provisions of the SFO), or the Model Code for Securities Transactions by Directors of Listed Companies or which were required to be entered into the register required to be kept under Section 352 of the SFO.

(b) Interests and short positions of substantial Shareholders and other persons required to be disclosed under the SFO

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

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GENERAL INFORMATION

APPENDIX V

Long position in the Shares:

			Approximate
Name of substantial		Number of	percentage of
Shareholders	Capacity	Shares held	shareholding
			%
			(Note 1)
The Wing Hong Trust	Beneficial owner	60,811,856 Shares	50.22 (L)
	(Note 2)
Chin Ivan	Beneficial owner	10,492,000 Shares	8.67 (L)
Million Honest Limited	Beneficial owner	6,805,344 Shares	5.62 (L)
	(Note 3)

Notes:

The letter “L” denotes the Directors’ long position in each securities.
These shares are held by Rich Place Investment Limited which is wholly owned by RBTT. RBTT is the trustee of the Wing Hong Trust, a discretionary trust whose beneficiaries are the family members of Mr. Hui Kau Mo.
The entire issued share capital of Million Honest Limited is beneficial owned by Mr. Yiu Kai Yeuk, Raphael.

Save as disclosed above, the Directors and chief executive of the Company were not aware of any persons who had an interest or short position in the securities of the Company which would fall to be disclosed to the Company and the Stock Exchange under the provisions of Divisions 2 and 3 of Part XV of the SFO as at the Latest Practicable Date.

3. LITIGATION

The Group is involved in the following litigation cases as at the Latest Practicable Date:

(a) In the normal course of business, the Group is subject to claims for liquidated damages by relevant employers due to delay in completion of certain phases of construction contracts. The Group has filed extension of time claims.
(b) On 7 August 2002, a High Court action had been commenced by a subcontractor against a subsidiary of the Group in respect of (i) a claim for subcontracting fees and material costs of approximately HK$31,300,000; and (ii) a compensation claim for approximately HK$191,200,000 for the improper termination of a subcontracting contract. On 13 September 2002, an agreement was reached between the relevant subsidiary of the Group and the subcontractor resulting in the High Court action being withdrawn and all the dispute being referred to arbitration. In the statement of claim for the arbitration, the subcontractor revised the claim for subcontracting fees and material costs and compensation claim to approximately HK$42,600,000 and HK$84,400,000, respectively. On 9 July 2005, a writ of summons was issued and the proceedings were transferred to the Court of First Instance. The Subcontractor further revised the claim for the subcontracting fees and material costs and compensation claim to approximately HK$56,000,000 and HK$278,100,000 respectively.

As at the Latest Practicable Date, no decision had been made in relevant the arbitration and court proceedings.

130

GENERAL INFORMATION

APPENDIX V

(c) On 13 May 2004, 19 August 2004, 23 August 2005, 7 February 2006, 4 September 2006 and 19 July 2007, two District Court actions and four High Court actions had commenced by six employees against subsidiaries of the Group and other respondents in respect of the claims for employees’ compensation under common law for personal injuries sustained by the employees in accidents arising in and out of the course of their employments and personal injury, loss and damage arising out of negligence.

Settlement has not been reached and no judgement have been made against the subsidiaries of the Group in respect of above actions.

(d) On 13 September 2004, a subsidiary of the Group received a notice of arbitration from a nominated subcontractor in respect of a claim against the subsidiary of the Group in relation to payment being withheld in respect of subcontracting work delays and defects caused by the nominated subcontractor regarding works performed in a residential development project in Kowloon Tong, Hong Kong. The amount of claim was approximately HK$26,000,000.

On 5 May 2005, the subsidiary of the Group and the nominated subcontractor agreed to enter into a moratorium period of six months in relation to the arbitration. On 13 April 2006, the subsidiary of the Group and the nominated subcontractor further agreed to suspend the arbitration proceedings for another three months subject to the rights to re-active the proceedings upon three days written notice to the subsidiary of the Group. As at the Latest Practicable Date, the subsidiary has not received any notice to re-activate the case for the relevant subcontractor and there has been no further development on this case.

(e) On 26 July 2005, a High Court action was commenced by a subcontracted party of a subcontractor of the Group (the “Subcontracted Party”) against a subsidiary of the Group and the subcontractor, which is in liquidation, in respect of a claim for subcontracting fees and material costs of approximately HK$20,500,000 relating to a maintenance term contract. On 25 April 2006, the subcontracted party substantially revised its statement of claim and the total amount of claim was revised to approximately HK$14,241,000.
(f) An accounts receivable in a subsidiary of the Enlarged Group of approximately HK$120,459,000 recorded based on architect’s certificates, currently withheld by a major customer of the Enlarged Group with respect to disputes on claims arising from liquidated damages and alleged environmental related damages in relation to main contract work for a residential development project carried out in Kowloon Tong, Hong Kong, and the claim made by the Enlarged Group on extension of time entitlement by the Enlarged Group. The receivable was certified by the architects of the residential development project.

131

GENERAL INFORMATION

APPENDIX V

alleged environmental related damages claimed by the major customers and that the final amount being claimed, if any, would not have a material impact to the Enlarged Group’s financial position.

(g) On 23 August 2005, a subsidiary of the Group commenced arbitration proceedings against a subcontractor of the Group to recover an amount of approximately HK$12,886,000 due from the subcontractor, representing the costs incurred by the subsidiary on behalf of the subcontractor due to the subcontractor’s unsatisfactory performance in relation to a civil engineering works contract granted by the Civil Engineering Department of the HKSAR Government to the subsidiary. The subcontractor counterclaimed the subsidiary outstanding payment in the sum of HK$2,531,000. The parties had exchanged claims submission and there has been no further development on this case.
(h) On 7 December 2006, a subsidiary of the Group received a notice of arbitration from a subcontractor in respect of a claim against a subsidiary of the Group in respect of subcontracting works performed in a residential development project in Kowloon Tong, Hong Kong. The amount of claim was approximately HK$5,629,000. On 24 February 2007, the subsidiary of the Group sought to counterclaim against the subcontractor for approximately HK$8,062,000. As at the Latest Practicable Date, no ruling had been made in relation to the arbitration.
(i) On 28 March 2007, a subsidiary of the Group received a notice of arbitration from a nominated subcontractor in respect of a claim against the subsidiary of the Group in respect of subcontracting works performed in a residential development project in Kowloon Tong, Hong Kong. The amount of claim was approximately HK$3,253,000. On 29 June 2007, the subsidiary of the Group sought to counterclaim against the subcontractor for approximately HK$232,000 together with an order for indemnity for a sum amounting to approximately HK$4,389,000. As at the Latest Practicable Date, no ruling had been made in the arbitration. Saved as disclosed above as at the Latest Practicable Date, there is no litigation or arbitration of material importance pending or threatened against the Group.

As at the Latest Practicable Date, save as disclosed, none of the Company or any of its subsidiaries was engaged in any litigation or arbitration of material importance and there is no litigation or arbitration of material importance known to the Directors to be pending or threatened by or against the Company or any of its subsidiaries.

4. COMPETING INTERESTS

To the best knowledge of the Directors, none of the Directors and their respective associates are considered to have any interest in any business, which competes or is likely to compete with the business of the Group, other than those businesses where the Directors were appointed as directors to represent the interests of the Company and/or the Group.

No Director had any interest, direct or indirect, in any assets which had been, since the date to which the latest published audited accounts of the Company were made up, acquired or disposed of by or leased to or proposed to be acquired or disposed of by or leased to any member of the Group.

Save for the subscription agreement dated 16 August 2007 entered into between the Company and Rich Place Investment Limited pursuant to which the Company has agreed to issue the series of zero coupon convertible notes in aggregate principal amount of up to HK$148,000,000 to Rich Place Investment

132

GENERAL INFORMATION

APPENDIX V

Limited and its associates, there are no contracts or arrangements subsisting as at the Latest Practicable Date in which a Director is materially interested or which is significant in relation to the business of the Group.

5. MATERIAL CONTRACTS

In the two years immediately preceding the date of this circular, the following contract (not being contracts entered into in the ordinary course of business) were entered into by the Company or its subsidiaries which are or may be material:

The placing agreement and subscription agreement dated 16 August 2007 entered into between the Company and President Securities (Hong Kong) Limited, and the Company and Rich Place Investment Limited respectively. Pursuant to which the Company has agreed to issue a series of zero coupon convertible notes in aggregate principal amount of up to HK$296,000,000.

6. SERVICE CONTRACTS

Each of the executive Directors has entered into a service agreement with the Company for an initial term of three years commencing from 1 September 2004. Each of the executive Directors is entitled to the respective basic salaries set out below (subject to an annual increment after each completed year of service at a rate to be determined at the sole and absolute discretion of the board of Directors). In addition, the executive Directors are also entitled to a discretionary bonus as the board of Directors may in its absolute discretion determine having regard to the performance of the executive Director and the operating results of the Group in respect of any financial year of the Company. An executive Director may not vote on any resolution of the Directors regarding the amount of the bonus payable to him. Furthermore, the executive Directors are entitled to all reasonable medical expenses as provided under the Group’s medical benefits scheme. In addition, the executive Directors may, at the sole and absolute discretion of the board of Directors, be eligible to participate in any share option scheme from time to time adopted by the Company in accordance with the terms and conditions of such share option scheme. The current basic monthly salaries of the executive Directors are as follows:

Name	Amount
	HK$
Mr. Hui Chi Yung	68,800
Mr. Yiu Kai Yeuk, Raphael	139,800

The independent non-executive Directors have been appointed for a term of 1 year commencing from 1 September 2006. The Company intends to pay a director’s fee of HK$20,000 per annum to each of the independent non-executive Directors. Save for the Director’s fee, none of the independent non-executive Director is expected to receive any other remuneration for holding their office as an independent non-executive Director.

Apart from the foregoing, no Director proposed for re-election at the forthcoming annual general meeting has a service contract with the Company which is not determinable by the Company within one year without payment of compensation, other than statutory compensation.

133

GENERAL INFORMATION

APPENDIX V

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

7. PROCEDURES TO DEMAND A POLL BY THE SHAREHOLDERS AT THE EGM

Pursuant to Article 66 of the existing articles of association of the Company, at any meeting of shareholders a resolution shall be decided on a show of hands unless a poll is required by the Listing Rules or (before or after any vote by show of hands) a poll is demanded:

(a) by the chairman of the meeting; or
(b) by at least three Shareholders present in person or in the case of a Shareholder being a corporation by its duly authorized representative or by proxy for the time being entitled to vote at the meeting; or
(c) by a Shareholder or Shareholders present in person or in the case of a Shareholder being a corporation by its duly authorized representative or by proxy and representing in the aggregate not less than one-tenth of the total voting rights of all Shareholders having the right to vote in the meeting; or
(d) by a Shareholder or Shareholders present in person or in case of a Shareholder being a corporation by its duly authorized representative or by proxy and holdings Shares in the Company conferring a right to vote at the meeting being Shares on which an aggregate sum has been paid up equal to not less than one-tenth of the total sum paid up on all Shares conferring the rights; or
(e) if required by the Listing Rules, by any Director or Directors who, individually or collectively, holding proxies in respect of the Shares representing five per cent. (5%) or more of the total voting rights at such meeting.

Unless a poll be so demanded, a declaration by the chairman that a resolution has on a show of hands been carried unanimously, or carried by a particular majority, or lost, and an entry to that effect in the book containing the minutes of the proceedings of the Company shall be conclusive evidence of the fact without proof of the number or proportion of the votes recorded in favour of or against such resolution.

The demand for a poll may be withdrawn by the person who makes such demand.

134

GENERAL INFORMATION

APPENDIX V

8. EXPERTS

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

Name Qualification HLB Hodgson Impey Cheng Chartered Accountants Certified Public Accountants BMI Appraisals Limited Independent professional valuer

As at the Latest Practicable Date, each of HLB Hodgson Impey Cheng and BMI did not have any shareholding in any member of the Enlarged Group and did not have any right, whether legally enforceable or not, to subscribe for or to nominate persons to subscribe for securities in any member of the Enlarged Group.

As at the Latest Practicable Date, each of HLB Hodgson Impey Cheng and BMI did not have any direct or indirect interest in any assets which have been, since 31 March 2007 (the date to which the latest published audited consolidated accounts of the Group were made up), acquired or disposed of by or leased to any member of the Enlarged Group, or are proposed to be acquired or disposed of by or leased to any member of the Enlarged Group.

9. CONSENT

Each of HLB Hodgson Impey Cheng and BMI has given and has not withdrawn its written consent to the issue of this circular with the inclusion in this circular of the text of its respective letter/report and references to its respective name, in the form and context in which it is included.

10. MISCELLANEOUS

(a) Save as disclosed herein, there was no contract or arrangement entered into by any member of the Group subsisting at the Latest Practicable Date in which any Director was materially interested and which was significant in relation to the business of the Group.
(b) None of the Directors has, or has had, any direct or indirect interest in any assets which have been acquired or disposed of by or leased to, or which are proposed to be acquired or disposed of by or leased to, the Company or any of its subsidiaries since 31 March 2007, the date to which the latest published audited consolidated financial statements of the Group were made up.
(c) The registered office of the Company is at Cricket Square, Hutchins Drive, P.O. Box 2681, Grand Cayman KY1-1111, Cayman Islands and its principal place of business in Hong Kong is at 13th Floor, OTB Building, 259-265 Des Voeux Road Central, Hong Kong.
(d) The branch share registrar and transfer office of the Company in Hong Kong is Tricor Investor Services Limited at 26th Floor, Tesbury Centre, 28 Queen’s Road East, Hong Kong.
(e) The secretary of the Company is Mr. Shea Chun Lok B. Bus., CPA, FCPA (Aust.) . The qualified accountant of the Company is Mr. Tam Ping Kuen Daniel MSc, CPA, FCCA .

135

GENERAL INFORMATION

APPENDIX V

(f) The English language texts of this circular and the accompanying form of proxy shall prevail over their respective Chinese language texts.

11. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents are available for inspection from 9:30 a.m. to 5:30 p.m., Monday to Friday at the office of the Company, at 13th Floor, OTB Building, 259-265 Des Voeux Road Central, Hong Kong from the date this circular up to and including the date of the EGM and at the EGM:

(a) the memorandum of association and the articles of association of the Company;
(b) the annual reports of the Company for the two years ended 31 March 2007;
(c) the Agreement and the Supplemental Agreement;
(d) the accountants’ report on the Target prepared by HLB Hodgson Impey Cheng, the text of which is reproduced in Appendix II of this circular;
(e) the unaudited pro forma financial information of the Enlarged Group, the text of which is reproduced in Appendix III of this circular;
(f) the Valuation prepared by BMI, the text of which is reproduced in Appendix IV of this circular;
(g) the material contracts referred to in the paragraph headed “Material Contracts” in this appendix;
(h) the service contracts referred to in the paragraph headed “Service Contracts” in this appendix; and
(i) the respective written consent referred to in the paragraph headed “Consent” in this appendix.

136

NOTICE OF EGM

==> picture [61 x 39] intentionally omitted <==

WING HONG (HOLDINGS) LIMITED 榮康（控股）有限公司 *

(Incorporated in the Cayman Islands with limited liability)

(Stock code: 745)

NOTICE OF THE EXTRAORDINARY GENERAL MEETING

NOTICE IS HEREBY GIVEN that an extraordinary general meeting of Wing Hong (Holdings) Limited (the “Company”) will be held at Room 901, 9th Floor, Hong Kong Scout Centre, Scout Path, Austin Road, Kowloon, Hong Kong on Monday, 19 November 2007 at 9:00 a.m. for the purpose of considering and, if thought fit, passing the following resolution as an ordinary resolution of the Company:

ORDINARY RESOLUTION

“ THAT:

(a) the entering into of the acquisition agreement dated 24 September 2007 (the “Agreement” (as amended by a supplemental agreement dated 23 October 2007 (the “Supplemental Agreement”)), copies of which were produced to the meeting marked “A” and initialled by the Chairman of the meeting for the purpose of identification, between Mr. Wang Xue Qin, Mr. Wu Qi (the “Vendors”) as vendors and Top Asian Limited (the “Investor”), a whollyowned subsidiary of the Company, as investor, whereby the Investor conditionally agreed to invest an aggregate of RMB312 million (equivalent to approximately HK$321.4 million) by (i) subscribing for the new registered capital of 北京鐵聯通達廣告傳媒有限公司 (the “Target”) in the amount of RMB88 million (equivalent to approximately HK$90.6 million); (ii) providing a shareholders’ loan to the Target in the amount of RMB176 million (equivalent to approximately HK$181.3 million); and (iii) the Investor will acquire an additional 10% shareholding interest in the Target at a consideration of RMB48 million (equivalent to approximately HK$49.4 million) from the Vendors within a period of 2 years commencing from the date of the signing of the Agreement, be and is hereby approved, confirmed and ratified and all transactions contemplated under the Agreement (as amended by the Supplemental Agreement) be and are hereby approved;

* the Chinese name of the Company is for identification purpose only

137

NOTICE OF EGM

(b) any one director of the Company (the “Director”) be and is hereby authorised for and on behalf of the Company to do all acts and things and execute and deliver all documents whether under the common seal of the Company or otherwise as may be necessary, desirable or expedient to carry out or to give effect to any or all transactions contemplated under the Agreement (as amended by the Supplemental Agreement).”

By Order of the Board Wing Hong (Holdings) Limited Hui Chi Yung Chairman

Hong Kong, 2 November 2007

Head office & principal place of Registered office: business in Hong Kong: 13th Floor, OTB Building Cricket Square, Hutchins Drive 259-265 Des Voeux Road Central P.O. Box 2681 Hong Kong Grand Cayman KY1-1111 Cayman Islands

As at the date hereof, the board of Directors comprises Mr. Hui Chi Yung, Mr. Yiu Kai Yeuk, Raphael and Mr. Hui Kau Mo as executive Directors and Mr. Liu Kwong Sang, Mr. Sit Hing Wah and Dr. Hu Chung Kuen, David as independent non-executive Directors.

138

AI assistant

Imperium Financial Group Limited — Proxy Solicitation & Information Statement 2007

51224_rns_2007-11-01_dfe6ac0c-d219-4d5f-bb27-f7db3ab3b74f.pdf

VERY SUBSTANTIAL ACQUISITION

Financial adviser to Wing Hong (Holdings) Limited

Grand Vinco Capital Limited

CONTENTS

Expression

Meaning

DEFINITIONS

WING HONG (HOLDINGS) LIMITED 榮 康 （控 股） 有 限 公 司 *

VERY SUBSTANTIAL ACQUISITION

INTRODUCTION

THE AGREEMENT (as amended by the Supplemental Agreement)

Parties:

Summary of the Acquisition:

The investment plan into the Target:

Conditions of the Agreement:

Composite of board of directors of the Target

SUPPLEMENTAL AGREEMENT DATED 23 OCTOBER 2007

The Supplemental Agreement

Reasons for entering into the Supplemental Agreement

INFORMATION ON THE TARGET

LETTER FROM THE BOARD

INFORMATION ON THE INVESTOR

REASONS FOR AND BENEFITS OF ENTERING INTO THE AGREEMENT

LETTER FROM THE BOARD

FINANCIAL EFFECT OF THE ACQUISITION

Net assets

Working capital

Earnings

EGM

RECOMMENDATION

ADDITIONAL INFORMATION

1. SUMMARY OF AUDITED FINANCIAL INFORMATION

Consolidated Income Statement

Consolidated Balance Sheet

REPORT OF THE AUDITORS FOR THE YEAR ENDED 31 MARCH 2005

Wing Hong (Holdings) Limited

RESPECTIVE RESPONSIBILITIES OF DIRECTORS AND AUDITORS

BASIS OF OPINION

FUNDAMENTAL UNCERTAINTY RELATING TO RECOVERABILITY OF ACCOUNTS RECEIVABLE AND GOING CONCERN BASIS OF PRESENTATION OF FINANCIAL STATEMENTS

FUNDAMENTAL UNCERTAINTY RELATING TO RECOVERABILITY OF RECEIVABLE FROM A SUBCONTRACTOR

OPINION

Ernst & Young

REPORT OF THE AUDITORS FOR THE YEAR ENDED 31 MARCH 2006

TO THE SHAREHOLDERS OF WING HONG (HOLDINGS) LIMITED

RESPECTIVE RESPONSIBILITIES OF DIRECTORS AND AUDITORS

BASIS OF OPINION

FUNDAMENTAL UNCERTAINTY AND LIMITATION OF AUDIT SCOPE RELATING TO THE RECOVERABILITY OF ACCOUNTS RECEIVABLE AND ARBITRATION

APPENDIX I

FUNDAMENTAL UNCERTAINTY AND LIMITATION OF AUDIT SCOPE RELATING TO RECOVERABILITY OF OTHER RECEIVABLE AND ARBITRATION

FUNDAMENTAL UNCERTAINTIES RELATING TO THE GOING CONCERN BASIS OF THE GROUP

QUALIFIED OPINION: DISCLAIMER ON OPENING BALANCES IN RELATION TO THE RECEIVABLES UNDER DISPUTE AND THE RECEIVABLE AND DISCLAIMER ON VIEW GIVEN BY THE FINANCIAL STATEMENTS

REPORT OF THE AUDITORS FOR THE YEAR ENDED 31 MARCH 2007

TO THE SHAREHOLDERS OF WING HONG (HOLDINGS) LIMITED

DIRECTORS’ RESPONSIBILITY FOR THE CONSOLIDATED FINANCIAL STATEMENTS

AUDITORS’ RESPONSIBILITY

BASIS FOR DISCLAIMER OF OPINION

Significant uncertainty and limitation of audit scope relating to the recoverability of accounts receivable and arbitration

Significant uncertainty and limitation of audit scope relating to recoverability of other receivable and arbitration

Significant uncertainties relating to the going concern basis of the Group

DISCLAIMER OF OPINION: DISCLAIMER ON VIEW GIVEN BY THE FINANCIAL STATEMENTS

HLB Hodgson Impey Cheng

(ii) Effect on the consolidated balance sheet as at 1 April 2005

(iv) Effect on the consolidated balance sheet as at 31 March 2006

Financial guarantee contracts

2. AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR THE YEAR ENDED 31 MARCH 2007

CONSOLIDATED INCOME STATEMENT

CONSOLIDATED BALANCE SHEET

CONSOLIDATED BALANCE SHEET

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

CONSOLIDATED CASH FLOW STATEMENT

CONSOLIDATED CASH FLOW STATEMENT

BALANCE SHEET

NOTES TO FINANCIAL STATEMENTS

1. CORPORATE INFORMATION

2. APPLICATION OF NEW AND REVISED HONG KONG FINANCIAL REPORTING STANDARDS (“HKFRSs”)

Financial guarantee contracts

(i) Balance sheet of the Company as at 1 April 2005, 31 March 2006 and 31 March 2007

Imperium Financial Group Limited Proxy Solicitation & Information Statement 2007

WING HONG (HOLDINGS) LIMITED 榮康（控股）有限公司 *