Joy Spreader Group Inc. - Proxy Solicitation & Information Statement 2011

IMPORTANT

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

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

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

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AGTech Holdings Limited 亞博科技控股有限公司 *

(incorporated in Bermuda with limited liability)

(Stock Code: 8279)

VERY SUBSTANTIAL ACQUISITION IN RELATION TO THE ACQUISITION OF A 65% EQUITY INTEREST IN GOT

A notice convening the SGM to be held at the conference room of HLB Hodgson Impey Cheng at 31/F., Gloucester Tower, The Landmark, 11 Pedder Street, Central, Hong Kong on Monday, 9 May 2011 at 10:00 a.m. is set out on pages 75 to 76 of this circular.

Whether or not you are able to attend the SGM, please complete the accompanying form of proxy in accordance with the instructions printed thereon and return the same to the branch share registrar and transfer office of the Company in Hong Kong, Tricor Abacus Limited at 26th Floor, Tesbury Centre, 28 Queen’s Road East, Hong Kong, as soon as possible but in any event not less than 48 hours before the time appointed for the holding of the SGM or any adjournment thereof. Completion and return of the form of proxy will not preclude you from attending and voting at the SGM or any adjournment thereof if you so wish.

This circular will remain on the “Latest Company Announcement” page of the GEM website operated by the Stock Exchange at www.hkgem.com for at least seven days from the date of its posting and will be published on the website of the Company at www.agtech.com.

For identification purpose only

19 April 2011

CHARACTERISTICS OF GEM

GEM has been positioned as a market designed to accommodate companies to which a higher investment risk may be attached than other companies listed on the Stock Exchange. Prospective investors should be aware of the potential risks of investing in such companies and should make the decision to invest only after due and careful consideration. The greater risk profile and other characteristics of GEM mean that it is a market more suited to professional and other sophisticated investors.

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

– i –

CONTENTS

	Page
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
Procedures for the bidding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
The Share Transfer Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
Information on GOT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
Reasons for the Acquisition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	9
Financial effects of the Acquisition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	10
Financial and trading prospects of the Enlarged Group . . . . . . . . . . . . . . . . . . .	10
GEM Listing Rules implications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	11
SGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	11
Recommendation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	11
Additional information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	11
Appendix I – Financial information of the Group . . . . . . . . . . . . . . . . . .	12
Appendix II − Financial information of GOT . . . . . . . . . . . . . . . . . . . . . .	23
Appendix III – Unaudited pro forma financial information
of the Enlarged Group. . . . . . . . . . . . . . . . . . . . . . . . . . .	56
Appendix IV – General information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	68
Notice of SGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	75

– ii –

DEFINITIONS

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

“Acquisition” the acquisition of the Sale Interest by Century Decai through the tender process convened at the Beijing Equity Exchange as described in this circular
“Beijing Equity Exchange” 北京產權交易所 (China Beijing Equity Exchange)
“Board” the board of Directors
“Business Day” a day (other than a Saturday or a Sunday) on which banks are open for general business in the PRC
“CEC” China Electronics Corporation, a state-owned enterprise established under the laws of the PRC
“Century Decai”
北京世紀德彩科技有限公司 (Beijing Century Decai Technology Co., Ltd.*), a company incorporated in the PRC with limited liability which is an indirect whollyowned subsidiary of the Company and holds a 35% equity interest in GOT as at the Latest Practicable Date

“Company”

AGTech Holdings Limited, a company incorporated in Bermuda as an exempted company with limited liability, the issued Shares of which are listed on GEM (stock code: 8279)
“Consideration”
the consideration of RMB108,023,500 (equivalent to approximately HK$127.47 million) for the Sale Interest
“Deposit”
the deposit in the amount of RMB32,407,050 (equivalent to approximately HK$38.24 million) required to be paid by bidders for the Sale Interest in accordance with the requirement of the Beijing Equity Exchange
“Director(s)”
director(s) of the Company
“Enlarged Group” the Group as enlarged by the Acquisition upon completion of the Share Transfer Agreement

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DEFINITIONS

“First Acquisition”

the acquisition by FAIRMAX ENTERPRISES LIMITED, an indirect wholly-owned subsidiary of the Company, of the entire issued share capital in Exequs, which in turn indirectly holds a 35% equity interest in GOT as announced by the Company on 5 March 2010 and completed on 28 April 2010
“GEM”
The Growth Enterprise Market of the Stock Exchange
“GEM Listing Rules” the Rules Governing the Listing of Securities on GEM
“GOT”
北京長城高騰信息產品有限公司 (Beijing Greatwall GOT Information Products Co., Ltd.*), a company incorporated in the PRC with limited liability which is owned as to 35% indirectly by the Company and as to 65% by CEC as at the Latest Practicable Date
“Group” the Company and its subsidiaries
“Hong Kong” Hong Kong Special Administrative Region of the PRC
“Latest Practicable Date”
18 April 2011, being the latest practicable date prior to the printing of this circular for ascertaining certain information referred to in this circular
“PRC”
the People’s Republic of China which, for the purpose of this circular, excludes Hong Kong, the Macau Special Administrative Region and Taiwan
“Sale Interest”
a 65% interest in the registered and paid-up capital of GOT
“SFO”
Securities and Futures Ordinance (Chapter 571 of the laws of Hong Kong)
“SGM”

the special general meeting of the Company to be convened at the conference room of HLB Hodgson Impey Cheng at 31/F., Gloucester Tower, The Landmark, 11 Pedder Street, Central, Hong Kong on Monday, 9 May 2011 at 10:00 a.m. to consider and, if thought fit, to approve the Share Transfer Agreement and the transactions contemplated thereby

– 2 –

DEFINITIONS

“Share(s)”	ordinary share(s) of HK$0.002 each in the share capital	ordinary share(s) of HK$0.002 each in the share capital	ordinary share(s) of HK$0.002 each in the share capital
	of the Company
“Shareholder(s)”	holder(s) of the Share(s)
“Share Transfer Agreement”	the conditional sale and purchase agreement	entered into
	between CEC and Century Decai on 15 April 2011 in
	relation to the Acquisition
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“HK$”	Hong Kong dollars, the lawful currency of Hong Kong
“RMB”	Renminbi, the lawful currency of the PRC
“GBP”	pound sterling, the lawful currency of	the	United
	Kingdom of Great Britain and Northern Ireland
“%”	per cent

For illustration purposes, figures in RMB and GBP in this circular have been translated into HK$ at the exchange rate of RMB1 = HK$1.18 and GBP1 = HK$12.3 respectively. Such conversion shall not be construed as a representation that amounts in RMB and GBP were or may have been converted into HK$ using such exchange rate or any other exchange rate or at all.

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LETTER FROM THE BOARD

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AGTech Holdings Limited 亞博科技控股有限公司 *

(incorporated in Bermuda with limited liability)

(Stock Code: 8279)

Executive Directors: Mr. Sun Ho (Chairman & CEO) Mr. Robert Geoffrey Ryan Mr. Bai Jinmin Mr. Liang Yu

Registered Office: Clarendon House 2 Church Street Hamilton HM 11 Bermuda

Non-executive Director: Ms. Yang Yang

Independent non-executive Directors: Mr. Kwok Wing Leung Andy Mr. Wang Ronghua Mr. Hua Fengmao

Head office & principal place of business: Unit 3912, 39th Floor Shell Tower Times Square Causeway Bay Hong Kong 19 April 2011

To the Shareholders,

Dear Sir or Madam,

VERY SUBSTANTIAL ACQUISITION IN RELATION TO THE ACQUISITION OF A 65% EQUITY INTEREST IN GOT

INTRODUCTION

Reference is made to the announcement of the Company dated 5 March 2010 and the circular of the Company dated 26 April 2010 relating to the acquisition by FAIRMAX ENTERPRISES LIMITED, an indirect wholly-owned subsidiary of the Company, of the entire issued share capital in Exequs, which in turn indirectly holds a 35% equity interest in GOT. The First Acquisition constituted a major transaction of the Company for the purposes of the GEM Listing Rules and was completed on 28 April 2010.

For identification purpose only

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LETTER FROM THE BOARD

On 23 March 2011, the Board has resolved for Century Decai, an indirect wholly-owned subsidiary of the Company, to participate in a bid for the Sale Interest, which represents a 65% equity interest in GOT being sold by CEC under a tender process organised at the Beijing Equity Exchange. Century Decai has submitted its bid at the floor price of RMB 108,023,500 (equivalent to approximately HK$127.47 million) for the Sale Interest in accordance with the procedures laid down by the Beijing Equity Exchange on 28 March 2011.

On 6 April 2011, the Beijing Equity Exchange sent a notification acknowledging the receipt of the bid from Century Decai and the Deposit paid by Century Decai. It was also confirmed that Century Decai was the final accepted bidder for the Sale Interest during the tender process organised at the Beijing Equity Exchange. Details of such notification have been disclosed in the announcement of the Company dated 6 April 2011. On 15 April 2011, Century Decai entered into the Share Transfer Agreement with CEC in relation to the sale and purchase of the Sale Interest.

The Acquisition constitutes a very substantial acquisition of the Company under the GEM Listing Rules and the Share Transfer Agreement and the transactions contemplated thereunder are therefore subject to the approval of the Shareholder at the SGM.

The purpose of this circular is to provide you with, among other things, (i) details of the Share Transfer Agreement; (ii) financial and other information of the Group; (iii) financial information of GOT; (iv) unaudited pro forma financial information of the Enlarged Group; and (v) the notice of SGM.

PROCEDURES FOR THE BIDDING

The Sale Interest is being offered for sale by way of tender convened at the Beijing Equity Exchange pursuant to 中華人民共和國合同法 (Contracts Law of the PRC), 企業國有產權轉讓管理暫行辦法 (Temporary Management Policy of National Assets Transfer) and other national assets transfer related laws, regulations and policies in the PRC. Based on the information published by the Beijing Equity Exchange, the tender opened from 1 March 2011 to 28 March 2011 and the floor price for the Sale Interest was RMB108,023,500 (equivalent to approximately HK$127.47 million).

Century Decai submitted the bid at the floor price on 28 March 2011. According to the procedures stipulated by the Beijing Equity Exchange, Century Decai was required to pay the Deposit in cash, cheque or bank note on or before 1 April 2011 and the Share Transfer Agreement shall be entered into between CEC and Century Decai within 5 Business Days after the payment of the Deposit. The balance of the Consideration for the Sale Interest shall be settled in cash within 10 Business Days after the effective date of the Share Transfer Agreement (which is expected to be around end of May/early June 2011).

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LETTER FROM THE BOARD

Pursuant to 中華人民共和國合同法 (PRC Company Law*), existing shareholders of a company shall have the pre-emptive right to purchase the equity interests of the other shareholders if the other shareholders wish to sell their interests. Accordingly, Century Decai, being an existing shareholder of GOT, has the pre-emptive right to acquire the Sale Interest from CEC during the bidding process conducted at the Beijing Equity Exchange. Despite the Board has also resolved on 23 March 2011 for Century Decai to exercise such pre-emptive right, there was no need for Century Decai to exercise the pre-emptive right as it was the final accepted bidder during the tender process.

THE SHARE TRANSFER AGREEMENT

Date

15 April 2011

Parties

Purchaser: Century Decai, an indirect wholly-owned subsidiary of the Company Vendor: CEC

To the best of the Directors’ knowledge, information and belief, and having made all reasonable enquiries, CEC is one of the largest state-owned information technology enterprises established under the laws of the PRC with the approval of the State Council of the PRC. It is a nationwide electronics and information technology conglomerate directly administered by the PRC government. It actively focuses on communications, consumer electronics, semiconductor and software sectors in the PRC. Save for being co-investors in GOT, CEC is otherwise a third party independent of the Company and its connected persons (as defined in the GEM Listing Rules). The Group has not entered into any previous transactions with CEC or its associates (as defined in the GEM Listing Rules) which would otherwise require aggregation pursuant to Rule 19.22 of the GEM Listing Rules.

Asset to be acquired

The Sale Interest, being a 65% equity interest in GOT.

The Consideration

The Consideration is RMB108,023,500 (equivalent to approximately HK$127.47 million) which is payable in cash in the following manner:

(i) the Deposit of RMB32,407,050 (equivalent to approximately HK$38.24 million) has been paid by Century Decai on 30 March 2011 which is non-refundable; and
(ii) the balance of RMB75,616,450 (equivalent to approximately HK$89.23 million) shall be payable by Century Decai within 10 Business Days after the effective date of the Share Transfer Agreement.

The Consideration is equivalent to the floor price set out by the Beijing Equity Exchange and the bid price submitted by Century Decai. The bid price was determined by the Company taking into account the net asset value, financial performance and growth potential of the business of GOT.

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LETTER FROM THE BOARD

Pursuant to the Share Transfer Agreement, 10% of the Consideration (i.e. RMB10,802,350, equivalent to approximately HK$12.75 million) will be forfeited by CEC in the event that Century Decai terminates the Share Transfer Agreement after the Share Transfer Agreement is effective. In the event that Century Decai fails to settle the balance of the Consideration in accordance with the prescribed timeframe, Century Decai shall compensate a 0.05% daily interest to CEC as late penalty. CEC has the right to terminate the Share Transfer Agreement and request Century Decai to compensate 10% of the Consideration (i.e. RMB10,802,350) and any liability in respect of the antecedent breaches in the terms of the Share Transfer Agreement if Century Decai fails to settle the payment of balance in 30 calendar days after the due date for the payment of balance. Century Decai has the right to terminate the Share Transfer Agreement and request CEC to compensate 10% of the Consideration (i.e. RMB10,802,350) if CEC fails to proceed with the prescribed procedures and timeframe to complete the sale and purchase of the Sale Interest. If CEC terminates the Share Transfer Agreement after the Share Transfer Agreement becomes effective, CEC shall also pay Century Decai 10% of the Consideration as compensation.

Conditions

The Share Transfer Agreement, which is in a form prescribed by the Beijing Equity Exchange, shall become effective subject to and conditional upon the fulfillment of the following conditions:

(i) CEC having obtained all necessary consents and approvals from the relevant authorities in respect of the Share Transfer Agreement and the transactions contemplated thereunder;
(ii) CEC having completed the tender process convened at the Beijing Equity Exchange in accordance with the relevant laws, regulations and policies in the PRC; and
(iii) Century Decai having obtained all necessary consents and approvals from the relevant authorities (including the GEM Listing Rules of the Stock Exchange and the Shareholders in the SGM) in respect of the Share Transfer Agreement and the transactions contemplated thereunder.

Completion

The 產權交易憑證 (asset transfer certificate) will be issued by the Beijing Equity Exchange after the fulfillment of all the above conditions. CEC shall procure GOT to proceed with completing the necessary registration procedures for the change in shareholders with the relevant authorities in the PRC within 30 Business Days after the issue of the 產權交易憑証 (asset transfer certificate). Completion of the Acquisition will take place once a new business licence is issued to GOT reflecting the new shareholding structure.

INFORMATION ON GOT

GOT was established in the PRC with limited liability in 1994 and is one of the largest terminal and system providers for sports lottery in the PRC. Initially, it was approved by the

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LETTER FROM THE BOARD

State Council and authorised by, among others, the Ministry of Finance, State Administration of Taxation and the former Ministry of Electric Industry and was set up for the implementation of commercial terminal projects in the PRC. The scope of business provided by GOT was research and development, manufacturing and sales of commercial terminals in the PRC at that time.

In 1998, GOT became one of the vendors approved by China Sports Lottery Administration Centre for the research, development and production of sports lottery terminals and systems. In 2004, it established a manufacturing base in Beijing with annual production capability of over 200,000 units. After over 10 years of industry experience, GOT has built up superior research and development abilities in sports lottery terminals and systems and developed an extensive sales network in over 20 provinces and cities in the PRC. In addition, GOT has enhanced its after-sales services by setting up service centres in several provinces and cities across the PRC to handle product repair and provide technical support services. Through its efficient call centre system, under normal circumstances, GOT is able to respond to customers’ enquiries within 1 hour after receiving their calls and provide on-site maintenance services within 2 hours (for customers in urban areas) to 6 hours (for customers in rural areas) upon customers’ requests. GOT is recognised as a reputable brand in the PRC sports lottery field and was appraised by General Administration of Sport of China as the “Outstanding Company Contributing to Sports Lottery” in 2005.

As at the Latest Practicable Date, GOT was owned as to 35% by Century Decai and 65% by CEC. To the best knowledge of the Directors, CEC is one of the largest state-owned information technology enterprises established under the laws of the PRC in 1989 with the approval of the State Council of the PRC. CEC is a nationwide electronics and information technology conglomerate directly administered by the PRC government. It actively focuses on communications, consumer electronics, semiconductor and software sectors in the PRC.

Based on the accountants’ report of GOT prepared in accordance with Hong Kong Financial Reporting Standards as set out in Appendix II to this circular, the audited profit before tax of GOT was approximately RMB19.03 million (equivalent to approximately HK$22.46 million) and net profit after tax of GOT was approximately RMB16.37 million (equivalent to approximately HK$19.32 million) for the year ended 31 December 2007. For the year ended 31 December 2008, GOT recorded audited profit before tax of approximately RMB21.75 million (equivalent to approximately HK$25.67 million) and audited profit after tax of approximately RMB18.46 million (equivalent to approximately HK$21.78 million). For the year ended 31 December 2009, net profit before tax of GOT was approximately RMB15.11 million (equivalent to approximately HK$17.83 million) and net profit after tax of GOT was approximately RMB12.82 million (equivalent to approximately HK$15.13 million). For the 10 months ended 31 October 2010, GOT recorded audited profit before tax of approximately RMB15.00 million (equivalent to approximately HK$17.70 million) and audited profit after tax of approximately RMB12.62 million (equivalent to approximately HK$14.89 million). The audited net asset value of GOT as at 31 October 2010 was approximately RMB100.32 million (equivalent to approximately HK$118.38 million).

The historical performance of GOT was satisfactory and recorded approximately RMB16.37 million (equivalent to approximately HK$19.32 million), RMB18.46 million

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LETTER FROM THE BOARD

(equivalent to approximately HK$21.78 million), RMB12.82 million (equivalent to approximately HK$15.13 million) and RMB12.62 million (equivalent to approximately HK$14.89 million) net profits attributable to owners of GOT for the years ended 31 December 2007, 31 December 2008, 31 December 2009 and for the ten-month period ended 31 October 2010 respectively. Due to the implementation of PRC government policy in 2008 requiring lottery shops to upgrade and/or replace their old lottery terminals, the demand for lottery terminals increased which boosted the revenue of GOT during that year. In light of this, GOT had an outstanding financial performance in 2008. Despite the fluctuations in net profits, the Company does not consider the profitability of GOT volatile, as the gross profit margin of GOT was quite stable and maintained at over 20% throughout the reporting periods as set out in Appendix II to this circular.

REASONS FOR THE ACQUISITION

The Company is an investment holding company. The Group is a leading sports lottery and sports leisure service provider in the PRC and is principally engaged in (i) lottery management and gaming technologies business; (ii) online and phone lottery sales business; and (iii) sports and media business.

As disclosed in the annual report of the Company for the year ended 31 December 2010, the PRC government has constantly embarked on a number of initiatives to support sports lottery development, thereby enabling continued healthy growth in the PRC sports lottery market. It is expected that phone betting will be launched by the end of 2011, online betting will be launched in 2012, and the number of non-cash betting accounts will reach 5 million and 10 million in 2013 and 2015 respectively. In the meantime, sports lottery scratch tickets have become one of the three major sports lottery products. It is expected that the compound annual growth rate of the scratch ticket market is approximately 10.5% during the “Twelfth Five Year Plan” period and the sales may be as high as RMB50 billion by 2015. The China Sports Lottery Administration Centre is currently studying various innovative lottery games and focusing on the development of paperless scratch products and sports betting lottery products, which is expected to facilitate the continuous research and development of as well as demand for real and virtual betting sports lottery technology.

The Directors consider that there are strong prospects for the sports lottery sector in the PRC. Considering that GOT is an established key industry player with cutting-edge technologies, has built up superior research and development capabilities in sports lottery terminals and systems, developed an extensive sales network in over 20 provinces and cities in the PRC and recorded a profitable track record, the Directors consider it desirous to increase its interest in GOT and to participate in the bid. In view of the aforesaid favorable government policy, the Directors expect GOT’s business would continue to grow and achieve an improved financial performance to a level similar to GOT’s performance in 2008 in the near future. Upon completion of the Share Transfer Agreement, GOT will become a wholly-owned subsidiary of the Company and is expected to contribute positively to the future earnings of the Group. In view of the above, the Directors consider that the Acquisition is in the interests of the Company and its Shareholders as a whole.

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LETTER FROM THE BOARD

The Group intends to finance the consideration for the Sale Interest by a combination of bank borrowings and internal resources of the Group.

FINANCIAL EFFECTS OF THE ACQUISITION

Upon completion of the Share Transfer Agreement, GOT will become a wholly-owned subsidiary of the Company and the assets, liabilities and results of GOT will be consolidated into the financial statements of the Company. In view of the profitable track record of GOT as shown in Appendix II to this circular, the Directors believe the Acquisition will widen and strengthen the earnings base of the Enlarged Group.

Set out in Appendix III to this circular is the unaudited pro forma financial information of the Enlarged Group which illustrates the financial effect of the Acquisition on the earnings and assets and liabilities of the Group assuming completion of the Acquisition had taken place on 31 December 2010 and the Consideration is satisfied in cash. Based on the unaudited pro forma financial information in Appendix III to this circular, the loss of the Enlarged Group would decrease to approximately HK$33.04 million from approximately HK$41.01 million; the total assets of the Enlarged Group would increase to HK$1,163.48 million from HK$1,087.20 million; and its total liabilities would increase to HK$124.30 million from HK$45.03 million, as a result of the Acquisition. The total assets and total liabilities of the Enlarged Group will increase from the aforesaid pro forma figures if bank borrowings are utilised by the Group to partly finance the Consideration. As at the Latest Practicable Date, the terms of such bank borrowings are yet to be finalised and therefore have not been utilised by the Group.

Shareholders should note that the earnings contribution from GOT after completion of the Acquisition will depend on the future performance of GOT and the actual effect of the Acquisition on the assets and liabilities of the Enlarged Group will depend on the financial position of GOT as at the date of completion of the Acquisition, which could not be ascertained as at the Latest Practicable Date.

FINANCIAL AND TRADING PROSPECTS OF THE ENLARGED GROUP

After the Acquisition, the Company’s market competitiveness and market presence will be strengthened which enables it to capture business opportunities in the blooming sports lottery market in the PRC. Looking forward, the Directors consider that the growth momentum of the PRC’s lottery industry will be sustained for the coming years and the Enlarged Group will step up efforts on all fronts to capitalise on the trend. In anticipation of the growth potential of the sports lottery business in the PRC, the Enlarged Group will continue to serve as a reliable supplier of quality lottery products as well as a professional management and marketing consultant in the sport lottery market in the PRC. Meanwhile, the Enlarged Group will continue to look for new investment business opportunities with a view to seeking further expansion, enhancing the Enlarged Group’s overall competitiveness and improving its business and financial performance.

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LETTER FROM THE BOARD

GEM LISTING RULES IMPLICATIONS

The Acquisition constitutes a very substantial acquisition of the Company under the GEM Listing Rules. The Share Transfer Agreement and the transactions contemplated thereunder are subject to the approval of the Shareholders at the SGM. To the best of the Directors’ knowledge, information and belief having made all reasonable enquires, no Shareholder will be required to abstain from voting on the resolution approving the Share Transfer Agreement and the transactions contemplated thereunder at the SGM.

SGM

The Company will convene the SGM at the conference room of HLB Hodgson Impey Cheng at 31/F., Gloucester Tower, The Landmark, 11 Pedder Street, Central, Hong Kong on Monday, 9 May 2011 to consider and, if though fit, approving the Share Transfer Agreement and the transactions contemplated thereunder. The notice convening the SGM is set out on pages 75 to 76 of this circular. A form of proxy for use at the SGM is also enclosed to this circular.

Whether or not you are able to attend the SGM and/or vote at the SGM in person, you are requested to complete the accompanying form of proxy in accordance with the instructions printed thereon and return the same to the branch share registrar and transfer office of the Company in Hong Kong, Tricor Abacus Limited at 26th Floor, Tesbury Centre, 28 Queen’s Road East, Hong Kong, as soon as possible but in any event not less than 48 hours before the time appointed for the holding of the SGM or any adjournment thereof. Completion and return of the form of proxy will not preclude you from attending and voting at the SGM or any adjournment thereof if you so wish.

RECOMMENDATION

The Directors consider that the terms of the Share Transfer Agreement and the transactions contemplated thereunder are fair and reasonable and the Acquisition is in the interests of the Group and the Shareholders as a whole. Accordingly, the Directors recommend the Shareholders to vote in favour of the ordinary resolution to be proposed at the SGM to approve the Share Transfer Agreement and the transactions contemplated thereunder.

ADDITIONAL INFORMATION

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

Yours faithfully, By order of the Board AGTech Holdings Limited Sun Ho

Chairman & CEO

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

1. FINANCIAL SUMMARY

In order to conform to the statutory financial year end date of the Group’s principal operating subsidiaries, which are mainly situated in the PRC, the Board announced that the financial year end date of the Company had been changed from 30 June to 31 December on 10 December 2009.

The following is a summary of the financial results of the Group for the year ended 31 December 2010, and 6-month period ended 31 December 2009, and the year ended 30 June 2009 extracted from the Company’s annual report for the year ended 31 December 2010.

Results

		For	the period
	1 January –		1 July –
	31 December	31 December		1	July 2008 –
	2010		2009	30 June 2009
	HK$		HK$		HK$
Revenue
−continuing operations	105,143,580		33,822,293		58,988,495
−discontinued operation	–		340,447		2,633,483
Total	105,143,580		34,162,740		61,621,978


Loss for the year/period
attributable to owners of
the Company
−continuing operations	(37,798,646)	(44,268,184)		(189,237,306)
−discontinued operation	–		8,897,185		(262,425)
Total	(37,798,646)	(35,370,999)		(189,499,731)

Assets and Liabilities

		As at

	31 December	31 December	30 June
	2010	2009	2009
Total assets	1,087,202,198	1,036,008,408	1,073,894,601
Total liabilities	(45,025,145)	(30,465,966)	(36,812,081)
	1,042,177,053	1,005,542,442	1,037,082,520


Equity attributable to
owners of the Company	1,039,252,415	1,002,482,563	1,034,828,450
Non-controlling interests	2,924,638	3,059,879	2,254,070
	1,042,177,053	1,005,542,442	1,037,082,520

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

2. AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE COMPANY FOR THE SIX-MONTH PERIOD ENDED 31 DECEMBER 2009 AND YEAR ENDED 31 DECEMBER 2010

The audited consolidated financial statements of the Company for the six-month period ended 31 December 2009 and the year ended 31 December 2010, together with the accompanying notes thereto, are disclosed on pages 63 to 139 in the annual report of the Company for the year ended 31 December 2010 published on 29 March 2011. The same information is published on the website of GEM at www.hkgem.com and the website of the Company at www.agtech.com.

3. AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE COMPANY FOR THE YEAR ENDED 30 JUNE 2009

The audited consolidated financial statements of the Company for the year ended 30 June 2009, together with the accompanying notes thereto, are disclosed on pages 63 to 115 in the annual report of the Company for the year ended 30 June 2009 published on 25 September 2009. The same information is published on the website of GEM at www.hkgem.com and the website of the Company at www.agtech.com.

4. MANAGEMENT DISCUSSION AND ANALYSIS FOR THE YEAR ENDED 31 DECEMBER 2010

(a) Business outlook

The Chinese government has constantly embarked on a number of initiatives to support sports lottery development, thereby enabling continued healthy growth in the PRC sports lottery market. The future lottery development in China will incline to the development of online and mobile betting business and the development will concentrate on betting games including real and virtual sports games and electronic scratch tickets. The Group considers that the growth momentum will be sustained well into the future and will continue to serve as a reliable provider of professional lottery products and services in China’s lottery market to capitalise on the trend. Meanwhile, the Group will accelerate to seek the opportunities to carry out horizontal and vertical expansions such as extending its geographic reach to more provinces or cities, integrating the industry value chain, as well as developing new sports lottery terminals, systems and technologies, as lottery sale distribution and games increase.

The outlook for the next financial year is robust and the Directors are excited about the growth opportunities they see ahead. The Board strongly believes that the Group’s solid business foundation, its customer and government relationships as well as its international gaming partnerships, and the advanced products and technological advantage of the Group will help it capture new potential opportunities and consolidate its leading position in the industry so as to maximise returns to the Shareholders.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

In the future, the Group will continue to seek for more potential business partners and forge more strategic business alliances, with a view to increasing its market share and ultimately maximizing returns for Shareholders. Towards these ends, the Group will also continuously place great emphasis on maintaining close ties with major business partners.

(b) Revenue and profitability

Revenue of the Group for the year under review amounted to approximately HK$105.1 million (for the six-month period ended 31 December 2009: revenue amounted to approximately HK$33.8 million). All revenue for the year under review was derived from provision of sports lottery management and marketing consultancy services and supply of sports lottery sales terminals (and accessories) and sports and media business. During the year under review, the gross profit percentage stood at approximately 61.2% (for the six-month period ended 31 December 2009: the gross profit percentage was approximately 60.9%). The increase in gross profit percentage was due to the increase in revenue and effect of strict costs control measures carried out by the Group for the year.

Loss attributable to owners of the Company for the year under review amounted to approximately HK$37.8 million, primarily due to (i) the share-based payments (totalling approximately HK$6.1 million) as a result of the adoption of Hong Kong Financial Reporting Standard 2 Share-based Payment for share options of the Company granted to Directors, eligible employees and other eligible participants under the Share Option Scheme of the Company; and (ii) the amortisation of other intangible assets (totalling approximately HK$40.9 million).

(c) Capital resources and liquidity

Net bank balances and cash as at 31 December 2010 were approximately HK$140.9 million (at 31 December 2009: approximately HK$141.5 million). The total assets and net current assets of the Group as at 31 December 2010 were approximately HK$1,087.2 million and approximately HK$202.9 million respectively (at 31 December 2009: approximately HK$1,036 million and approximately HK$201.2 million respectively).

During the year under review the Group maintained a debt-free capital structure. The Group financed its operations primarily with internally generated cashflows as well as the proceeds from previous fund raising exercises and from the exercising by grantees of the share options granted under the Share Option Scheme.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

(d) Capital commitments

	At	At
	31 December	31 December
	2010	2009
	HK$	HK$
Contracted but not provided for:
Research and development expenditures	–	1,241,861

(e) Charges on Group’s assets

As at 31 December 2010, there was no charge on the assets of the Group.

(f) Foreign exchange exposure

As at 31 December 2010, the Group’s bank deposits denominated in Hong Kong Dollars and Renminbi. Since all of its revenue-generating operations, monetary assets and liabilities of the Group are conducted or transacted substantially in Hong Kong Dollars and Renminbi, which is not freely convertible into foreign currencies the Group faced minimal exchange rate risk during the year under review.

(g) Contingent liabilities

As at 31 December 2010, the Group had no material contingent liabilities.

(h) Significant acquisitions and disposals

The Group completed the acquisition of 35% interest of GOT during the year.

Save for the deregistration of 江西世紀星彩企業管理有限公司 (China Lottery Management (Jiangxi) Co., Ltd.) and 遼寧世紀星彩企業管理有限公司 (China Lottery Management (Liaoning) Co., Ltd.), the Group did not have significant disposal during the year.

(i) Significant investments

As at 31 December 2010, there was no significant investment of the Group.

(j) Employees’ information

As at 31 December 2010, the Group had 161 (at 31 December 2009: 167) employees in Hong Kong and the PRC. Total staff costs (excluding Directors’ emoluments) for the year ended 31 December 2010 amounted to approximately HK$24.0 million.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

The Group’s remuneration policies are formulated on the basis of performance and experience of individual employees and are in line with local market practices. In addition to salary, the Group also offers to its employees other fringe benefits including year-end bonus, Share Option Scheme, contributory provident fund, social security fund, medical benefits and training.

5. MANAGEMENT DISCUSSION AND ANALYSIS FOR THE SIX-MONTH PERIOD ENDED 31 DECEMBER 2009

(a) Business outlook

It is expected that the forthcoming major sport events, including South Africa 2010 World Cup, Guangzhou 2010 Asian Games and the annual NBA games in the United States, are set to boost the sports development in China, thereby further fuelling the demand for sports lottery. Meanwhile, the introduction of the Regulations reflects the commitment of the Chinese government to supporting legal lottery and cracking down on illegal gambling amid the robust sports development nationwide, which is conducive to a favorable operational environment for the Group’s advancement. Also, China’s sports lottery industry is set to boom further in line with the continuous growth of the national economy.

The above factors are conducive to the expansion of the Group’s business, broadening of its client base and enhancing profitability. In addition to vigorously capturing the business opportunities emerging from the rapid growth of the PRC sports lottery industry, the Group will continue to place great emphasis on maintaining close ties with major business partners. As such, the Group will continue to seek for potential business partners and forge more strategic business alliances, with a view to increasing its market share and ultimately maximizing returns for the Shareholders.

(b) Revenue and profitability

Revenue of the Group for the period under review amounted to approximately HK$33.8 million (for the year ended 30 June 2009: revenue restated amounted to approximately HK$59.0 million). All revenue for the period under review was derived from provision of sports lottery management and marketing consultancy services and supply of sports lottery sales terminals (and accessories). During the period under review, the gross profit percentage stood at approximately 60.9% (for the year ended 30 June 2009: the gross profit percentage was approximately 41.1%). The increase in gross profit percentage was due to the effect of strict costs control measures carried out by the Group for the period.

Loss attributable to owners of the Company for the period under review amounted to approximately HK$35.4 million, primarily due to (i) the share-based payments (totalling approximately HK$12.8 million) as a result of the adoption of Hong Kong Financial Reporting Standard 2 Share-based Payment for share options of the Company

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

granted to Directors, eligible employees and other eligible participants under the Share Option Scheme of the Company; (ii) the amortisation of other intangible assets (totalling approximately HK$19.7 million); and (iii) profit on disposal of discontinued operation (Enterprise solutions) of approximately HK$8.9 million in which approximately HK$11.1 million is mainly due to release of related contributed surplus reserve from equity to profit or loss account.

(c) Capital resources and liquidity

Net bank balances and cash at 31 December 2009 were approximately HK$141.5 million (at 30 June 2009: approximately HK$171.7 million). The total assets and net current assets of the Group at 31 December 2009 were approximately HK$1,036.0 million and approximately HK$201.2 million respectively.

During the period under review, the Group maintained a debt-free capital structure. The Group financed its operations primarily with internally generated cashflows as well as the proceeds from previous fund raising exercises and from the exercising by grantees of the share options granted under the Share Option Scheme.

(d) Capital commitments

	At	At
	31 December	30 June
	2009	2009
	HK$	HK$
Contracted but not provided for:
Research and development expenditures	1,241,861	–

(e) Charges on Group’s assets

At 31 December 2009, there was no charge on the assets of the Group.

(f) Foreign exchange exposure

At 31 December 2009, the Group’s bank deposits denominated in Hong Kong Dollars and Renminbi. Since all of its revenue-generating operations, monetary assets and liabilities of the Group are conducted or transacted substantially in Hong Kong Dollars and Renminbi, which is not freely convertible into foreign currencies, the Group faced minimal exchange rate risk during the period under review.

(g) Contingent liabilities

At 31 December 2009, the Group had no material contingent liabilities.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

(h) Significant acquisitions and disposals

The Group did not have significant acquisition during the period.

Save for the deregistration of 安徽世紀星彩企業管理有限公司 (China Lottery Management (Anhui) Co.,Ltd.) and 江蘇世紀星彩企業管理有限公司 (China Lottery Management (Jiangsu) Co., Ltd.) during the period, on 19 November 2009, the Group entered into a sale agreement to dispose of MegaInfo Limited and its subsidiaries (the “MegaInfo Group”), which carried out all of the Group’s enterprise solutions operation. The disposal of the enterprise solutions operation is consistent with the Group’s long-term policy to focus its activities on consultancy services operation and information technology solutions operation. The disposal was completed on 19 November 2009, on which date control of the enterprise solutions operation passed to the acquirer.

(i) Significant investments

As at 31 December 2009, there was no significant investment of the Group.

(j) Employees’ information

At 31 December 2009, the Group had 167 (at 30 June 2009: 214) employees in Hong Kong and the PRC. Total staff costs (excluding Directors’ emoluments) for the period ended 31 December 2009 amounted to approximately HK$9.9 million.

6. MANAGEMENT DISCUSSION AND ANALYSIS FOR THE YEAR ENDED 30 JUNE 2009

(a) Business outlook

China’s lottery industry is booming and the trend is set to continue. Following months of economic downturn, China’s economy has passed its trough and is gradually recovering. Meanwhile, the Chinese government is making well-meaning efforts to nurture an operational environment conducive to healthy growth of the lottery industry. The burgeoning middle class and the growth in disposable income of the urban and rural population also help to fuel the growth momentum of the lottery industry. All these set the stage for the Group to seek business expansion, stretch its tentacles and boost its earnings base.

With sports lottery sales from January to June 2009 already reaching RMB27.08 billion, the Group considers that the growth momentum will be sustained for the second half of the year, and it will step up efforts on all fronts to capitalise on the trend. In the latter half of the year, the Group will continue to serve as a reliable supplier of quality lottery products as well as a professional management and marketing consultant in the sports lottery market of China. The Group will liaise closely with the authorities so that

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

it can keep itself abreast of industry development and implement effective strategies to achieve its business objectives. Meanwhile, it will continue to draw up specific marketing and promotion strategies targeting different localities with a view to boosting lottery sales and broaden the Group’s market presence across China. The Group will also be on the lookout for more potential business partners and new market opportunities with a view to seeking further expansion and ultimately generating higher returns for the Shareholders.

(b) Revenue and profitability

Revenue of the Group for the financial year under review amounted to approximately HK$61.6 million, representing a surge of approximately 37.0% over last year. The increase in revenue of the Group during the financial year under review was mainly attributable to the contributions of its Consultancy services in the PRC, which were boosted as the Group expanded into more provinces of the PRC and penetrated into the lucrative sports lottery scratch tickets market during the financial year under review. Indeed, approximately 95.5% of the Group’s revenue for the financial year under review was derived from the provision of its Consultancy services in the PRC. During the financial year under review, the gross profit percentage stood at approximately 40.7% whereas the gross profit percentage of the corresponding year in 2008 was approximately 63.9%. The decrease in gross profit percentage was due to the fact that higher cost of sales and services was incurred by the Group for the year since there were more start-up costs as the Group expanded its retail management consultancy business into more provinces in the PRC, supplied more sports lottery sales terminals and accelerated its penetration into the sports lottery scratch tickets market.

The net loss of the Group attributable to equity holders of the Company for the financial year under review amounted to approximately HK$189.5 million (2008: HK$128.5 million). The increase in net loss of the Group was primarily attributable to (i) the share-based payments expense (totalling approximately HK$123.1 million for the financial year under review) resulting from the adoption of HKFRS 2 “Share-based Payment” for share options of the Company granted to Directors, eligible employees and other eligible participants under the Share Option Scheme. Higher share-based payments expense was charged during the financial year under review as the Company reduced and cancelled the number of Shares of the Company entitled under share options previously granted to Directors, eligible employees and other eligible participants under the Share Option Scheme; (ii) the amortisation of other intangible assets (amounting to approximately HK$39.3 million for the financial year under review); and (iii) the increase in cost of sales and services as well as selling and administrative expenses as a result of the continuous expansion of the Group’s businesses.

(c) Capital resources and liquidity

Net bank balances and cash as at 30 June 2009 were approximately HK$172.2 million (2008: HK$212.9 million). The total assets and net current assets of the Group as at 30 June 2009 were approximately HK$1,073.9 million and approximately HK$211.2 million respectively.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

During the year, the Group maintained a debt-free capital structure. The Group financed its operations primarily with internally generated cashflows as well as the proceeds from previous fund raising exercises and from exercising by grantees of share options granted under the Share Option Scheme.

(d) Capital commitments

			2009	2008
			HK$	HK$
Contracted	but	not provided for:
Acquisition	of	equipment	–	6,578,514

(e) Charges on Group’s assets

As at 30 June 2009, there was no charge on the assets of the Group.

(f) Foreign exchange exposure

As at 30 June 2009, the Group’s bank deposits denominated in Hong Kong Dollars, Renminbi and Macao Patacas. Since all of its revenue-generating operations, monetary assets and liabilities of the Group are conducted or transacted substantially in Hong Kong Dollars and Renminbi, which is not freely convertible into foreign currencies, and Macao Patacas, which is considered as a stable currency under the control of the Government of Macao, the Group faced minimal exchange rate risk during the year.

(g) Contingent liabilities

As at 30 June 2009, the Group had no material contingent liabilities.

(h) Significant acquisitions and disposals

The Group did not have significant acquisition during the year.

Save for the deregistration of 湖南世紀星彩科技有限公司 (China Lottery Technology (Hunan) Co., Ltd.*), the Group did not have significant disposal during the year.

(i) Significant investments

As at 30 June 2009, there was no significant investment of the Group.

(j) Employees’ information

As at 30 June 2009, the Group had 214 (2008: 209) employees in Hong Kong, Macao and the PRC. Total staff costs (excluding Directors’ emoluments) for the year ended 30 June 2009 amounted to approximately HK$23.0 million.

– 20 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

7. INDEBTEDNESS STATEMENT

Borrowings

At the close of business on 28 February 2011, being the latest practicable date for the purpose of preparing this indebtedness statement prior to the printing of this circular, the Enlarged Group had outstanding indebtedness of approximately RMB5,000,000 (equivalent to approximately HK$5.9 million) which represents the outstanding amount of an unsecured bank loan borrowed by GOT for its own working capital usage.

Contingent liabilities

As at 28 February 2011, the Enlarged Group had no significant contingent liabilities.

Capital and other commitments

As at 28 February 2011, the Enlarged Group had no material capital commitments in respect of capital expenditure which had been authorized and contracted but not provided for.

In addition, as at 28 February 2011, the Enlarged Group had operating lease commitments amounting to HK$8,238,542.

Disclaimers

Save as disclosed above and apart from intra-group liabilities and normal trade payables as at the 28 February 2011, the Enlarged Group did not have any bank overdrafts or loans, or other similar indebtedness, mortgages, charges, liabilities under acceptance (other than normal trade bills) or acceptance credits, hire purchase commitments, or guarantees or other material contingent liabilities. The Directors have confirmed that, save as disclosed above, there has not been any other material changes in the indebtedness, commitments or contingent liabilities of the Enlarged Group since the latest practicable date.

8. MATERIAL ADVERSE CHANGE

The Directors are not aware, as at the Latest Practicable Date, of any material adverse change in the financial or trading position of the Group since 31 December 2010, the date to which the latest published audited financial statements of the Company were made up.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

9. WORKING CAPITAL

The Directors, after due and careful consideration, are of the opinion that following completion of the Acquisition, after taking into account of the internal resources and the banking facilities available to the Enlarged Group, the Enlarged Group would have sufficient working capital for at least 12 months from the date of this circular.

– 22 –

FINANCIAL INFORMATION OF GOT

APPENDIX II

1. ACCOUNTANTS’ REPORT ON GOT

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

==> picture [184 x 68] intentionally omitted <==

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

19 April 2011

The Board of Directors AGTech Holdings Limited Unit 3912, 39/F, Shell Tower, Times Square, Causeway Bay, Hong Kong

Dear Sirs,

We set out below our report on the financial information (the “Financial Information”) regarding 北京長城高騰信息產品有限公司 (transliterated as Beijing Greatwall GOT Information Products Co., Ltd.) (“GOT”), for the financial years ended 31 December 2007, 2008 and 2009 and the ten-month period ended 31 October 2010 (the “Relevant Periods”), for inclusion in the circular (the “Circular”) dated 19 April 2011 issued by AGTech Holdings Limited (the “Company”) in connection with the proposed very substantial acquisition by the Company relating to the acquisition of a 65% equity interest in GOT.

GOT was established in the People’s Republic of China (“PRC”) on 8 August 1994 as a limited liability company. The principal activities of GOT are research and development, manufacturing and sales of commercial terminals in the PRC. The address of GOT’s registered office and principal place of business is 11th Floor, Building No.1 Jia, No. 66 Zhong Guan Cun East Road, Haidian District, Beijing, the PRC. As at the date of this report, GOT is owned as to 65% by CEC and 35% by 北京世紀德彩科技有限公司 (transliterated as Beijing Century Decai Technology Co., Ltd.) (“Century Decai”), an indirect wholly-owned subsidiary of the Company.

The financial statements of GOT for the years ended 31 December 2007, 2008 and 2009 were prepared in accordance with the relevant accounting principles and financial regulations applicable to enterprises established in the PRC. The financial statements of GOT for the year ended 31 December 2007 were audited by華寅會計師事務所有限公司 (Huayin Certified Public Accountants Ltd.), certified public accountants registered in the PRC. The financial statements

– 23 –

FINANCIAL INFORMATION OF GOT

APPENDIX II

of GOT for the years ended 31 December 2008 and 2009 were audited by中審亞太會計師事務所有限公司 (China Audit Asia Pacific Certified Public Accountants Co., Ltd.), certified public accountants registered in the PRC.

For the purpose of this report, the directors of GOT have prepared management accounts of GOT for the Relevant Periods in accordance with Hong Kong Financial Reporting Standards (“HKFRSs”) issued by the Hong Kong Institute of Certified Public Accountants (“HKICPA”) (the “Underlying Financial Statements”). We have, for the purpose of this report, carried out appropriate audit procedures in respect of the Underlying Financial Statements in accordance with Hong Kong Standards on Auditing issued by the HKICPA.

We have examined the Underlying Financial Statements and have carried out such additional procedures as we considered necessary in accordance with Auditing Guideline 3.340 “Prospectuses and the Reporting Accountant” as recommended by the HKICPA.

The Financial Information of GOT for the Relevant Periods set out in this report has been prepared based on the Underlying Financial Statements for the purpose of preparing our report for inclusion in the Circular. No adjustments were considered necessary to adjust the Underlying Financial Statements in preparing our report for inclusion in the Circular.

The Underlying Financial Statements are the responsibility of the directors of GOT who approved their issue. The directors of the Company are responsible for the contents of the Circular in which this report is included. It is our responsibility to compile the Financial Information from the Underlying Financial Statements, to form an independent opinion on the Financial Information and to report our opinion to you.

In our opinion, the Financial Information, for the purpose of this report, gives a true and fair view of the state of affairs of GOT as at 31 December 2007, 2008 and 2009 and 31 October 2010 and of the results and cash flows of GOT for each of the Relevant Periods.

The comparative statement of comprehensive income, statement of changes in equity and statement of cash flows of GOT for the ten-month period ended 31 October 2009 together with the notes thereon (the “31 October 2009 Financial Information”) have been extracted from GOT’s unaudited financial information for the same period which were prepared by the directors of GOT solely for the purpose of this report. We have reviewed the 31 October 2009 Financial Information in accordance with Hong Kong Standard on Review Engagements 2410 “Review of Interim Financial Information Performed by the Independent Auditor of the Entity” issued by the HKICPA. Our review of the 31 October 2009 Financial Information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Hong Kong Standards on Auditing and consequently does not enable us to obtain assurance that we could become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion on the 31 October 2009 Financial Information. On the basis of our review which does not constitute an audit, we are not aware of any material modifications should be made to the 31 October 2009 Financial Information.

– 24 –

FINANCIAL INFORMATION OF GOT

APPENDIX II

I. FINANCIAL INFORMATION

Statement of comprehensive income

								Ten-month		Ten-month
		Year ended		Year ended		Year ended	period ended		period ended
		31 December	31 December		31 December			31 October		31 October
		2007		2008		2009		2009		2010
	Notes	RMB		RMB		RMB		RMB		RMB
								(Unaudited)
Revenue	8	111,123,298		150,801,630		131,013,033		106,439,852		134,606,927
Cost of sales		(76,422,422)	(107,952,005)			(94,672,927)		(78,889,099)	(103,673,616)
Gross profit		34,700,876		42,849,625		36,340,106		27,550,753		30,933,311
Other income	9	416,754		194,794		992,534		157,246		261,770
Other gains and losses	10	(378,951)		(446,005)		(118,768)		(32,052)		(33,460)
Selling and administrative
expenses		(15,392,283)		(20,213,384)		(20,575,894)		(14,846,102)		(15,383,701)
Profit from business operations		19,346,396		22,385,030		16,637,978		12,829,845		15,777,920
Net foreign exchange (loss)/gain		(141,930)		29,124		(7,564)		(2,901)		36,155
Finance costs	11	(175,500)		(664,603)		(1,520,575)		(1,329,325)		(816,675)
Profit before tax		19,028,966		21,749,551		15,109,839		11,497,619		14,997,400
Income tax	12	(2,654,375)		(3,287,861)		(2,285,415)		(1,341,453)		(2,378,505)
Profit and total comprehensive
income for the year/period
attributable to owners of
GOT	13	16,374,591		18,461,690		12,824,424		10,156,166		12,618,895

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FINANCIAL INFORMATION OF GOT

APPENDIX II

Statement of financial position

		As at		As at		As at	As at
		31 December	31 December		31 December		31 October
		2007		2008		2009	2010
	Notes	RMB		RMB		RMB	RMB
Non-current assets
Property, plant and equipment	17	15,944,677		15,734,075		15,088,497	14,444,996
Deferred tax assets	18	630,267		1,951,978		1,933,039	2,953,978

		16,574,944		17,686,053		17,021,536	17,398,974

Current assets
Inventories	19	52,108,266		93,546,817		56,387,027	37,740,277
Trade receivables	20	5,756,773		23,759,644		34,489,244	74,360,960
Other receivables, deposits and
prepayments	21	2,083,908		4,176,126		3,649,452	6,357,575
Current tax assets		–		351,101		–	–
Pledged bank deposits	22	–		–		–	1,760,250
Bank balances and cash	23	23,927,207		30,507,826		34,949,840	30,922,805

		83,876,154		152,341,514		129,475,563	151,141,867

Current liabilities
Trade payables	24	14,195,727		24,605,881		14,922,563	19,158,409
Other payables, accruals and
deposits received	25	10,511,672		6,808,620		5,838,395	8,673,988
Borrowings	26	–		21,000,000		10,000,000	15,000,000
Current tax liabilities		1,494,682		–		518,504	2,076,494

		26,202,081		52,414,501		31,279,462	44,908,891

Net current assets		57,674,073		99,927,013		98,196,101	106,232,976

Total assets less current liabilities		74,249,017		117,613,066		115,217,637	123,631,950

Non-current liabilities
Borrowings	26	–		20,000,000		10,000,000	5,000,000
Provision for warranties	27	3,274,721		11,677,080		11,517,227	18,312,645

		3,274,721		31,677,080		21,517,227	23,312,645

Net assets		70,974,296		85,935,986		93,700,410	100,319,305


Equity attributable to owners of
GOT
Paid-up capital	28	42,647,431		42,647,431		42,647,431	42,647,431
Reserves		28,326,865		43,288,555		51,052,979	57,671,874

Total equity		70,974,296		85,935,986		93,700,410	100,319,305

– 26 –

FINANCIAL INFORMATION OF GOT

APPENDIX II

Statement of changes in equity

		Attributable to owners of GOT	Attributable to owners of GOT	Attributable to owners of GOT	Attributable to owners of GOT
	Paid-up	Statutory	Discretionary		Retained
	capital	reserve		reserve	profits	Total equity
	RMB	RMB		RMB	RMB		RMB
	(Note 28)	(Note 29)		(Note 29)
Balance at 1 January 2007	42,647,431	1,728,825		1,728,825	10,494,624		56,599,705
Profit and total comprehensive
income for the year	–	–		–	16,374,591		16,374,591
	42,647,431	1,728,825		1,728,825	26,869,215		72,974,296

Transfer from retained profits	–	1,536,188		1,536,188	(3,072,376)		–
Dividend recognised (Note 30)	–	–		–	(2,000,000)		(2,000,000)
Balance at 31 December 2007	42,647,431	3,265,013		3,265,013	21,796,839		70,974,296
Profit and total comprehensive
income for the year	–	–		–	18,461,690		18,461,690
	42,647,431	3,265,013		3,265,013	40,258,529		89,435,986

Transfer from retained profits	–	1,874,351		1,874,351	(3,748,702)		–
Dividend recognised (Note 30)	–	–		–	(3,500,000)		(3,500,000)
Balance at 31 December 2008	42,647,431	5,139,364		5,139,364	33,009,827		85,935,986
Profit and total comprehensive
income for the year	–	–		–	12,824,424		12,824,424
	42,647,431	5,139,364		5,139,364	45,834,251		98,760,410

Transfer from retained profits	–	1,286,223		1,286,223	(2,572,446)		–
Dividend recognised (Note 30)	–	–		–	(5,060,000)		(5,060,000)
Balance at 31 December 2009	42,647,431	6,425,587		6,425,587	38,201,805		93,700,410
Profit and total comprehensive
income for the period	–	–		–	12,618,895		12,618,895
	42,647,431	6,425,587		6,425,587	50,820,700	106,319,305

Transfer from retained profits	–	1,261,890		1,261,890	(2,523,780)		–
Dividend recognised (Note 30)	–	–		–	(6,000,000)		(6,000,000)
Balance at 31 October 2010	42,647,431	7,687,477		7,687,477	42,296,920	100,319,305


(Unaudited)
Balance at 1 January 2009	42,647,431	5,139,364		5,139,364	33,009,827		85,935,986
Profit and total comprehensive
income for the period	–	–		–	10,156,166		10,156,166
	42,647,431	5,139,364		5,139,364	43,165,993		96,092,152

Transfer from retained profits	–	1,015,616		1,015,616	(2,031,232)		–
Dividend recognised (Note 30)	–	–		–	(5,060,000)		(5,060,000)
Balance at 31 October 2009	42,647,431	6,154,980		6,154,980	36,074,761		91,032,152

– 27 –

FINANCIAL INFORMATION OF GOT

APPENDIX II

Statement of cash flows

				Ten-month	Ten-month
	Year ended	Year ended	Year ended	period ended	period ended
	31 December	31 December	31 December	31 October	31 October
	2007	2008	2009	2009	2010
	RMB	RMB	RMB	RMB	RMB
				(Unaudited)
CASH FLOWS FROM
OPERATING ACTIVITIES
Profit before tax	19,028,966	21,749,551	15,109,839	11,497,619	14,997,400
Adjustments for:
Bank interest income	(284,498)	(189,544)	(274,634)	(157,246)	(258,450)
Finance costs	175,500	664,603	1,520,575	1,329,325	816,675
Depreciation of property, plant
and equipment	1,410,161	1,313,315	1,513,439	1,244,515	1,421,723
Net loss/(gain) on disposal of
property, plant and equipment	14,095	396,562	85,176	(1,540)	22,616
Impairment losses recognised on
trade and other receivables	364,856	49,443	33,592	33,592	10,844
Reversal of impairment losses on
trade and other receivables	(132,256)	(5,250)	–	–	–
	20,576,824	23,978,680	17,987,987	13,946,265	17,010,808
Movements in working capital
(Increase)/decrease in inventories	(28,913,725)	(41,438,551)	37,159,790	33,545,783	18,646,750
Increase in trade receivables	(4,299,962)	(18,025,619)	(10,763,192)	(6,066,194)	(39,882,560)
Decrease/(increase) in other
receivables, deposits and
prepayments	5,253,454	(2,113,663)	526,674	1,108,623	(2,708,123)
Increase in pledged bank
deposits	–	–	–	–	(1,760,250)
Increase/(decrease) in trade
payables	5,336,038	10,399,385	(9,683,318)	(17,577,967)	4,235,846
Increase/(decrease) in other
payables, accruals and deposits
received	4,111,581	(4,042,283)	(970,225)	(2,049,096)	2,835,593
Increase/(decrease) in provision
for warranties	1,945,161	8,402,359	(159,853)	2,332,841	6,795,418
Cash generated by/(used in)
operations	4,009,371	(22,839,692)	34,097,863	25,240,255	5,173,482
Income tax paid	(1,952,674)	(6,455,355)	(2,320,386)	(2,149,002)	(1,841,454)
Income tax refunded	–	–	923,515	–	–

NET CASH GENERATED
BY/(USED IN) OPERATING
ACTIVITIES	2,056,697	(29,295,047)	32,700,992	23,091,253	3,332,028

– 28 –

FINANCIAL INFORMATION OF GOT

APPENDIX II

				Ten-month	Ten-month
	Year ended	Year ended	Year ended	period ended	period ended
	31 December	31 December	31 December	31 October	31 October
	2007	2008	2009	2009	2010
	RMB	RMB	RMB	RMB	RMB
				(Unaudited)
CASH FLOWS FROM
INVESTING ACTIVITES
Proceeds from disposal of
property, plant and equipment	–	535,250	93,197	33,000	2,793
Payments of property, plant and
equipment	(463,065)	(2,034,525)	(1,046,234)	(952,217)	(803,631)
Interest received	284,498	189,544	274,634	157,246	258,450

NET CASH USED IN
INVESTING ACTIVITES	(178,567)	(1,309,731)	(678,403)	(761,971)	(542,388)
CASH FLOWS FROM
FINANCING ACTIVITES
Dividends paid	(2,000,000)	(3,150,000)	(5,060,000)	(5,060,000)	(6,000,000)
Proceeds from borrowings	10,000,000	46,000,000	–	–	5,000,000
Repayments of borrowings	(10,000,000)	(5,000,000)	(21,000,000)	(16,000,000)	(5,000,000)
Interest paid	(175,500)	(664,603)	(1,520,575)	(1,329,325)	(816,675)
NET CASH (USED
IN)/GENERATED BY
FINANCING ACTIVITES	(2,175,500)	37,185,397	(27,580,575)	(22,389,325)	(6,816,675)
NET (DECREASE)/INCREASE
IN CASH AND CASH
EQUIVALENTS	(297,370)	6,580,619	4,442,014	(60,043)	(4,027,035)
CASH AND CASH
EQUIVALENTS AT THE
BEGINNING OF THE
YEAR/PERIOD	24,224,577	23,927,207	30,507,826	30,507,826	34,949,840

CASH AND CASH
EQUIVALENTS AT THE END
OF THE YEAR/PERIOD	23,927,207	30,507,826	34,949,840	30,447,783	30,922,805


ANALYSIS OF THE
BALANCES OF CASH AND
CASH EQUIVALENTS
Bank balances and cash	23,927,207	30,507,826	34,949,840	30,447,783	30,922,805

– 29 –

FINANCIAL INFORMATION OF GOT

APPENDIX II

NOTES TO THE FINANCIAL INFORMATION

1. BASIS OF PREPARATION OF THE FINANCIAL INFORMATION

GOT was incorporated as a company with limited liability in the PRC on 8 August 1994. The directors of GOT regard China Electronics Corporation Limited (“CEC”), a state-owned enterprise established under the laws of the PRC, as the ultimate holding company of GOT. The address of the registered office and principal place of business of GOT is 11th Floor, Building No.1 Jia, No. 66 Zhong Guan Cun East Road, Haidian District, Beijing, the PRC.

The principle activities of GOT are research and development, manufacturing and sales of commercial terminals in the PRC.

The Financial Information is presented in Renminbi (“RMB”), which is the same as the functional currency of GOT.

2. APPLICATION OF NEW AND REVISED HONG KONG FINANCIAL REPORTING STANDARDS

For the purpose of preparing and presenting the Financial Information for the Relevant Periods, GOT has consistently applied HKFRSs, Hong Kong Accounting Standards (“HKASs”), amendments and interpretations (“INT”) issued by the HKICPA that are effective for annual accounting years beginning on or after 1 January 2010.

GOT has not early applied the following new or revised standards, amendments or interpretations that have been issued but are not yet effective.

HKFRSs (Amendments)	Improvements to HKFRSs issued in 20101
HKFRS 1 (Amendments)	Limited Exemption from Comparative HKFRS 7 Disclosures
	for First-Time Adopters3
HKFRS 1 (Amendments)	Severe Hyperinflation and Removal of Fixed Dates for
	First-time Adopters5
HKFRS 7 (Amendments)	Disclosures – Transfers of Financial Assets5
HKFRS 9	Financial Instruments7
HKAS 12 (Amendments)	Deferred Tax: Recovery of Underlying Assets6
HKAS 24 (as revised in 2009)	Related Party Disclosures4
HKAS 32 (Amendments)	Classification of Rights Issues2
HK(IFRIC)-Int 14 (Amendments)	Prepayments of a Minimum Funding Requirement4
HK(IFRIC)-Int 19	Extinguishing Financial Liabilities with Equity Instruments3

1 Effective for annual periods beginning on or after 1 July 2010 and 1 January 2011, as appropriate.
2 Effective for annual periods beginning on or after 1 February 2010.
3 Effective for annual periods beginning on or after 1 July 2010.
4 Effective for annual periods beginning on or after 1 January 2011.
5 Effective for annual periods beginning on or after 1 July 2011.
6 Effective for annual periods beginning on or after 1 January 2012.
7 Effective for annual periods beginning on or after 1 January 2013.

HKFRS 9 Financial Instruments (as issued in November 2009) introduces new requirements for the classification and measurement of financial assets. HKFRS 9 Financial Instruments (as revised in November 2010) adds requirements for financial liabilities and for derecognition.

Under HKFRS 9, all recognised financial assets that are within the scope of HKAS 39 Financial Instruments: Recognition and Measurement are subsequently measured at either amortised cost or fair value. Specifically, debt investments that are held within a business model whose objective is to collect the contractual cash flows, and that have contractual cash flows that are solely payments of principal and interest on the principal outstanding are generally measured at amortised cost at the end of subsequent accounting periods. All other debt investments and equity investments are measured at their fair values at the end of subsequent accounting periods.

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FINANCIAL INFORMATION OF GOT

APPENDIX II

In relation to financial liabilities, the significant change relates to financial liabilities that are designated as at fair value through profit or loss. Specifically, under HKFRS 9, for financial liabilities that are designated as at fair value through profit or loss, the amount of change in the fair value of the financial liability that is attributable to changes in the credit risk of that liability is presented in other comprehensive income, unless the presentation of the effects of changes in the liability’s credit risk in other comprehensive income would create or enlarge an accounting mismatch in profit or loss. Changes in fair value attributable to a financial liability’s credit risk are not subsequently reclassified to profit or loss. Previously, under HKAS 39, the entire amount of the change in the fair value of the financial liability designated as at fair value through profit or loss was presented in profit or loss.

HKFRS 9 is effective for annual periods beginning on or after 1 January 2013, with earlier application permitted.

The directors anticipate that HKFRS 9 that will be adopted in the GOT’s financial statements for the annual period beginning 1 January 2013 and that the application of the new Standard may have a significant impact on amounts reported in respect of the GOT’s financial assets. However, it is not practicable to provide a reasonable estimate of that effect until a detailed review has been completed.

GOT is in the process of assessing the impact of other new and revised HKFRSs on the financial performance and financial position of GOT.

3. SIGNIFICANT ACCOUNTING POLICIES

The Financial Information has been prepared on the historical cost convention except for certain financial instruments, which are measured at fair values, as explained in the accounting policies set out below.

The Financial Statements have been prepared in accordance with HKFRSs issued by the HKICPA. In addition, the Financial Statements include applicable disclosures required by the GEM Listing Rules and by the Hong Kong Companies Ordinance.

Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for goods sold and services provided in the course of the ordinary activities, net of discounts and sales related taxes.

Revenue from the sales of commercial terminals and systems is recognised when the commercial terminals and systems are supplied to the customers.

Interest income from a financial asset is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts the estimated future cash receipts through the expected life of the financial asset to that asset’s net carrying amount.

Property, plant and equipment

Property, plant and equipment including buildings held for use in the production or supply of goods or services, or for administrative purposes, are stated in the statement of financial position at cost, less subsequent accumulated depreciation and subsequent accumulated impairment losses, if any.

Depreciation is recognised so as to write off the cost of items of property, plant and equipment less their residual values over their useful, using the straight-line method. The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in profit or loss.

Leasing

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.

– 31 –

FINANCIAL INFORMATION OF GOT

APPENDIX II

GOT as lessee

Operating lease payments are recognised as an expense on a straight-line method over the lease term, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.

In the event that lease incentives are received to enter into operating leases, such incentives are recognised as a liability. The aggregate benefit of incentives is recognised as a reduction of rental expense on a straight-line method, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.

Leasehold land for own use

The land and building elements of a lease of land and building are considered separately for the purpose of lease classification, unless the lease payments cannot be allocated reliably between the land and building elements, in which case the entire lease is generally treated as a finance lease and accounted for as property, plant and equipment. To the extent the allocation of the lease payments can be made reliably, interest in leasehold land is accounted for as operating leases and amortised over the lease term on a straight-line method.

Foreign currencies

In preparing the financial statements of GOT, transactions in currencies other than the GOT’s functional currency (foreign currencies) are translated at the rates of exchange prevailing at the dates of the transactions. At the end of the reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.

Exchange differences on monetary items are recognised in profit or loss in the period in which they arise except for:

exchange differences on foreign currency borrowings relating to assets under construction for future productive use, which are included in the cost of those assets when they are regarded as an adjustment to interest costs on those foreign currency borrowings;
exchange differences on transactions entered into in order to hedge certain foreign currency risks (see the accounting policies below); and
exchange differences on monetary items receivable from or payable to a foreign operation for which settlement is neither planned nor likely to occur (therefore forming part of the net investment in the foreign operation), which are recognised initially in other comprehensive income and reclassified from equity to profit or loss on repayment of the monetary items.

Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.

Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation.

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

Retirement benefit costs

Payments to defined contribution retirement benefit scheme (State-managed retirement benefit schemes) are charged as expenses when employees have rendered services entitling them to the contributions.

Taxation

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

– 32 –

FINANCIAL INFORMATION OF GOT

APPENDIX II

The tax currently payable is based on taxable profit for the period. Taxable profit differs from profit as reported in the statement of comprehensive income because of items of income or expense that are taxable or deductible in other periods and items that are never taxable or deductible. GOT’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period.

Deferred tax is recognised on temporary 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. Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are generally recognised for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilised. Such deferred tax assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.

The carrying amount of deferred tax assets is reviewed at the end of the reporting period 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 assets and liabilities are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which GOT expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

Current or deferred tax is recognised in profit or loss, except when it relates to items that are recognised in other comprehensive income or directly in equity, in which case, the current tax or deferred tax is also recognised in other comprehensive income or directly in equity respectively.

Intangible assets

Research and development expenditure

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

An internally-generated intangible asset arising from development (or from the development phase of an internal project) is recognised if, and only if, all of the following have been demonstrated:

the technical feasibility of completing the intangible asset so that it will be available for use or sale;
the intention to complete the intangible asset and use or sell it;
the ability to use or sell the intangible asset;
how the intangible asset will generate probable future economic benefits;
the availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible asset; and
the ability to measure reliably the expenditure attributable to the intangible asset during its development.

The amount initially recognised for internally-generated intangible assets is the sum of the expenditure incurred from the date when the intangible asset first meets the recognition criteria listed above. Where no internally-generated asset can be recognised, development expenditure is recognised in profit or loss in the period in which it is incurred.

Subsequent to initial recognition, internally-generated intangible assets are reported at cost less accumulated amortisation and accumulated impairment losses, on the same basis as intangible assets that are acquired separately.

– 33 –

FINANCIAL INFORMATION OF GOT

APPENDIX II

Impairment of tangible assets

At the end of each reporting period, GOT reviews the carrying amounts of its tangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss, if any.

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 immediately in profit or loss.

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 immediately in profit or loss.

Inventories

Inventories are stated at the lower of cost and net realisable value. Costs, including an appropriate portion of fixed and variable overhead expenses, are determined on the weighted average method. Net realisable value represents the estimated selling price for inventories less all estimated costs of completion and costs necessary to make the sale.

Financial instruments

Financial assets and financial liabilities are recognised when GOT becomes a party to the contractual provisions of the instrument.

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

Financial assets

GOT’s financial assets comprise those classified as loans and receivables. The accounting policy adopted is set out below.

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Loans and receivables (including trade and other receivables, pledged bank deposits and bank balances and cash) are measured at amortised cost using the effective interest method, less any impairment (see the accounting policy in respect of impairment loss on financial assets below).

Interest income is recognised by applying the effective interest rate, except for short-term receivables when the recognition of interest would be immaterial.

Impairment of financial assets

Financial assets are assessed for indicators of impairment at the end of the reporting period. Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have been affected.

For the financial assets, objective evidence of impairment could include:

significant financial difficulty of the issuer or counterparty; or

– 34 –

FINANCIAL INFORMATION OF GOT

APPENDIX II

breach of contract, such as a default or delinquency in interest or principal payments; or
it becoming probable that the borrower will enter bankruptcy or financial re-organisation; or
the disappearance of an active market for that financial asset because of financial difficulties.

For certain categories of financial asset, such as trade receivables, assets that are assessed not to be impaired individually are, in addition, assessed for impairment on a collective basis. Objective evidence of impairment for a portfolio of receivables could include GOT’s past experience of collecting payments, an increase in the number of delayed payments in the portfolio past the average credit period, as well as observable changes in national or local economic conditions that correlate with default on receivables.

For financial assets carried at amortised cost, the amount of the impairment is the difference between the assets carrying amount and the present value of estimated future cash flows, discounted at the financial asset’s original effective interest rate.

For financial assets carried at cost, the amount of the impairment loss is measured as the difference between the assets carrying amount 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 loss will not be reversed in subsequent periods.

The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables, where the carrying amount is reduced through the use of an allowance account. When a trade receivable is considered uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against the allowance account. Changes in the carrying amount of the allowance account are recognised in profit or loss.

For financial assets measured at amortised cost, if, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed through profit or loss to the extent that the carrying amount of the investment at the date the impairment is reversed does not exceed what the amortised cost would have been had the impairment not been recognised.

Financial liabilities and equity instruments

Debt and equity instruments issued by GOT are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.

The accounting policies adopted in respect of financial liabilities and equity instruments are set out below.

Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by GOT are recognised at the proceeds received, net of direct issue costs.

Financial liabilities

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

Derecognition

GOT derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If GOT neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, GOT recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If GOT retains substantially all the risks and rewards of ownership of a transferred financial asset, GOT continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received.

– 35 –

FINANCIAL INFORMATION OF GOT

APPENDIX II

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 in other comprehensive income and accumulated in equity is recognised in profit or loss.

GOT derecognises financial liabilities when, and only when, GOT’s obligations are discharged, cancelled or they expire. The difference between the carrying amount of the financial liability derecognised and the consideration paid and payable is recognised in profit or loss.

Provisions

Provisions are recognised when GOT has a present obligation (legal or constructive) as a result of a past event, it is probable that GOT will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.

The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. When a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows (where the effect is material).

When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.

Related parties

A party is considered to be related to GOT if:

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

Cash and cash equivalents

For the purpose of the statement of cash flows, cash and cash equivalents comprise cash on hand and demand deposits, and short term highly liquid investments that are readily convertible into known amounts of cash, are subject to an insignificant risk of changes in value, and have a short maturity of generally within three months when acquired, less bank overdrafts which are repayable on demand and form an integral part of the GOT’s cash management.

For the purpose of the statement of financial position, cash and cash equivalents comprise cash on hand and at banks, including term deposits, and assets similar in nature to cash, which are not restricted as to use.

4. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

In the application of GOT’s accounting policies, which are described in Note 3, management is required to make judgments, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and underlying assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

– 36 –

FINANCIAL INFORMATION OF GOT

APPENDIX II

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the Relevant Periods in which the estimates are revised if the revisions affect only that period, or in the period of the revisions and future periods if the revisions affect both current and future periods.

Key sources of estimation uncertainty

The following are the key assumptions concerning the future, and other key sources of estimation uncertainty at the end of each reporting period that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial period.

Estimated impairment loss of trade and other receivables

GOT’s policy for doubtful receivables is based on the on-going evaluation of the collectability and aging analysis of the trade and other receivables and on management’s judgments. Considerable judgment is required in assessing the ultimate realisation of these receivables, including the current creditworthiness and the past collection history of each debtor, and the present values of the estimated future cash flows discounted at the effective interest rates. If the financial conditions of GOT’s debtors were to deteriorate, resulting in an impairment of their ability to make payments, additional impairment loss of trade and other receivables may be required.

Estimated impairment loss of inventories

Net realisable value of inventories is the estimated selling price in the ordinary course of business, less estimated costs of completion and selling expenses. These estimates are based on the current market condition and the historical experience of selling products of similar nature. It could change significantly as a result of changes in customer taste and competitor actions in response to changes to economic conditions.

Deferred tax assets

Deferred tax assets in relation to temporary differences have been recognised in the statement of financial position. The recognition of deferred tax assets mainly depends on whether sufficient taxable temporary differences of future assessable profits will be available in the future. In cases where the actual future assessable profits generates are less than expected, a material reversal of deferred tax assets may arise, which would be recognised in profit or loss in the statement of comprehensive income in the period of the reversal takes place.

Provision for warranties

Provisions for product warranties granted by GOT are recognised based on sales volume and past experience of the level of repairs and returns, discounted to their present values at the end of each reporting period. Management reviews and adjusts the provision to recognise the estimate at the end of each reporting period.

5. CAPITAL RISK MANAGEMENT

GOT manages its capital to ensure that the entity will be able to continue as a going concern while maximising the return to stakeholders through the optimisation of the debt and equity balance. GOT’s overall strategy remains unchanged during the Relevant Periods.

The capital structure of GOT consists of debt (which includes trade and other payables and borrowings), cash and cash equivalents and equity attributable to owners of GOT (comprising paid-up capital and reserves).

Net debt to equity ratio

The directors of GOT reviews the capital structure regularly. As part of this review, the directors of GOT considers the cost of capital and the risks associated with each class of capital. Based on recommendations of the directors of GOT, GOT will balance its overall capital structure through the payment of dividends, as well as the issue of new debt.

– 37 –

FINANCIAL INFORMATION OF GOT

APPENDIX II

The net debt to equity ratio at the end of each reporting period was as follows:

	As at	As at	As at	As at
	31 December	31 December	31 December	31 October
	2007	2008	2009	2010
	RMB	RMB	RMB	RMB
Debt	24,707,399	72,414,501	40,760,958	47,832,397
Less: Cash and cash
equivalents	23,927,207	30,507,826	34,949,840	30,922,805
Net debt	780,192	41,906,675	5,811,118	16,909,592
Equity attributable to owners
of GOT	70,974,296	85,935,986	93,700,410	100,319,305

Net debt to equity ratio	1.10%	48.76%	6.20%	16.86%

6. FINANCIAL INSTRUMENTS

(a) Categories of financial instruments

	As at	As at	As at	As at
	31 December	31 December	31 December	31 October
	2007	2008	2009	2010
	RMB	RMB	RMB	RMB
Financial assets
Loans and receivables
Trade receivables	5,756,773	23,759,644	34,489,244	74,360,960
Financial assets included in
other receivables, deposits
and prepayments	430,000	1,425,337	2,729,500	5,922,175
Pledged bank deposits	–	–	–	1,760,250
Bank balances and cash	23,927,207	30,507,826	34,949,840	30,922,805

	30,113,980	55,692,807	72,168,584	112,966,190


Financial liabilities
At amortised cost
Trade payables	14,195,727	24,605,881	14,922,563	19,158,409
Financial liabilities included
in other payables, accruals
and deposits received	2,821,976	3,614,659	5,280,004	8,249,158
Borrowings	–	41,000,000	20,000,000	20,000,000
	17,017,703	69,220,540	40,202,567	47,407,567

(b) Financial risk management objectives and policies

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

There has been no significant change to GOT’s exposure in respect of financial instruments or the manner in which it manages and measures the risks.

– 38 –

FINANCIAL INFORMATION OF GOT

APPENDIX II

Market risks

Currency risk

Transactional currency exposures arise from revenue or cost of sales in currencies other than GOT’s functional currency. Substantially all GOT’s transactions are denominated in the functional currency of GOT. According, the directors of GOT consider that GOT is not exposed to significant currency risk.

GOT 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.

Interest rate risk

GOT’s fair value interest rate risk primarily relates to fixed-rate borrowings, further details of these borrowings are set out in Note 26 to the Financial Information. GOT’s cash flow interest rate risk primarily relates to variable-rate bank balances. GOT has not used any interest rate swaps in order to mitigate its exposure associated with fluctuations relating to cash flows of interest receipts. However, the management monitors interest rate exposure and will consider other necessary actions when significant interest rate exposure is anticipated.

Price risk

As GOT has no significant investments in financial instruments at fair values, GOT is not exposed to significant price risk.

Credit risk

At the end of each reporting period, GOT’s maximum exposure to credit risk which will cause a financial loss to GOT due to failure to discharge an obligation by the counterparties is arising from the carrying amount of the respective recognised financial assets as stated in the statement of financial position. In order to minimise the credit risk, GOT has monitoring procedures to ensure that follow-up action is taken to recover overdue debts. In addition, GOT reviews the recoverable amount of each individual trade debt at the end of each reporting period to ensure that adequate impairment losses are made for irrecoverable amounts. In this regard, the directors of GOT consider that GOT’s credit risk is significantly reduced.

The credit risk on liquid funds is limited because the counterparties are banks with high credit ratings assigned by international credit-rating agencies or with good reputation.

GOT has certain concentrations of credit risk as 93%, 95%, 83% and 81% of GOT’s trade receivables as at 31 December 2007, 2008 and 2009 and 31 October 2010 respectively were due from the five largest customers.

Further quantitative data in respect of GOT’s exposure to credit risk arising from trade receivables are disclosed in Note 20.

Liquidity risk

In the management of the liquidity risk, GOT monitors and maintains a level of cash and cash equivalents deemed adequate by the management to finance GOT’s operations and mitigate the effects of fluctuations in cash flows.

– 39 –

FINANCIAL INFORMATION OF GOT

APPENDIX II

The following table details GOT’s remaining contractual maturity for its non-derivative financial liabilities based on the agreed repayment terms. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which GOT can be required to pay and includes both interest and principal cash flows.

		More than
	On demand	1 year but	Total
	or within	less than	undiscounted	Carrying
	1 year	5 years	cash flows	amounts
	RMB	RMB	RMB	RMB
At 31 December 2007
Non-derivative
financial liabilities
Trade payables	14,195,727	–	14,195,727	14,195,727
Other payables and
accruals	2,821,976	–	2,821,976	2,821,976


At 31 December 2008
Non-derivative
financial liabilities
Trade payables	24,605,881	–	24,605,881	24,605,881
Other payables and
accruals	3,614,659	–	3,614,659	3,614,659
Borrowings	22,520,575	21,215,750	43,736,325	41,000,000


At 31 December 2009
Non-derivative
financial liabilities
Trade payables	14,922,563	–	14,922,563	14,922,563
Other payables and
accruals	5,280,004	–	5,280,004	5,280,004
Borrowings	10,882,000	10,333,750	21,215,750	20,000,000


At 31 October 2010
Non-derivative
financial liabilities
Trade payables	19,158,409	–	19,158,409	19,158,409
Other payables and
accruals	8,249,158	–	8,249,158	8,249,158
Borrowings	15,518,400	5,008,250	20,526,650	20,000,000

(c) Fair value of financial instruments

The fair values of financial assets and financial liabilities are determined as follows.

The fair values of financial assets and financial liabilities with standard terms and conditions and traded in active markets are determined with reference to quoted market bid and ask prices respectively.
The fair values of other financial assets and financial liabilities (excluding derivative instruments) are determined in accordance with generally accepted pricing models based on discounted cash flow analysis.

The directors of GOT consider that the carrying amounts of financial assets and financial liabilities recorded at amortised cost in the Financial Information approximate to their fair values.

– 40 –

FINANCIAL INFORMATION OF GOT

APPENDIX II

Fair value measurements recognised in the statement of financial position

The following table provides an analysis of financial instruments that are measured subsequent to initial recognition at fair value, grouped into Levels 1 to 3 based on the degree to which the fair value is observable:

Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities;
Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and
Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs).

At the end of each reporting period, GOT did not have any assets and liabilities that were measured at the above fair value measurements hierarchy.

7. SEGMENT INFORMATION

The directors of GOT review the GOT’s internal financial reporting and other information and also obtain other relevant external information in order to assess performance and allocate resources and operating segment is identified with reference to these.

The directors of GOT consider that the business of GOT is organised in one operating segment as research and development, manufacturing and sales of commercial terminals in the PRC. Additional disclosure in relation to segment information is not presented as the directors of GOT assess the performance of the only operating segment identified based on the consistent information as disclosed in the Financial Information.

The total net segment income is equivalent to profit and total comprehensive income for the year/period attributable to owners of GOT as shown in the statement of comprehensive income and the total segment assets and total segment liabilities are equivalent to total assets and total liabilities as shown in the statement of financial position.

Details of interest income and depreciation in relation to the operating segment are disclosed in Notes 9 and 13 below respectively.

GOT is domiciled in the PRC with its major operations in the PRC. Total revenue and turnover, as disclosed in Note 8 below represented the revenue from external customers arising from the supply of sports lottery terminals and systems in the PRC. The directors of GOT consider that all the assets and liabilities of GOT are located in the PRC.

8. REVENUE

							Ten-month		Ten-month
	Year ended		Year ended		Year ended	period ended		period ended
	31 December	31 December		31 December			31 October		31 October
	2007		2008		2009		2009		2010
	RMB		RMB		RMB		RMB		RMB
							(Unaudited)
Sales of commercial
terminals and systems	111,123,298		150,801,630		131,013,033		106,439,852		134,606,927

– 41 –

FINANCIAL INFORMATION OF GOT

APPENDIX II

9. OTHER INCOME

							Ten-month		Ten-month
	Year ended		Year ended		Year ended	period ended		period ended
	31 December	31 December		31 December			31 October		31 October
	2007		2008		2009		2009		2010
	RMB		RMB		RMB		RMB		RMB
							(Unaudited)
Interest income on bank
deposits	284,498		189,544		274,634		157,246		258,450
Reversal of impairment
losses on trade and other
receivables	132,256		5,250		–		–		–
Sundry income	–		–		717,900		–		3,320
	416,754		194,794		992,534		157,246		261,770

10. OTHER GAINS AND LOSSES

							Ten-month		Ten-month
	Year ended		Year ended		Year ended	period ended		period ended
	31 December	31 December		31 December			31 October		31 October
	2007		2008		2009		2009		2010
	RMB		RMB		RMB		RMB		RMB
							(Unaudited)
Net losses/(gains) on
disposal of property,
plant and equipment	14,095		396,562		85,176		(1,540)		22,616
Impairment losses
recognised on trade
and other receivables	364,856		49,443		33,592		33,592		10,844

	378,951		446,005		118,768		32,052		33,460

11. FINANCE COSTS

							Ten-month		Ten-month
	Year ended		Year ended		Year ended	period ended		period ended
	31 December	31 December		31 December			31 October		31 October
	2007		2008		2009		2009		2010
	RMB		RMB		RMB		RMB		RMB
							(Unaudited)
Interest on borrowings
wholly repayable within
five years	175,500		664,603		1,520,575		1,329,325		816,675

– 42 –

APPENDIX II

FINANCIAL INFORMATION OF GOT

12. INCOME TAX

							Ten-month		Ten-month
	Year ended		Year ended		Year ended	period ended		period ended
	31 December	31 December		31 December			31 October		31 October
	2007		2008		2009		2009		2010
	RMB		RMB		RMB		RMB		RMB
							(Unaudited)
Current tax:
– PRC Enterprise Income
Tax	3,284,642		4,609,572		2,266,476		1,696,418		3,291,562
– Underprovision of
current tax in prior
year/period	–		–		–		–		107,882
Deferred tax (Note 18):
– Current year/period	(630,267)		(1,321,711)		18,939		(354,965)		(1,020,939)
	2,654,375		3,287,861		2,285,415		1,341,453		2,378,505

Income tax is calculated at 15% of estimated assessable profit of GOT during the Relevant Periods. GOT is subject to a preferential tax rate of 15% as GOT is recognised as a sino-foreign equity joint venture for the year ended 31 December 2007 and as an advance and new technology enterprise under the PRC Enterprise Income Tax Law for the years ended 31 December 2008 and 2009. The directors of GOT are of the opinion that, subject to approval from the relevant tax bureau, GOT will be entitled to PRC Enterprise Income Tax at 15% for the year ended 2010 onwards. The deferred tax balance has been adjusted to reflect the tax rates that are expected to apply to the Relevant Periods when the asset is realised or the liability is settled.

The tax charge for the year/period can be reconciled to the profit per the statement of comprehensive income as follows:

							Ten-month		Ten-month
	Year ended		Year ended		Year ended	period ended		period ended
	31 December	31 December		31 December			31 October		31 October
	2007		2008		2009		2009		2010
	RMB		RMB		RMB		RMB		RMB
							(Unaudited)
Profit before tax	19,028,966		21,749,551		15,109,839		11,497,619		14,997,400


Tax at PRC Enterprise
Income Tax rate of 15%	2,854,345		3,262,433		2,266,476		1,724,643		2,249,610
Tax effect of expenses not
deductible for tax
purpose	487,663		1,357,245		107,882		89,733		1,020,939
(Reversal)/recognition of
temporary differences	(630,267)		(1,321,711)		18,939		(354,965)		(1,020,939)
Underprovision in prior
year/period	–		–		–		–		107,882
Others	(57,366)		(10,106)		(107,882)		(117,958)		21,013

Income tax expense for
the year/period	2,654,375		3,287,861		2,285,415		1,341,453		2,378,505

Details of deferred taxation are set out in Note 18.

– 43 –

FINANCIAL INFORMATION OF GOT

APPENDIX II

13. PROFIT FOR THE YEAR/PERIOD

Profit for the year/period has been arrived at after charging/(crediting):

							Ten-month		Ten-month
	Year ended		Year ended		Year ended	period ended		period ended
	31 December	31 December		31 December			31 October		31 October
	2007		2008		2009		2009		2010
	RMB		RMB		RMB		RMB		RMB
							(Unaudited)
Employee benefit expense
(Note 15):
Fees, salaries,
discretionary bonuses
and other benefits	6,517,488		9,717,153		8,052,691		5,143,699		4,772,077
Social security costs	988,836		1,281,965		1,112,532		984,999		935,222
Retirement benefit scheme
contributions	612,033		731,176		670,961		582,170		531,802

Total employee benefit
expense (Note (i))	8,118,357		11,730,294		9,836,184		6,710,868		6,239,101


Auditors’ remuneration	26,300		31,200		35,000		35,000		45,833
Cost of inventories
recognised as expenses	72,837,932		96,461,052		83,210,302		68,428,622		91,088,352
Provision for warranties
(included in cost of
sales)	3,357,234		10,332,122		8,662,488		8,032,488		10,090,290
Depreciation of property,
plant and equipment
(Note (ii))	1,410,161		1,313,315		1,513,439		1,244,515		1,421,723
Operating lease rentals in
respect of rented
premises (Note (iii))	245,959		477,715		372,075		259,775		125,303
Research and development
costs expensed as
incurred	623,808		434,404		1,538,303		1,017,542		613,832
Reversal of impairment
losses on trade and other
receivables	(132,256)		(5,250)		–		–		–
Net foreign exchange
loss/(gain)	141,930		(29,124)		7,564		2,901		(36,155)
Net losses/(gains) on
disposal of property,
plant and equipment	14,095		396,562		85,176		(1,540)		22,616
Impairment losses
recognised on trade and
other receivables	364,856		49,443		33,592		33,592		10,844

Notes:

(i) Employee benefit expense of RMB699,123, RMB1,157,173, RMB738,027 and RMB304,607 were allocated in cost of inventories for the years ended 31 December 2007, 2008 and 2009, and the ten-month period ended 31 October 2010. The remaining was recognised as expenses in selling and administrative expenses for each of the Relevant Periods.
(ii) Depreciation of RMB361,781, RMB316,915, RMB397,714 and RMB378,669 were allocated in cost of inventories for the years ended 31 December 2007, 2008 and 2009, and the ten-month period ended 31 October 2010. The remaining was recognised as expenses in selling and administrative expenses for each of the Relevant Periods.
(iii) Operating leases rental of RMB245,959, RMB477,715, RMB372,075 and RMB125,303 were allocated in cost of inventories for the years ended 31 December 2007, 2008 and 2009, and the ten-month period ended 31 October 2010.

– 44 –

FINANCIAL INFORMATION OF GOT

APPENDIX II

14. DIRECTORS’ EMOLUMENTS

During the Relevant Periods, there was no emolument paid or payable to the directors of GOT.

15. EMPLOYEES’ EMOLUMENTS

Of the five individuals with the highest emoluments in GOT, none of them were directors of GOT whose emoluments are included in the disclosures in Note 14 above. The emoluments of the five highest paid individuals were as follows:

								Ten-month		Ten-month
	Year ended			Year ended		Year ended		period ended	period ended
	31 December		31 December		31 December			31 October		31 October
		2007		2008			2009	2009		2010
		RMB		RMB			RMB	RMB		RMB
								(Unaudited)
Fees, salaries,
discretionary bonus and
other benefits	1,724,173			2,880,085		2,281,068		2,098,984		1,878,845
Social security costs		162,950		149,006			162,950	135,792		129,742
Retirement benefit scheme
contributions		82,860		82,860			82,860	69,050		76,300

	1,969,983			3,111,951		2,526,878		2,303,826		2,084,887

Their emoluments were all within RMB1,000,000.

During the Relevant Periods, no emoluments were paid by GOT to any of the directors or the five highest paid individuals (including directors and employees) as an inducement to join or upon joining GOT or as compensation for loss of office. None of the directors waived any emoluments during the Relevant Periods.

16. EARNINGS PER SHARE

No earnings per share information is presented as its inclusion, for the purpose of this report, is not considered meaningful.

– 45 –

FINANCIAL INFORMATION OF GOT

APPENDIX II

17. PROPERTY, PLANT AND EQUIPMENT

		Plant,
		machinery
	Land and	and	Motor		Leasehold
	buildings	equipment	vehicles	improvements		Total
	RMB	RMB	RMB		RMB	RMB
COST
Balance at 1 January 2007	13,701,874	4,274,213	937,276		293,139	19,206,502
Additions	–	463,065	–		–	463,065
Disposals	–	(266,875)	–		–	(266,875)
Balance at 31 December
2007	13,701,874	4,470,403	937,276		293,139	19,402,692
Additions	–	1,662,209	372,316		–	2,034,525
Disposals	–	(1,568,645)	(811,435)		–	(2,380,080)
Balance at 31 December
2008	13,701,874	4,563,967	498,157		293,139	19,057,137
Additions	–	1,046,234	–		–	1,046,234
Disposals	–	(497,125)	(125,841)		–	(622,966)
Balance at 31 December
2009	13,701,874	5,113,076	372,316		293,139	19,480,405
Additions	–	131,001	672,630		–	803,631
Disposals	–	(85,379)	–		–	(85,379)
Balance at 31 October
2010	13,701,874	5,158,698	1,044,946		293,139	20,198,657


DEPRECIATION
Balance at 1 January 2007	154,146	1,702,045	187,870		256,573	2,300,634
Depreciation expense	616,584	588,756	168,255		36,566	1,410,161
Eliminated on disposals of
assets	–	(252,780)	–		–	(252,780)

Balance at 31 December
2007	770,730	2,038,021	356,125		293,139	3,458,015
Depreciation expense	616,584	574,191	122,540		–	1,313,315
Eliminated on disposals of
assets	–	(1,119,292)	(328,976)		–	(1,448,268)

Balance at 31 December
2008	1,387,314	1,492,920	149,689		293,139	3,323,062
Depreciation expense	616,584	797,419	99,436		–	1,513,439
Eliminated on disposals of
assets	–	(350,212)	(94,381)		–	(444,593)

Balance at 31 December
2009	2,003,898	1,940,127	154,744		293,139	4,391,908
Depreciation expense	513,820	759,665	148,238		–	1,421,723
Eliminated on disposals of
assets	–	(59,970)	–		–	(59,970)

Balance at 31 October
2010	2,517,718	2,639,822	302,982		293,139	5,753,661


CARRYING AMOUNTS
Balance at 31 December
2007	12,931,144	2,432,382	581,151		–	15,944,677


Balance at 31 December
2008	12,314,560	3,071,047	348,468		–	15,734,075


Balance at 31 December
2009	11,697,976	3,172,949	217,572		–	15,088,497


Balance at 31 October
2010	11,184,156	2,518,876	741,964		–	14,444,996

– 46 –

FINANCIAL INFORMATION OF GOT

APPENDIX II

The above items of property, plant and equipment are depreciated on a straight-line method at the following rate per annum:

Leasehold land under finance lease:	Over the lease term
Buildings:	41⁄2%
Plant, machinery and equipment:	9% – 32%
Motor vehicles:	19% – 24%
Leasehold improvements:	121⁄2%

Land and buildings with a carrying amount of RMB12,931,144, RMB12,314,560 and RMB11,697,976 as at 31 December 2007, 2008 and 2009 respectively have been pledged to secure general banking facilities and short-term borrowings granted to GOT (Note 26). The pledge was released during the ten-month period ended 31 October 2010.

The carrying amount of the land and buildings shown above comprises properties situated in the PRC under medium-term lease.

18. DEFERRED TAXATION

The following are the major deferred tax assets balances recognised and movement thereon during the current and prior year/period:

								Provision for
					Doubtful debts			warranties	Total
						RMB		RMB	RMB
	At 1 January 2007					–		–	–
	Charge to profit or loss (Note 12)					139,059		491,208	630,267
	At 31 December 2007					139,059		491,208	630,267
	Charge to profit or loss (Note 12)					61,357		1,260,354	1,321,711
	At 31 December 2008					200,416		1,751,562	1,951,978
	Charge/(credit) to profit or loss _(Note _	12)				5,039		(23,978)	(18,939)
	At 31 December 2009					205,455		1,727,584	1,933,039
	Charge to profit or loss (Note 12)					1,626		1,019,313	1,020,939
	At 31 October 2010					207,081		2,746,897	2,953,978


19.	INVENTORIES
				As	at	As	at	As at	As at
			31	December		31 December		31 December	31 October
				2007		2008		2009	2010
				RMB		RMB		RMB	RMB
	Raw materials			26,822,733		39,934,577		13,777,557	13,890,833
	Work-in-progress				–	22,594		1,596,240	–
	Finished goods			25,285,533		53,589,646		41,013,230	23,849,444
				52,108,266		93,546,817		56,387,027	37,740,277


20.	TRADE RECEIVABLES
				As	at	As	at	As at	As at
			31	December		31 December		31 December	31 October
				2007		2008		2009	2010
				RMB		RMB		RMB	RMB
	Trade receivables			6,981,149		25,006,768		35,769,960	75,652,520
	Less: Allowance for doubtful debts			(1,224,376)		(1,247,124)		(1,280,716)	(1,291,560)

				5,756,773		23,759,644		34,489,244	74,360,960

– 47 –

FINANCIAL INFORMATION OF GOT

APPENDIX II

The following is an aged analysis of trade receivables, presented based on the invoice date, net of allowance for doubtful debts:

	As at	As at	As at	As at
	31 December	31 December	31 December	31 October
	2007	2008	2009	2010
	RMB	RMB	RMB	RMB
Within 1 year	5,690,628	22,426,844	27,408,100	65,118,010
Over 1 year but less than 2 years	55,376	1,310,052	6,159,670	6,701,500
Over 2 years but less than 3 years	–	22,748	921,474	2,541,450
Over 3 years	10,769	–	–	–
	5,756,773	23,759,644	34,489,244	74,360,960

The credit terms granted to customers are varied and are generally the result of negotiations between individual customers and GOT. No interest is charged on trade receivables.

At 31 December 2007, 2008 and 2009 and 31 October 2010, approximately 1%, 1%, 3% and 4% of the trade receivables are past due but not impaired respectively. Of the trade receivables at the end of each reporting period, approximately RMB5,400,000, RMB22,700,000, RMB29,400,000 and RMB60,200,000 are due from GOT’s five largest customers.

Receivables that are past due but not impaired relate to a number of independent customers that have good track records with GOT. Based on past experience, the directors are of the opinion that no provision for impairment is considered necessary in respect of these balances as there has not been a significant change in the credit quality and the balances are still considered fully recoverable. GOT does not hold any collateral or other credit enhancements over these balances nor does it have a legal right of offset against any amounts owed by GOT to the counterparty.

Ageing of past due but not impaired

	As at	As at	As at	As at
	31 December	31 December	31 December	31 October
	2007	2008	2009	2010
	RMB	RMB	RMB	RMB
Within 1 year	–	22,748	921,474	2,541,450
Over 1 year but less than 2 years
past due	–	–	–	–
Over 2 years but less than 3 years
past due	10,769	–	–	–
Total	10,769	22,748	921,474	2,541,450

Movement in the allowance for doubtful debts

	As at	As at	As at	As at
	31 December	31 December	31 December	31 October
	2007	2008	2009	2010
	RMB	RMB	RMB	RMB
Balance at beginning of the
year/period	991,776	1,224,376	1,247,124	1,280,716
Impairment losses recognised on
trade receivables	364,856	22,748	33,592	10,844
Reversal of impairment losses on
trade receivables	(132,256)	–	–	–

Balance at end of the year/period	1,224,376	1,247,124	1,280,716	1,291,560

– 48 –

FINANCIAL INFORMATION OF GOT

APPENDIX II

21. OTHER RECEIVABLES, DEPOSITS AND PREPAYMENTS

	As at	As at	As at	As at
	31 December	31 December	31 December	31 October
	2007	2008	2009	2010
	RMB	RMB	RMB	RMB
Deposits paid to suppliers	1,186,090	2,400,900	344,200	435,400
Prepayments	467,818	349,889	575,752	–
Other receivables	430,000	1,425,337	2,729,500	5,922,175

	2,083,908	4,176,126	3,649,452	6,357,575

22. PLEDGED BANK DEPOSITS

At 31 October 2010, the pledged bank deposits held in dedicated bank account of RMB1,760,250 were pledged for GOT’s letter of guarantee in respect of certain sales contracts with customers.

23. BANK BALANCES AND CASH

At 31 December 2007, 2008, 2009 and 31 October 2010, bank balances and cash comprise cash held by GOT and short-term bank deposits carrying effective interest rate ranging at 0.60% – 1.71%, 0.30% – 1.71%, 0.30% – 1.35% and 0.36% – 1.35% per annum respectively.

At 31 December 2007, 2008 and 2009 and 31 October 2010, the bank balances and cash of approximately RMB23,182,000, RMB29,726,000, RMB34,184,000 and RMB30,120,000 respectively were dominated in RMB which is not freely convertible into other currencies.

Included in bank balances and cash, amounts of approximately RMB20,410,000, RMB25,717,000, RMB32,011,000 and RMB29,482,000 as at 31 December 2007, 2008 and 2009 and 31 October 2010 respectively were placed in a financial institution, which is a fellow subsidiary of GOT and controlled by CEC.

24. TRADE PAYABLES

The following is an analysis of trade payables by age based on the invoice date:

	As at	As at	As at	As at
	31 December	31 December	31 December	31 October
	2007	2008	2009	2010
	RMB	RMB	RMB	RMB
Within 1 year	14,167,978	24,579,031	14,895,713	19,123,909
Over 1 year but less than 3 years	27,749	26,850	26,850	15,051
Over 3 years	–	–	–	19,449
	14,195,727	24,605,881	14,992,563	19,158,409

GOT has financial risk management policies in place to ensure that all payables are paid within the credit time frame. Trade payables are non-interest bearing.

At 31 December 2009, included above is an amount due to a fellow subsidiary amounted to RMB294,017.

– 49 –

FINANCIAL INFORMATION OF GOT

APPENDIX II

25. OTHER PAYABLES, ACCRUALS AND DEPOSITS RECEIVED

	As at	As at	As at	As at
	31 December	31 December	31 December	31 October
	2007	2008	2009	2010
	RMB	RMB	RMB	RMB
Deposits received from customers
for contracts	7,689,696	3,193,961	558,391	424,831
Accrued charges	2,142,758	2,432,818	2,012,787	786,318
Other payables	679,218	1,181,841	3,267,217	7,462,839
	10,511,672	6,808,620	5,838,395	8,673,988

GOT has financial risk management policies in place to ensure that all payables are paid within the credit time frame. Other payables are non-interest bearing.

26. BORROWINGS

	As at	As at	As at	As at
	31 December	31 December	31 December	31 October
	2007	2008	2009	2010
	RMB	RMB	RMB	RMB
Bank loan (Note (i))	–	–	–	5,000,000
Loans from a fellow subsidiary
(Note (ii))	–	41,000,000	20,000,000	15,000,000

	–	41,000,000	20,000,000	20,000,000


Secured term loans	–	11,000,000	–	–
Unsecured term loans	–	30,000,000	20,000,000	20,000,000

	–	41,000,000	20,000,000	20,000,000


Carrying amount repayable:
On demand or within 1 year	–	21,000,000	10,000,000	15,000,000
More than 1 year, but not
exceeding 2 years	–	10,000,000	10,000,000	5,000,000
More than 2 years, but not
exceeding 5 years	–	10,000,000	–	–
	–	41,000,000	20,000,000	20,000,000
Less: Amounts due within one year
and shown under current
liabilities	–	(21,000,000)	(10,000,000)	(15,000,000)

	–	20,000,000	10,000,000	5,000,000

Notes:

(i) Unsecured fixed rate loan with a financial institution amounted to RMB5,000,000 with maturity period of six months and bear interest at 4.86% per annum. The unsecured term loan was fully settled in March 2011.
(ii) The borrowings were provided by a fellow subsidiary, which is controlled by CEC, the ultimate holding company of GOT. The secured term loans were secured by the pledge of property held by GOT (Note 17). The weighted average effective interest rate on the borrowings for the Relevant Periods are 5.85%, 6.53%, 5.80% and 5.38% per annum respectively. The unsecured term loan was fully settled in December 2010.

– 50 –

FINANCIAL INFORMATION OF GOT

APPENDIX II

27. PROVISION FOR WARRANTIES

	RMB
Balance at 1 January 2007	1,329,560
Additional provision recognised	3,357,234
Amounts utilised during the year	(1,412,073)
Balance at 31 December 2007	3,274,721
Additional provision recognised	10,332,122
Amounts utilised during the year	(1,929,763)
Balance at 31 December 2008	11,677,080
Additional provision recognised	8,662,488
Amounts utilised during the year	(8,822,341)
Balance at 31 December 2009	11,517,227
Additional provision recognised	10,090,290
Amounts utilised during the period	(3,294,872)
Balance at 31 October 2010	18,312,645

GOT provides warranties to its customers on certain of its products, under which faulty products are repaired or replaced. The amount of the provision for the warranties is estimated based on sales volumes and past experience of the level of repairs and returns. The estimation basis is reviewed on an ongoing basis and revised where appropriate.

28. PAID-UP CAPITAL

					As at	As at	As at	As at
				31	December	31 December	31 December	31 October
					2007	2008	2009	2010
					RMB	RMB	RMB	RMB
Registered	and	paid-up	capital		42,647,431	42,647,431	42,647,431	42,647,431

GOT was established in the PRC with limited liability on 8 August 1994 and has a registered and paid-up capital US$5,000,000 (equivalent to RMB42,647,431).

29. RESERVES

Statutory reserve

According to the relevant laws and regulations and the Articles of Association of GOT, 10% of profit after taxation reported in its PRC statutory financial statements is required to be transferred to statutory reserve until the statutory reserve reaches 50% of the registered capital of GOT. Upon approval from the authorities, the statutory surplus reserve can be used to offset accumulated losses or to increase share capital. When it is utilised to increase share capital, the remaining balance of the statutory reserve cannot fall below 25% of the share capital.

Discretionary reserve

According to GOT’s Articles of Association, the board of directors, after obtaining approval from the shareholders, has the discretion to provide for discretionary reserve. Upon approval from the authorities, the discretionary reserve can be used to make up any losses incurred or to increase share capital.

– 51 –

FINANCIAL INFORMATION OF GOT

APPENDIX II

30. DIVIDENDS

							Ten-month		Ten-month
	Year ended		Year ended		Year ended	period ended		period ended
	31 December	31 December		31 December			31 October		31 October
	2007		2008		2009		2009		2010
	RMB		RMB		RMB		RMB		RMB
							(Unaudited)
Dividends recognised as
distribution during the
year/period	2,000,000		3,500,000		5,060,000		5,060,000		6,000,000

31. RETIREMENT BENEFIT SCHEME

GOT participates in employee social security plans as required by the regulations in the PRC. The employees are members of social security schemes operated by the relevant local government authorities. The pension plans are funded by payments from employees and by GOT. The amounts charged to the statement of comprehensive income represent contributions payable by GOT at the specified rates according to the respective plans. The only obligation of GOT in respect of the retirement benefit plans is to make the specified contributions.

32. OPERATING LEASE COMMITMENT

GOT as lessee

At the end of each reporting period, GOT has commitments for future minimum lease payments under non-cancellable operating lease which falls due as follows:

				As at	As at	As at	As at
			31	December	31 December	31 December	31 October
				2007	2008	2009	2010
				RMB	RMB	RMB	RMB
Within	one	year		–	–	–	106,763

Operating lease payment represents rental payable by GOT for its warehouse facility. Lease is negotiated for a term of one year and rental is fixed over the lease period.

33. RELATED PARTY TRANSACTIONS

Apart from those disclosed elsewhere in the Financial Information, GOT entered into the following significant related party transactions during the Relevant Periods:

							Ten-month		Ten-month
	Year ended		Year ended		Year ended	period ended		period ended
	31 December	31 December		31 December			31 October		31 October
	2007		2008		2009		2009		2010
	RMB		RMB		RMB		RMB		RMB
							(Unaudited)
Interest income received
from a fellow subsidiary
(Note (i))	16,726		115,778		225,403		115,644		231,789
Interest expense paid to a
fellow subsidiary
(Note (ii))	175,500		664,603		1,520,575		1,329,325		782,250
Purchases from a fellow
subsidiary (Note (iii))	–		94,100		367,200		367,200		55,450

– 52 –

FINANCIAL INFORMATION OF GOT

APPENDIX II

Notes:

(i) Interest income arose from bank balances were received from a financial institution which is a fellow subsidiary of GOT and controlled by CEC. Further details regarding the bank balances are set out in Note 23 to the Financial Information.
(ii) Interest expenses were paid to a financial institution which is a fellow subsidiary of GOT and controlled by CEC. Further details regarding the borrowings are set out in Note 26 to the Financial Information.
(iii) Purchases were made from a fellow subsidiary, which is controlled by CEC. The amounts were mutually agreed by both parties.

The remuneration of key management personnel during the Relevant Periods was as follows:

							Ten-month		Ten-month
	Year ended		Year ended		Year ended	period ended		period ended
	31 December	31 December		31 December			31 October		31 October
	2007		2008		2009		2009		2010
	RMB		RMB		RMB		RMB		RMB
							(Unaudited)
Short-term employee
benefits	1,887,123		3,029,091		2,444,018		2,234,776		2,008,587
Post-employment benefits	82,860		82,860		82,860		69,050		76,300
	1,969,983		3,111,951		2,526,878		2,303,826		2,084,887

II. EVENTS AFTER THE REPORTING PERIOD

Save as disclosed elsewhere in the Financial Information, no significant event took place subsequent to 31 October 2010.

III. SUBSEQUENT FINANCIAL STATEMENTS

No audited financial statements of GOT have been prepared in respect of any period subsequent to 31 October 2010.

Yours faithfully,

HLB Hodgson Impey Cheng

Chartered Accountants Certified Public Accountants Hong Kong

– 53 –

FINANCIAL INFORMATION OF GOT

APPENDIX II

2. MANAGEMENT DISCUSSION AND ANALYSIS OF GOT

(a) Business review

GOT was established in the PRC on 8 August 1994 with registered and paid-up capital of RMB42,647,400. During the Relevant Periods, GOT was mainly engaged in research, development and production of sports lottery terminals and systems. GOT was one of the largest players in the PRC sports lottery terminals market with annual production capability of over 200,000 units. After over 10 years of industry experience, GOT has built up superior research and development abilities in sports lottery terminals and systems and developed an extensive sales network in over 20 provinces and cities in the PRC. In addition, GOT has enhanced its aftersales services by setting up provincial service centres in several provinces and cities across the PRC to handle product repair and maintenance and provide technical support services.

(b) Financial review, financial position and capital structure

As at 31 December 2007, 2008, 2009 and 31 October 2010, the respective net asset values were RMB70,974,296, RMB85,935,986, RMB93,700,410 and RMB100,319,305. The respective revenues for the Relevant Periods were RMB111,123,298, RMB150,801,630, RMB131,013,033 and RMB134,606,927, while the respective net profit after tax for the Relevant Periods were RMB16,374,591, RMB18,461,690, RMB12,824,424 and RMB12,618,895. Due to the implementation of PRC government policy in 2008 requiring lottery shops to upgrade and/or replace their old lottery terminals, the demand for lottery terminals increased which boosted the revenue of GOT during that year. In light of this, GOT had an outstanding financial performance in 2008.

As at 31 December 2007, 2008, 2009 and 31 October 2010, the respective bank balances were RMB23,927,207, RMB30,507,826, RMB34,949,840 and RMB30,922,805. While, the respective net current assets were RMB57,674,073, RMB99,927,013, RMB98,196,101 and RMB106,232,976.

During the Relevant Periods, GOT funded its operation by its internal resources, borrowings from a finance company controlled by CEC and an unsecured bank loan for its working capital usage. The borrowings from the finance company controlled by CEC was fully repaid before 1 January 2011. No financial instrument was used for hedging purposes during the Relevant Periods.

(c) Employment and remuneration policy

As at 31 December 2007, 2008, 2009 and 31 October 2010, the total number of employees of GOT were 117, 134, 96 and 97 respectively. The respective staff costs for the Relevant Periods were RMB8,118,357, RMB11,730,294, RMB9,836,184 and RMB6,239,101. The remuneration policy was reviewed in line with the market conditions, current legislation and the performance of the individual staff.

– 54 –

FINANCIAL INFORMATION OF GOT

APPENDIX II

(d) Future Plan and Prospects

GOT is an established key industry player with cutting-edge technologies. Leveraging on its continuous robust investment in research and development together with strong support from the Group by introducing world-class lottery technologies from its foreign business partners, the management expected that GOT will continue to develop new technologies for the sports lottery industry in the PRC so as to capture those valuable opportunities invited by the burgeoning PRC’s lottery market.

(e) Details of charges on assets

The carrying amounts of pledged properties for the borrowings from a finance company controlled by CEC were nil as at 31 December 2007, RMB12,314,560 as at 31 December 2008, RMB11,697,976 as at 31 December 2009 and nil as at 31 October 2010.

(f) Borrowings and gearing ratio

As at 31 December 2007, 2008, 2009 and at 31 October 2010, the total borrowings outstanding were nil, RMB41,000,000, RMB20,000,000 and RMB20,000,000. The gearing ratios (based on total borrowings over total equity) were approximately nil, 48%, 21% and 20% respectively.

(g) Foreign exchange exposure

Since the operations of GOT are in the PRC and most of the transactions, monetary assets and liabilities are denominated in RMB, GOT’s exposure to foreign currency risk is minimal.

(h) Significant acquisition and disposal

There was no material acquisition and disposal of subsidiaries and associated companies during the Relevant Periods.

(i) Contingent liabilities

Save for the provision for warranties to customers on product repair and replacement, GOT had no contingent liabilities and capital commitment as at 31 December 2007, 2008, 2009 and 31 October 2010.

– 55 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

APPENDIX III

A. UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

1. Introduction

The unaudited pro forma financial information of the Enlarged Group, comprising the unaudited pro forma consolidated statement of comprehensive income, the unaudited pro forma consolidated statement of financial position and the unaudited pro forma consolidated statement of cash flows of the Enlarged Group (hereinafter collectively referred to as the “Unaudited Pro Forma Financial Information”), has been prepared by the Directors to illustrate the effect of the Acquisition.

The Unaudited Pro Forma Financial Information should be read in conjunction with the financial information of the Group as set out in Appendix I, the financial information of GOT as set out in Appendix II and other financial information included elsewhere in this circular. The Unaudited Pro Forma Financial Information does not take account of any trading or other transactions subsequent to the dates of the respective financial statements of the companies comprising the Enlarged Group included in the Unaudited Pro Forma Financial Information.

2. Unaudited Pro Forma Consolidated Statement of Comprehensive Income of the Enlarged Group

The following is the unaudited pro forma consolidated statement of comprehensive income of the Enlarged Group as if the Acquisition had been completed at the commencement of the period reported on. The unaudited pro forma consolidated statement of comprehensive income has been prepared based on (i) the audited consolidated statement of comprehensive income of the Group for the year ended 31 December 2010 as set out in Appendix I to this circular; and (ii) the audited statement of comprehensive income of GOT for the year ended 31 December 2009 as set out in Appendix II to this circular respectively, after making pro forma adjustments that are (i) directly attributable to the proposed Acquisition and not relating to future events or decisions; and (ii) factually supportable.

The unaudited pro forma consolidated statement of comprehensive income has been prepared for illustrative purposes only, based on the judgments and assumptions of the Directors, and, because of its hypothetical nature, it may not give a true picture of the results of the Enlarged Group for the year ended 31 December 2010 or any future periods.

– 56 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

APPENDIX III

								Pro forma
	The Group							Enlarged
	for the year							Group for the
	ended							year ended
	31 December	GOT for the	year ended					31 December
	2010	31 December 2009				Pro forma	adjustments	2010
	HK$	RMB		HK$		HK$	HK$	HK$
	(Audited)	(Audited)		(Unaudited)		(Unaudited)	(Unaudited)	(Unaudited)
	Note 2.1	Note 2.2		_Note _	2.2	Note 2.3	Note 2.4
Revenue	105,143,580	131,013,033		148,981,470				254,125,050
Cost of sales and services	(40,782,791)	(94,672,927)		(107,657,319)				(148,440,110)

Gross profit	64,360,789	36,340,106		41,324,151				105,684,940
Investment and other income	1,102,253	992,534		1,128,660				2,230,913
Other gains and losses	970,582	(118,768)		(135,057)				835,525
Selling and administrative expenses	(70,846,906)	(20,575,894)		(23,397,877)			(1,450,000)	(95,694,783)
Share of profits of an associate	5,153,835	–			–	(5,153,835)		–

Profit from business operations	740,553	16,637,978		18,919,877				13,056,595
Share-based payments	(6,122,251)	–			–			(6,122,251)
Net foreign exchange loss	(74,700)	(7,564)		(8,601)				(83,301)
Amortisation of other intangible
assets	(40,904,060)	–			–			(40,904,060)
Finance costs	–	(1,520,575)		(1,729,122)				(1,729,122)

(Loss)/profit before tax	(46,360,458)	15,109,839		17,182,154				(35,782,139)
Income tax	5,345,881	(2,285,415)		(2,598,860)				2,747,021

(Loss)/profit for the year	(41,014,577)	12,824,424		14,583,294				(33,035,118)
Other comprehensive income, net
of income tax
Exchange differences on translating
foreign operations	34,680,218	–		605,045				35,285,263
Exchange differences released upon
disposals of subsidiaries	353,719	–			–			353,719
Share of other comprehensive
income of an associate	1,550,991	–			–	(1,550,991)		–

Other comprehensive income for
the year, net of income tax	36,584,928	–		605,045				35,638,982

Total comprehensive income for
the year	(4,429,649)	12,824,424		15,188,339				2,603,864


(Loss)/profit attributable to:
Owners of the Company	(37,798,646)	12,824,424		14,583,294				(29,819,187)
Non-controlling interests	(3,215,931)	–			–			(3,215,931)

	(41,014,577)	12,824,424		14,583,294				(33,035,118)


Total comprehensive income
attributable to:
Owners of the Company	(1,244,408)	12,824,424		15,188,339				5,789,105
Non-controlling interests	(3,185,241)	–			–			(3,185,241)

	(4,429,649)	12,824,424		15,188,339				2,603,864

– 57 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

APPENDIX III

Notes to the unaudited pro forma consolidated statement of comprehensive income of the Enlarged Group:

2.1 The amounts have been extracted from the audited consolidated statement of comprehensive income of the Group for the year ended 31 December 2010 as shown in the published annual report of the Company for the year ended 31 December 2010 as set out in Appendix I to this circular.
2.2 The adjustment reflects the inclusion of the revenue, income and expenses of GOT as if the proposed Acquisition had been completed at the commencement of the year ended 31 December 2010. The amounts have been extracted from the audited statement of comprehensive income of GOT for the year ended 31 December 2009 as set out in Appendix II to this circular.

The amounts presented in the statement of comprehensive income of GOT for the year ended 31 December 2009 are converted into HK$ at an exchange rate of RMB1 to HK$1.13715. No representation is made that Renminbi amounts have been, could have been or could be translated to Hong Kong dollar amounts, or vice versa, at that rate or at any other rates or at all.

2.3 The Group holds 35% equity interest in GOT and accounted for the results of GOT using the equity method of accounting in the consolidated financial statements of the Company for the year ended 31 December 2010. The adjustment represents the reversal of the share of profits of an associate and the share of other comprehensive income, which were attributable to the 35% equity interest in GOT held by the Group during the year ended 31 December 2010, as if the Acquisition had been completed at the commencement of the period being reported on. Upon completion of the Acquisition, GOT will become a wholly-owned subsidiary of the Company and the assets, liabilities and results of GOT will be consolidated into the financial statements of the Company. The adjustments have continuing effect on the pro forma consolidated statement of comprehensive income of the Enlarged Group.
2.4 The adjustment reflects the estimated costs related to the Acquisition amounting to approximately HK$1,450,000 expensed in profit or loss, as if the Acquisition had been completed at the commencement of the period being reported on. In accordance with Hong Kong Financial Reporting Standard 3 (Revised) “Business Combinations” (applicable for annual periods beginning on or after 1 July 2009), acquisition-related costs are costs the acquirer incurs to effect a business combination, and the acquirer shall account for acquisition-related costs as expenses in the periods in which the costs are incurred and the services are received. This adjustment is not expected to have a continuing effect on the Enlarged Group.

The unaudited pro forma consolidated statement of comprehensive income does not take account of any trading or other transactions subsequent to the date of the financial statements included in the unaudited pro forma consolidated statement of comprehensive income (i.e. 31 December 2010).

3. Unaudited Pro Forma Consolidated Statement of Financial Position of the Enlarged Group

The following is the unaudited pro forma consolidated statement of financial position of the Enlarged Group as if the Acquisition had been completed at the date reported on. The unaudited pro forma consolidated statement of financial position has been prepared based on (i) the audited consolidated statement of financial position of the Group as at 31 December 2010 as set out in Appendix I to this circular; and (ii) the audited statement of financial position of GOT as at 31 October 2010 as set out in Appendix II to this circular respectively, after making pro forma adjustments that are (i) directly attributable to the proposed Acquisition and not relating to future events or decisions; and (ii) factually supportable.

The unaudited pro forma consolidated statement of financial position has been prepared for illustrative purposes only, based on the judgments and assumptions of the Directors, and, because of its hypothetical nature, it may not give a true picture of the financial position of the Enlarged Group as at 31 December 2010 or any future date.

– 58 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

APPENDIX III

											Pro forma
	The Group										Enlarged
	as at										Group as at
	31 December										31 December
	2010	GOT as at 31		October 2010				Pro forma	adjustments		2010
	HK$		RMB		HK$		HK$	HK$	HK$	HK$	HK$
	(Audited)		(Audited)		(Unaudited)		(Unaudited)	(Unaudited)	(Unaudited)	(Unaudited)	(Unaudited)
	Note 3.1		Note 3.2		Note 3.2		Note 3.3	Note 3.4	Note 3.5	Note 3.6
Non-current assets
Property, plant and
equipment	15,474,499		14,444,996		16,785,085						32,259,584
Goodwill	688,498,150		–		–		127,467,730		50,573,426	(116,571,033)	749,968,273
Other intangible assets	62,864,771		–		–						62,864,771
Interest in an associate	52,124,417		–		–				(52,124,417)		–
Deposits and prepayments	33,358,991		–		–						33,358,991
Other assets	1,676,594		–		–						1,676,594
Deferred tax assets	–		2,953,978		3,432,522						3,432,522

	853,997,422		17,398,974		20,217,607						883,560,735

Current assets
Inventories	–		37,740,277		43,854,202						43,854,202
Trade receivables	37,595,399		74,360,960		86,407,436						124,002,835
Other receivables, deposits
and prepayments	54,741,888		6,357,575		7,387,502						62,129,390
Pledged bank deposits	–		1,760,250		2,045,411						2,045,411
Bank balances and cash	140,867,489		30,922,805		35,932,299	(127,467,730)		(1,450,000)			47,882,058

	233,204,776		151,141,867		175,626,850						279,913,896

Current liabilities
Trade payables	6,444,817		19,158,409		22,262,071						28,706,888
Accruals and other payables	20,011,359		8,673,988		10,079,174						30,090,533
Amount due to an associate	1,285,310		–		–						1,285,310
Borrowings	–		15,000,000		17,430,000						17,430,000
Current tax liabilities	2,560,234		2,076,494		2,412,886						4,973,120

	30,301,720		44,908,891		52,184,131						82,485,851

Net current assets	202,903,056		106,232,976		123,442,719						197,428,045

Total assets less current
liabilities	1,056,900,478		123,631,950		143,660,326						1,080,988,780

Non-current liabilities
Borrowings	–		5,000,000		5,810,000						5,810,000
Provision for warranties	–		18,312,645		21,279,293						21,279,293
Deferred tax liabilities	14,723,425		–		–						14,723,425

	14,723,425		23,312,645		27,089,293						41,812,718


Net assets	1,042,177,053		100,319,305		116,571,033						1,039,176,062


Capital and reserves
Share capital	7,356,321		42,647,431		49,556,315					(49,556,315)	7,356,321
Reserves	1,031,896,094		57,671,874		67,014,718			(1,450,000)	(1,550,991)	(67,014,718)	1,028,895,103

Equity attributable to owners
of the Company	1,039,252,415		100,319,305		116,571,033						1,036,251,424
Non-controlling interests	2,924,638		–		–						2,924,638


Total equity	1,042,177,053		100,319,305		116,571,033						1,039,176,062

Notes to the unaudited pro forma consolidated statement of financial position of the Enlarged Group:

3.1 The balances have been extracted from the audited consolidated statement of financial position of the Group as at 31 December 2010 as shown in the published annual report of the Company for the year ended 31 December 2010 as set out in Appendix I to this circular.
3.2 The adjustment reflects the inclusion of the assets, liabilities and equity of GOT as if the proposed Acquisition had been completed on 31 December 2010. The balances have been extracted from the audited statement of financial position of GOT as at 31 October 2010 as set out in Appendix II to this circular.

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UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

APPENDIX III

The amounts presented in the statement of financial position of GOT as at 31 October 2010 are converted into HK$ at an exchange rate of RMB1 to HK$1.162. No representation is made that Renminbi amounts have been, could have been or could be translated to Hong Kong dollar amounts, or vice versa, at that rate or at any other rates or at all.

3.3 The adjustment reflects the settlement of the Consideration for the Acquisition of RMB108,023,500 (equivalent to HK$127,467,730) by cash. The Group intends to finance the Consideration for the Acquisition by a combination of bank borrowings and internal resources of the Group. For the purpose of the preparation of the unaudited pro forma consolidated statement of financial position, it has been assumed that the Consideration of RMB108,023,500 (equivalent to HK$127,467,730) was paid by the Group from internal resources of the Group.
3.4 The adjustment reflects the payment of the estimated costs directly attributable to the Acquisition of approximately HK$1,450,000 by the Group from its internal resources.
3.5 The Group holds 35% equity interest in GOT and accounted for the interest in GOT using the equity method of accounting in the consolidated financial statements of the Company for the year ended 31 December 2010. The adjustment represents the reversal of the interest in an associate and the related exchange reserve, which were attributable to the 35% equity interest in GOT held by the Group as at 31 December 2010, as if the Acquisition had been completed at the date reported on. Upon completion of the Acquisition, GOT will become a wholly-owned subsidiary of the Company and the assets, liabilities and results of GOT will be consolidated into the financial statements of the Company.
3.6 The adjustment reflects:
(i) the estimated goodwill arising from the Acquisition of approximately HK$61,470,123; and
(ii) elimination of the share capital and pre-acquisition reserves of GOT, as if the Acquisition had been completed at the date reported on; and

For the purpose of the preparation of the unaudited pro forma consolidated statement of financial position, it has been assumed that:

(i) the fair value of the identifiable assets and liabilities of GOT as at 31 October 2010 approximated their carrying amounts as shown in the statement of financial position set out in Appendix II.
(ii) the fair value of the 35% equity in GOT held by the Group on the date of the completion of the Acquisition approximated the excess of the carrying amount of the interest in associate of HK$52,124,417, over the related reserves as accumulated in the equity of the Group of HK$1,550,991, as shown in the consolidated statement of financial position set out in Appendix I.
(iii) the excess of the aggregate of (i) the Consideration of HK$127,467,730; and (ii) the estimated fair value of the 35% equity in GOT held by the Group of HK$50,573,426 (note (ii) above), over the net assets of GOT of HK$116,571,033 as at 31 October 2010, is amounting to HK$61,470,123. As the Acquisition will be accounted for by applying the acquisition method, this excess is recognised as goodwill arising from the Acquisition on the unaudited pro forma consolidated statement of financial position of the Enlarged Group.

On the date of completion of the Acquisition, the fair value of the 35% equity interest in GOT held by the Group, and the net identifiable assets and liabilities of GOT will have to be assessed. Since the actual fair values of the 35% equity interest in GOT held by the Group, and the assets, liabilities and contingent liabilities of GOT on the date of completion of the Acquisition would be different from their estimated fair values used in the preparation of the unaudited pro forma consolidated statement of financial position of the Enlarged Group presented above, the actual financial position and amount of goodwill arising from the Acquisition might be materially different from the estimated amounts shown in this Appendix.

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UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

APPENDIX III

For the purpose of the preparation of the unaudited pro forma consolidated statement of financial position of the Enlarged Group in accordance with the requirements of Hong Kong Accounting Standard 36 “Impairment of Assets”, the Directors consider that no impairment is required in respect of the goodwill arising from the Acquisition taking into account the business potential of GOT and other factors as disclosed in the paragraph headed “Reasons for the Acquisition” in the “Letter from the Board” in this circular. The reporting accountants concurred with the Directors’ assessment of impairment of goodwill in Unaudited Pro Forma Financial Information and adoption of consistent accounting policies and principal assumptions in the preparation of the consolidated financial statements of the Group after the completion of the Acquisition. After the completion of the Acquisition, the Group will perform annual impairment test for the cash-generating unit to which the goodwill has been allocated in accordance with the Company’s accounting policies and the requirements of Hong Kong Accounting Standard 36 “Impairment of Assets”, and the Company’s auditors will perform audit procedures thereon in respect of their audit of the consolidated financial statements of the Group for the next financial year in accordance with the requirements of Hong Kong Accounting Standard 36 “Impairment of Assets”.

The unaudited pro forma consolidated statement of financial position does not take account of any trading or other transactions subsequent to the date of the financial statements included in the unaudited pro forma consolidated statement of financial position (i.e. 31 December 2010).

4. Unaudited Pro Forma Consolidated Statement of Cash Flows of the Enlarged Group

The following is the unaudited pro forma consolidated statement of cash flows of the Enlarged Group as if the Acquisition had been completed at the commencement of the period reported on. The unaudited pro forma consolidated statement of cash flows has been prepared based on (i) the audited consolidated statement of cash flows of the Group for the year ended 31 December 2010 as set out in Appendix I to this circular; and (ii) the audited statement of cash flows of GOT for the year ended 31 December 2009 as set out in Appendix II to this circular respectively, after making pro forma adjustments that are (i) directly attributable to the proposed Acquisition and not relating to future events or decisions; and (ii) factually supportable.

The unaudited pro forma consolidated statement of cash flow has been prepared for illustrative purposes only, based on the judgments and assumptions of the Directors, and, because of its hypothetical nature, it may not give a true picture of the cash flows of the Enlarged Group for the year ended 31 December 2010 or any future periods.

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UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

APPENDIX III

CASH FLOWS FROM OPERATING ACTIVITIES (Loss)/profit before tax Adjustments for: Acquisition-related costs Share of profits of an associate Expenses recognised in respect of equity- settled share-based payments Depreciation of property, plant and equipment Amortisation of other intangible assets Loss on disposal of property, plant and equipment Impairment losses recognised on trade and other receivables Net losses on disposals of subsidiaries Bank interest income Interest expense Movements in working capital Decrease in inventories Decrease in deposits and prepayments Increase in trade receivables (Increase)/decrease in other receivables, deposits and prepayments Increase/(decrease) in trade payables Increase/(decrease) in other payables, accruals and deposits received Increase in amount due to an associate Decrease in provision for warranties Cash (used in)/generated by operations Income taxes paid Income taxes refunded NET CASH (USED IN)/GENERATED BY OPERATING ACTIVITIES CASH FLOWS FROM INVESTING ACTIVITIES Interest received Dividend received from an associate Payment for the Consideration, net of cash and cash equivalents of GOT acquired Payment for acquisition-related costs Payments for property, plant and equipment Proceeds from disposal of property, plant and equipment Net cash outflows on acquisition of subsidiaries NET CASH USED IN INVESTING ACTIVITIES	The Group for the year ended 31 December 2010 HK$ (Audited) Note 4.1 (46,360,458) – (5,153,835) 6,122,251 7,283,133 40,904,060 427,409 – 353,719 (938,487) – 2,637,792 – 7,924,176 (20,142,879) (2,587,964) 6,444,817 4,259,075 1,285,310 – (179,673) (2,530,614) – (2,710,287) 938,487 2,457,840 – – (1,449,141) 608,141 (18,278,494) (15,723,167)	GOT for th 31 Decem RMB (Audited) Note 4.2 15,109,839 – – – 1,513,439 – 85,176 33,592 – (274,634) 1,520,575 17,987,987 37,159,790 – (10,763,192) 526,674 (9,683,318) (970,225) – (159,853) 34,097,863 (2,320,386) 923,515 32,700,992 274,634 – – – (1,046,234) 93,197 – (678,403)	e year ended ber 2009 Pro forma adjustments HK$ HK$ HK$ HK$ (Unaudited) (Unaudited) (Unaudited) (Unaudited) Note 4.2 Note 4.3 Note 4.4 Note 4.5 17,182,154 (5,153,835) (1,450,000) – 1,450,000 – 5,153,835 – 1,721,007 – 96,858 38,199 – (312,300) 1,729,122 20,455,040 42,256,255 – (12,239,364) 598,907 (11,011,385) (1,103,291) – (181,777) 38,774,385 (2,638,627) 1,050,175 37,185,933 312,300 – (2,457,840) – (127,467,730) 34,492,148 – (1,450,000) (1,189,725) 105,979 – (771,446)	Pro forma Enlarged Group for the year ended 31 December 2010 HK$ (Unaudited) (35,782,139) 1,450,000 – 6,122,251 9,004,140 40,904,060 524,267 38,199 353,719 (1,250,787) 1,729,122 23,092,832 42,256,255 7,924,176 (32,382,243) (1,989,057) (4,566,568) 3,155,784 1,285,310 (181,777) 38,594,712 (5,169,241) 1,050,175 34,475,646 1,250,787 – (92,975,582) (1,450,000) (2,638,866) 714,120 (18,278,494) (113,378,035)

– 62 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

APPENDIX III

												Pro forma
												Enlarged
		The Group										Group for
		for the year										the year
		ended										ended
	31 December			GOT for the year ended								31 December
		2010		31 December 2009					Pro	forma adjustments		2010
		HK$		RMB		HK$			HK$	HK$	HK$	HK$
		(Audited)		(Audited)	(Unaudited)			(Unaudited)		(Unaudited)	(Unaudited)	(Unaudited)
		Note 4.1		Note 4.2		_Note _	4.2		Note 4.3	Note 4.4	Note 4.5
CASH FLOWS FROM FINANCING
ACTIVITIES
Proceeds from issue of Shares		8,444,939		–			–					8,444,939
Capital contributed by non-controlling
interests		3,050,000		–			–					3,050,000
Dividends paid		–		(5,060,000)		(5,753,979)						(5,753,979)
Repayments of borrowings		–	(21,000,000)		(23,880,150)							(23,880,150)
Interest paid		–		(1,520,575)		(1,729,122)						(1,729,122)

NET CASH GENERATED BY/(USED IN)
FINANCING ACTIVITIES		11,494,939	(27,580,575)		(31,363,251)							(19,868,312)

NET (DECREASE)/INCREASE IN CASH
AND CASH EQUIVALENTS		(6,938,515)		4,442,014		5,051,236						(98,770,701)
CASH AND CASH EQUIVALENTS AT
THE BEGINNING OF THE YEAR		141,520,650		30,507,826		34,492,148					(34,492,148)	141,520,650
EFFECT OF EXCHANGE RATE
CHANGES		6,285,354		–		215,554						6,500,908

CASH AND CASH EQUIVALENTS AT
THE END OF THE YEAR		140,867,489		34,949,840		39,758,938						49,250,857

Notes to the unaudited pro forma consolidated statement of cash flows of the Enlarged Group:

4.1 The amounts have been extracted from the audited consolidated statement of cash flows of the Group for the year ended 31 December 2010 as shown in the published annual report of the Company for the year ended 31 December 2010 as set out in Appendix I to this circular.
4.2 The adjustment reflects the inclusion of the cash flows of GOT as if the proposed Acquisition had been completed at the commencement of the year ended 31 December 2010. The amounts have been extracted from the audited statement of cash flows of GOT for the year ended 31 December 2009 as set out in Appendix II to this circular.

The amounts presented in the statement of cash flows of GOT for the year ended 31 December 2009 are converted into HK$ at an exchange rate of RMB1 to HK$1.13715. No representation is made that Renminbi amounts have been, could have been or could be translated to Hong Kong dollar amounts, or vice versa, at that rate or at any other rates or at all.

4.3 The Group holds 35% equity interest in GOT and accounted for the results of GOT using the equity method of accounting in the consolidated financial statements of the Company for the year ended 31 December 2010. The adjustment represents the reversal of the dividends received from associate, which were attributable to the 35% equity interest in GOT held by the Group during the year ended 31 December 2010, as if the Acquisition had been completed at the commencement of the period being reported on. Upon completion of the Acquisition, GOT will become a wholly-owned subsidiary of the Company and the assets, liabilities and results of GOT will be consolidated into the financial statements of the Company. The adjustments have continuing effect on the pro forma consolidated statement of cash flows of the Enlarged Group.
4.4 The adjustment reflects the payment of the estimated costs directly attributable to the Acquisition of approximately HK$1,450,000 by the Group from its internal resources. This adjustment is not expected to have a continuing effect on the Enlarged Group.

– 63 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

APPENDIX III

4.5 The adjustment reflects the settlement of the Consideration of HK$127,467,730 by cash by the Group, net of cash and cash equivalents of GOT acquired (i.e. HK$34,492,148 as of 1 January 2009), as if the Acquisition had been completed at the commencement of the period being reported on. This adjustment is not expected to have a continuing effect on the Enlarged Group.

Since the actual dates of payment of the cash consideration for the Acquisition and the estimated costs directly attributable to the Acquisition would be different from the assumptions used in the preparation of the unaudited pro forma consolidated statement of cash flows presented above, the actual timing of cash flows arising from the Acquisition might be materially different from the timing of cash flows as shown in this Appendix.

The unaudited pro forma consolidated statement of cash flow does not take account of any trading or other transactions subsequent to the date of the financial statements included in the unaudited pro forma consolidated statement of cash flow (i.e. 31 December 2010).

– 64 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

APPENDIX III

B. REPORT ON THE UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

==> picture [184 x 68] intentionally omitted <==

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

19 April 2011

The Board of Directors AGTech Holdings Limited Unit 3912, 39/F, Shell Tower, Times Square, Causeway Bay, Hong Kong

Dear Sirs,

REPORT ON THE UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

Introduction

We report on the unaudited pro forma financial information of AGTech Holdings Limited (the “Company”) and its subsidiaries (collectively, the “Group”), and 北京長城高騰信息產品有限公司 (Beijing Greatwall GOT Information Products Co., Ltd.) (“GOT”) (hereinafter collectively referred to as the “Enlarged Group”), comprising the unaudited pro forma consolidated statement of comprehensive income, the unaudited pro forma consolidated statement of financial position and the unaudited pro forma consolidated statement of cash flows of the Enlarged Group (the “Unaudited Pro Forma Financial Information”), as set out in Section A entitled “Unaudited Pro Forma Financial Information of the Enlarged Group” in Appendix III of the Company’s circular dated 19 April 2011 (the “Circular”). The Unaudited Pro Forma Financial Information has been prepared by the directors of the Company for illustrative purposes only, to provide information about how the Acquisition (as defined in the Circular) might have affected the financial information presented. The basis of preparation of the Unaudited Pro Forma Financial Information is set out in Section A of Appendix III of the Circular.

– 65 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

APPENDIX III

Respective responsibilities of the directors of the Company and the reporting accountants

It is the responsibility solely of the directors of the Company to prepare the Unaudited Pro Forma Financial Information in accordance with paragraph 7.31 of the Rules Governing the Listing of Securities on the Growth Enterprise Market of The Stock Exchange of Hong Kong Limited (the “GEM Listing Rules”) and with reference to Accounting Guideline 7 “Preparation of Pro Forma Financial Information for Inclusion in Investment Circulars” issued by the Hong Kong Institute of Certified Public Accountants.

It is our responsibility to form an opinion, as required by paragraph 7.31(7) of the GEM Listing Rules, on the Unaudited Pro Forma Financial Information and to report our opinion to you. We do not accept any responsibility for any reports previously given by us on any financial information used in the compilation of the Unaudited Pro Forma Financial Information beyond that owed to those to whom those reports were addressed by us at the dates of their issue.

Basis of opinion

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

We planned and performed our work so as to obtain the information and explanations we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the Unaudited Pro Forma Financial Information has been properly compiled by the directors of the Company on the basis stated, that such basis is consistent with the accounting policies of the Group and that the adjustments are appropriate for the purposes of the Unaudited Pro Forma Financial Information as disclosed pursuant to paragraph 7.31(1) of the GEM Listing Rules.

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

the financial position of the Enlarged Group as at 31 December 2010 or any future date; or
the results or cash flows of the Enlarged Group for the year ended 31 December 2010 or any future periods.

– 66 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

APPENDIX III

Opinion

In our opinion:

a. the Unaudited Pro Forma Financial Information has been properly compiled by the directors of the Company on the basis stated;
b. such basis is consistent with the accounting policies of the Group; and
c. the adjustments are appropriate for the purposes of the Unaudited Pro Forma Financial Information as disclosed pursuant to paragraph 7.31(1) of the GEM Listing Rules.

Yours faithfully, HLB Hodgson Impey Cheng

Chartered Accountants Certified Public Accountants Hong Kong

– 67 –

GENERAL INFORMATION

APPENDIX IV

1. RESPONSIBILITY STATEMENT

This circular, for which the Directors collectively and individually accept full responsibility, includes particulars given in compliance with the GEM Listing Rules for the purpose of giving information with regard to the issuer. The Directors, having made all reasonable enquiries, confirm that to the best of their knowledge and belief the information contained in this circular is accurate and complete in all material respects and not misleading or deceptive, and there are no other matters the omission of which would make any statement herein or this circular misleading.

2. DISCLOSURE OF INTERESTS

(a) Interests of the Directors or chief executives of the Company

As at the Latest Practicable Date, the interests and short positions of the Directors or chief executives of the Company in the Shares, underlying Shares or debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO), which (a) were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which they were taken or deemed to have under such provisions of the SFO); or (b) were required, pursuant to section 352 of the SFO, to be entered in the register referred to therein; or (c) were required, pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers (the “Model Code”) adopted by the Company, to be notified to the Company and the Stock Exchange, were as follows:

(i) Interests in the Shares and underlying Shares under equity derivatives (as defined in Part XV of the SFO)

Interests in the Shares:

Number of Shares

				Approximate
	Personal	Corporate		percentage
Name of Director	interest	interest	Total	held
Mr. Sun Ho	27,078,000	2,006,250,000	2,033,328,000	55.13%
		(Note 1)
Mr. Robert	3,347,750	–	3,347,750	0.09%
Geoffrey Ryan
Mr. Bai Jinmin	3,343,750	44,876,600	48,220,350	1.31%
		(Note 2)
Mr. Liang Yu	3,343,750	–	3,343,750	0.09%
Ms. Yang Yang	414,375	–	414,375	0.01%
Mr. Wang Ronghua	2,275,000	–	2,275,000	0.06%
Mr. Hua Fengmao	1,355,000	–	1,355,000	0.04%

– 68 –

GENERAL INFORMATION

APPENDIX IV

Notes:

These 2,006,250,000 Shares were held in the name of MAXPROFIT GLOBAL INC. As MAXPROFIT GLOBAL INC is beneficially and wholly-owned by Mr. Sun Ho, an executive Director, Chairman and CEO of the Company, Mr. Sun was deemed to be interested in such Shares.
These 44,876,600 Shares were held in the name of Fine Bridge International Limited. Fine Bridge International Limited is beneficially and wholly-owned by HB Resources Investment Limited, which in turn is beneficially and wholly-owned by Mr. Bai Jinmin, an executive Director. Accordingly, HB Resources Investment Limited and Mr. Bai were deemed to be interested in such Shares.

(ii) Interests in the share options of the Company

				Number of
				outstanding
				options as
				at the
		Exercise		Latest	Approximate
		price per	Exercisable	Practicable	percentage
Name of Director	Date of grant	Share	period	Date,	held
		(HK$)	(Note)
Mr. Robert	9 October 2008	0.2198	9 October 2009 –	10,031,250	0.27%
Geoffrey Ryan			8 October 2013
Mr. Bai Jinmin	9 October 2008	0.2198	9 October 2009 –	10,031,250	0.27%
			8 October 2013
Mr. Liang Yu	9 October 2008	0.2198	9 October 2009 –	10,031,250	0.27%
			8 October 2013
Ms. Yang Yang	9 October 2008	0.2198	9 October 2009 –	1,003,125	0.03%
			8 October 2013

Note: A portion of the options representing 25% of the total underlying Shares entitled under such options shall be vested in the grantee of the options in each of the 4 years during the exercisable period. If the grantee does not exercise such portion of the options within one year after it has been vested in him/her, such portion of the options will lapse.

Save as disclosed above, as at the Latest Practicable Date, none of the Directors or chief executives of the Company had any interests or short positions in the Shares, underlying Shares or debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO), which (a) were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO; or (b) were required, pursuant to section 352 of the SFO, to be entered in the register referred to therein; or (c) were required, pursuant to the Model Code adopted by the Company, to be notified to the Company and the Stock Exchange.

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GENERAL INFORMATION

APPENDIX IV

(b) Interests of Shareholders discloseable pursuant to the SFO

As at the Latest Practicable Date, so far as was known to the Directors or chief executives of the Company based on the register maintained by the Company pursuant to Part XV of the SFO, the following persons (other than a Director or chief executive of the Company) had, or were deemed or taken to have, interests or short positions in the shares and underlying shares which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO or, were directly or indirectly, interested in 5% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any other members of the Group or had any option in respect of such capital:

Interests in the Shares:

			Approximate
			percentage of
			issued share
		Number of	capital of the
Name of Shareholder	Capacity	Shares held	Company
MAXPROFIT GLOBAL	Beneficial	2,006,250,000	54.40%
INC	owner (Note)
TIG Advisors LLC	Investment	224,643,000	6.09%
	manager

Note: As disclosed above, Mr. Sun Ho was deemed to be interested in those 2,006,250,000 Shares by virtue of his interest in MAXPROFIT GLOBAL INC.

Save as disclosed above, as at the Latest Practicable Date, so far as was known to the Directors or chief executives of the Company based on the register maintained by the Company pursuant to Part XV of the SFO, no other persons (not being a Director or chief executive of the Company) had, or deemed to have, any interests or short positions in the Shares or underlying Shares which were required to be disclosed to the Company and the Stock Exchange under the provisions of Divisions 2 and 3 of Part XV of the SFO, nor were there any persons, directly or indirectly, interested in 5% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any other members of the Group or held any option in respect of such capital.

(c) Competing interests

As at the Latest Practicable Date, none of the Directors, controlling Shareholder or their respective associates was interested in any business apart from the Enlarged Group’s businesses which competes or is likely to compete, either directly or indirectly, with the businesses of the Enlarged Group.

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GENERAL INFORMATION

APPENDIX IV

(d) Other interests

As at the Latest Practicable Date, none of the Directors had any direct or indirect interest in any assets which have, since 31 December 2010 (being the date to which the latest published audited accounts of the Company were made up), been (i) acquired or disposed of by; or (ii) leased to; or (iii) proposed to be acquired or disposed of by; or (iv) proposed to be leased to, any member of the Enlarged Group.

None of the Directors was materially interested in any contract or arrangement subsisting at the Latest Practicable Date which is significant in relation to the business of the Enlarged Group.

3. MATERIAL CONTRACTS

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

(a) on 6 October 2009, AGTech Limited, a wholly-owned subsidiary of the Company, entered into respective agreements with Gextech Holdings Limited in relation to the subscription for new shares in, and a call option for the issue of convertible notes by, Gextech Holdings Limited for a total consideration of GBP4,021,993.50 (equivalent to approximately HK$49,470,520). Upon completion of the respective agreements, the aforesaid new shares, together with the shares that are issuable to AGTech Limited upon full conversion of the convertible notes, in Gextech Holdings Limited, shall allow AGTech Limited to hold up to a maximum of approximately 55.0% of the enlarged issued share capital of Gextech Holdings Limited. The aforesaid agreements lapsed on 6 November 2009 as certain documents were still outstanding and could not be delivered by Gextech Holdings Limited to AGTech Limited before the target completion date of the agreements;
(b) on 30 October 2009, 世紀星彩企業管理有限公司 (China Lottery Management Co., Ltd.*), a wholly-owned subsidiary of the Company, entered into a strategic co-operation agreement with Beijing Honking Cyber Info-tech Co., Ltd., pursuant to which both parties agreed to leverage on their respective resources advantages to explore jointly the mobile lottery betting business, mobile lottery information service business and mobile technology products development business in various provinces in the PRC;
(c) on 8 September 2010, 亞博泰科科技(北京)有限公司 (Asia Gaming Technologies (Beijing) Co., Ltd.*), a company incorporated in the PRC with limited liability which is indirectly owned as to 51% by the Company and 49% by Ladbroke Group, entered into a technical cooperation agreement with Hunan China Sports Lottery Administration Centre subsequent to obtaining final approvals from all relevant government authorities for the provision of a new rapid draw (or high frequency) sports lottery platform and the initial game “Lucky Racing” (“幸運賽車”) in the PRC. This platform and the game is the first legitimate rapid draw fixed odds lottery

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GENERAL INFORMATION

APPENDIX IV

platform and game in the PRC sports lottery market approved by the PRC lottery regulator (the Ministry of Finance of the PRC);

(d) on 5 March 2010, FAIRMAX ENTERPRISES LIMITED, an indirect wholly-owned subsidiary of the Company, entered into the conditional sale and purchase agreement with SPEEDSUPER LIMITED pursuant to which FAIRMAX ENTERPRISE LIMITED had conditionally agreed to acquire and SPEEDSUPER LIMITED has conditionally agreed to sell the 35% interest of GOT for an aggregate consideration of HK$50 million. The aforesaid acquisition was completed on 28 April 2010; and
(e) the Share Transfer Agreement.

4. CLAIMS AND LITIGATION

As at the Latest Practical Date, the Directors were not aware of any claims or litigation of material importance pending or threatened against any member of the Enlarged Group.

5. SERVICE CONTRACTS

As at the Latest Practicable Date, none of the Directors had any existing or proposed service contracts with any member of the Enlarged Group which does not expire or is not determinable by the Enlarged Group within one year without payment of compensation (other than statutory compensation).

6. EXPERT AND CONSENT

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

Name Qualification

HLB Hodgson Impey Cheng Chartered accountants, certified public accountants

HLB Hodgson Impey Cheng has given and has not withdrawn its written consent to the issue of this circular with the inclusion herein of its letter and references to its name in the form and context in which they respectively appear.

As at the Latest Practicable Date, HLB Hodgson Impey Cheng had no shareholding, directly or indirectly, in any member of the Enlarged Group or the right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any member of the Enlarged Group.

As at the Latest Practicable Date, HLB Hodgson Impey Cheng had no direct or indirect interests in any assets which had been, since 31 December 2010 (being the date to which the latest published audited accounts of the Company were made up), (i) acquired or disposed of by; or (ii) leased to; or (iii) proposed to be acquired or disposed of by; or (iv) proposed to be leased to, any member of the Enlarged Group.

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GENERAL INFORMATION

APPENDIX IV

7. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents are available for inspection during normal business hours at the Company’s head office and principal place of business in Hong Kong at Unit 3912, 39th Floor, Shell Tower, Times Square, Causeway Bay, Hong Kong, for a period of 14 days from the date hereof:

(a) the memorandum of association and bye-laws of the Company;
(b) the material contracts referred to in the paragraph headed “Material contracts” in this appendix;
(c) the published annual reports of the Company for the financial year ended 31 December 2010 and for the six-month period ended 31 December 2009;
(d) the accountants’ report on GOT as set out in Appendix II to this circular;
(e) the accountants’ report from HLB Hodgson Impey Cheng in relation to the unaudited pro forma financial information of the Enlarged Group, the text of which is set out in Appendix III to this circular;
(f) the letter of consent referred to in the paragraph headed “Expert and consent” in this appendix; and
(g) a copy of each circular issued pursuant to the requirements set out in Chapters 19 and/or 20 of the GEM Listing Rules which has been issued by the Company since 31 December 2010 (being the date of the latest published audited accounts).

8. MISCELLANEOUS

(a) The company secretary of the Company is Mr. Wong Wai Sing. Mr. Wong is a fellow member of the Hong Kong Institute of Certified Public Accountants and The Association of Chartered Certified Accountants.
(b) The compliance officer of the Company is Mr. Sun Ho, an executive Director, Chairman & CEO of the Company.
(c) As at Latest Practicable Date, the audit committee of the Company comprises three independent non-executive Directors, namely Mr. Kwok Wing Leung, Andy, Mr. Wang Ronghua and Mr. Hua Fengmao.

Wang Ronghua, aged 65, is the First Advisory Officer of Beijing Budding Flower International Cultural Promotions Co., Ltd. and the chief representative of Treasury Holdings China Limited in Beijing. He has been appointed as independent non-executive Director as well as member of each of the audit, remuneration and nomination committees of the Company since 19 July 2006. Mr. Wang graduated from the Beijing Institute of Foreign Trade. Prior to the appointment as independent

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GENERAL INFORMATION

APPENDIX IV

non-executive Director, Mr. Wang held various positions in the PRC Government. Mr. Wang was the general manager of Beijing Personnel Service Corporation for Diplomatic Missions, the general manager of China Jiaoyuan Corporation for International Economic and Technical Cooperation, the first deputy director general of Beijing Service Bureau for Diplomatic Missions and an ambassador of the PRC to the Republic of Iceland. Thereafter, Mr. Wang joined Shanghai Institute of International Finance as vice president and was the chief operating officer of Shanghai Sinoman Industrial (Group) Ltd.

Mr. Hua Fengmao, aged 42, is the Managing Director of BOCOM International (Asia) Limited. He has been appointed as independent non-executive Director as well as member of each of the audit, remuneration and nomination committees of the Company since 19 July 2006. Mr. Hua obtained a bachelor degree and a master degree in English Language & Literature from the Shanghai International Studies University, Shanghai, the PRC. Mr. Hua obtained a master degree in Business Administration from the International University of Japan, Niigata, Japan. Prior to joining BOCOM International (Asia) Limited, Mr. Hua held various positions in various investment banks. Mr. Hua was the founding partner and managing director of China Finance Strategies Limited, the managing director of investment banking of CLSA Equity Capital Markets Limited, the general manager of Cazenove Asia Limited, manager of ICEA Capital Limited and associate investment banking officer of Bank of America NT&SA.

Mr. Kwok Wing Leung Andy, aged 36, has over 14 years of local and overseas financial and general management experiences and has experience in the trading business in the PRC. He has been appointed as independent non-executive Director as well as member of each of the audit, remuneration and nomination committees of the Company since 19 July 2006. Mr. Kwok holds a master degree in Business Administration from Tsinghua University, the PRC and a bachelor degree in Economics from the University of Sydney in Australia. Mr. Kwok is a member of the Hong Kong Institute of Certified Public Accountants and a member of CPA Australia. With effect from 1 April 2009, Mr. Kwok resigned as chairman of Asia Coal Limited (formerly known as Nubrands Group Holdings Limited) but remained as its executive director. The issued shares of Asia Coal Limited are listed on the Main Board of the Stock Exchange.

(d) The registered office of the Company is at Clarendon House, 2 Church Street, Hamilton HM 11, Bermuda.
(e) The head office and principal place of business of the Company in Hong Kong is situated at Unit 3912, 39th Floor, Shell Tower, Times Squares, Causeway Bay, Hong Kong.
(f) The branch share registrar and transfer office of the Company in Hong Kong is Tricor Abacus Limited at 26th Floor, Tesbury Centre, 28 Queen’s Road East, Hong Kong.
(g) The English text of this circular shall prevail over the corresponding Chinese text.

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NOTICE OF SGM

==> picture [99 x 31] intentionally omitted <==

**AGTech Holdings Limited 亞博科技控股有限公司[*]**

(incorporated in Bermuda with limited liability)

(Stock Code: 8279)

NOTICE OF SPECIAL GENERAL MEETING

NOTICE IS HEREBY GIVEN THAT a special general meeting (the “SGM”) of AGTech Holdings Limited (the “Company”) will be held at 10:00 a.m. on Monday, 9 May 2011 at the conference room of HLB Hodgson Impey Cheng at 31/F., Gloucester Tower, The Landmark, 11 Pedder Street, Central, Hong Kong for the purpose of considering and, if thought fit, passing with or without amendment, the following resolution of the Company as an ordinary resolution:

ORDINARY RESOLUTION

“ THAT :

(1) (a) the agreement dated 15 April 2011 entered into between 北京世紀德彩科技有限公司 (Beijing Century Decai Technology Co., Ltd.), an indirect wholly owned subsidiary of the Company, as purchaser (the “Purchaser”) and China Electronics Corporation, as vendor in relation to the acquisition by the Purchaser of, among other things, 65% of the equity interest in 北京長城高騰信息產品有限公司 (Beijing Greatwall GOT Information Products Co., Ltd.) (the “Share Transfer Agreement”), and the transactions contemplated thereunder, be and are hereby confirmed, approved and ratified; and
(b) any one Director of the Company be and is hereby authorised, for and on behalf of the Company, to sign, execute, perfect, deliver and exercise all documents, and to affix the seal of the Company thereon where required in accordance with the bye-laws of the Company, and do all such acts, matters and things which he deems
For identification purpose only

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NOTICE OF SGM

necessary, desirable or expedient to carry out and give effect to any or all transactions contemplated, and the exercise or enforcement of rights, under the Share Transfer Agreement or documents contemplated thereunder, and to make and agree such variations to the Share Transfer Agreement or documents contemplated thereunder as he or they may deem necessary, desirable or appropriate and in the interests of the Company.”

Yours faithfully, By order of the Board AGTech Holdings Limited Sun Ho Chairman & CEO

Hong Kong, 19 April 2011

Registered office:

Clarendon House 2 Church Street Hamilton HM 11 Bermuda

Head office and principal place of business:

Unit 3912, 39th Floor

Shell Tower Times Square Causeway Bay Hong Kong

As at the date of this notice, the Board comprises (i) Mr. Sun Ho, Mr. Robert Geoffrey Ryan, Mr. Bai Jinmin and Mr. Liang Yu as executive Directors; (ii) Ms. Yang Yang as non-executive Director; and (iii) Mr. Wang Ronghua, Mr. Hua Fengmao and Mr. Kwok Wing Leung Andy as independent non-executive Directors.

Notes:

Any member entitled to attend and vote at the SGM is entitled to appoint one or more proxies to attend and vote in his/her stead in accordance with the bye-laws of the Company. A proxy need not be a member of the Company.
Where there are joint registered holders of any Share, any one of such persons may vote at any the meeting, either personally or by proxy, in respect of such Share as if he were solely entitled thereto; but if more than one of such joint holders shall be present at the meeting personally or by proxy, that one of the holders so present whose name stands first on the register of members of the Company in respect of such Share shall alone be entitled to vote in respect thereof.
The form of proxy and the power of attorney or other authority, if any, under which it is signed or a certified copy of such power of attorney or authority must be deposited at the branch share registrar and transfer office of the Company in Hong Kong, Tricor Abacus Limited at 26th Floor, Tesbury Centre, 28 Queen’s Road East, Hong Kong, not less than 48 hours before the time for holding the SGM, and in default the form of proxy shall not be treated as valid. The completion and return of the form of proxy shall not preclude members from attending and voting in person at the SGM (or any adjournment thereof) should they so desire.

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AI assistant

Joy Spreader Group Inc. — Proxy Solicitation & Information Statement 2011

51106_rns_2011-04-18_8595f83e-2b63-4967-88f1-df0d09d48c5e.pdf

AGTech Holdings Limited 亞博科技控股有限公司 *

(Stock Code: 8279)

VERY SUBSTANTIAL ACQUISITION IN RELATION TO THE ACQUISITION OF A 65% EQUITY INTEREST IN GOT

DEFINITIONS

DEFINITIONS

DEFINITIONS

AGTech Holdings Limited 亞博科技控股有限公司 *

VERY SUBSTANTIAL ACQUISITION IN RELATION TO THE ACQUISITION OF A 65% EQUITY INTEREST IN GOT

INTRODUCTION

PROCEDURES FOR THE BIDDING

THE SHARE TRANSFER AGREEMENT

Date

Parties

Asset to be acquired

The Consideration

LETTER FROM THE BOARD

Conditions

Completion

INFORMATION ON GOT

LETTER FROM THE BOARD

REASONS FOR THE ACQUISITION

FINANCIAL EFFECTS OF THE ACQUISITION

FINANCIAL AND TRADING PROSPECTS OF THE ENLARGED GROUP

GEM LISTING RULES IMPLICATIONS

SGM

RECOMMENDATION

ADDITIONAL INFORMATION

1. FINANCIAL SUMMARY

Results

Assets and Liabilities

3. AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE COMPANY FOR THE YEAR ENDED 30 JUNE 2009

4. MANAGEMENT DISCUSSION AND ANALYSIS FOR THE YEAR ENDED 31 DECEMBER 2010

(a) Business outlook

(b) Revenue and profitability

(c) Capital resources and liquidity

(d) Capital commitments

(e) Charges on Group’s assets

(f) Foreign exchange exposure

(g) Contingent liabilities

(h) Significant acquisitions and disposals

(i) Significant investments

(j) Employees’ information

5. MANAGEMENT DISCUSSION AND ANALYSIS FOR THE SIX-MONTH PERIOD ENDED 31 DECEMBER 2009

(a) Business outlook

(b) Revenue and profitability

(c) Capital resources and liquidity

(d) Capital commitments

(e) Charges on Group’s assets

(f) Foreign exchange exposure

(g) Contingent liabilities

(h) Significant acquisitions and disposals

(i) Significant investments

(j) Employees’ information

6. MANAGEMENT DISCUSSION AND ANALYSIS FOR THE YEAR ENDED 30 JUNE 2009

(a) Business outlook

(b) Revenue and profitability

(c) Capital resources and liquidity

(d) Capital commitments

(e) Charges on Group’s assets

(f) Foreign exchange exposure

(g) Contingent liabilities

(h) Significant acquisitions and disposals

(i) Significant investments

(j) Employees’ information

7. INDEBTEDNESS STATEMENT

Borrowings

Contingent liabilities

Capital and other commitments

Disclaimers

8. MATERIAL ADVERSE CHANGE

9. WORKING CAPITAL

1. ACCOUNTANTS’ REPORT ON GOT

I. FINANCIAL INFORMATION

Statement of comprehensive income

Statement of financial position

Statement of changes in equity

Statement of cash flows

Joy Spreader Group Inc. Proxy Solicitation & Information Statement 2011