Keymed Biosciences Inc. - Proxy Solicitation & Information Statement 2009

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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

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

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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SUGA INTERNATIONAL HOLDINGS LIMITED 信佳國際集團有限公司

(Incorporated in Bermuda with limited liability)

(Stock Code: 912)

MAJOR TRANSACTION – ACQUISITION OF PROPERTY

14 July 2009

		Page
DEFINITIONS		1
LETTER FROM THE BOARD 3
APPENDIX I	– FINANCIAL INFORMATION ON THE GROUP	8
APPENDIX II	– VALUATION REPORT OF THE PROPERTY 89
APPENDIX III	– GENERAL INFORMATION	94

DEFINITIONS

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

“Acquisition”	the proposed acquisition of the Property by the Purchaser from
	the Vendor pursuant to the terms of the Memorandum
“Announcement”	announcement of the Company dated 1 June 2009 in relation to
	the Acquisition
“associate(s)”	has the meaning ascribed to it under the Listing Rules
“Board”	the board of Directors
“Company”	Suga International Holdings Limited, a company incorporated
	in Bermuda with limited liability, the securities of which are
	listed on the Main Board of the Stock Exchange (Stock Code:
	912)
“connected person(s)”	has the meaning ascribed to it under the Listing Rules
“Directors”	the directors of the Company
“Formal Agreement”	a formal agreement for sale and purchase to be signed between
	the Purchaser and the Vendor in relation to the Property
“Group”	the Company and its subsidiaries
“Hong Kong”	the Hong Kong Special Administrative Region of the People’s
	Republic of China
“Latest Practicable Date”	10 July 2009, being the latest practicable date prior to the
	printing of this circular for ascertaining certain information in
	this circular
“Listing Rules”	Rules Governing the Listing of Securities on The Stock Exchange
	of Hong Kong Limited
“Memorandum”	the memorandum for sale dated 29 May 2009 entered into
	between the Purchaser as purchaser and the Vendor as vendor
	in relation to the Property
“Mr. Ng”	Mr. NG Chi Ho, the Chairman of the Group and an executive
	Director

DEFINITIONS

“Property”	22nd Floor, Tower B, No. 1 Wang Kwong Road, Kowloon Bay,
	Kowloon (NKIL 5925 RP), including car parks No. P48, P64,
	P65 and P66 on the 2nd Floor
“Purchaser”	On Million Limited, a company incorporated in Hong Kong and
	a wholly-owned subsidiary of the Company as at the date of the
	Latest Practicable Date
“SFO”	Securities and Futures Ordinance, Chapter 571 of the Laws of
	Hong Kong
“Share(s)”	ordinary share(s) of nominal value of HK$0.10 each in the
	capital of the Company
“Shareholder(s)”	holder(s) of the Shares
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“Vendor”	Wealthy Star Development Limited, a company incorporated in
	Hong Kong
“HK$”	Hong Kong dollars, the lawful currency of Hong Kong
“%”	per cent.

LETTER FROM THE BOARD

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SUGA INTERNATIONAL HOLDINGS LIMITED 信佳國際集團有限公司

(Incorporated in Bermuda with limited liability)

(Stock Code: 912)

Executive Directors: Mr. NG Chi Ho (Chairman) Mr. MA Fung On (Deputy Chairman) Mr. WONG Wai Lik, Lamson

Independent Non-executive Directors: Prof. WONG Sook Leung, Joshua Mr. LEUNG Yu Ming, Steven Mr. CHAN Kit Wang

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

Head Office and principal place of business: Units 1904-7 19th Floor Chevalier Commercial Centre 8 Wang Hoi Road Kowloon Bay Kowloon Hong Kong 14 July 2009

To the Shareholders

Dear Sir or Madam,

MAJOR TRANSACTION – ACQUISITION OF PROPERTY

Reference is made to the Announcement in which the Board announced that on 29 May 2009, the Purchaser, a wholly-owned subsidiary of the Company, entered into the Memorandum with the Vendor, pursuant to which the Purchaser had agreed to purchase, and the Vendor had agreed to sell, the Property at a consideration of HK$49,627,300.

The purpose of this circular is to provide the Shareholders with further information in relation to the Acquisition. Details of the Acquisition and the Memorandum are as follows:

LETTER FROM THE BOARD

THE ACQUISITION AND THE MEMORANDUM

Date: 29 May 2009 Parties: Purchaser: On Million Limited, a company incorporated in Hong Kong and a wholly-owned subsidiary of the Company as at the Latest Practicable Date Vendor: Wealthy Star Development Limited, a company incorporated in Hong Kong

To the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, the Vendor and its ultimate beneficial owners are third parties independent of the Company and its connected persons.

Property: 22nd Floor, Tower B, No. 1 Wang Kwong Road, Kowloon Bay, Kowloon (NKIL 5925 RP), including car parks No. P48, P64, P65 and P66 on the 2nd Floor

Consideration: The consideration of HK$49,627,300 for the Acquisition has been arrived at after arm’s length negotiations between the Purchaser and the Vendor with reference to the prevailing market value of comparable properties in the vicinity. No independent valuation of the Property was carried out by the Group.

Payment terms: Pursuant to the terms of the Memorandum, the consideration for the Acquisition shall be payable by the Purchaser to the Vendor in the following manner:

(1) an initial deposit of HK$2,481,365 was paid to the Vendor by the Purchaser on 29 May 2009 upon signing of the Memorandum;
(2) a sum of HK$7,444,095 as further deposit shall be paid to the Vendor by the Purchaser on or before 15 July 2009 upon signing of the Formal Agreement; and
(3) a sum of HK$39,701,840 as balance of consideration shall be paid to the Vendor by the Purchaser within 14 days of notice of completion of the construction of the Property issued by the Vendor.

The Group currently intends to finance the consideration for the Acquisition partially by internal resources of the Group and partially by bank borrowing.

LETTER FROM THE BOARD

Condition precedent:

The purchase of the Property and the signing of the Formal Agreement are conditional upon the passing by the Shareholders of a resolution approving the Formal Agreement and the transaction contemplated thereunder in accordance with the Listing Rules on or before 15 July 2009. In the event of non-fulfillment of the aforesaid condition on or before 15 July 2009, the Vendor shall be entitled to re-sell the Property to other party and to charge the Purchaser a sum equal to 3% of the consideration for arranging reservation of the Property under the Memorandum. In such event, the sale and purchase of the Property shall be cancelled and all deposits paid less an amount of 3% of the consideration shall be refunded to the Purchaser without interest or compensation whereupon the Memorandum shall be null and void and neither party shall have any claim against the other. The Purchaser will notify the Vendor in writing as soon as reasonably practicable the fulfillment of the aforesaid condition.

As at the Latest Practicable Date, the Company has obtained a written certificate from Mr. Ng, Superior View Inc. and Billion Linkage Limited to approve the Acquisition in lieu of a general meeting pursuant to Rule 14.44 of the Listing Rules. Details of the aforesaid shareholders are set out under the paragraph headed “Listing Rules Implications” below.

Formal
The principal terms of the Formal Agreement are expected to be substantially
Agreement: the same as those contained in the Memorandum. In particular, the consideration for the Acquisition will remain unchanged in the Formal Agreement. The Company will re-comply with the requirements of the Listing Rules if the principal terms of the Formal Agreement are different from those disclosed in this circular.

The Purchaser currently intends to enter into the Formal Agreement with the Vendor on or before 15 July 2009.

INFORMATION ON THE GROUP

The Company is a company incorporated in Bermuda with limited liability, the securities of which are listed on the Main Board of the Stock Exchange.

The principal business activity of the Company is investment holding. The principal business activities of its subsidiaries are the research and development, manufacture and sale of electronic products.

The Purchaser is a company incorporated in Hong Kong and its principal business activity is investment holding. It is a wholly-owned subsidiary of the Company as at the Latest Practicable Date.

LETTER FROM THE BOARD

INFORMATION ON THE PROPERTY AND THE VENDOR

The Directors are informed that:

The Vendor is a company incorporated in Hong Kong and its principal business activity is property development.

The Property is situated at the 22nd Floor of a new property development project named “No. 1 Wang Kwong Road” located in Kowloon Bay, Kowloon (“ New Project ”). The New Project is a commercial and office complex, which planned usage includes commercial, office and shop. The gross area of the Property is 12,895 square feet. Construction of the New Project is expected to be completed by the end of 2009. The Group currently intends to move into the Property as its office during the first quarter of 2010.

REASONS FOR AND BENEFITS OF THE ACQUISITION

The Group is currently leasing Units 1904-1907 and Unit 1915, Chevalier Commercial Centre, 8 Wang Hoi Road, Kowloon Bay, Kowloon as its office and the lease is subject to rental review. The Group currently intends to use the Property as its office and thus, it will no longer be affected by any rental review in the future.

The Directors, including the independent non-executive Directors, consider that the terms of the Memorandum are on normal commercial terms and are fair and reasonable and in the interests of the Company and the Shareholders as a whole. Accordingly, should a physical meeting be required to be held, the Board would recommend the Shareholders to vote in favour of the ordinary resolution to be proposed at the meeting to approve the Memorandum and the transactions contemplated thereunder.

FINANCIAL EFFECTS ON THE COMPANY

On the assumption that the Acquisition will be completed on 31 December 2009 and that 60% of the consideration would be financed by bank loans, the Acquisition would result in an increase in consolidated total assets of approximately HK$27,615,000 and increase in consolidated total liabilities of approximately HK$29,776,000. As the Company intends to use the Property as its office and thus no rental income will be generated from the Property, the transaction should not have any material impact on the earnings of the Group.

LISTING RULES IMPLICATIONS

As the applicable percentage ratios exceed 25% but less than 100%, the Acquisition constitutes a major transaction for the Company under Rule 14.06(3) of the Listing Rules and is therefore subject to the notification, announcement and shareholders’ approval requirements under Chapter 14 of the Listing Rules.

LETTER FROM THE BOARD

Under Rule 14.44 of the Listing Rules, Shareholders’ approval for the Acquisition may be obtained by way of written Shareholders’ approval in lieu of holding a general meeting if (a) no Shareholder is required to abstain from voting if the Company were to convene a general meeting for the approval of the Acquisition; and (b) written Shareholder’s approval has been obtained from a Shareholder or a closely allied group of Shareholders who together hold more than 50% in nominal value of the issued share capital of the Company giving the right to attend and vote at that general meeting to approve the Acquisition.

The Directors confirm that, to the best of their knowledge, information and belief after having made all reasonable enquiries, the Vendor and its shareholders are third parties independent of the Company and its connected persons and therefore no Shareholder is required to abstain from voting if the Company were to convene a general meeting for the approval of the Acquisition. Mr. Ng, Superior View Inc. (the entire issued shares of which are ultimately held by Fidelitycorp Limited as the trustee of the C.H. Family Trust, the beneficiaries of which are the family members of Mr. Ng) and Billion Linkage Limited (the entire issued shares of which are held by Mr. Ng and his spouse in equal share), who have no interest in the Acquisition other than their interests as Shareholders holding 4,000,000 Shares, 100,000,000 Shares and 39,608,000 Shares respectively, representing an aggregate of approximately 62.21% of the issued share capital of the Company as at 29 May 2009, have given a written certificate to the Company to approve the Acquisition in lieu of a general meeting pursuant to Rule 14.44 of the Listing Rules. Therefore, no general meeting of the Company for the approval of the Acquisition will be held.

FURTHER INFORMATION

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

Yours faithfully, For and on behalf of the Board NG Chi Ho Chairman

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

1. FINANCIAL SUMMARY

The following is a summary of the consolidated results of the Group for each of the years ended 31 March 2006, 2007 and 2008 and for each of the six months ended 30 September 2007 and 2008, and the consolidated balance sheets as at 31 March 2006, 2007 and 2008 and 30 September 2008.

The consolidated result of the Group for each of the years ended 31 March 2007 and 2008 and the consolidated balance sheets as at 31 March 2007 and 2008 were extracted from annual report of the Company for the year ended 31 March 2008. The consolidated balance sheet as at 31 March 2006 was extracted from the annual report of the Company for the year ended 31 March 2006. The consolidated results of the Group for the six months ended 30 September 2007 and 2008 and the consolidated balance sheet as at 30 September 2008 were extracted from the interim report of the Company for the six months ended 30 September 2008.

Consolidated Income Statements

	For the six months ended For the year	For the six months ended For the year	For the six months ended For the year	For the six months ended For the year	For the six months ended For the year	ended
		30 September			31 March
		2008	2007	2008	2007	2006
		HK$’000	HK$’000	HK$’000	HK$’000	HK$’000
	(unaudited)		(unaudited)
Revenue		409,225	343,254	707,711	696,346	771,968
Cost of sales		(358,318 ) (298,244 )		(614,878 )	(606,304 )	(685,992)
Gross profit		50,907	45,010	92,833	90,042	85,976
Other income		222	86	336	465	1,027
Distribution and
selling expenses		(9,734 ) (9,226 )		(15,512 )	(15,558 )	(18,498 )
General and administrative
expenses		(25,341 ) (24,350 )		(53,425 )	(54,268 )	(53,936)
		16,054	11,520	24,232	20,681	14,569
Finance income		353	157	621	1,205	329
Finance costs		(1,154 ) (1,540 )		(3,226 )	(6,866 )	(9,207)
Finance costs – net		(801 ) (1,383 )		(2,605 )	(5,661 )	(8,878 )
Share of loss and impairment
of an associate		–	–	–	–	(2,260)
Profit before income tax		15,253	10,137	21,627	15,020	3,431
Income tax expense		(2,115 ) (409 )		(940 )	(2,967 )	(2,082)
Profit for the period/year		13,138	9,728	20,687	12,053	1,349

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

	For the six months ended For the year ended	For the six months ended For the year ended	For the six months ended For the year ended	For the six months ended For the year ended	For the six months ended For the year ended	For the six months ended For the year ended
		30 September			31 March
		2008	2007	2008	2007		2006
		HK$’000	HK$’000	HK$’000	HK$’000	HK$’000
	(unaudited)		(unaudited)
Attributable to:
Equity holders of
the Company		13,138	9,728	20,687	12,053		1,349
Minority interests		–	–	–	–		–
		13,138	9,728	20,687	12,053		1,349

Earnings per share for profit
attributable to the equity
holders of the Company
– Basic (HK cents)		5.69	4.22	8.97	5.29		0.60

– Diluted (HK cents)		5.67	4.17	8.85	5.25		0.60

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

Consolidated Balance Sheet

As at 30 September 2008 HK$’000 (unaudited) ASSETS Non-current assets Property, plant and equipment 64,989 Land use rights 4,465 Goodwill 1,059 Interest in an associate – Interest in a jointly controlled entity – Deferred tax assets 2,190 Trade and other receivables 4,719 77,422 Current assets Inventories 138,455 Trade and other receivables 116,105 Tax recoverable 1,462 Amount due from a jointly controlled entity 23,121 Derivative financial instruments – Cash and cash equivalents 75,644 354,787 Total assets 432,209 LIABILITIES Current liabilities Trade and other payables 108,602 Income tax payables 15,115 Bank borrowings 14,326 Finance lease liabilities 83 Bank advances for factored receivables 6,047 Derivative financial instruments 1,417 145,590	As at 31 March 2008 2007 HK$’000 HK$’000 65,195 78,028 4,458 4,443 1,059 1,059 – – – – 3,106 3,063 – – 73,818 86,593 139,664 130,210 104,565 119,902 1,293 577 16,141 – 1,040 – 64,868 45,099 327,571 295,788 401,389 382,381 80,186 76,058 14,266 13,243 19,404 41,658 81 77 6,777 8,602 1,875 – 122,589 139,638	2006 HK$’000 94,115 4,505 1,059 – – 3,489 –
		103,168
		164,695 169,531 1,037 – – 62,899
		398,162
		501,330

		105,772 11,250 155,300 946 5,019 –
		278,287

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FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

As at 30 September 2008 HK$’000 (unaudited) Non-current liabilities Long term bank borrowings 7,273 Finance lease liabilities – Deferred tax liabilities 2,880 10,153 Total liabilities 155,743 EQUITY Capital and reserve attributable to the equity holders of the Company Share capital 23,084 Other reserves 96,040 Retained earnings – Proposed dividend 4,617 – Others 152,725 276,466 Minority interests – Total equity 276,466 Total equity and liabilities 432,209 Net current assets 209,197 Total assets less current liabilities 286,619	As at 31 March 2008 2007 HK$’000 HK$’000 10,909 – 42 123 2,853 3,902 13,804 4,025 136,393 143,663 23,084 22,994 90,783 78,442 6,925 4,609 144,204 132,673 264,996 238,718 – – 264,996 238,718 401,389 382,381 204,982 156,150 278,800 242,743	2006 HK$’000 – 200 3,986
		4,186
		282,473

		22,794 69,879 – 126,184
		218,857 –
		218,857

		501,330

		119,875

		223,043

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FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

2. UNAUDITED INTERIM FINANCIAL STATEMENTS OF THE GROUP FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2008

(Terms defined herein apply to this appendix only)

The following financial information is extracted from the interim report of the Company for the six months ended 30 September 2008 together with the unaudited comparative figures for the corresponding period in 2007.

Condensed Consolidated Interim Balance Sheet

Note ASSETS Non-current assets Property, plant and equipment 5 Land use rights 6 Goodwill 7 Interest in an associate 8 Interest in a jointly controlled entity 9 Deferred tax assets Trade and other receivables 10 Current assets Inventories Trade and other receivables 10 Tax recoverable Amounts due from a jointly controlled entity 9 Derivative financial instruments Cash and cash equivalents Total assets	As at 30 September 2008 HK$’000 (Unaudited) 64,989 4,465 1,059 – – 2,190 4,719 77,422 138,455 116,105 1,462 23,121 – 75,644 354,787 432,209	As at 31 March 2008 HK$’000 (Audited) 65,195 4,458 1,059 – – 3,106 –
		73,818
		139,664 104,565 1,293 16,141 1,040 64,868
		327,571
		401,389

12 -

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

Note LIABILITIES Current liabilities Trade and other payables 11 Income tax payable Bank borrowings 12 Finance lease liabilities 13 Bank advances for factored receivables Derivative financial instruments Non-current liabilities Long term bank borrowings 12 Finance lease liabilities 13 Deferred tax liabilities Total liabilities EQUITY Capital and reserves attributable to the equity holders of the Company Share capital 14 Other reserves Retained earnings – Proposed dividend – Others Total equity Total equity and liabilities Net current assets Total assets less current liabilities	As at 30 September 2008 HK$’000 (Unaudited) 108,602 15,115 14,326 83 6,047 1,417 145,590 7,273 – 2,880 10,153 155,743 23,084 96,040 4,617 152,725 276,466 432,209 209,197 286,619	As at 31 March 2008 HK$’000 (Audited) 80,186 14,266 19,404 81 6,777 1,875
		122,589
		10,909 42 2,853
		13,804
		136,393
		23,084 90,783 6,925 144,204
		264,996
		401,389

		204,982

		278,800

13 -

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

Condensed Consolidated Interim Income Statement

Note
Revenue
4
Cost of sales
15
Gross profit
Other income
Distribution and selling expenses
15
General and administrative expenses
15
Finance income
16
Finance costs
16
Finance costs – net
16
Profit before income tax
Income tax expense
17
Profit for the period
Earnings per share for profit
attributable to equity holders of
the Company during the period
– Basic (HK cents)
18
– Diluted (HK cents)
18
Interim dividend
19

Six months ended
30 September
2008
2007
HK$’000
HK$’000
(Unaudited)
(Unaudited)
409,225
343,254
(358,318 )
(298,244)
50,907
45,010
222
86
(9,734 )
(9,226 )
(25,341 )
(24,350)
16,054
11,520
353
157
(1,154 )
(1,540)
(801 )
(1,383)
15,253
10,137
(2,115 )
(409)
13,138
9,728
5.69
4.22
5.67
4.17
4,617
2,307

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FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

Condensed Consolidated Interim Statement of Changes in Equity

For the six months ended 30 September 2008

As at 1 April 2008 Exchange difference arising on translation of the accounts of a foreign subsidiary Profit attributable to the equity holders of the Company Total recognised income for the period ended 30 September 2008 Dividend paid As at 30 September 2008 Representing: Proposed dividend Others	Share Share capital premium HK$’000 HK$’000 23,084 54,490 – – – – – – – – 23,084 54,490	Unaudited		Total HK$’000 264,996 5,257 13,138 18,395 (6,925 ) 276,466
		Share-based compen- Capital sation Exchange reserve reserve reserve HK$’000 HK$’000 HK$’000 10,591 664 25,038 – – 5,257 – – – – – 5,257 – – – 10,591 664 30,295	Retained earnings HK$’000 151,129 – 13,138 13,138 (6,925 ) 157,342 4,617 152,725 157,342

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FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

For the six months ended 30 September 2007

As at 1 April 2007 Exchange difference arising on translation of the accounts of a foreign subsidiary Profit attributable to the equity holders of the Company Total recognised income for the period ended 30 September 2007 Exercise of share options Dividend paid As at 30 September 2007 Representing: Proposed dividend Others	Share Share capital premium HK$’000 HK$’000 22,994 54,187 – – – – – – 80 269 – – 80 269 23,074 54,456	Unaudited		Total HK$’000 238,718 4,832 9,728 14,560 349 (4,609 ) (4,260 ) 249,018
		Share-based compen- Capital sation Exchange reserve reserve reserve HK$’000 HK$’000 HK$’000 10,591 747 12,917 – – 4,832 – – – – – 4,832 – 73 – – – – – 73 – 10,591 674 17,749	Retained earnings HK$’000 137,282 – 9,728 9,728 73 (4,609 ) (4,536 ) 142,474 2,307 140,167 142,474

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FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

Condensed Consolidated Interim Cash Flow Statement

Net cash generated from operating activities Net cash used in investing activities Net cash (used in)/generated from financing activities Net increase in cash and cash equivalents Effect of foreign exchange rate changes Cash and cash equivalents, beginning of period Cash and cash equivalents, end of period	Six months ended 30 September 2008 2007 HK$’000 HK$’000 (Unaudited) (Unaudited) 33,330 9,226 (6,524 ) (1,356 ) (16,833 ) 596 9,973 8,466 803 3,941 64,868 45,099 75,644 57,506

Notes to the Condensed Consolidated Interim Financial Information

1. GENERAL INFORMATION

Suga International Holdings Limited (the “Company”) and its subsidiaries (together, “the Group”) are principally engaged in the research and development, manufacturing and sales of electronic products. The Group has operations mainly within Hong Kong, Mainland China and Macao.

The Company was incorporated as an exempted company with limited liability in Bermuda on 28 September 2001. The address of its registered office is Clarendon House, 2 Church Street, Hamilton HM11, Bermuda.

The Company’s shares are listed on The Stock Exchange of Hong Kong Limited.

This condensed consolidated interim financial information was approved for issue on 10 December 2008.

2. BASIS OF PREPARATION

This unaudited condensed consolidated financial information for the six months ended 30 September 2008 has been prepared in accordance with Hong Kong Accounting Standard (“HKAS”) 34 “Interim Financial Reporting” issued by the Hong Kong Institute of Certified Public Accountants (“HKICPA”). This condensed consolidated interim financial information should be read in conjunction with the annual financial statements for the year ended 31 March 2008, which have been prepared in accordance with Hong Kong Financial Reporting Standards (“HKFRS”).

3. ACCOUNTING POLICIES

The principal accounting policies and method of computation used in the preparation of this unaudited condensed consolidated interim financial information are consistent with those used in the annual financial statements for the year ended 31 March 2008, except that the following interpretations are mandatory for financial year ending 31 March 2009.

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FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

Interpretation relevant and applied to the Group:

HK(IFRIC)-Int 11, “HKFRS 2 – Group and Treasury Share Transactions”, provides guidance on whether share-based transactions involving treasury shares or involving group entities (for example, options over a parent’s shares) should be accounted for as equity-settled or cash-settled share-based payment transactions in the stand-alone financial statements of the parent and group companies. This interpretation does not have an impact on the Group’s consolidated financial statements. The impact on the stand-alone financial statements of the parent will be disclosed in the financial statements of the Company for the year ending 31 March 2009.

Interpretations not relevant to the Group:

HK(IFRIC)-Int 12, “Service Concession Arrangements”.
HK(IFRIC)-Int 14, “HKAS 19 – The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction”.

The following new standards, amendments to standards and interpretations have been issued but are not effective for the financial year beginning on 1 April 2008 and have not been early adopted by the Group:

HKAS 1 (Revised), “Presentation of Financial Statements”, effective for annual periods beginning on or after 1 January 2009. The Group will apply HKAS 1 (revised) from 1 April 2009.
HKAS 23 (Revised), “Borrowing Costs”, effective for annual periods beginning on or after 1 January 2009. The Group will apply HKAS 23 (Revised) from 1 April 2009 but it is currently not applicable to the Group as there are no qualifying assets.
HKAS 27 (Revised), “Consolidated and Separate Financial Statements”, effective for annual periods beginning on or after 1 July 2009. The Group will apply HKAS 27 (Revised) from 1 April 2010.
HKAS 32 (Amendment), “Financial Instruments: Presentation”, and consequential amendments to HKAS 1, “Presentation of financial statements – Puttable Financial Instruments and Obligations Arising on Liquidation”, effective for annual periods beginning on or after 1 January 2009. The Group will apply HKAS 32 and HKAS 1 amendments from 1 April 2009, but it is not expected to have any impact on the Group’s financial statements.
HKAS 39 (Amendment), “Financial Instruments: Recognition and Measurement”, permits reclassification of certain financial assets out of the held-for-trading and available-for-sale categories if specified conditions are met. The related amendment to HKFRS 7, “Financial Instruments: Disclosures”, introduces disclosure requirements with respect to financial assets reclassified out of the held-for-trading and available-for- sale categories. The amendments are effective prospectively from 1 July 2008. These amendments do not have any impact on the Group’s financial statements, as the Group has not reclassified any financial assets.
HKFRS 1 (Amendment), “First-time Adoption of Hong Kong Financial Reporting Standards” and HKAS 27 “Consolidated and Separate Financial Statements”, effective for annual periods beginning on or after 1 January 2009. The Group will apply HKFRS 1 (Amendment) and HKAS 27 (Amendment) prospectively from 1 April 2009.
HKFRS 2 (Amendment), “Share-based Payment – Vesting Conditions and Cancellations”, effective for annual periods beginning on or after 1 January 2009. The Group will apply HKFRS 2 (Amendment) from 1 April 2009, but it is not expected to have any impact on the Group’s financial statements.
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FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

HKFRS 3 (Revised), “Business Combinations” and consequential amendments to HKAS 27, “Consolidated and Separate Financial Statements”, HKAS 28, “Investments in Associates” and HKAS 31, “Interests in Joint Ventures”, effective prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after 1 July 2009. The Group will apply HKFRS 3 (Revised) and consequential amendments to HKAS 27, HKAS 28 and HKAS 31 from 1 April 2010.
HKFRS 8, “Operating Segments”, effective for annual periods beginning on or after 1 January 2009. HKFRS 8 replaces HKAS 14, “Segment Reporting”, and requires a “management approach” under which segment information is presented on the same basis as that used for internal reporting purposes. The Group will apply HKFRS 8 from 1 April 2009. The expected impact is still being assessed in detail by management.
HK(IFRIC)-Int 13, “Customer Loyalty Programmes”, effective for annual periods beginning on or after 1 July 2008. HK(IFRIC)-Int 13 is not relevant to the Group’s operations because none of the Group’s companies operate any loyalty programmes.
HK(IFRIC)-Int 15, “Agreement for the Construction of Real Estate”, effective for annual periods beginning on or after 1 January 2009. It is not relevant to the Group.
HK(IFRIC)-Int 16, “Hedges of a Net Investment in a Foreign Operation”, effective for annual periods beginning on or after 1 October 2008. It is not relevant to the Group.
Improvements to HKFRS which include amendments to a number of standards, effective for accounting periods beginning on or after 1 January 2009. Management is assessing the effect of all the amendments on the Group’s financial statements.

4. SEGMENTAL INFORMATION

(a) Primary reporting format – business segments

Total segment revenue Segment results Other income Finance income Finance costs Income tax expense Profit for the period	Six months ended 30 September 2008 Consumer electronic Tele- products and communication other products products Total HK$’000 HK$’000 HK$’000 (Unaudited) (Unaudited) (Unaudited) 342,683 66,542 409,225 13,916 1,916 15,832 222 353 (1,154 ) (2,115 ) 13,138

19 -

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

Total segment revenue Segment results Other income Finance income Finance costs Income tax expense Profit for the period	Six months ended 30 September 2007 Consumer electronic Tele- products and communication other products products Total HK$’000 HK$’000 HK$’000 (Unaudited) (Unaudited) (Unaudited) 268,111 75,143 343,254 10,502 932 11,434 86 157 (1,540 ) (409 ) 9,728	Six months ended 30 September 2007 Consumer electronic Tele- products and communication other products products Total HK$’000 HK$’000 HK$’000 (Unaudited) (Unaudited) (Unaudited) 268,111 75,143 343,254 10,502 932 11,434 86 157 (1,540 ) (409 ) 9,728

		11,434 86 157 (1,540 ) (409 )
		9,728

(b) Secondary reporting format – geographical segments

The United States of America Asian Pacific Region (excluding Mainland China) Europe Mainland China	Six months ended 30 September 2008 2007 Segment Segment Revenue results Revenue results HK$’000 HK$’000 HK$’000 HK$’000 (Unaudited) (Unaudited) (Unaudited) (Unaudited) 149,002 12,296 124,601 9,459 123,810 884 136,810 838 120,546 1,965 65,134 1,034 15,867 687 16,709 103 409,225 15,832 343,254 11,434	Six months ended 30 September 2008 2007 Segment Segment Revenue results Revenue results HK$’000 HK$’000 HK$’000 HK$’000 (Unaudited) (Unaudited) (Unaudited) (Unaudited) 149,002 12,296 124,601 9,459 123,810 884 136,810 838 120,546 1,965 65,134 1,034 15,867 687 16,709 103 409,225 15,832 343,254 11,434
		11,434

20 -

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

5. PROPERTY, PLANT AND EqUIPMENT

Six months ended 30 September 2008
Opening net book amount as at 1 April 2008
Additions
Exchange differences
Depreciation
Closing net book amount as at 30 September 2008
Six months ended 30 September 2007
Opening net book amount as at 1 April 2007
Additions
Exchange differences
Depreciation
Closing net book amount as at 30 September 2007
LAND USE RIGHTS
Six months ended 30 September 2008
Opening net book amount as at 1 April 2008
Amortisation
Exchange differences
Closing net book amount as at 30 September 2008
Six months ended 30 September 2007
Opening net book amount as at 1 April 2007
Amortisation
Exchange differences
Closing net book amount as at 30 September 2007

HK$’000
(Unaudited)
65,195
6,930
1,088
(8,224 )
64,989
78,028
1,513
1,093
(10,294 )
70,340
HK$’000
(Unaudited)
4,458
(66 )
73
4,465
4,443
(64 )
58
4,437

6. LAND USE RIGHTS

21 -

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

7. GOODwILL

Movements of goodwill during the period are as follows:

Six months ended 30 September 2007 Net book amount as at 1 April and 30 September 2007 At 30 September 2007 Cost Accumulated depreciation Net book amount Six months ended 30 September 2008 Net book amount as at 1 April and 30 September 2008 At 30 September 2008 Cost Accumulated depreciation Net book amount	HK$’000 (Unaudited) 1,059

	1,059 –
	1,059

	1,059

	1,059 –
	1,059

8. INTEREST IN AN ASSOCIATE

		As at	As at
	30	September	31 March
		2008	2008
		HK$’000	HK$’000
		(Unaudited)	(Audited)
Share of net assets		–	–

The Group’s share of net assets of the associate represents the Group’s cost of investment plus its share of results and reserves in the associate. Under the equity method of accounting, the Group’s share of losses of the associate is restricted to the cost of investment. As at 30 September 2008, the Group’s share of loss of the associate exceeded its cost of investment. Accordingly, the share of net assets of the associate is reported at nil value.

22 -

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

9. INTEREST IN A jOINTLY CONTROLLED ENTITY

Share of net assets_(Note (a)) Amount due from a jointly controlled entity(Note (b))_ Less: provision for impairment	As at 30 September 2008 HK$’000 (Unaudited) – 23,166 (45 ) 23,121	As at 31 March 2008 HK$’000 (Audited) –

		16,186 (45 )
		16,141

Notes:

(a) The Group’s share of net assets of the jointly controlled entity represents the Group’s cost of investment plus its share of results and reserves in the jointly controlled entity. Under the equity method of accounting, the Group’s share of losses of the jointly controlled entity is restricted to the cost of investment. As at 30 September 2008, the Group’s share of loss of jointly controlled entity exceeded its cost of investment. Accordingly, the share of net assets of the jointly controlled entity is reported at nil value.
(b) The amount due from the jointly controlled entity is unsecured, non-interest bearing and repayable on demand. The carrying value of the amount due from the jointly controlled entity approximates its fair value.

The Group’s indirect interest in a jointly controlled entity, which is unlisted, is as follows:

	Place of	Particulars of	Interest
Name	incorporation	issued shares held	held	Principal activities
Suga-AI Limited	Hong Kong,	2 shares of HK$1.00 each	50%	Trading of
	limited liability			electronic products
	company

The aggregate amounts of revenues, results, assets and liabilities of the jointly controlled entity are as follows:

Financial position Assets Liabilities	As at 30 September 2008 HK$’000 (Unaudited) 13,437 13,482	As at 31 March 2008 HK$’000 (Audited) 10,723

		10,768

23 -

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

Operating results Revenue Loss for the period	Six months ended 30 September 2008 2007 HK$’000 HK$’000 (Unaudited) (Unaudited) 57,039 – – –	Six months ended 30 September 2008 2007 HK$’000 HK$’000 (Unaudited) (Unaudited) 57,039 – – –

		–

There are no contingent liabilities relating to the Group’s interest in the jointly controlled entity, and no contingent liabilities exist in the jointly controlled entity itself.

As at 30 September 2008, accumulated losses of the jointly controlled entity not recognised by the Group amounted to HK$40,000 (31 March 2008: HK$40,000).

10. TRADE AND OTHER RECEIvABLES

Trade receivables Less: Provision for impairment Trade receivables, net Prepayments Rental and other deposits Value added tax receivables Others Less: non-currnet portion Current portion	As at 30 September 2008 HK$’000 (Unaudited) 117,777 (7,385 ) 110,392 1,234 1,157 6,283 1,758 120,824 (4,719 ) 116,105	As at 31 March 2008 HK$’000 (Audited) 98,038 (10,156 )
		87,882 2,105 7,432 6,612 634
		104,565 –
		104,565

The carrying value of the Group’s trade and other receivables approximates their fair value.

24 -

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

The ageing analysis of trade receivables is as follows:

0 to 30 days 31 to 60 days 61 to 90 days 91 to 180 days Over 180 days Less: Provision for impairment Trade receivables, net Less: non-current portion Current portion of trade receivables	As at 30 September 2008 HK$’000 (Unaudited) 103,141 635 183 465 13,353 117,777 (7,385 ) 110,392 (4,719 ) 105,673	As at 31 March 2008 HK$’000 (Audited) 63,696 6,220 6,790 9,896 11,436
		98,038 (10,156 )
		87,882 –
		87,882

At 30 September 2008, a subsidiary of the Company had factored trade receivables of approximately HK$6,047,000 (31 March 2008: HK$6,777,000) (the “Factored Receivables”) to banks for cash under certain receivables purchase agreements. As the subsidiary of the Company still retained the risks and rewards associated with the default and delay in payment by the customers, the financial asset derecognition conditions as stipulated in HKAS 39 have not been fulfilled. Accordingly, the proceeds from the factoring of trade receivables have been accounted for as the Group’s liabilities and included in “Bank advances for factored receivables”.

11. TRADE AND OTHER PAYABLES

0 to 30 days 31 to 60 days 61 to 90 days 91 to 180 days Over 180 days Trade payables Salaries and staff welfare payable Accrued expense Others	As at 30 September 2008 HK$’000 (Unaudited) 84,652 5,959 3,610 1,941 1,137 97,299 5,926 2,932 2,445 108,602	As at 31 March 2008 HK$’000 (Audited) 55,082 6,108 1,963 4,882 2,566
		70,601 4,871 2,816 1,898
		80,186

25 -

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

12. BANk BORROwINGS

Non-current Long term bank borrowings Less: Current portion of long-term bank borrowings Current Trust receipt bank loans Other bank borrowings Total borrowings	As at 30 September 2008 HK$’000 (Unaudited) 14,546 (7,273 ) 7,273 7,053 7,273 14,326 21,599	As at 31 March 2008 HK$’000 (Audited) 18,182 (7,273 )
		10,909
		12,131 7,273
		19,404
		30,313

The maturity of borrowings is as follows:

Within one year In the second year In the third year	Trust receipt As at 30 September 2008 HK$’000 (Unaudited) 7,053 – – 7,053	bank loans As at 31 March 2008 HK$’000 (Audited) 12,131 – – 12,131	Bank borrowings As at As at 30 September 31 March 2008 2008 HK$’000 HK$’000 (Unaudited) (Audited) 7,273 7,273 7,273 7,273 – 3,636 14,546 18,182	Total As at As at 30 September 31 March 2008 2008 HK$’000 HK$’000 (Unaudited) (Audited) 14,326 19,404 7,273 7,273 – 3,636 21,599 30,313	Total As at As at 30 September 31 March 2008 2008 HK$’000 HK$’000 (Unaudited) (Audited) 14,326 19,404 7,273 7,273 – 3,636 21,599 30,313
					30,313

At 30 September 2008, the Group has aggregate banking facilities of approximately HK$448,025,000 (As at 31 March 2008: HK$438,704,000) for overdrafts, loans and trade financing.

Unused facilities at the same date amounted to approximately HK$380,297,000 (As at 31 March 2008: HK$354,494,000). Certain of these facilities are secured by:

(a) certain inventories held under trust receipts bank loans arrangements.
(b) corporate guarantee provided by the Company and certain of its subsidiaries.

In addition to the above, the Group has agreed to comply with certain restrictive financial covenants imposed by certain banks.

26 -

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

13. FINANCE LEASE LIABILITIES

At 30 September 2008, the Group’s finance lease liabilities were repayable as follows:

Within one year In the second to fifth year Less: future finance charges on finance leases Less: current portion The present value of finance lease liabilities is as follows: Within one year In the second to fifth year 14. SHARE CAPITAL Authorised – ordinary shares of HK$0.1 each Issued and fully paid – ordinary shares of HK$0.1 each At 1 April 2007 Issue of shares upon exercise of share options At 31 March 2008, 1 April 2008 and 30 September 2008	As at 30 September 2008 HK$’000 (Unaudited) 85 – 85 (2 ) 83 (83 ) – As at 30 September 2008 HK$’000 (Unaudited) 83 – 83 Number of shares ’000 (Unaudited) 2,000,000 229,940 900 230,840	As at 31 March 2008 HK$’000 (Audited) 85 42 127 (4 ) 123 (81 ) 42 As at 31 March 2008 HK$’000 (Audited) 81 42 123 Nominal value HK$’000 (Unaudited) 200,000 22,994 90 23,084

27 -

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

15. EXPENSES BY NATURE

Expenses included in cost of sales, distribution and selling expenses and general and administrative expenses are analysed as follows:

Cost of inventories
Staff costs, including directors’ emoluments
Depreciation of property, machinery and equipment
– owned assets
– assets held under finance leases
Amortisation of land use rights
Provision for impairment of trade receivables
(Written back of provision for)/provision for
obsolete and slow-moving inventories
Fair value loss on derivative instruments
Research and development cost
Other expenses
Total cost of sales, distribution and selling expenses
and general and administrative expenses
FINANCE INCOME AND FINANCE COSTS
Interest on:
– bank borrowings wholly repayable within five years
– finance leases liabilities
Finance costs
Finance income
Finance costs – net

Six months ended
30 September
2008
2007
HK$’000
HK$’000
(Unaudited)
(Unaudited)
315,237
264,617
41,248
33,482
8,182
10,252
42
42
66
64
29
369
(104 )
16
582
–
1,486
987
26,625
21,991
393,393
331,820
Six months ended
30 September
2008
2007
HK$’000
HK$’000
(Unaudited)
(Unaudited)
(1,152 )
(1,536 )
(2 )
(4 )
(1,154 )
(1,540 )
353
157
(801 )
(1,383 )

16. FINANCE INCOME AND FINANCE COSTS

17. INCOME TAX EXPENSE

Hong Kong profits tax has been provided at the rate of 16.5% (2007: 17.5%) on the estimated assessable profit for the period. Taxation on overseas profits has been calculated on the estimated assessable profit for the period at the rates of taxation prevailing in the countries in which the Group operates.

28 -

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

Current income tax – Hong Kong profits tax – Income tax outside Hong Kong Deferred income tax relating to the origination and reversal of temporary differences	Six months ended 30 September 2008 2007 HK$’000 HK$’000 (Unaudited) (Unaudited) 645 492 528 110 1,173 602 942 (193 ) 2,115 409	Six months ended 30 September 2008 2007 HK$’000 HK$’000 (Unaudited) (Unaudited) 645 492 528 110 1,173 602 942 (193 ) 2,115 409
		602 (193 )
		409

18. EARNINGS PER SHARE

(a) Basic

Basic earnings per share is calculated by dividing the profit attributable to equity holders of the Company by the weighted average number of ordinary shares in issue during the period.

Profit attributable to equity holders of the Company_(HK$’000) Weighted average number of ordinary shares in issue(’000) Basic earnings per share(HK cents)_	Six months ended 30 September 2008 2007 (Unaudited) (Unaudited) 13,138 9,728 230,840 230,444 5.69 4.22	Six months ended 30 September 2008 2007 (Unaudited) (Unaudited) 13,138 9,728 230,840 230,444 5.69 4.22

		230,444

		4.22

(b) Diluted

Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding assuming conversion of all dilutive potential ordinary shares. The Company has one category of dilutive potential ordinary shares which is the share options granted to employees. For the share options, a calculation is done to determine the number of shares that could have been acquired at fair value (determined as the average annual market price of the Company’s shares) based on the monetary value of the subscription rights attached to outstanding share options. The number of shares calculated as above is compared with the number of shares that would have been issued assuming the exercise of the share options.

29 -

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

Profit attributable to equity holders of the Company_(HK$’000) Weighted average number of ordinary shares in issue(’000) Adjustments for share options(’000) Weighted average number of ordinary shares for diluted earnings per share(’000) Diluted earnings per share(HK cents)_	Six months ended 30 September 2008 2007 (Unaudited) (Unaudited) 13,138 9,728 230,840 230,444 995 2,827 231,835 233,271 5.67 4.17	Six months ended 30 September 2008 2007 (Unaudited) (Unaudited) 13,138 9,728 230,840 230,444 995 2,827 231,835 233,271 5.67 4.17

		230,444 2,827
		233,271

		4.17

19. INTERIM DIvIDEND

The Board has resolved to declare an interim dividend of HK2.0 cents per share (2007: HK1.0 cent) for the six months ended 30 September 2008 payable to shareholders whose names appear on the register of shareholders of the Company on 2 January 2009. The interim dividend will be paid on or before 16 January 2009.

20. OPERATING LEASE COMMITMENTS

As at 30 September 2008, the Group had future aggregate minimum lease payments in respect of rented premises under non-cancellable operating leases as follows:

Not later than one year Later than one year and not later than five years	As at 30 September 2008 HK$’000 (Unaudited) 3,598 2,719 6,317	As at 31 March 2008 HK$’000 (Audited) 1,527 774
		2,301

The Company did not have any other significant commitments as at 30 September 2008 (As at 31 March 2008:

nil).

30 -

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

21. RELATED PARTY TRANSACTIONS

(a) During the period, the Group has the following related party transactions:

	Six months ended	Six months ended
	30 September
	2008	2007
	HK$’000	HK$’000
	(Unaudited)	(Unaudited)
Sales of electronics products to
a jointly controlled entity	97,336	–
Management fee received from
a jointly controlled entity	90	–
Management fee paid to
a jointly controlled entity	46	–

Note:

In the opinion of the Directors, the above transactions were carried out in the normal course of the Group’s business, and conducted at terms mutually agreed by the respective parties.

(b) key management compensation

Salaries and other short-term employee benefits Post-employment benefits	Six months ended 30 September 2008 2007 HK$’000 HK$’000 (Unaudited) (Unaudited) 4,141 3,966 257 240 4,398 4,206	Six months ended 30 September 2008 2007 HK$’000 HK$’000 (Unaudited) (Unaudited) 4,141 3,966 257 240 4,398 4,206
		4,206

31 -

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

3. AUDITED FINANCIAL STATEMENT OF THE GROUP FOR YEAR ENDED 31 MARCH 2008

(Terms defined herein apply to this appendix only)

The following financial information is the relevant information extracted from the audited financial statements of the Group for the year ended 31 March 2008 as published in the 2008 annual report of the Company.

Balance Sheets

As at 31 March 2008

Note ASSETS Non-current assets Property, plant and equipment 5 Land use rights 6 Goodwill 7 Investment in subsidiaries 8 Interest in an associate 9 Interest in a jointly controlled entity 10 Deferred tax assets 20 Current assets Inventories 12 Trade and other receivables 13 Tax recoverable Amounts due from subsidiaries 8 Amount due from a jointly controlled entity 10 Derivative financial instruments 14 Cash and cash equivalents 15 Total assets	Group 2008 2007 HK$’000 HK$’000 65,195 78,028 4,458 4,443 1,059 1,059 – – – – – – 3,106 3,063 73,818 86,593 139,664 130,210 104,565 119,902 1,293 577 – – 16,141 – 1,040 – 64,868 45,099 327,571 295,788 401,389 382,381	Company 2008 2007 HK$’000 HK$’000 – – – – – – 65,072 65,072 – – – – – – 65,072 65,072 – – 242 193 – – 86,382 83,892 – – – – 1,346 404 87,970 84,489 153,042 149,561	Company 2008 2007 HK$’000 HK$’000 – – – – – – 65,072 65,072 – – – – – – 65,072 65,072 – – 242 193 – – 86,382 83,892 – – – – 1,346 404 87,970 84,489 153,042 149,561
			65,072
			– 193 – 83,892 – – 404
			84,489

			149,561

32 -

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

Note LIABILITIES Current liabilities Trade and other payables 16 Income tax payable Bank borrowings 17 Finance lease liabilities 18 Bank advances for factored receivables 19 Derivative financial instruments 14 Non-current liabilities Long term bank borrowings 17 Finance lease liabilities 18 Deferred tax liabilities 20 Total liabilities EQUITY Capital and reserves attributable to the equity holders of the Company Share capital 21 Other reserves 23 Retained earnings 23 – Proposed dividend – Others Minority interests Total equity Total equity and liabilities Net current assets Total assets less current liabilities	Group 2008 2007 HK$’000 HK$’000 80,186 76,058 14,266 13,243 19,404 41,658 81 77 6,777 8,602 1,875 – 122,589 139,638 10,909 – 42 123 2,853 3,902 13,804 4,025 136,393 143,663 23,084 22,994 90,783 78,442 6,925 4,609 144,204 132,673 264,996 238,718 – – 264,996 238,718 401,389 382,381 204,982 156,150 278,800 242,743	Company 2008 2007 HK$’000 HK$’000 1,619 1,431 – – – – – – – – – – 1,619 1,431 – – – – – – – – 1,619 1,431 23,084 22,994 120,026 119,806 6,925 4,609 1,388 721 151,423 148,130 – – 151,423 148,130 153,042 149,561 86,351 83,058 151,423 148,130	Company 2008 2007 HK$’000 HK$’000 1,619 1,431 – – – – – – – – – – 1,619 1,431 – – – – – – – – 1,619 1,431 23,084 22,994 120,026 119,806 6,925 4,609 1,388 721 151,423 148,130 – – 151,423 148,130 153,042 149,561 86,351 83,058 151,423 148,130
			1,431
			– – –
			–

			1,431

			22,994 119,806 4,609 721
			148,130 –
			148,130

			149,561

			83,058

			148,130

33 -

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

Consolidated Income Statement

For the year ended 31 March 2008

Note Revenue 24 Cost of sales 27 Gross profit Other income 25 Distribution and selling expenses 27 General and administrative expenses 27 Finance income 28 Finance costs 28 Finance costs – net 28 Profit before income tax Income tax expense 29 Profit for the year Attributable to: Equity holders of the Company 30 Minority interests Earnings per share for profit attributable to the equity holders of the Company during the year – Basic (HK cents) 31 – Diluted (HK cents) 31 Dividends 32	2008 HK$’000 707,711 (614,878 ) 92,833 336 (15,512 ) (53,425 ) 24,232 621 (3,226 ) (2,605 ) 21,627 (940 ) 20,687 20,687 – 20,687 8.97 8.85 9,239	2007 HK$’000 696,346 (606,304 ) 90,042 465 (15,558 ) (54,268 ) 20,681 1,205 (6,866 ) (5,661 ) 15,020 (2,967 ) 12,053 12,053 – 12,053 5.29 5.25 5,749

34 -

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

Consolidated Statement of Changes in Equity

For the year ended 31 March 2008

Balance at 1 April 2006 Exchange differences arising on translation of the financial statements of foreign subsidiaries Profit for the year Total recognised income for the year ended 31 March 2007 Employee share option scheme expenses Exercise of share options Dividends paid Balance at 31 March 2007 Balance at 1 April 2008 Exchange differences arising on translation of the financial statements of foreign subsidiaries Profit for the year Total recognised income for the year ended 31 March 2008 Exercise of share options Dividends paid Balance at 31 March 2008	Attributable to the equity holders Share Other Retained capital reserves earnings HK$’000 HK$’000 HK$’000 22,794 69,879 126,184 – 7,144 – – – 12,053 22,794 77,023 138,237 – 932 – 200 487 185 – – (1,140 ) 22,994 78,442 137,282 22,994 78,442 137,282 – 12,121 – – – 20,687 22,994 90,563 157,969 90 220 83 – – (6,923 ) 23,084 90,783 151,129	of the Company Minority interest HK$’000 – – – – – – – – – – – – – – –	Total HK$’000 218,857 7,144 12,053 238,054 932 872 (1,140 ) 238,718 238,718 12,121 20,687 271,526 393 (6,923 ) 264,996

35 -

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

Consolidated Cash Flow Statement

For the year ended 31 March 2008

Note Cash flows from operating activities Cash generated from operations 34 Hong Kong profits tax (paid)/refund Mainland Chinese enterprise income tax paid Net cash generated from operating activities Cash flows from investing activities Purchase of property, plant and equipment Proceeds from disposals of property, plant and equipment Interest received Net cash used in investing activities Cash flows from financing activities Issuance of shares upon exercise of share options New long-term bank loans Repayment of long-term bank loans New short-term bank loans Repayment of short-term bank loans Repayment of capital element of finance lease obligations (Decrease)/increase in trust receipts bank loans Interest paid Dividends paid Net cash used in financing activities Net increase/(decrease) in cash and cash equivalents Effect of changes in foreign exchange rates Cash and cash equivalents, beginning of year Cash and cash equivalents, end of year	2008 HK$’000 45,109 (1,162 ) (1,215 ) 42,732 (4,132 ) 37 621 (3,474 ) 393 18,182 – – (28,700 ) (77 ) (827 ) (3,226 ) (6,923 ) (21,178 ) 18,080 1,689 45,099 64,868	2007 HK$’000 101,048 534 (706 ) 100,876 (3,842 ) – 1,205 (2,637 ) 872 – (77,291 ) 53,089 (98,389 ) (946 ) 8,949 (6,866 ) (1,140 ) (121,722 ) (23,483 ) 5,683 62,899 45,099

36 -

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

Notes to the Financial Statements

1 GENERAL INFORMATION

Suga International Holdings Limited (the “Company”) was incorporated as an exempted company with limited liability in Bermuda on 28 September 2001. The Company’s shares have been listed on The Stock Exchange of Hong Kong Limited (the “Stock Exchange”) since 18 September 2002.

The Company is an investment holding company. The Company and its subsidiaries (together, “the Group”) are principally engaged in the research and development, manufacturing and sales of electronic products. The Group has operations mainly in Hong Kong, Mainland China and Macao.

The address of the Company’s registered office is Clarendon House, 2 Church Street, Hamilton HM 11, Bermuda.

These consolidated financial statements are presented in Hong Kong dollars, unless otherwise stated. These consolidated financial statements have been approved for issue by the Board of Directors on 22 July 2008.

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The consolidated financial statements comprise the consolidated and company balance sheets as at 31 March 2008, the consolidated income statement, the consolidated statement of changes in equity and the consolidated cash flow statement for the year then ended, and a summary of significant accounting policies and other explanatory notes.

The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.

2.1 Basis of preparation

These consolidated financial statements have been prepared in accordance with Hong Kong Financial Reporting Standards (“HKFRS”) under the historical cost convention, except that certain derivative financial instruments are stated at fair value as at the reporting date.

The preparation of financial statements in conformity with HKFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements, are disclosed in Note 4.

(a) Standards, amendment and interpretations effective in 2007

HKFRS 7, “Financial Instruments: Disclosures”, and the complementary amendment to HKAS 1, “Presentation of financial statements – Capital disclosures”, introduces new disclosures relating to financial instruments. This Standard does not have any impact on the classification and valuation of the Group’s financial instruments, or the disclosures relating to taxation and trade and other payables.

HK(IFRIC)-Int 8, “Scope of HKFRS 2”, requires consideration of transactions involving the issuance of equity instruments, where the identifiable consideration received is less than the fair value of the equity instruments issued in order to establish whether or not they fall within the scope of HKFRS 2. This standard does not have any impact on the Group’s financial statements.

HK(IFRIC)-Int 10, “Interim Financial Reporting and Impairment”, prohibits the impairment losses recognised in an interim period on goodwill and investments in equity instruments and in financial assets carried at cost to be reversed at a subsequent balance sheet date. This standard does not have any impact on the Group’s financial statements.

37 -

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

HK(IFRIC)-Int 11, “HKFRS 2 – Group and Treasury Share Transactions”, provides guidance on whether share-based transactions involving treasury shares or involving group entities (for example, options over a parent’s shares) should be accounted for as equity-settled or cash-settled share-based payment transactions in the stand-alone financial statement of the parent and group companies. This interpretation does not have an impact on the Group’s financial statements.

(b) Standards, amendments and interpretations effective in 2007 but not relevant

The following standards, amendments and interpretations to published standards are mandatory for accounting periods beginning on or after 1 January 2007 but they are not relevant to the Group’s operations:

HK(IFRIC)-Int 7, “Applying the Restatement Approach under HKAS 29, Financial Reporting in Hyper-inflationary Economies”; and
HK(IFRIC)-Int 9, “Re-assessment of Embedded Derivatives”.
(c) Standards, amendments and interpretations to existing standards that are not yet effective and have not been early adopted by the Group

The following standards, amendments and interpretations to existing standards have been published and are mandatory for the Group’s accounting periods beginning on or after 1 January 2008 or later periods, but the Group has not early adopted them:

HKAS 1 (Revised), “Presentation of Financial Statements” (effective from 1 January 2009). HKAS 1 (Revised) requires all owners’ changes in equity to be presented in a statement of changes in equity. All comprehensive income is presented in one statement of comprehensive income or in two statements (a separate income statement and a statement of comprehensive income). It requires presenting a statement of financial position as at the beginning of the earliest comparative period in a complete set of financial statements when there are retrospective adjustments or reclassification adjustments. However, it does not change the recognition, measurement or disclosure of specific transactions and other events required by other HKFRSs. The Group will apply HKAS 1 (Revised) from 1 April 2009.
HKAS 23 (Revised), “Borrowing Costs” (effective from 1 January 2009). The amendment requires an entity to capitalise borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset (one that takes a substantial period of time to get ready for use or sale) as part of the cost of that asset. The option of immediately expensing those borrowing costs will be removed. The Group will apply HKAS 23 (Revised) from 1 April 2009 but is currently not applicable to the Group as there are no qualifying assets.
HKFRS 8, “Operating Segments” (effective from 1 January 2009). HKFRS 8 replaces HKAS 14 and aligns segment reporting with the requirements of the US standard SFAS 131, ‘Disclosures about segments of an enterprise and related information’. The new standard requires a ‘management approach’, under which segment information is presented on the same basis as that used for internal reporting purposes. The Group will apply HKFRS 8 from 1 April 2009. The expected impact is still being assessed in detail by management, but it appears likely that the number of reportable segments, as well as the manner in which the segments are reported, will change in a manner that is consistent with the internal reporting provided to the chief operating decision-maker. As goodwill is
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allocated to Groups of cash-generating units based on segment level, the change will also require management to reallocate goodwill to the newly identified operating segments. Management does not anticipate that this will result in any material impairment to the goodwill balance.

HK(IFRIC)-Int 14, “HKAS 19 – The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction” (effective from 1 January 2008). HK(IFRIC)-Int 14 provides guidance on assessing the limit in HKAS 19 on the amount of the surplus that can be recognised as an asset. It also explains how the pension asset or liability may be affected by a statutory or contractual minimum funding requirement. The Group will apply HK(IFRIC)-Int 14 from 1 April 2008, but it is not expected to have any impact on the Group’s financial statements.

• HKAS 27 (Revised) “Consolidated and Separate Financial Statements” (effective from annual period beginning on or after 1 July 2009). The amendment requires non-controlling interests (i.e. minority interests) to be presented in the consolidated statement of financial position within equity, separately from the equity of the owners of the parent. Total comprehensive income must be attributed to the owners of the parent and to the noncontrolling interests even if this results in the non-controlling interests having a deficit balance. Changes in a parent’s ownership interest in a subsidiary that do not result in the loss of control are accounted for within equity. When control of a subsidiary is lost, the assets and liabilities and related equity components of the former subsidiary are derecognised. Any gain or loss is recognised in profit or loss. Any investment retained in the former subsidiary is measured at its fair value at the date when control is lost. The Group will apply HKAS 27 (Revised) from 1 April 2010.

• HKAS 32 and HKAS 1 Amendments “Puttable Financial Instruments and Obligations Arising on Liquidation” (effective from 1 January 2009). The amendment require some puttable financial instruments and some financial instruments that impose on the entity an obligation to deliver to another party a pro rata share of the net assets of the entity only on liquidation to be classified as equity. The Group will apply HKAS 32 and HKAS 1 Amendments from 1 April 2009, but it is not expected to have any impact on the Group’s financial statements.

• HKFRS 3 (Revised) “Business Combinations” (effective for business combinations with acquisition date on or after the beginning of the first annual reporting period beginning on or after 1 July 2009). The amendment may bring more transactions into acquisition accounting as combinations by contract alone and combinations of mutual entities are brought into the scope of the standard and the definition of a business has been amended slightly. It now states that the elements are ‘capable of being conducted’ rather than ‘are conducted and managed’. It requires considerations (including contingent consideration), each identifiable asset and liability to be measured at its acquisition-date fair value, except leases and insurance contracts, reacquired right, indemnification assets as well as some assets and liabilities required to be measured in accordance with other HKFRSs. They are income taxes, employee benefits, share-based payment and non current assets held for sale and discontinued operations. Any non-controlling interest in an acquiree is measured either at fair value or at the non-controlling interest’s proportionate share of the acquiree’s net identifiable assets. The Group will apply HKFRS 3 (Revised) from 1 April 2010.

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HKFRS 2 Amendment “Share-based Payment – Vesting Conditions and Cancellations” (effective from 1 January 2009). The amendment clarifies the definition of “Vesting conditions” and specifies the accounting treatment of “cancellations” by the counterparty to a share-based payment arrangement. Vesting conditions are service conditions (which require a counterparty to complete a specified period of service) and performance conditions (which require a specified period of service and specified performance targets to be met) only. All “non-vesting conditions” and vesting conditions that are market conditions shall be taken into account when estimating the fair value of the equity instruments granted. All cancellations are accounted for as an acceleration of vesting and the amount that would otherwise have been recognised over the remainder of the vesting period is recognised immediately. The Group will apply HKFRS 2 Amendment from 1 April 2009, but it is not expected to have any impact on the Group’s financial statements.
(d) Interpretations to existing standards that are not yet effective and not relevant to the Group’s operations

The following interpretations to existing standards have been published and are mandatory for the Group’s accounting periods beginning on or after 1 April 2008 or later periods but are not relevant to the Group’s operations:

HK(IFRIC)-Int 12, “Service Concession Arrangements” (effective from 1 January 2008). HK(IFRIC)-Int 12 applies to contractual arrangements whereby a private sector operator participates in the development, financing, operation and maintenance of infrastructure for public sector services. HK(IFRIC)-Int 12 is not relevant to the Group’s operations because none of the group companies provide public sector services.
HK(IFRIC)-Int 13, “Customer Loyalty Programmes” (effective from 1 July 2008). HK(IRFIC)-Int 13 clarifies that where goods or services are sold together with a customer loyalty incentive (for example, loyalty points or free products), the arrangement is a multiple-element arrangement and the consideration receivable from the customer is allocated between the components of the arrangement using fair values. HK(IFRIC)-Int 13 is not relevant to the Group’s operations because none of the Group’s companies operate any loyalty programmes.

2.2 Consolidation

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

(a) Subsidiaries

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

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

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The purchase method of accounting is used to account for the acquisition of subsidiaries by the Group. The cost of an acquisition is measured at the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any minority interest. The excess of the cost of acquisition over the fair value of the Group‘s share of the identifiable net assets acquired is recorded as goodwill. If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognised directly in the consolidated income statement (Note 2.6).

Inter-company transactions, balances and unrealised gains on transactions between group companies are eliminated. Unrealised losses are also eliminated but considered an indicator of an impairment of the asset transferred. Accounting policies of subsidiaries have been changed where necessary in the consolidated financial statements to ensure consistency with the policies adopted by the Group.

In the Company’s balance sheet, investments in subsidiaries are stated at cost less provision for impairment losses (Note 2.7). The results of subsidiaries are accounted for by the Company on the basis of dividends received and receivable.

(b) Associates

Associates are entities over which the Group has significant influence but not control, generally accompanying a shareholding of between 20% and 50% of the voting rights. Investments in associates are accounted for using the equity method of accounting and are initially recognised at cost. The Group’s investment in an associate includes goodwill (net of any accumulated impairment loss) identified on acquisition (Note 2.6).

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

Unrealised gains on transactions between the Group and its associates are eliminated to the extent of the Group’s interest in the associates. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of associates have been changed where necessary to ensure consistency with the policies adopted by the Group.

Dilution gains and losses in associates are recognised in the consolidated income statement.

In the Company’s balance sheet, investments in associates are stated at cost less provision for impairment losses (Note 2.7). The results of associated companies are accounted for by the Company on the basis of dividend received and receivable.

(c) Jointly controlled entities

A jointly controlled entity is a joint venture in which the Group and other parties undertake an economic activity which is subject to jointly control and none of the participating parties has unilateral control over the economic activity. The Group’s interests in jointly controlled entities are accounted for using the equity method of accounting and are initially recognised at cost.

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

Unrealised gains on transactions between the Group and its jointly controlled entities are eliminated to the extent of the Group’s interest in the jointly controlled entities. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of jointly controlled entities have been changed where necessary to ensure consistency with the policies adopted by the Group.

2.3 Segment reporting

A business segment is a group of assets and operations engaged in providing products or services that are subject to risks and returns that are different from those of other business segments. A geographical segment is engaged in providing products or services within a particular economic environment that are subject to risks and returns that are different from those of segments operating in other economic environments.

(a) Functional and presentation currency

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

(b) Transactions and balances

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

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

(c) Group companies

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

(i) assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet;
(ii) income and expenses for each income statement are translated at average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the dates of the transactions); and
(iii) all resulting exchange differences are recognised as a separate component of equity.
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On consolidation, exchange differences arising from the translation of the net investment in foreign entities, and of borrowings and other currency instruments designated as hedges of such investments, are taken to shareholders’ equity. When a foreign operation is partially disposed of or sold, such exchange differences are recognised in the income statement as part of the gain or loss on sale.

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

2.5 Property, plant and equipment

Property, plant and equipment is stated at historical cost less depreciation and impairment. Historical cost includes expenditure that is directly attributable to the acquisition of the items.

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

Depreciation of property, plant and equipment is calculated using the straight-line method to allocate cost less residual values over their estimated useful lives, as follows:

Buildings	37 – 42 years
Leasehold improvements	5 years
Plant and machinery	5 years
Furniture and equipment	5 years

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

An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount (Note 2.7).

Gains and losses on disposals are determined by comparing proceeds with carrying amount and are recognised in the income statement.

2.6 Goodwill

Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the net identifiable assets of the acquired subsidiary/associate at the date of acquisition. Goodwill on acquisitions of subsidiaries is included in intangible assets. Goodwill on acquisition of an associate is included in investment in an associate. Separately recognised goodwill is tested for impairment and carried at cost less accumulated impairment losses. Impairment losses on goodwill are not reversed. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.

Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation is made to those cash-generating units or groups of cash-generating units that are expected to benefit from the business combination in which the goodwill arose. The Group allocates goodwill to each business segment in each geographical location in which it operates (Note 2.7).

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2.7 Impairment of investments in subsidiaries, associates, jointly controlled entities and non-financial assets

Assets that have an indefinite useful life or are not yet available for use are not subject to amortisation and are tested at least annually for impairment. Assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). Assets other than goodwill that suffered an impairment are reviewed for possible reversal of the impairment at each reporting date.

2.8 Financial assets

The Group classifies its financial assets in the following categories: at fair value through profit or loss, loans and receivables and available-for-sale. The classification depends on the purposes for which the financial assets were acquired. Management determine the classification of its financial assets at initial recognition.

As at 31 March 2008, the Group’s financial assets primarily comprise financial assets at fair value through profit or loss and loans and receivables.

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

Financial assets at fair value through profit or loss are financial assets held for trading. A financial asset is classified in this category if acquired principally for the purpose of selling in the short term. Derivatives are classified as held for trading unless they are designated as hedges. Assets in this category are classified as current assets.

(b) Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for maturities greater than 12 months after the balance sheet date. These are classified as non-current assets. Loans and receivables are classified as trade and other receivables and cash and cash equivalents in the balance sheets.

Regular way purchases and sales of financial assets are recognised on the trade-date – the date on which the Group commits to purchase or sell the asset. Investments are initially recognised at fair value plus transaction costs for all financial assets not carried at fair value through profit or loss. Financial assets carried at fair value through profit or loss are initially recognised at fair value, and transaction costs are expensed in the income statement. Financial assets are derecognised when the rights to receive cash flows from the investments have expired or have been transferred and the Group has transferred substantially all risks and rewards of ownership. Available-for-sale financial assets and financial assets at fair value through profit or loss are subsequently carried at fair value. Loans and receivables are carried at amortised cost using the effective interest method.

Gains or losses arising from changes in the fair value of the ‘financial assets at fair value through profit or loss’ category are recognised in the income statement in the period in which they arise.

The Group assesses at each balance sheet date whether there is objective evidence that a financial asset or a group of financial assets is impaired.

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2.9 Inventories

Inventories are stated at the lower of cost and net realisable value. Cost is determined using the first-in, first-out (FIFO) method. The cost of finished goods and work in progress comprises design costs, raw materials, direct labour, other direct costs and related production overheads (based on normal operating capacity). It excludes borrowing costs. Net realisable value is the estimated selling price in the ordinary course of business, less applicable variable selling expenses.

2.10 Trade and other receivables

Trade and other receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. A provision for impairment of trade and other receivables is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of the receivables. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation, and default or delinquency in payments are considered indicators that the trade receivable is impaired. The amount of the provision is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. The carrying amount of the assets is reduced through the use of an allowance account, and the amount of the loss is recognised in the income statement within general and administrative expenses. When a trade receivable is uncollectible, it is written off against the allowance account for trade receivables. Subsequent recoveries of amounts previously written off are credited against general and administrative expenses in the income statement.

2.11 Cash and cash equivalents

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

2.12 Share capital

Ordinary shares are classified as equity.

Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.

2.13 Trade and other payables

Trade and other payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.

2.14 Borrowings

Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the income statement over the period of the borrowings using the effective interest method.

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

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2.15 Current and deferred income tax

The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the countries where the Company and its subsidiaries and associates operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation and establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.

Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.

Deferred income tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised.

Deferred income tax is provided on temporary differences arising on investments in subsidiaries, associates and jointly controlled entities, except where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future.

2.16 Employee benefits

(a) Pension obligations

The Group’s contributions to the Mandatory Provident Fund Scheme established under the Hong Kong Mandatory Provident Fund Schemes Ordinance are expensed as incurred. The assets of which are generally held in separate trustee-administrated funds. The pension plans are generally funded by payments from employees and by the Group.

For employees in Mainland China, the Group contributes on a monthly basis to various defined contribution retirement benefit plans organised by relevant municipal and provincial governments based on certain percentage of the relevant employees’ monthly salaries. The municipal and provincial governments undertake to assume the retirement benefit obligations of all existing and future retired employees under these plans and the Group has no further obligation for post-retirement benefits beyond the contributions made. Contributions to these plans are expensed as incurred.

For employees in Macao, the Group contributes to defined contribution retirement plan organised by government based on the amount as stipulated by the relevant rules and regulations. The Macao government undertakes to assume the retirement benefit obligations of all existing and future retired employees under the retirement plan and the Group has no further obligation for post-retirement benefits beyond the contributions made. Contributions to these plans are expensed as incurred.

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(b) Share-based compensation

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

The proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value) and share premium when the options are exercised.

(c) Employee leave entitlements

Employee entitlements to annual leave and long service leave are recognised when they accrue to employees. A provision is made for the estimated liability for annual leave and long service leave as a result of services rendered by employees up to the balance sheet date.

Employee entitlements to sick leave and maternity leave are not recognised until the time of leave.

(d) Other benefits

Other directors’ and employees’ obligations are recorded as a liability and charged to the income statement when the Group is contractually obliged or when there is a past practice that has created a constructive obligation.

2.17 Provisions

Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events; it is probable that an outflow of resources will be required to settle the obligation; and the amount has been reliably estimated. Restructuring provisions comprise lease termination penalties and employee termination payments. Provisions are not recognised for future operating losses.

Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small.

Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to passage of time is recognised as interest expense.

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2.18 Revenue recognition

Revenue comprises the fair value of the consideration received or receivable for the sale of goods in the ordinary course of the Group’s activities. Revenue is shown net of value-added tax, returns, rebates and discounts and after eliminating sales within the Group. Revenue is recognised as follows:

(a) Sales of goods

Sales of goods are recognised when a group entity has delivered products to the customer, the customer has accepted the products, the amount of sales can be reliably measured and it is probable that future economic benefits will flow to the entities.

(b) Interest income

Interest income is recognised on a time-proportion basis using the effective interest method. When a receivable is impaired, the Group reduces the carrying amount to its recoverable amount, being the estimated future cash flow discounted at the original effective interest rate of the instrument, and continues unwinding the discount as interest income. Interest income on impaired loans is recognised using the original effective interest rate.

(c) Dividend income

Dividend income is recognised when the right to receive payment is established.

2.19 Leases

(a) Operating lease

Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor), including upfront payment made for leasehold land and land use rights, are charged in the income statement on a straight-line basis over the period of the lease.

(b) Finance lease

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

2.20 Financial guarantees

A financial guarantee (a kind of insurance contract) is a contract that requires the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payments when due in accordance with the original or modified terms of a debt instrument. The Group does not recognise liabilities for financial guarantee at inception, but performs a liability adequacy test at each reporting date by comparing its net liability regarding the financial guarantee with the amount that would be required if the financial guarantee would result in a present legal or constructive obligation. If the liability is less than its present legal or constructive obligation amount, the entire difference is recognised in the income statement immediately.

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2.21 Derivative financial instruments

Derivative financial instruments are initially measured at fair value on the date the derivative contracts are entered into and are subsequently remeasured at their fair values. The method of recognising the resulting gain or loss depends on whether the derivative is designated as a hedged instrument, and if so, the mature of item being hedged.

As at 31 March 2008, the Group did not designate any derivatives as hedging instruments. Changes in fair values of derivatives that do not qualify for hedge accounting are being recognised in the income statement.

2.22 Dividend distribution

Dividend distribution to the Company’s equity holders is recognised as a liability in the Group’s financial statements in the period in which the dividends are approved by the Company’s equity holders in case of final dividend and the Company’s directors in case of interim dividend.

2.23 Contingent liability

A contingent liability is a possible obligation that arises from past events and whose existence will only be confirmed by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Group. It can also be a present obligation arising from past events that is not recognised because it is not probable that outflow of economic resources will be required or the amount of obligation cannot be measured reliably. A contingent liability is not recognised but is disclosed in the notes to the consolidated financial statements. When a change in the probability of an outflow occurs so that outflow is probable, it will then be recognised as a provision.

3 FINANCIAL RISK MANAGEMENT

3.1 Financial risk factors

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

Risk management is carried out by core management team of the Group under directions from the Board of Directors.

(i) Foreign currency risk

The Group mainly operates in Hong Kong and Mainland China and most of its business transactions, assets and liabilities are principally denominated in HK dollars, U.S. dollars and Renminbi (“RMB”). Foreign currency risk arises when future commercial transactions or recognised assets and liabilities are denominated in a currency that is not the entity’s functional currency. The Group is exposed to foreign currency risk primarily with respect to RMB. Management will continue to monitor foreign currency exchange exposure and will take measures to minimise the currency translation risk. The Group also enters into certain forward foreign exchange contracts to hedge against foreign currency risk. The exchange rate of RMB to foreign currencies is subject to the rules and regulations of foreign exchange control promulgated by the Mainland Chinese Government.

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APPENDIX I

As at 31 March 2008 and 2007, if both HK dollars and US dollars strengthen/weakened by 5% against RMB with all other variables held constant, the post-tax profit for each year would have changed mainly as a result of foreign exchange gains/losses on translation of monetary assets and liabilities denominated in foreign currencies of the relevant group companies.

Post-tax profit increase/(decrease) – Strengthen 5% – Weakened 5%	2008 HK$’000 (2,164 ) 2,164	2007 HK$’000 (895 ) 895

(ii) Cash flow and fair value interest rate risk

The Group’s income and operating cash flows are substantially independent of changes in market interest rates and the Group has no significant interest-bearing assets except for the cash and cash equivalents, details of which have been disclosed in Note 15. The Group’s interest rate risk primarily relates to its bank borrowings. The Group currently does not have hedging policy in respect of the interest rate risk. However, management monitors the related interest rate risk exposure closely and will consider hedging significant interest rate risk exposure should the need arise.

The Group has no fixed interest rate borrowings, as such the Group does not have any fair value interest rate risk.

At 31 March 2008, if the interest rates on bank borrowings had been 50 basis points higher/lower than the prevailing interest rate, with all other variables held constant, post-tax profit for the year would have been HK$152,000 (2007: HK$208,000) lower/higher, mainly as a result of higher/lower interest expense on floating rate bank borrowings.

(iii) Credit risk

Credit risk is managed on a group basis. The Group’s financial assets are trade and other receivables, derivative financial instruments, amount due from a jointly controlled entity and cash at banks. The amounts of those assets stated in the consolidated balance sheet represent the Group’s maximum exposure to credit risk in relation to financial assets.

The Group’s credit risk is concentrated on a number of major and long established customers. Trade receivables from the top five customers amounted to approximately 70% of the Group’s total trade receivables. The Group has policies in place to ensure that sales are made to customers with appropriate credit history and to limit the amount of credit exposure to individual customer. The Group reviews the recoverable amount of each individual trade receivable at each balance sheet date to ensure that adequate impairment losses are made for irrecoverable amounts. The Group’s past experience in collection of trade receivables falls within the recorded allowances. In order to minimise credit risk to the Group, the Group has certain non-recourse factoring arrangement with banks to cover the credit risk.

The credit risk on liquid funds is limited because the counterparties are banks with high creditratings assigned by international credit-rating agencies. Transactions in relations to derivative financial instruments are only carried out with financial instrument of high reputations. The Group has policies that limit the amount of credit exposure to any one financial institution.

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For balance due from the jointly controlled entity and subsidiaries, the Group regularly monitors the financial positions of those companies to access their recoverability.

No credit limits were exceeded during the reporting period, and management does not expect any losses from non-performance by these counterparties.

(iv) Liquidity risk

Prudent liquidity risk management implies maintaining sufficient cash and cash equivalents and the availability of funding through an adequate amount of committed credit facilities. The Group manages its liquidity risk by controlling the level of inventories, closely monitoring the turnover days of receivables, monitoring its working capital requirements and keeping credit lines available.

Management monitors rolling forecast of the Group’s bank facilities and cash and cash equivalents on the basis of expected cash flows.

The table below analyses the Group’s financial liabilities that will be settled into relevant maturity grouping based on the remaining period at the balance sheet date to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows.

2008 Trade payables Other payables and accruals Borrowings Finance lease liabilities Bank advances for factored receivables Derivative financial instruments 2007 Trade payables Other payables and accruals Borrowings Finance lease liabilities Bank advances for factored receivables	Less than 1 year HK$’000 70,601 9,585 19,404 81 6,777 1,875 108,323 65,361 10,697 41,658 77 8,602 126,395	Between 1 and 2 years HK$’000 – – 7,452 42 – – 7,494 – – – 81 – 81	Between 2 and 5 years HK$’000 – – 3,654 – – –
			3,654

			– – – 42 –
			42

3.2 Capital risk management

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

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APPENDIX I

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

The Group monitors capital on the basis of the gearing ratio. This ratio is calculated as total borrowings (including bank borrowings and bank advances for factored receivables) divided by equity holders’ equity as shown in the consolidated balance sheet.

Total bank borrowings Bank advances for factored receivables Total equity Gearing ratio	2008 HK$’000 30,313 6,777 37,090 264,996 14.0%	2007 HK$’000 41,658 8,602
		50,260 238,718
		21.1%

The decrease in the gearing ratio during the relevant periods resulted primarily from the decrease of bank borrowings during the year ended 31 March 2008.

3.3 Fair value estimation

The fair value of financial instruments that are not traded in an active market is determined by using valuation techniques. The Group uses a variety of methods and makes assumptions that are based on market conditions existing at each balance sheet date. The fair value of forward foreign exchange contracts is determined using forward exchange market rates at the balance sheet date.

The carrying value less impairment provision of trade receivables and payable are reasonable approximation of their fair values. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest rate that is available to the Group for similar financial instruments.

4 CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS

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

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

(a) Estimated impairment of goodwill

The Group tests annually whether goodwill has suffered any impairment, in accordance with the accounting policy stated in Note 2.6. The recoverable amounts of cash-generating units have been determined based on value-in-use calculations. These calculations require the use of estimates.

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APPENDIX I

(b) Income taxes

The Group is subject to various taxes in a number of jurisdictions. Significant judgment is required in determining the provision for income taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the current income tax and deferred income tax provisions in the period in which such determination is made.

Deferred tax assets relating to certain temporary differences are recognised when management considers it is probable that future taxable profits will be available against which the temporary differences or tax losses can be utilised when the expectation is different from the original estimate, such differences will impact the recognition of deferred tax assets and income tax charges in the period in which such estimate is changed.

(c) Estimated write-downs of inventories to net realisable value

The Group writes down inventories to net realisable value based on an assessment of the realisability of inventories. Write-downs of inventories are recorded where events or changes in circumstances indicate that the balances may not be realised. The identification of write-downs requires the use of judgement and estimates. Where the expectation is different from the original estimate, such difference will impact the carrying value of inventories and write-downs of inventories in the period in which such estimate has been changed.

(d) Estimated provision for impairment of trade receivables

The Group makes provision for impairment of trade receivables based on an assessment of the recoverability of trade receivables. Provisions are applied to trade receivables where events or changes in circumstances indicate that the balances may not be collectible. The identification of doubtful debts requires the use of judgement and estimates. Where the expectation is different from the original estimate, such difference will impact the carrying value of trade receivables and impairment is recognised in the year in which such estimate has been changed.

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APPENDIX I

5 PROPERTY, PLANT AND EQUIPMENT

			Group
		Leasehold		Furniture
		improve-	Plant and	and
	Buildings	ments	machinery	equipment	Total
	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000
At 1 April 2006
Cost	43,712	16,422	83,003	23,889	167,026
Accumulated depreciation	(4,142 )	(10,633 )	(43,544 )	(14,592 )	(72,911 )
Net book amount	39,570	5,789	39,459	9,297	94,115

Year ended 31 March 2007
Opening net book amount	39,570	5,789	39,459	9,297	94,115
Exchange differences	334	212	644	207	1,397
Additions	220	447	2,185	990	3,842
Disposals	–	(29 )	(98 )	(95 )	(222 )
Depreciation	(1,101 )	(2,397 )	(14,174 )	(3,432 )	(21,104 )
Closing net book amount	39,023	4,022	28,016	6,967	78,028

At 31 March 2007
Cost	44,272	17,386	84,714	25,227	171,599
Accumulated depreciation	(5,249 )	(13,364 )	(56,698 )	(18,260 )	(93,571 )
Net book amount	39,023	4,022	28,016	6,967	78,028

Year ended 31 March 2008
Opening net book amount	39,023	4,022	28,016	6,967	78,028
Exchange differences	781	336	1,269	350	2,736
Additions	–	47	2,679	1,406	4,132
Disposals	–	–	–	(27 )	(27 )
Depreciation	(1,127 )	(2,078 )	(13,211 )	(3,258 )	(19,674 )
Closing net book amount	38,677	2,327	18,753	5,438	65,195

At 31 March 2008
Cost	45,088	18,805	91,929	27,741	183,563
Accumulated depreciation	(6,411 )	(16,478 )	(73,176 )	(22,303 )	(118,368 )
Net book amount	38,677	2,327	18,753	5,438	65,195

Depreciation expense of HK$13,410,000 (2007: HK$14,228,000) has been expensed in cost of sales, and HK$6,264,000 (2007: HK$6,876,000) has been expensed in general and administrative expenses.

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APPENDIX I

Net book value of machinery held under finance leases of the Group is as follows:

Cost Less: Accumulated depreciation Net book value Depreciation for the year	2008 HK$’000 419 (259 ) 160 84	2007 HK$’000 419 (175 ) 244 84

6 LAND USE RIGHTS

The Group’s interests in land use rights represented prepaid operating lease payments and their movements and net book value are analysed as follows:

Beginning of the year Exchange differences Amortisation End of the year In Mainland China, held on leases of between 10 and 50 years	Group 2008 2007 HK$’000 HK$’000 4,443 4,505 145 64 (130 ) (126 ) 4,458 4,443 2008 2007 HK$’000 HK$’000 4,458 4,443

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FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

7 GOODWILL

Movements of goodwill during the year are as follows:

Year ended 31 March 2007 Net book amount at 1 April 2006 and 31 March 2007 At 31 March 2007 Cost Impairment charge Net book amount Year ended 31 March 2008 Net book amount at 1 April 2007 and 31 March 2008 At 31 March 2008 Cost Impairment charge Net book amount	HK$’000 1,059

	1,059 –
	1,059

	1,059

	1,059 –
	1,059

Impairment tests for goodwill

Goodwill is allocated to the Group’s cash-generating units (CGUs) identified according to country of operation and business segment.

A segment-level summary of the goodwill allocation is presented below.

	2008	2007
	HK$’000	HK$’000
Telecommunication products in Mainland China	1,059	1,059

The recoverable amount of a CGU is determined based on value-in-use calculations. These calculations use cash flow projections based on financial budgets approved by management covering a five-year period.

	Telecommunication
Gross margin	11%
Growth rate	3%
Discount rate	5%

The assumptions have been used for the analysis of the CGU within the business segment.

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FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

Management determined budgeted gross margin based on past performance and their expectations for the market development. The weighted average growth rates used are consistent with the forecasts included in industry reports. The discount rates used are pre-tax and reflect specific risks relating to the relevant segments.

Based on discounted cash flow forecast prepared by management, the directors are of the view that there is no impairment of goodwill as at 31 March 2008 and 2007.

8 INVESTMENT IN SUBSIDIARIES AND AMOUNTS DUE FROM SUBSIDIARIES

(a) Investment in subsidiaries

Unlisted shares, at cost	Company 2008 2007 HK$’000 HK$’000 65,072 65,072

The Directors are of the opinion that the underlying value of investment in subsidiaries is not less than its carrying values as at 31 March 2008.

(b) Amounts due from subsidiaries

The balances due from subsidiaries are unsecured, non-interest bearing and repayable on demand. The carrying values of the amounts due from subsidiaries approximate their fair values.

(c) Details of the principal subsidiaries of the Company as at 31 March 2008 are as follows:

	Place of
	incorporation/
	establishment	Issued share			Principal activities
	and kind of	capital/	Group equity		and place
Name	legal entity	paid-up capital	interest		of operation
			2008	2007
Suga International	British Virgin	Ordinary shares	100%	100%	Investment holding in
Limited_(vii)_	Islands, limited	US$700			Hong Kong
	liability company
Speedy Source Limited	Hong Kong,	Ordinary shares	100%	100%	Trading of electronic
	limited liability	HK$2			products in
	company				Hong Kong
Suga Electronics	Hong Kong,	Ordinary shares	100%	100%	Trading of electronic
Limited_(i)_	limited liability	HK$2			products in
	company				Hong Kong
		Non-voting
		deferred shares
		HK$4,000,000_(i)_
Suga Electronics	Mainland China,	HK$33,500,000	100%	100%	Manufacturing of
(Shenzhen) Co.,	limited liability				electronic products in
Ltd.(ii), (ix)	company				Mainland China
Suga Networks	Hong Kong,	Ordinary shares	100%	100%	Trading of networking
Hong Kong Limited	limited liability	HK$100,000			devices in Hong Kong
	company

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FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

	Place of
	incorporation/
	establishment	Issued share			Principal activities
	and kind of	capital/	Group equity		and place
Name	legal entity	paid-up capital		interest	of operation
			2008	2007
Suga Networks	Mainland China,	HK$17,500,000	100%	100%	Manufacturing of
Equipment	limited liability				networking devices in
(Shenzhen) Co. Ltd.	company				Mainland China
(“SNESL”)(iii), (ix)
Typhoon	British Virgin Islands,	Ordinary shares	100%	100%	Property holding in
International	limited liability	US$1			Mainland China
Limited	company
P&S Macao	Macao, limited	Ordinary shares	100%	100%	Trading of pet
Commercial	liability company	MOP100,000			products in Macao
Offshore Limited
Pets & Supplies	Mainland China,	HK$10,000,000	100%	100%	Manufacture of pet
(Shenzhen) Co.,	limited liability				products in Mainland
Ltd. (“PSSL”)	company				China
(iv), (ix)
Suga Digital	Hong Kong,	Ordinary shares	100%	100%	Design and trading of
Technology	limited liability	HK$2			digital A/V products
Limited	company				in Hong Kong
Net-Tech	Hong Kong,	Ordinary shares	100%	100%	Trading of electronic
Products Limited	limited liability	HK$2			products in
	company				Hong Kong
Net-Tech	Singapore, limited	Ordinary shares	90%	90%	Trading of electronic
Products Pte.	exempt private	SGD20,000			products in Singapore
Limited	company
Precise Computer	Hong Kong,	Ordinary shares	100%	100%	Manufacture and
Tooling Co.,	limited liability	HK$500,000			trading of plastic
Limited	company				parts in Hong Kong
Precise Plastic	Mainland China,	HK$5,600,000	100%	100%	Manufacture of
Injection (Shenzhen)	limited liability				plastic parts in
Co., Ltd. (“PPISL”)	company				Mainland China
(v), (ix)
Nodic-Matsumoto	Mainland China,	US$3,957,407	100%	100%	Manufacture of
Tooling and Plastic	limited liability				plastic parts in
Injection (Huizhou)	company				Mainland China
Co., Limited
(“Nodic”)(vi), (ix)

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FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

Notes:

(i) The non-voting deferred shares of Suga Electronics Limited are held by Essential Mix Enterprises Limited and Broadway Business Limited, which are owned by Mr. Ng Chi Ho and Mr. Ma Fung On, directors and beneficial shareholders of the Company. These non-voting deferred shares have no voting rights, are not entitled to dividends, and are not entitled to any distributions upon winding up unless a sum of HK$10,000,000,000 per ordinary share has been distributed to the holders of the ordinary shares.
(ii) Suga Electronics (Shenzhen) Co., Ltd. is a wholly foreign owned enterprise established in Mainland China with an approved period of operation of 20 years until June 2014.
(iii) SNESL is a wholly foreign owned enterprise established in Mainland China with an approved period of operation of 20 years until October 2022.
(iv) PSSL is a wholly foreign owned enterprise established in Mainland China with an approved period of operation of 20 years until April 2024.
(v) PPISL is a wholly foreign owned enterprise established in Mainland China with an approved period of operation of 20 years until September 2025.
(vi) Nodic is a wholly foreign owned enterprise established in Mainland China with an approved period of operation of 30 year until September 2020. As at 31 March 2008, approximately HK$15,932,000 (2007: HK$15,932,000) of the registered capital has not yet been paid up.
(vii) The shares of Suga International Limited are held directly by the Company. The shares of the other subsidiaries are held indirectly.
(viii) None of the subsidiaries had any loan capital in issue at any time during the year ended 31 March 2008.
(ix) All subsidiaries established in Mainland China have financial accounting year end dated on 31 December in accordance with the local statutory requirements, which is not coterminous with the Group. The consolidated financial statements of the Group were prepared based on the financial statements of these subsidiaries for the twelve months ended 31 March 2008.

9 INTEREST IN AN ASSOCIATE

Group
2008	2007
HK$’000	HK$’000

Share of net assets – –

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FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

The Group’s indirect interest in an associate, which is unlisted, is as follows:

	Particulars of	Country of						% Interest
Name	issued shares held	incorporation	Year	Assets	Liabilities	Revenue	Loss	held
				HK$’000	HK$’000	HK$’000	HK$’000
Modern Tech	Ordinary shares	Hong Kong,	2008	105	77	–	–	28.57%
Limited	HK$10,500,000	limited liability
	(2007: HK$	company	2007	105	77	10	546	28.57%
	HK$10,500,000)

The accumulated losses not recognised by the Group for Modern Tech Limited were HK$546,000 (2007: HK$546,000).

10 INTEREST IN A JOINTLY CONTROLLED ENTITY

Share of net assets_(Note (a)) Amount due from a jointly controlled entity(Note (b)) Less: provision for impairment _Notes:	Group 2008 2007 HK$’000 HK$’000 – – 16,186 – (45 ) – 16,141 –	Group 2008 2007 HK$’000 HK$’000 – – 16,186 – (45 ) – 16,141 –

		– –
		–

(a) The Group’s share of net assets of the jointly controlled entity represents the Group’s cost of investment plus its share of results and reserves in the jointly controlled entity. Under the equity method of accounting, the Group’s share of losses of the jointly controlled entity is restricted to the cost of investment. As at 31 March 2008, the Group’s share of loss of the jointly controlled entity exceeded its cost of investment. Accordingly, the share of net assets of the jointly controlled entity is reported at nil value.
(b) The amount due from the jointly controlled entity is unsecured, non-interest bearing and repayable on demand. The carrying value of the amount due from the jointly controlled entity approximates its fair value.

The Group’s indirect interest in a jointly controlled entity, which is unlisted, is as follows:

	Particulars of	Country of						% Interest
Name	issued shares held	incorporation	Year	Assets	Liabilities	Revenue	Loss	held
				HK$’000	HK$’000	HK$’000	HK$’000
Suga-AI	Ordinary shares	Hong Kong,	2008	10,723	10,768	35,765	40	50%
Limited	HK$2	limited liability
		company
			2007	–	–	–	–	–

There are no contingent liabilities relating to the Group’s interest in the jointly controlled entity, and no contingent liabilities exist in the jointly controlled entity itself.

The Group has not recognised losses amounting to HK$40,000 (2007: Nil) for Suga-AI Limited. The accumulated losses not recognised were HK$40,000 (2007: Nil).

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FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

11 FINANCIAL INSTRUMENTS BY CATEGORY

Assets At 31 March 2008 Trade and other receivables, excluding prepayments_(Note 13) Amount due from a jointly controlled entity(Note 10) Derivative financial instruments(Note 14) Cash and cash equivalents(Note 15) At 31 March 2007 Trade and other receivables, excluding prepayments(Note 13) Cash and cash equivalents(Note 15) Liabilities At 31 March 2008 Trade and other payables(Note 16) Bank borrowings(Note 17) Finance lease liabilities(Note 18) Bank advances for factored receivables(Note 19) Derivative financial instruments(Note 14) At 31 March 2007 Trade and other payables(Note 16) Bank borrowings(Note 17) Finance lease liabilities(Note 18) Bank advances for factored receivables(Note 19)_	Loans and receivables HK$’000 102,460 16,141 – 64,868 183,469 118,684 45,099 163,783 Other financial liabilities HK$’000 80,186 30,313 123 6,777 – 117,399 76,058 41,658 200 8,602 126,518	Group Assets at fair value through profit or loss HK$’000 – – 1,040 – 1,040 – – – Liabilities at fair value through profit or loss HK$’000 – – – – 1,875 1,875 – – – – –	Total HK$’000 102,460 16,141 1,040 64,868
			184,509

			118,684 45,099
			163,783

			Total HK$’000 80,186 30,313 123 6,777 1,875
			119,274

			76,058 41,658 200 8,602
			126,518

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FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

Assets At 31 March 2008 Amount due from subsidiaries_(Note 8) Cash and cash equivalents(Note 15) At 31 March 2007 Rental and other deposits(Note 13) Amount due from subsidiarie_s (Note 8) Cash and cash equivalents_(Note 15) Liabilities At 31 March 2008 Trade and other payables(Note 16) At 31 March 2007 Trade and other payables(Note 16)_ 12 INVENTORIES Raw materials Work-in-progress Finished goods Less: Provision for impairment	Loans and receivables HK$’000 86,382 1,346 87,728 20 83,892 404 84,316 Other financial liabilities HK$’000 1,619 1,431	Loans and receivables HK$’000 86,382 1,346 87,728 20 83,892 404 84,316 Other financial liabilities HK$’000 1,619 1,431	Company Assets at fair value through profit or loss HK$’000 – – – – – – – Liabilities at fair value through profit or loss HK$’000 – – Group 2008 HK$’000 108,225 25,317 12,445 145,987 (6,323 ) 139,664	Company Assets at fair value through profit or loss HK$’000 – – – – – – – Liabilities at fair value through profit or loss HK$’000 – – Group 2008 HK$’000 108,225 25,317 12,445 145,987 (6,323 ) 139,664	Total HK$’000 86,382 1,346 87,728 20 83,892 404 84,316 Total HK$’000 1,619 1,431 2007 HK$’000 98,136 23,639 12,662 134,437 (4,227 ) 130,210

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FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

Certain inventories were held under trust receipts bank loan arrangements. The cost of inventories recognised as expense and included in cost of sales amounted to HK$535,839,000 (2007: HK$539,647,000).

The Group realised a loss of approximately HK$2,096,000 for the year ended 31 March 2008 (2007: write back of HK$1,177,000) in respect of write down of inventories to their net realisable value. These amounts have been included in cost of sales in the income statement.

13 TRADE AND OTHER RECEIVABLES

Trade receivables Less: Provision for impairment Trade receivables, net Prepayments Rental and other deposits Value added tax receivables Others	Group 2008 2007 HK$’000 HK$’000 98,038 119,546 (10,156 ) (9,224 ) 87,882 110,322 2,105 1,218 7,432 6,089 6,512 1,572 634 701 104,565 119,902	Company 2008 2007 HK$’000 HK$’000 – – – – – – 242 173 – 20 – – – – 242 193	Company 2008 2007 HK$’000 HK$’000 – – – – – – 242 173 – 20 – – – – 242 193
			– 173 20 – –
			193

The carrying values of the Group’s trade and other receivables approximate their fair values.

The ageing analysis of trade receivables is as follows:

0 to 30 days 31 to 60 days 61 to 90 days 91 to 180 days Over 180 days Less: Provision for impairment Trade receivables, net	Group 2008 2007 HK$’000 HK$’000 63,696 98,840 6,220 4,941 6,790 1,950 9,896 4,416 11,436 9,399 98,038 119,546 (10,156 ) (9,224 ) 87,882 110,322	Group 2008 2007 HK$’000 HK$’000 63,696 98,840 6,220 4,941 6,790 1,950 9,896 4,416 11,436 9,399 98,038 119,546 (10,156 ) (9,224 ) 87,882 110,322
		119,546 (9,224 )
		110,322

The Group generally granted credit terms of 30 days to its customers.

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FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

As of 31 March 2008, trade receivable of HK$24,186,000 (31 March 2007: HK$11,482,000) were past due but not impaired. These relate to a number of independent customers who have no recent history of default. The ageing analysis of these receivables is as follows:

31 to 60 days 61 to 90 days 91 to 180 days Over 180 days	2008 HK$’000 6,220 6,790 9,896 1,280 24,186	2007 HK$’000 4,941 1,950 4,416 175
		11,482

As of 31 March 2008, trade receivable of HK$10,156,000 (31 March 2007: HK$9,224,000) were impaired. The individual impairment receivables are mainly related to customers which no longer have business relationship with the Group. The amount of provision was HK$10,156,000 as of 31 March 2008 (31 March 2007: HK$9,224,000). The impairment was firstly assessed individually for significant or long ageing balances, and the remaining balances were grouped for collective assessment according to their ageing and historical default rates as these customers were of similar credit risk. The ageing analysis of these impaired receivables is as follows:

Over 180 days	2008 HK$’000 10,156	2007 HK$’000 9,224

Movements of the provision for impairment of trade receivables are as follows:

At 1 April Provision for receivable impairment Unused amounts reversed Receivables written off during the year as uncollectible Others At 31 March	2008 HK$’000 9,224 1,188 (373 ) (33 ) 150 10,156	2007 HK$’000 8,665 878 (319 ) – –
		9,224

As at 31 March 2008, the trade receivables from five customers accounted for approximately 70% (2007: 64%) of the total trade receivables. The Group’s credit risk management is disclosed in Note 3 to the financial statements.

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FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

The carrying amount of trade receivables are denominated in the following currencies:

Hong Kong dollars US dollars Renminbi	Group 2008 2007 HK$’000 HK$’000 8,809 19,353 73,523 86,073 5,550 4,896 87,882 110,322	Group 2008 2007 HK$’000 HK$’000 8,809 19,353 73,523 86,073 5,550 4,896 87,882 110,322
		110,322

All trade receivables are either repayable within one year or on demand. During the year, the Group recognised a loss of HK$815,000 (2007: HK$559,000) for the impairment of its trade receivables. Such loss has been included in general and administrative expenses in the income statement.

As at 31 March 2008, a subsidiary of the Company had factored trade receivables of approximately HK$6,777,000 (2007: HK$8,602,000) (the “Factored Receivables”) to banks for cash under certain receivables purchase agreements. As the subsidiary of the Company still retained the risks and rewards associated with the default and delay in payment by the customers, the financial asset derecognition conditions as stipulated in HKAS 39 have not been fulfilled. Accordingly, the proceeds from the factoring of trade receivables have been accounted for as the Group’s liabilities and included in “Bank advances for factored receivables” (Note 19).

The Group was not aware of any credit risk on deposits, value added tax receivables and other receivables as their counterparties are either banks or government or corporation with good credit ratings. Majority of these financial assets are neither past due nor impaired with no history of default. The carrying amount of deposits, value added tax receivables and other receivables are denominated in the following currencies:

Hong Kong dollars Renminbi	Group 2008 2007 HK$’000 HK$’000 1,474 1,373 13,104 6,989 14,578 8,362	Company 2008 2007 HK$’000 HK$’000 – 20 – – – 20	Company 2008 2007 HK$’000 HK$’000 – 20 – – – 20
			20

The maximum exposure to credit risk at each reporting date is the fair value of each class of receivables as mentioned above. The Group does not hold any collateral as security.

14 DERIVATIVE FINANCIAL INSTRUMENTS

Forward foreign exchange contracts_(Note (a)) Structured forward contract(Note (b))_	Group 2008 2007 Assets Liabilities Assets Liabilities HK$’000 HK$’000 HK$’000 HK$’000 1,040 (1,051 ) – – – (824 ) – – 1,040 (1,875 ) – –	Group 2008 2007 Assets Liabilities Assets Liabilities HK$’000 HK$’000 HK$’000 HK$’000 1,040 (1,051 ) – – – (824 ) – – 1,040 (1,875 ) – –
		–

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FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

Notes:

(a) The Group entered into several forward foreign exchange contracts which enable the Group to (i) buy an aggregate of US$2,500,000 for RMB; and (ii) sell an aggregate of US$2,500,000 for RMB at certain fixed rates at the maturity dates. These forward contracts will mature within one year. The Group accounted for these contracts as financial assets at fair value through profit or loss and fair value changes are recorded in general and administrative expenses (Note 27) in the income statement.
(b) The Group entered into a structured forward contract with a bank in January 2008 with several settlement dates (the “Structured Contract”). The total notional principal amount under the Structured Contract amounted to approximately US$4,000,000. The Structured Contract will expire in January 2009 and the net settlement receivables/payables from/to the bank are determined based on the spot rates of RMB against US dollars on the three settlement dates prior to expiry of the Structured Contract. The Group accounted for these contracts as financial assets at fair value through profit or loss and fair value changes are recorded in general and administrative expenses (Note 27) in the income statement.

The maximum exposure to credit risk as at 31 March 2008 is the fair value of the derivative assets in the consolidated balance sheet.

15 CASH AND CASH EQUIVALENTS

Cash and cash equivalents are denominated in the following currencies:

Hong Kong dollars US dollars Renminbi Other currencies	Group 2008 2007 HK$’000 HK$’000 9,540 5,789 41,928 26,965 13,153 11,430 247 915 64,868 45,099	Company 2008 2007 HK$’000 HK$’000 198 374 1,134 10 – 5 14 15 1,346 404	Company 2008 2007 HK$’000 HK$’000 198 374 1,134 10 – 5 14 15 1,346 404
			404

As at 31 March 2008, the effective interest rate on bank deposits was 3.5% (2007: 4.0%), these deposits have an average maturity of 8 days (2007: 11 days).

The conversion of bank balances and cash of the Group denominated in Renminbi into foreign currencies is subject to the rules and regulations of foreign exchange control promulgated by the Mainland Chinese government.

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APPENDIX I

16 TRADE AND OTHER PAYABLES

The ageing analysis of the trade payables is as follows:

0 to 30 days 31 to 60 days 61 to 90 days 91 to 180 days Over 180 days Trade payables Salaries and staff welfare payable Accrued expenses Value added tax payable Others	Group 2008 2007 HK$’000 HK$’000 55,082 54,186 6,108 8,849 1,963 234 4,882 1,712 2,566 380 70,601 65,361 4,871 3,926 2,816 2,577 – 2,471 1,898 1,723 80,186 76,058	Company 2008 2007 HK$’000 HK$’000 – – – – – – – – – – – – – – 1,611 1,424 – – 8 7 1,619 1,431	Company 2008 2007 HK$’000 HK$’000 – – – – – – – – – – – – – – 1,611 1,424 – – 8 7 1,619 1,431
			– – 1,424 – 7
			1,431

The fair values of the Group’s trade and other payables approximate their carrying value.

The carrying amount of trade payables are denominated in the following currencies:

Hong Kong dollars US dollars Renminbi Other currencies	Group 2008 2007 HK$’000 HK$’000 16,719 20,865 50,217 35,229 3,665 7,587 – 1,680 70,601 65,361	Group 2008 2007 HK$’000 HK$’000 16,719 20,865 50,217 35,229 3,665 7,587 – 1,680 70,601 65,361
		65,361

The carrying amount of other payables are denominated in the following currencies:

Hong Kong dollars Renminbi	Group 2008 2007 HK$’000 HK$’000 4,363 3,533 5,222 7,164 9,585 10,697	Company 2008 2007 HK$’000 HK$’000 1,619 1,431 – – 1,619 1,431	Company 2008 2007 HK$’000 HK$’000 1,619 1,431 – – 1,619 1,431
			1,431

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FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

17 BANK BORROWINGS

Non-current Long-term bank borrowings Less: current portion of long-term bank borrowings Current Trust receipt bank loans Other bank borrowings Current portion of long-term bank borrowings Total borrowings	Group 2008 2007 HK$’000 HK$’000 18,182 – (7,273 ) – 10,909 – 12,131 12,958 – 28,700 7,273 – 19,404 41,658 30,313 41,658	Group 2008 2007 HK$’000 HK$’000 18,182 – (7,273 ) – 10,909 – 12,131 12,958 – 28,700 7,273 – 19,404 41,658 30,313 41,658
		–
		12,958 28,700 –
		41,658

		41,658

The maturity of borrowings is as follows:

			Group	Group
	Trust	receipt
	bank	loans	Bank borrowings		Total
	2008	2007	2008	2007	2008	2007
	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000 HK$’000
Within one year	12,131	12,958	7,273	28,700	19,404	41,658
In the second year	–	–	7,273	–	7,273	–
In the third year	–	–	3,636	–	3,636	–
	12,131	12,958	18,182	28,700	30,313	41,658

At 31 March 2008, the Group has aggregate banking facilities of approximately HK$438,704,000 (2007: HK$366,000,000) for overdrafts, loans and trade financing.

Unused facilities at the same date amounted to approximately HK$354,494,000 (2007: HK$266,562,000). Certain of these facilities are secured by:

(a) certain inventories held under trust receipt bank loans arrangements.
(b) corporate guarantee provided by the Company and certain of its subsidiaries.

In addition to the above, the Group has agreed to comply with certain restrictive financial covenants imposed by certain banks.

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FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

The effective interest rates at the balance sheet date were as follows:

Trust receipt bank loans Other bank borrowings	2008 HK$’000 6.4% 5.0%	2007 HK$’000 6.0% 6.1%

The carrying amounts of the borrowings approximate their fair values.

The carrying amounts of the borrowings are denominated in the following currencies:

Hong Kong dollars US dollars	2008 HK$’000 30,313 – 30,313	2007 HK$’000 39,200 2,458
		41,658

18 FINANCE LEASE LIABILITIES

At 31 March 2008, the Group’s finance lease liabilities were repayable as follows:

Within one year In the second to fifth year Less: future finance charges on finance leases Less: current portion The present value of finance lease liabilities is as follows: Within one year In the second to fifth year	2008 HK$’000 85 42 127 (4 ) 123 (81 ) 42 2008 HK$’000 81 42 123	2007 HK$’000 85 127
		212 (12 )
		200 (77 )
		123

		2007 HK$’000 77 123
		200

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FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

19 BANK ADVANCES FOR FACTORED RECEIVABLES

The Group factored certain receivables to banks in exchange for cash. The transactions have been accounted for as bank advances for the year ended 31 March 2008. The factored receivables to banks and remained outstanding as at 31 March 2008 amounted to HK$6,777,000 (2007: HK$8,602,000).

The fair values of the Group’s bank advances for factored receivables approximate their carrying values.

20 DEFERRED INCOME TAX

Deferred income tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when the deferred income taxes relate to the same fiscal authority. The offset amounts are as follows:

Deferred income tax assets: – Deferred income tax asset to be recovered after more than 12 months Deferred income tax liabilities: – Deferred income tax liabilities to be settled after more than 12 months	Group 2008 2007 HK$’000 HK$’000 (3,106 ) (3,063 ) 2,853 3,902	Group 2008 2007 HK$’000 HK$’000 (3,106 ) (3,063 ) 2,853 3,902

		3,902

The movement in the net deferred income tax liabilities/(assets) account is as follows:

At 1 April (Credited)/charged in income statement_(Note 29)_ At 31 March	Group 2008 2007 HK$’000 HK$’000 839 497 (1,092 ) 342 (253 ) 839	Group 2008 2007 HK$’000 HK$’000 839 497 (1,092 ) 342 (253 ) 839
		839

The movement in deferred income tax assets and liabilities during the year, without taking into consideration the offsetting of balances within the same tax jurisdiction, is as follows:

Deferred income tax liabilities At 1 April Credited to income statement At 31 March	Accelerated tax depreciation 2008 2007 HK$’000 HK$’000 4,301 4,572 (1,448 ) (271 ) 2,853 4,301	Accelerated tax depreciation 2008 2007 HK$’000 HK$’000 4,301 4,572 (1,448 ) (271 ) 2,853 4,301
		4,301

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FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

Deferred income tax assets At 1 April Charged to income statement At 31 March	Tax losses 2008 2007 HK$’000 HK$’000 (3,462 ) (4,075 ) 356 613 (3,106 ) (3,462 )	Tax losses 2008 2007 HK$’000 HK$’000 (3,462 ) (4,075 ) 356 613 (3,106 ) (3,462 )
		(3,462 )

As at 31 March 2008, the Group has unrecognised tax losses of HK$26,103,000 (2007: HK$26,070,000) for Hong Kong profits tax purposes with no expiry date and unrecognised tax losses of HK$15,362,000 (2007: HK$16,683,000) for the Mainland Chinese enterprise income tax that will expire within five years.

On 16 March 2007, the National People’s Congress approved the Corporate Income Tax Law of the People’s Republic of China (the “new CIT Law”). The new CIT Law reduces (increases) the corporate income tax rate for domestic enterprises (foreign invested enterprises) from 33% (15% or 24%) to 25% with effect from 1 January 2008. Further, pursuant to the Detailed Implementation Regulations issued by the State Council on 6 December 2007, a reduced tax rate of 15% will be granted to those high/new technology enterprises. The Group has assessed the impact of such new CIT Law and considers that there is no significant effect to the carrying value of deferred income tax balance as at 31 March 2008.

The State Council may issue further detailed measures and regulations on the determination of taxable profit, tax incentives and grandfathering provisions under the new CIT Law. As and when the State Council announces the additional regulations, the Group will assess their impact, if any, and this change in accounting estimate will be accounted for prospectively.

21 SHARE CAPITAL

Authorised – ordinary shares of HK$0.1 each Issued and fully paid – ordinary shares of HK$0.1 each At 1 April 2006 Issue of shares upon exercise of share options_(Note (a)) At 31 March 2007 and 1 April 2007 Issue of shares upon exercise of share options(Note (a))_ At 31 March 2008	Number of shares ’000 2,000,000 227,940 2,000 229,940 900 230,840	Nominal value HK’000 200,000

		22,794 200
		22,994 90
		23,084

Note:

(a) During the year, 900,000 (2007: 2,000,000) ordinary shares of HK$0.1 each were issued upon the exercise of share options (Note 22).

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FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

22 SHARE OPTIONS

The Company adopted a share option scheme (the “Share Option Scheme”) on 17 September 2002. Pursuant to the Share Option Scheme, the Company may grant share options to certain grantees (including directors and employees) of the Group to subscribe for shares in the Company. The maximum number of Shares which may be issued upon exercise of all outstanding options granted and yet to be exercised under this Share Option Scheme and any other share option schemes adopted by the Group shall not exceed 30 per cent of the share capital of the Company in issue from time to time. The subscription price will be determined by the directors, and will not be less than the highest of the nominal value of the shares, the closing price of the shares quoted on the Stock Exchange on the trading day of granting the options and the average of the closing prices of the shares quoted on the Stock Exchange for the five trading days immediately preceding the date of granting the options.

Movements in the number of share options outstanding during the year are as follows:

	2008	2008		2007
	Average		Average
	exercise		exercise
	price in HK$	Number of	price in HK$	Number of
	per share	options	per share	options
		’000		’000
At 1 April	0.923	20,980	1.230	13,680
Granted	–	–	0.436	10,100
Exercised	0.436	(900 )	0.436	(2,000 )
Lapsed/cancelled	1.230	(300 )	1.230	(800 )
At 31 March		19,780		20,980

As at 31 March 2008 and 2007, all the outstanding options were fully vested and exercisable.

Share options outstanding at the end of the year have the following expiry date and exercise prices:

Exercise price Expiry date HK$ Directors 4 May 2008 1.230 6 May 2009 1.230 22 March 2012 0.436 Employees 4 May 2008 1.230 6 May 2009 1.230 22 March 2012 0.436 Ex-directors 4 May 2008 1.230 6 May 2009 1.230	Number of options Vested percentages 2008 2007 2008 2007 ’000 ’000 2,370 2,370 100% 100% 5,000 5,000 100% 100% 4,000 4,000 100% 100% 2,110 2,410 100% 100% 800 800 100% 100% 3,200 4,100 100% 100% 1,800 1,800 100% 100% 500 500 100% 100% 19,780 20,980

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FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

No options were granted during the year ended 31 March 2008.

The fair value of options granted during the year ended 31 March 2007 determined using the binomial option pricing model was approximately HK$932,000. The significant inputs into the model were share price of HK$0.43 as at the grant date, exercise price as shown above, volatility of the share of 40%, expected life of options of five years, expected dividend yield of 3% and annual risk-free interest rate of 3.9%. The volatility measured at the standard deviation of expected share price returns is based on the historical volatility of the Company’s share price over a period of 4 years before the date when the options were granted.

23 RESERVES

At 1 April 2006 Exchange differences arising on translation of the financial statements of foreign subsidiaries Profit for the year Dividends paid Employee share option scheme expenses Exercise of share options At 31 March 2007 Representing: Proposed dividend Others At 1 April 2007 Exchange differences arising on translation of the financial statements of foreign subsidiaries Profit for the year Dividends paid Exercise of share options At 31 March 2008 Representing: Proposed dividend Others	Share premium HK$’000 53,515 – – – – 672 54,187 54,187 – – – 303 54,490	Capital reserve (Note (a)) HK$’000 10,591 – – – – – 10,591 10,591 – – – – 10,591	Group Sharebased compensation Exchange reserve reserve HK$’000 HK$’000 – 5,773 – 7,144 – – – – 932 – (185 ) – 747 12,917 747 12,917 – 12,121 – – – – (83 ) – 664 25,038	Retained earnings HK$’000 126,184 – 12,053 (1,140 ) – 185 137,282 4,609 132,673 137,282 137,282 – 20,687 (6,923 ) 83 151,129 6,925 144,204 151,129	Total HK$’000 196,063 7,144 12,053 (1,140 ) 932 672
					215,724

					215,724 12,121 20,687 (6,923 ) 303
					241,912

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FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

Note:

(a) The capital reserve of the Group comprises, among others, difference between the nominal value of the ordinary shares issued by the Company and the aggregate amount of the share capital and share premium of subsidiaries acquired through an exchange of shares pursuant to the Group’s reorganisation in September 2002.

At 1 April 2006 Profit for the year Dividends paid Employee share option scheme expenses Exercise of share options At 31 March 2007 Representing: Proposed dividend Others At 1 April 2007 Profit for the year Dividends paid Exercise of share options At 31 March 2008 Representing: Proposed dividend Others	Share premium HK$’000 53,515 – – – 672 54,187 54,187 – – 303 54,490		Contributed surplus (Note (a)) HK$’000 64,872 – – – – 64,872 64,872 – – – 64,872	Company Share-based compensation reserve HK$’000 – – – 932 (185 ) 747 747 – – (83 ) 664		Retained earnings HK$’000 416 5,869 (1,140 ) – 185 5,330 4,609 721 5,330 5,330 9,823 (6,923 ) 83 8,313 6,925 1,388 8,313		Total HK$’000 118,803 5,869 (1,140 ) 932 672 125,136 125,136 9,823 (6,923 ) 303 128,339

Note:

(a) Contributed surplus represents the difference between the nominal amount of the shares issued and the book value of the underlying net assets of subsidiaries acquired.

Under the Companies Act 1981 of Bermuda, contributed surplus is distributable to shareholders, subject to the condition that the Company cannot declare or pay a dividend, or make a distribution out of contributed surplus if (i) it is, or would after the payment be, unable to pay its liabilities as they become due, or (ii) the realisable value of its assets would thereby be less than the aggregate of its liabilities and its issued share capital and share premium.

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FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

24 REVENUE

The Group is principally engaged in the research and development, manufacture and sales of electronic products. Revenue recognised during the year are as follows:

Revenue recognised during the year are as follows:
Sales of electronic products – consumer electronic appliances and other products – telecommunication products 25 OTHER INCOME Scrap sales	2008 HK$’000 555,518 152,193 707,711 2008 HK$’000 336	2007 HK$’000 497,359 198,987
		696,346

		2007 HK$’000 465

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FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

26 SEGMENT INFORMATION

(a) Primary reporting format – business segments:

The Group has categorised its business segment by product types into consumer electronic appliances and telecommunication products. An analysis of the Group’s segment information by business segment is set out as follows:

Total segment revenue Segment results Other income Finance income Finance costs Income tax expense Profit for the year Segment assets Unallocated assets Segment liabilities Unallocated liabilities Other information Depreciation Amortisation of land use rights Capital expenditures	Consumer electronic appliances and other products HK$’000 555,518 20,826 309,078 75,008 18,929 126 3,930	2008 Telecom- munication products HK$’000 152,193 3,070 22,004 11,955 745 4 202	Total HK$’000 707,711 23,896 336 621 (3,226 ) (940 ) 20,687 331,082 70,307 401,389 86,963 49,430 136,393 19,674 130 4,132

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FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

Total segment revenue Segment results Other income Finance income Finance costs Income tax expense Profit for the year Segment assets Unallocated assets Segment liabilities Unallocated liabilities Other information Depreciation Amortisation of land use rights Capital expenditures	Consumer electronic appliances and other products HK$’000 497,359 18,087 271,915 58,008 17,306 116 3,511	2007 Telecom- munication products HK$’000 198,987 2,129 61,727 26,652 3,798 10 331	Total HK$’000 696,346 20,216 465 1,205 (6,866 ) (2,967 ) 12,053 333,642 48,739 382,381 84,660 59,003 143,663 21,104 126 3,842

Segment assets consist primarily of property, plant and equipment, land use rights, goodwill, inventories and receivables. They exclude deferred income tax assets, tax recoverable, prepayment, deposits and other receivables and operating cash.

Segment liabilities comprise operating liabilities. They exclude items such as taxation and corporate borrowings.

Capital expenditure comprises additions to property, plant and equipment (Note 5) and land use rights (Note 6).

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FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

(b) Secondary reporting format – geographical segments:

An analysis of the Group’s segment information by geographical segments is set out as follows:

(i) Analysis by revenue and segment results – by location of customers

	2008
		Segment		Segment
	Revenue	results	Revenue	results
	HK$’000	HK$’000	HK$’000	HK$’000
The United States of America	235,857	19,059	264,683	22,471
Asia Pacific Region (excluding
Mainland China)	357,665	2,029	303,641	(5,212 )
Mainland China	30,505	663	88,323	1,308
Europe	83,684	2,145	39,699	1,649
	707,711	23,896	696,346	20,216

(ii) Analysis by segment asset and capital expenditure – by location of assets

	2008			2007
	Segment	Capital	Segment	Capital
	assets expenditures		assets	expenditures
	HK$’000	HK$’000	HK$’000	HK$’000
Hong Kong	188,876	303	142,347	182
Mainland China	169,554	3,760	190,570	3,618
Macao	42,959	69	48,570	42
Singapore	–	–	894	–
	401,389	4,132	382,381	3,842

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FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

27 EXPENSES BY NATURE

Expenses included in cost of sales, distribution and selling expenses and general and administrative expenses are analysed as follows:

Cost of inventories Depreciation of property, plant and equipment – owned assets – assets held under finance leases Amortisation of land use rights (Gain)/loss on disposals of property, plant and equipment Operating lease rental of premises Net foreign currency exchange loss Staff costs, including directors’ remuneration_(Note 33)_ Provision for impairment of amount due from a jointly controlled entity Provision for impairment of trade receivables Provision for/(write back of provision for) obsolete and slow-moving inventories (included in cost of sales) Fair value loss on derivative financial instruments Auditor’s remuneration Research and development cost Other expenses Total cost of sales, distribution and selling expenses and general and administrative expenses 28 FINANCE INCOME AND FINANCE COSTS Interest on: – bank borrowings wholly repayable within five years – finance lease liabilities Finance costs Finance income Finance costs – net	2008 HK$’000 535,839 19,590 84 130 (10 ) 2,231 1,704 73,179 45 815 2,096 835 1,857 3,134 42,286 683,815 2008 HK$’000 (3,218 ) (8 ) (3,226 ) 621 (2,605 )	2007 HK$’000 539,647 21,020 84 126 222 2,128 1,353 69,711 – 559 (1,177 ) – 1,453 3,941 37,063 676,130 2007 HK$’000 (6,839 ) (27 ) (6,866 ) 1,205 (5,661 )

29 INCOME TAX EXPENSE

(a) Bermuda and British Virgin Islands income tax

The Company is exempted from taxation in Bermuda until 2016. The Company’s subsidiaries in the British Virgin Islands are incorporated under the International Business Acts of the British Virgin Islands and, accordingly, are exempted from the British Virgin Islands income taxes.

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FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

(b) Hong Kong profits tax

Hong Kong profits tax has been provided at the rate of 17.5% (2007: 17.5%) on the estimated assessable profit for the year.

(c) Mainland Chinese enterprise income tax

Suga Electronics (Shenzhen) Co., Ltd. (“SESL”), Suga Networks Equipment (Shenzhen) Co., Ltd. (“SNESL”), Pets & Supplies (Shenzhen) Co., Ltd (“PSSZ”), Nodic-Matsumoto Tooling and Plastic Injection (Huizhou) Co., Ltd. (“Nodic”) and Precise Plastic Injection (Shenzhen) Co., Ltd. (“PPISL”) are subsidiaries established in Mainland China. Being enterprises established in the special economic zones of Mainland China, they are subject to Mainland Chinese enterprise income tax (“EIT”) of 15% to 27% on their taxable income in accordance with the relevant Mainland Chinese tax laws and regulations in year 2007. With the effective of the new CIT Law from 1 January 2008, the general applicable Mainland China corporate income tax rate under the new CIT Law is 25%. Accordingly, all the Group’s subsidiaries in Mainland China are subject to corporate income tax at 25% effective from 1 January 2008.

(d) Macao taxation

P&S Macao Commercial Offshore Limited is a subsidiary established in Macao and is exempted from Macao Complementary Tax (2007: Nil).

The amount of income tax charged to the consolidated income statement represents:

Current income tax: – Hong Kong profits tax – Income tax outside Hong Kong – Over-provision in prior years Deferred income tax relating to the origination and reversal of temporary differences_(Note 20)_	2008 HK$’000 2,102 597 (667 ) (1,092 ) 940	2007 HK$’000 1,553 1,191 (119 ) 342 2,967

The income tax on the Group’s profit before income tax differs from the theoretical amount that would arise using the taxation rate in Hong Kong as follows:

Profit before income tax Calculated at a taxation rate of 17.5% (2007: 17.5%) Effect of different income tax rates on income arising outside Hong Kong Tax loss not recognised Expenses not deductible for income tax purpose Income not subject to income tax Over-provision in prior years Income tax expense	2008 HK$’000 21,627 3,785 (53 ) 206 886 (3,217 ) (667 ) 940	2007 HK$’000 15,020 2,629 (46 ) 2,093 2,147 (3,737 ) (119 ) 2,967

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FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

30 PROFIT ATTRIBUTABLE TO THE EQUITY HOLDERS OF THE COMPANY

The profit attributable to the equity holders of the Company is dealt with in the financial statements of the Company to the extent of a profit of approximately HK$9,823,000 (2007: HK$5,869,000).

31 EARNINGS PER SHARE

(a) Basic

Basic earnings per share is calculated by dividing the profit attributable to equity holders of the Company by the weighted average number of ordinary shares in issue during the year.

Profit attributable to equity holders of the Company_(HK$’000) Weighted average number of ordinary shares in issue(’000) Basic earnings per share(HK cents)_	2008 20,687 230,604 8.97	2007 12,053
		227,962
		5.29

(b) Diluted

Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding assuming conversion of all dilutive potential ordinary shares. The Company has one category of dilutive potential ordinary shares which is the share options granted to employees. For the share options, a calculation is done to determine the number of shares that could have been acquired at fair value (determined as the average market price of the Company’s shares) based on the monetary value of the subscription rights attached to outstanding share options. The number of shares calculated as above is compared with the number of shares that would have been issued assuming the exercise of the share options.

Profit attributable to equity holders of the Company_(HK$’000) Weighted average number of ordinary shares in issue(’000) Adjustments for share options(’000) Weighted average number of ordinary shares for diluted earnings per share(’000) Diluted earnings per share(HK cents)_	2008 20,687 230,604 3,105 233,709 8.85	2007 12,053
		227,962 1,596
		229,558
		5.25

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FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

32 DIVIDENDS

DIVIDENDS
Interim dividend, paid, of HK1.0 cents (2007: HK0.5 cents) per ordinary share Final dividend, proposed, of HK3.0 cents (2007: 2.0 cents) per ordinary share	2008 HK$’000 2,314 6,925 9,239	2007 HK$’000 1,140 4,609
		5,749

At a meeting held on 22 July 2008, the directors proposed the payment of a final dividend of HK 3.0 cents per share for the year ended 31 March 2008. This proposed dividend is not reflected as a dividend payable in the financial statements, but will be reflected as an appropriation of distributable reserves in the year ending 31 March 2009.

33 EMPLOYEE BENEFIT EXPENSE (INCLUDING DIRECTORS’ EMOLUMENTS)

Wages and salaries Bonus Unutilised annual leave Pension costs – defined contribution plans Social security costs Staff welfare Share-based compensation expenses	2008 HK$’000 62,508 1,939 108 1,193 915 6,516 – 73,179	2007 HK$’000 59,827 1,227 – 917 1,140 5,668 932
		69,711

(a) Directors’ remuneration and senior management emoluments

The remuneration of every director for the year ended 31 March 2008 is set out below:

			Other emoluments
			Retirement
		Salaries	benefits
		and other	scheme		Total
	Fees	benefits	contributions	Others	emoluments
	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000
Mr. Ng Chi Ho	–	2,675	268	–	2,943
Mr. Ma Fung On	–	1,083	54	–	1,137
Mr. Wong Wai Lik, Lamson	–	1,069	53	–	1,122
Professor Wong Sook Leung, Joshua	200	–	–	–	200
Mr. Murase Hiroshi	150	–	–	–	150
Mr. Leung Yu Ming, Steven	150	–	–	–	150

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FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

The remuneration of every director for the year ended 31 March 2007 is set out below:

			Other emoluments
			Retirement
		Salaries	benefits
		and other	scheme		Total
	Fees	benefits	contributions	Others	emoluments
	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000
				(Note)
Mr. Ng Chi Ho	–	2,556	256	185	2,997
Mr. Ma Fung On	–	1,020	51	185	1,256
Mr. Wong Wai Lik, Lamson	–	984	49	185	1,218
Professor Wong Sook Leung, Joshua	200	–	–	–	200
Mr. Murase Hiroshi	150	–	–	–	150
Mr. Leung Yu Ming, Steven	150	–	–	–	150

Note: Others include share-based compensation expenses, which is based on the amount of share-based payment charged to the consolidated income statement during the last year. Refer to Note 22 for details.

(b) Five highest paid individuals

The five individuals whose emoluments were the highest in the Group for the year included three (2007: three) directors whose emoluments are reflected in the analysis presented above. The emoluments payable to the remaining two individuals (2007: two individuals) during the year are as follows:

Basic salaries, allowances and other benefits in kind Contribution to retirement scheme Share-based compensation expenses The emoluments fell within the following bands:	2008 HK$’000 2,756 93 – 2,849	2007 HK$’000 2,590 90 231
		2,911

Emolument bands HK$Nil – HK$1,000,000 HK$1,500,001 – HK$2,000,000 HK$2,000,001 – HK$2,500,000	Number of individuals 2008 2007 1 1 1 – – 1 2 2	Number of individuals 2008 2007 1 1 1 – – 1 2 2
		2

(c) No emoluments were paid to the directors or the five highest paid individuals as an inducement to join or upon joining the Group, or as compensation for loss of office during the year. No directors or the five highest paid individuals waived or agreed to waive any emoluments during the year.

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FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

34 CASH GENERATED FROM OPERATIONS

Reconciliation of profit for the year to net cash generated from operations

Profit for the year – Income tax expense – Depreciation of property, plant and equipment – Amortisation of land use rights – (Gain)/loss on disposals of property, plant and equipment – Finance income – Finance cost – Share-based compensation expenses – Fair value loss on derivative financial instruments Changes in working capital: – Inventories – Trade and other receivables – Amount due from a jointly controlled entity – Trade and other payables Cash generated from operations	2008 HK$’000 20,687 940 19,674 130 (10 ) (621 ) 3,226 – 835 44,861 (1,265 ) 14,633 (16,141 ) 3,021 45,109	2007 HK$’000 12,053 2,967 21,104 126 222 (1,205 ) 6,866 932 –
		43,065 34,485 53,212 – (29,714 )
		101,048

35 FINANCIAL GUARANTEE

As at 31 March 2008, the Company had provided guarantees in respect of banking facilities of its subsidiaries amounting to approximately HK$415,182,000 (2007: HK$342,400,000). The facilities utilised by the subsidiaries as at 31 March 2008 amounted to HK$77,310,000 (2007: HK$90,636,000).

36 OPERATING LEASE COMMITTEES

At 31 March 2008, the Group had future aggregate minimum lease payments in respect of rented premises under non-cancellable operating leases as follows:

cellable operating leases as follows:
Not later than one year Later than one year and not later than five years	Group 2008 2007 HK$’000 HK$’000 1,527 1,940 774 964 2,301 2,904
		2,904

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FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

37 EMPLOYEE RETIREMENT BENEFITS

The Group has arranged for its Hong Kong employees to join the Mandatory Provident Fund Scheme (“the MPF Scheme”). The MPF Scheme is a defined contribution scheme managed by an independent trustee. Under the MPF Scheme, each of the Group and its employees makes monthly contributions to the scheme at 5% to 10% of the employees’ earnings as defined under the Mandatory Provident Fund legislation.

As stipulated by rules and regulations in Mainland China, the Group contributes to state-sponsored retirement plans for its employees in Mainland China. The Group contributes approximately 7% to 12% of the basic salaries of its employees, and has no further obligations for the actual payment of pensions or post-retirement benefits beyond the annual contributions. The state-sponsored retirement plans are responsible for the entire pension obligations payable to retired employees.

As stipulated by rules and regulations in Macao, the Group has arranged its Macao employees to join the government provident fund scheme (“the Macao Scheme”). The Group and its employees makes monthly contributions of MOP30 and MOP15, respectively, per month for each employee to the Macao Scheme, and had no further obligations for the actual payment of pensions or post-retirement benefits beyond the monthly contributions.

For the year ended 31 March 2008, the aggregate amount of the Group’s contributions to the aforementioned pension schemes were approximately HK$2,108,000 (2007: HK$2,057,000).

38 RELATED PARTY TRANSACTIONS

(a) Except as otherwise stated, during the year, the Group has the following related party transactions:

	2008	2007
	HK$’000	HK$’000
Technical consultancy fee paid to Micom Tech Limited
(Note (i))	–	200
License fee paid to Micom Tech Limited_(Note (i))_	–	206
Sales of electronic products to an associate	–	226
Sales of electronic products to a jointly controlled entity	60,715	–
Management fee received from a jointly controlled entity	90	–

Notes:

(i) Mr. Ng Chi Ho, a director of the Company, holds interests and is a director of Micom Tech Limited.
(ii) In the opinion of the Directors, the above transactions were carried out in the normal course of the Group’s business and conducted at terms mutually agreed by the respective parties.
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FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

(b)

Key management compensation

Remuneration of key personnel management, including amount paid to the Company’s directors and certain of the highest paid employee, as disclosed in Note 33, is as follows:

Salaries and other short-term employee benefits Post-employment benefits Share-based compensation expenses (c) Year-end balances with related parties Amount due from a jointly controlled entity	2008 HK$’000 8,266 502 – 8,768 2008 HK$’000 16,141	2007 HK$’000 7,935 485 821
		9,241

		2007 HK$’000 –

The terms of balances with related parties are disclosed in Note 10.

4. INDEBTEDNESS OF THE GROUP

Borrowings

As at the close of business on 31 May 2009, being the latest practicable date for the purpose of this indebtedness statement, the Group had the following outstanding borrowings:

Bank borrowings Within one year In the second year Obligations under finance lease Within one year	HK$’000 7,273 1,818
	9,091

	28

	9,119

Security

As at the close of business on 31 May 2009, being the latest practicable date for the purpose of this indebtedness statement, the Group’s bank borrowings were secured by corporate guarantee provided by the Company and certain of its subsidiaries.

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FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

Contingent liabilities

As at the close of business on 31 May 2009, being the latest practicable date for the purpose of this indebtedness statement, the Group had no material contingent liabilities.

Disclaimer

Saved as aforesaid and apart from intra-group liabilities, the Group did not, at the close of business on 31 May 2009, have any outstanding loan capital issued and outstanding or agreed to be issued, bank overdrafts, charges or debentures, mortgages, loans, or other similar indebtedness or any finance lease commitments, hire purchase commitments, liabilities under acceptances (other than normal trade bills), acceptance credits or any guarantees or other material contingent liabilities.

5. SUBSEQUENT CHANGE OF INDEBTEDNESS

The Directors confirmed that there has been no material change in the indebtedness, commitments and contingent liabilities of the Group since 31 May 2009.

6. WORKING CAPITAL

Taking into account the expected completion of the Acquisition on 31 December 2009 and the financial resources available to the Group, including the internally generated funds and the available banking facilities, the Directors are of the opinion that the Group has sufficient working capital for its present requirements, that is for at least the next 12 months from the date of this circular.

7. FINANCIAL AND TRADING PROSPECTS

The Group is principally engaged in research and development, manufacturing and sales of electronics products. The Group has operations mainly in Hong Kong, Mainland China and Macao.

As mentioned in the section “Reasons for and benefits of the Acquisition” in the Letter from the Board of this circular, the Group intends to use the Property as its office and will no longer be affected by any rental review in the future.

The Group generally finances its business operations by internal generated resources and banking facilities provided by its principal bankers in Hong Kong. As at 30 September 2008, the Group’s total cash balance was HK$75.6 million (31 March 2008: HK$64.9 million) while total indebtedness decreased to HK$21.7 million (31 March 2008: HK$30.3 million), representing approximately 7.8% of total shareholders’ equity (31 March 2008: 11.5%).

As a result of the financial tsunami starting in September 2008, less competitive players will be weeded out by the economic downturn. With the strong cash position and significant banking facilities available, the Group is certainly in a strong position to capture more market share and also has great flexibility in pursuing business expansion if so desired.

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FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

8. MATERIAL ADVERSE CHANGE

As at the Latest Practicable Date, to the best of the Directors’ knowledge, information and belief, after making all reasonable enquiry and the review of the interim report of the Group for the six months period ended 30 September 2008, the Directors are not aware of any material adverse change in the financial or trading position or operation of the Group since 31 March 2008, the date to which the latest published audited consolidated financial statements of the Group were made up.

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VALUATION REPORT OF THE PROPERTY

APPENDIX II

Vigers Appraisal and Consulting Limited

International Property Consultants 10/F, The Grande Building 398 Kwun Tong Road, Kowloon, Hong Kong Tel: (852) 2810 1100 Fax: (852) 3101 9041 www.Vigers.com

==> picture [73 x 72] intentionally omitted <==

14 July 2009

The Board of Directors Suga International Holdings Limited Units 1904-7,19th Floor Chevalier Commercial Centre 8 Wang Hoi Road, Kowloon Bay Kowloon, Hong Kong

Dear Sirs,

In accordance with your instruction for us to value the property to be acquired by “Suga International Holdings Limited” (referred to as “the Company”) or its subsidiaries (hereinafter together referred to as “the Group”), we confirm that we have inspected the property, conducted land searches at the Land Registry, made relevant enquiries and investigations as well as obtained such further information as we consider necessary for the purpose of providing our opinion of value of the property as at 29th May 2009 (the “Valuation Date”).

BAsIs OF VALUATION

Our valuation is our opinion of market value of the property which is defined as intended to mean “ the estimated amount for which a property should exchange on the date of valuation between a willing buyer and a willing seller on an arm’s length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion ”. Our valuation has been prepared in accordance with “The HKIS Valuation Standards on Properties (First Edition 2005)” published by The Hong Kong Institute of Surveyors, the relevant provisions in the Companies Ordinance and the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (Main Board).

TITLE INVEsTIgATION

The property is located in Hong Kong, and we have conducted land searches at the Land Registry but we have not searched the original documents to ascertain ownership nor to verify any lease amendments which may not appear on the copies handed to us. All documents have been used for reference purposes and all dimensions, measurements and areas are therefore approximations. The land lease had expired before 30th June 1997, we have taken into account the provisions contained in Annex III of the “Joint Declaration of the Government of the United Kingdom and the Government

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VALUATION REPORT OF THE PROPERTY

APPENDIX II

of the People’s Republic of China on the question of Hong Kong” as well as the New Territories Leases (Extension) Ordinance 1988 that such land lease has been extended without paying additional land premium until 30th June 2047 and that a rent of 3% of the then Rateable Value is charged per annum from the date of extension.

VALUATION AssUmPTIONs

Our valuation has been made on the assumption that the property can be sold in the prevailing market in existing state without the effect of any deferred term contract, leaseback, joint venture, management agreement or any other similar arrangement which may serve to affect the value of the property, unless otherwise noted or specified. In addition, no account has been taken into of any option or right of pre-emption concerning or affecting the sale of the property.

In our valuation, we have assumed that the owner of the property has free and uninterrupted rights to use and assign the property during the whole of the unexpired terms granted subject to the payment of usual Government Rent.

No investigation has been carried out to determine the suitability of the ground conditions or the services for any property development(s) erected or to be erected on the property in concern. Our valuation has been carried out on the assumption that these aspects are satisfactory. We have also assumed that all necessary consents, approvals and licences from relevant government authorities have been or will be granted without onerous conditions or delay.

No allowance has been made in our valuation for any charges, mortgages or amounts owing on the property for any expenses or taxation which may be incurred in effecting a sale. Unless otherwise stated, we have assumed that the property is free from any encumbrances, restrictions and outgoings of an onerous nature which may serve to affect the value of the property.

We have not carried out detailed on-site measurement to verify the correctness of the floor areas in respect of the property but we have assumed that the floor areas shown on the documents handed to us are correct.

Other special assumptions for the property have been stated in the footnotes of the valuation certificate for the property, if any.

VALUATION CONsIDERATION

We have inspected the property included in the attached valuation certificate. During the course of our inspection, we did not note any serious defect. However, no structural survey nor test on any of the services has been made and we are therefore unable to report as to whether the property is free from rot, infestation or other structural or non-structural defect.

Having examined all relevant documents, we have relied to a considerable extent on the information given by the Group, particularly in respect of planning approvals, statutory notices, easements, tenure, floor areas, occupancy status and in the identification of the property.

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VALUATION REPORT OF THE PROPERTY

APPENDIX II

Unless otherwise stated, all dimensions, measurements and areas included in the valuation certificate are based on the information contained in the documents provided to us by the Group and are therefore approximations. We have had no reason to doubt the truth and accuracy of the information made available to us and we have been advised by the Group that no material facts have been omitted from the information so given.

REmARks

We declare hereby that we are independent to the Group and we are not interested directly or indirectly in any shares in any member of the Group. We do not have any right or option whether legally enforceable or not to subscribe for or to nominate persons to subscribe for any shares in any member of the Group.

Unless otherwise stated, all monetary amounts stated herein are in the currency of Hong Kong Dollars (“HK$”), the lawful currency of Hong Kong.

We enclose herewith our Valuation Certificate.

Yours faithfully, For and on behalf of VIgERs APPRAIsAL AND CONsULTINg LImITED

David W. I. Cheung

MRICS MHKIS RPS(GP) CREA MCIArb Executive Director

Note: Mr. David W. I. Cheung is a Registered Professional Surveyor in General Practice Division with over 25 years’ valuation experience on properties in various regions including Hong Kong, who has been vetted on the list of property valuers for undertaking valuations for incorporation or reference in listing particulars and circulars and valuations in connection with takeovers and mergers published by The Hong Kong Institute of Surveyors, and is suitably qualified for undertaking valuations relating to listing exercises.

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VALUATION REPORT OF THE PROPERTY

APPENDIX II

VALUATION CERTIFICATE

Property to be held by the group for Owner Occupation Purpose

Property

Description and Tenure

market Value in Particulars Existing state as of Occupancy at 29th may 2009

22nd Floor of Tower B and Car Parking Space Nos. P48, P64, P65 and P66 on 2nd Floor, “No. 1 Wang Kwong Road”, Kowloon Bay, Kowloon, Hong Kong

All those

1,306/70,000th parts or parcels of ground known and registered at the Land Registry as The Remaining Portion of New Kowloon Inland Lot No. 5925

The property comprises an office floor on 22nd floor and 4 car parking spaces on 2nd floor of a 25-storey office building which will be completed in 2009.

The office floor of the property has a gross floor area of approximately 12,895 square feet (1,197.99 square metres) and a saleable area of approximately 9,000 square feet (836.13 square metres).

New Kowloon Inland Lot No. 5925 is held under Conditions of Sale No. UB11579 for a term of 99 years commencing on 1st July 1898 less the last three days and has been further extended to 30th June 2047 subject to the annual Government Rent equivalent to 3% of the then Rateable Value from time to time.

The property is HK$50,000,000 in its final stage of construction and is scheduled to be handed over in late 2009.

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VALUATION REPORT OF THE PROPERTY

APPENDIX II

Note:

Pursuant to our recent land search records, the current registered owner of the property is “WEALTHY STAR DEVELOPMENT LIMITED”.
Pursuant to our recent land search records, the property is subject to the following salient encumbrances:
i. Debenture and a Floating Charge for All Monies in favour of Industrial and Commercial Bank of China (Asia) Limited vide Memorial No. 07010300830262 dated 7th December 2006;
ii. Modification Letter from the Government of the Hong Kong Special Administrative Region by the District Lands officers/Kowloon East regarding New Kowloon Inland Lot No. 5925 vide Memorial No. 08012903010016 dated 25th January 2008;
iii. Deed Poll regarding Section A and the Remaining Portion vide Memorial No. 08052801490171 dated 13th May 2008;
iv. Consent Letter for Permitting Additional Gross Floor Area from District Lands Office, Kowloon East Lands Department regarding Section A and the Remaining Portion of New Kowloon Inland Lot No. 5925 vide Memorial No. 08103100820010 dated 27th October 2008;
v. Statutory Declaration by Tsang May Ping regarding the Remaining Portion of New Kowloon Inland Lot No. 5925 vide Memorial No. 08112101230196 dated 20th November 2008.
The property lies on area zoned “Other Specified Uses” under Ngau Tau Kok & Kowloon Bay Outline Zoning Plan.
The property is yet to be completed as at the Valuation Date but no allowance has been made in our valuation for any outstanding development cost.
93 -

GENERAL INFORMATION

APPENDIX III

1. RESPONSIBILITY STATEMENTS

This circular includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Company. The Directors collectively and individually accept full responsibility for the accuracy of the information contained in this circular and confirm, having made all reasonable enquiries, that to the best of their knowledge and belief, there are no other facts the omission of which would make any statement herein misleading.

2. DISCLOSURE OF INTERESTS

As at the Latest Practicable Date, the following Directors and chief executive of the Company had interests or short positions in the shares, underlying shares or debentures of the Company and its associated corporations (within the meaning of Part XV of the SFO) which are required (a) 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 he is taken or deemed to have under such provisions of the SFO); (b) pursuant to section 352 of the SFO, to be entered in the register referred to therein; or (c) pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers to be notified to the Company and the Stock Exchange:

(a) Interests (long position) of the Directors in the Company

			Number of ordinary shares of HK$0.1	Number of ordinary shares of HK$0.1	Number of ordinary shares of HK$0.1	each
								Number of
							Percentage	underlying
				Trust/			of issued	shares held
Name of	Personal	Corporate	Family	similar	Other	Total	ordinary	under equity
Director	interests	interests	interest	interest	interest	interests	share capital	derivatives
								(Note 1)
Mr. Ng Chi Ho	4,000,000	39,608,000	100,000,000	–	–	143,608,000	61.68%	0
		(Note 2)	(Note 3)
Mr. Ma Fung On	3,630,000	9,000,000	–	–	–	12,630,000	5.42%	0
		(Note 4)
Mr. Wong Wai Lik,
Lamson	500,000	–	–	–	–	500,000	0.21%	2,000,000
Notes:

These represent the interests in underlying shares in respect of the share opinions granted by the Company.
39, 608,000 shares are held by Billion Linkage Limited, the entire issued shares of which are held by Mr. Ng Chi Ho and his spouse in equal share.
100,000,000 Shares are held by Superior View Inc., the entire issued shares of which are ultimately held by Fidelitycorp Limited as the trustee of the C.H. Family Trust, the beneficiaries of which are the family members of Mr. Ng Chi Ho.
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GENERAL INFORMATION

APPENDIX III

9,000,000 Shares are held by Global Class Enterprises Limited, the entire issued shares of which are held by Mr. Ma Fung On.

(b) Interests (long position) of the Directors in associated corporation of the Company

As at the Latest Practicable Date, each of Mr. Ng Chi Ho and Mr. Ma Fung On held the following non-voting deferred shares of HK$1 each in Suga Electronics Limited, a wholly owned subsidiary of the Company.

Name of shareholder Number of non-voting deferred shares Mr. Ng Chi Ho (Note) 3,680,000 Mr. Ma Fung On (Note) 240,000

Note:

The 4,000,000 non-voting deferred shares in Suga Electronics Limited are held as to 80% by Essential Mix Enterprises Limited and 20% by Broadway Business Limited. Mr. Ng Chi Ho and Mr. Ma Fung On hold 92% and 6% interests in each of Essential Mix Enterprises Limited and Broadway Business Limited respectively.

These non-voting deferred shares have no voting rights, are not entitled to dividends, and are not entitled to any distributions upon winding up unless a sum of HK$10,000,000,000 per ordinary share has been distributed to the holders of ordinary shares.

Save as disclosed above, as at the Latest Practicable Date, none of the Directors or chief executive of the Company nor their respective associates 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 are required (a) 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 he is taken or deemed to have under such provisions of the SFO); (b) pursuant to section 352 of the SFO, to be entered in the register referred to therein; or (c) pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers to be notified to the Company and the Stock Exchange.

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GENERAL INFORMATION

APPENDIX III

(c) Interests or short positions of substantial shareholders (other than a Director or chief executive of the Company) discloseable under Divisions 2 and 3 of Part XV of the SFO

As at the Latest Practicable Date, so far as the Directors are aware, the register required to be maintained by the Company pursuant to section 336 of the SFO shows that, other than the interests disclosed above in respect of certain Directors, the following entities have, directly or indirectly, interests or short positions in the shares and the underlying shares of the Company which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO (other than a Director or chief executive of the Company), or have, directly or indirectly, interests in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any other member of the Group:

Long Positions

Shares
	Number of
Name of Shareholder	Ordinary Shares	Percentage
Superior View Inc.(Note 1)	100,000,000	42.95%
Billion Linkage Limited_(Note 2)_	39,608,000	17.01%
Shaw, Kwei & Partners (Asia) Ltd_(Note 3)_	12,500,000	5.37%

Notes:

The entire issued share capital of Superior View Inc. is ultimately held by Fidelitycorp Limited as trustee of the C.H. Family Trust, the beneficiaries of which are the family members of Mr. Ng Chi Ho. Mr. Ng Chi Ho is a director of Superior View Inc.
The entire issued share capital of Billion Linkage Limited is held by Mr. Ng Chi Ho and his spouse in equal shares and, as such, Mr. Ng Chi Ho is deemed to be interested in all the shares held by Billion Linkage Limited under the SFO. Mr. Ng Chi Ho is a director of Billion Linkage Limited.
The interests in the 12,000,000 shares are held by Shaw, Kwei & Partners (Asia) Limited as a general partner of the Asian Value Investment Fund L.P. The entire issued share capital of Shaw, Kwei & Partners (Asia) Limited is held by Mr. Kyle Arnold Shaw, Jr..

Other than as disclosed above, the Company had not been notified of any other relevant interests or short positions in the shares or underlying shares of the Company as at the Latest Practicable Date.

96 -

GENERAL INFORMATION

APPENDIX III

3. DIRECTORS’ INTEREST IN SERVICE CONTRACTS

Each of independent non-executive directors is appointed for a term of one year.

Each of Mr. Ng Chi Ho and Mr. Wong Wai Lik, Lamson, both being executive Directors, has entered into a service contract with the Company for an initial fixed term of three years commencing from 1 September 2002 and will continue thereafter until terminated by not less than three months’ notice in writing served by either party on the other. Mr. Ma Fung On, an executive Director, has entered into a service contract with the Company for an initial fixed term of three years commencing from 1 April 2004 and will continue thereafter until terminated by not less than three months’ notice in writing served by either party on the other. Save as disclosed above, none of the directors proposed for re-election has a service contract with the Company, which is not determinable by the Company within one year without payment of compensation, other than statutory compensation.

4. COMPETING INTEREST

As at the Latest Practicable Date, none of the Directors and their respective associates was considered by the Company to have interests in business which compete with, or might compete with, either directly or indirectly, with the business of the Group, other than those business in which such directors have been appointed to represent the interests of the Company and/or other members of the Group.

5. EXPERT AND CONSENT

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

Name	Qualification
Vigers Appraisal and Consulting Limited	Property valuer
(referred to as “Vigers”)

Vigers has given and has not withdrawn its written consent to the issue of this circular with the inclusion herein of its report and references to its name, in the form and context in which it appears.

As at the Latest Practicable Date, Vigers did not have any shareholding in any member of the Group nor any right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any member of the Group.

As at the Latest Practicable Date, Vigers had no direct or indirect interest in any assets which had been acquired or disposed of by, or leased to, or which were proposed to be acquired or disposed of by, or leased to, the Company or any of its subsidiaries since 31 March 2008, being the date to which the latest published audited consolidated financial statements of the Group were made up.

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GENERAL INFORMATION

APPENDIX III

6. DIRECTORS’ INTERESTS IN ASSETS AND CONTRACTS OF SIGNIFICANCE

As at the Latest Practicable Date, none of the Directors had any direct or indirect interests in any assets which have been acquired or disposed of by, or leased to, or which are proposed to be acquired or disposed of by, or leased to, the Company or any of its subsidiaries since 31 March 2008, being the date to which the latest published audited consolidated financial statements of the Company were made up. No contract or arrangement in which a Director was materially interested and which was significant in relation to the business of the Group subsisted as at the Latest Practicable Date.

7. LITIGATION

As at the Latest Practicable Date, no member of the Group was engaged in any litigation or arbitration of material importance and the Directors were not aware of any litigation or claim of material importance pending or threatened against any member of the Group.

8. MATERIAL CONTRACTS

No contract (not being contracts in the ordinary course of business) has been entered into by the Company within the two years immediately preceding the date of this circular and is or may be material.

9. GENERAL

(a) The registered office of the Company is situated at Clarendon House, 2 Church Street, Hamilton HM 11, Bermuda.
(b) The head office and principal place of business of the Company in Hong Kong is Units 1904-7, 19th Floor, Chevalier Commercial Centre, 8 Wang Hoi Road, Kowloon Bay, Kowloon, Hong Kong.
(c) The Company’s branch share registrar and transfer office in Hong Kong is Computershare Hong Kong Investor Services Limited of Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong.
98 -

GENERAL INFORMATION

APPENDIX III

(d) The secretary of the Company is Mr. Huen Po Wah. Mr. Huen, aged 60, is a director of Fair Wind Secretarial Services Limited and has 28 years of experience in company management and secretarial fields. He is an associate of The Hong Kong Institute of Chartered Secretaries and an associate of The Institute of the Chartered Secretaries and Administrators.
(e) The English text of this circular shall prevail over the Chinese text.

10. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be made available for inspection at the Company’s principal place of business in Hong Kong at Units 1904-7, 19th Floor, Chevalier Commercial Centre, 8 Wang Hoi Road, Kowloon Bay, Kowloon, Hong Kong during normal business hours on any weekday (except for public holidays) up to and including 28 July 2009:

(a) the memorandum of association and bye-laws of the Company;
(b) the service contracts referred to in the section headed “Directors’ Interest in Service Contracts” in this Appendix;
(c) the audited financial statements of the Company for each of the financial years ended 31 March 2007 and 2008;
(d) the valuation report from Vigers, the text of which is set out in Appendix II to this circular;
(e) the written consent of Vigers referred to in the section headed “Expert and Consent” in this Appendix; and
(f) this circular.
99 -

AI assistant

Keymed Biosciences Inc. — Proxy Solicitation & Information Statement 2009

50412_rns_2009-07-13_6f29569e-4846-42a8-b187-59f04cac13ea.pdf

SUGA INTERNATIONAL HOLDINGS LIMITED 信佳國際集團有限公司

MAJOR TRANSACTION – ACQUISITION OF PROPERTY

CONTENTS

DEFINITIONS

DEFINITIONS

SUGA INTERNATIONAL HOLDINGS LIMITED 信佳國際集團有限公司

MAJOR TRANSACTION – ACQUISITION OF PROPERTY

THE ACQUISITION AND THE MEMORANDUM

LETTER FROM THE BOARD

INFORMATION ON THE GROUP

INFORMATION ON THE PROPERTY AND THE VENDOR

REASONS FOR AND BENEFITS OF THE ACQUISITION

FINANCIAL EFFECTS ON THE COMPANY

LISTING RULES IMPLICATIONS

LETTER FROM THE BOARD

FURTHER INFORMATION

1. FINANCIAL SUMMARY

Consolidated Income Statements

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

Consolidated Balance Sheet

APPENDIX I

2. UNAUDITED INTERIM FINANCIAL STATEMENTS OF THE GROUP FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2008

Condensed Consolidated Interim Balance Sheet

Condensed Consolidated Interim Income Statement

Condensed Consolidated Interim Statement of Changes in Equity

Condensed Consolidated Interim Cash Flow Statement

Notes to the Condensed Consolidated Interim Financial Information

1. GENERAL INFORMATION

2. BASIS OF PREPARATION

3. ACCOUNTING POLICIES

4. SEGMENTAL INFORMATION

(a) Primary reporting format – business segments

(b) Secondary reporting format – geographical segments

5. PROPERTY, PLANT AND EqUIPMENT

6. LAND USE RIGHTS

7. GOODwILL

9. INTEREST IN A jOINTLY CONTROLLED ENTITY

10. TRADE AND OTHER RECEIvABLES

11. TRADE AND OTHER PAYABLES

12. BANk BORROwINGS

13. FINANCE LEASE LIABILITIES

15. EXPENSES BY NATURE

16. FINANCE INCOME AND FINANCE COSTS

17. INCOME TAX EXPENSE

18. EARNINGS PER SHARE

(a) Basic

(b) Diluted

19. INTERIM DIvIDEND

20. OPERATING LEASE COMMITMENTS

21. RELATED PARTY TRANSACTIONS

(a) During the period, the Group has the following related party transactions:

(b) key management compensation

Balance Sheets

APPENDIX I

Consolidated Income Statement

Consolidated Statement of Changes in Equity

Consolidated Cash Flow Statement

Notes to the Financial Statements

1 GENERAL INFORMATION

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

2.1 Basis of preparation

2.2 Consolidation

(b) Associates

(c) Jointly controlled entities

2.3 Segment reporting

(a) Functional and presentation currency

(b) Transactions and balances

(c) Group companies

2.5 Property, plant and equipment

2.6 Goodwill

2.7 Impairment of investments in subsidiaries, associates, jointly controlled entities and non-financial assets

2.8 Financial assets

2.9 Inventories

2.10 Trade and other receivables

2.11 Cash and cash equivalents

2.12 Share capital

Keymed Biosciences Inc. Proxy Solicitation & Information Statement 2009