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 ONE MEDIA GROUP LIMITED, you should at once hand this circular together with the enclosed proxy form to the purchaser or the transferee or to the bank, stockbroker or other agent through whom the sale was effected for transmission to the purchaser or the transferee.

This circular is for information purpose only and does not constitute an invitation or offer to acquire, purchase or subscribe for the shares or other securities of the Company.

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.

==> picture [100 x 37] intentionally omitted <==

ONE MEDIA GROUP LIMITED 萬華媒體集團有限公司

(incorporated in the Cayman Islands with limited liability)

(Stock Code: 426)

MAJOR AND CONNECTED TRANSACTION

AND

NOTICE OF EXTRAORDINARY GENERAL MEETING

Financial adviser to the Company

Independent financial adviser to the Independent Board Committee and Independent Shareholders

A letter from the Board is set out on pages 5 to 17 of this circular. A letter from the Independent Board Committee is set out on page 18 of this circular. A letter from Investec, the independent financial adviser to the Independent Board Committee and the Independent Shareholders is set out on pages 19 to 33 of this circular.

A notice convening the EGM of One Media Group Limited to be held at 15th Floor, Block A, Ming Pao Industrial Centre, 18 Ka Yip Street, Chai Wan, Hong Kong on Monday, 28 May 2012 at 4:00 p.m. is set out on pages 89 to 90 of this circular. A form of proxy for the EGM is enclosed with this circular. Whether or not you propose to attend the meeting, you are requested to complete the accompanying proxy form in accordance with the instructions printed thereon and return the same to the head office of the Company at 16th Floor, Block A, Ming Pao Industrial Centre, 18 Ka Yip Street, Chai Wan, Hong Kong as soon as possible and in any event not less than 48 hours before the time appointed for holding of the meeting or any adjournment thereof. Completion and return of the proxy form will not prevent you from attending and voting in person at the meeting if you so wish.

Hong Kong, 10 May 2012

CONTENTS

		page
DEFINITION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	. . . . . . . . . . .	1
LETTER FROM THE BOARD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	. . . . . . . . . . .	5
LETTER FROM THE INDEPENDENT BOARD COMMITTEE . . . . . . . . . . . . . . .	. . . . . . . . . . .	18
LETTER FROM INVESTEC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	. . . . . . . . . . .	19
APPENDIX I — FINANCIAL INFORMATION OF THE GROUP . . . . . . . . .	. . . . . . . . . . .	34
APPENDIX II — FINANCIAL INFORMATION OF THE TARGET . . . . . . . .	. . . . . . . . . . .	43
APPENDIX III — MANAGEMENT DISCUSSION AND ANALYSIS ON THE	TARGET .	58
APPENDIX IV — UNAUDITED PRO FORMA FINANCIAL INFORMATION
OF THE ENLARGED GROUP . . . . . . . . . . . . . . . . . . . . . . . . .	. . . . . . . . . . .	62
APPENDIX V — VALUATION REPORT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	. . . . . . . . . . .	67
APPENDIX VI — LETTER FROM PRICEWATERHOUSECOOPERS . . . . . .	. . . . . . . . . . .	80
APPENDIX VII — LETTER FROM GUANGDONG SECURITIES LIMITED	. . . . . . . . . . .	82
APPENDIX VIII — GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . .	. . . . . . . . . . .	83
NOTICE OF EGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	. . . . . . . . . . .	89

– i –

DEFINITION

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

‘‘Acquisition’’
the acquisition of the entire issued share capital of the Target by the Buyer from the Seller pursuant to the Sale and Purchase Agreement
‘‘Announcement’’ the announcement of the Company dated 29 February 2012 in relation to, among other things, the Sale and Purchase Agreement, the issue of the Convertible Bond and the allotment and issue of the Conversion Shares under the Specific Mandate
‘‘Articles’’ the articles of association of the Company
‘‘associates’’ has the meaning ascribed to it under the Listing Rules
‘‘Board’’ the board of Directors
‘‘Bondholder’’ the person whose name is registered as holder of the Convertible Bond in the register kept by the Company
‘‘Buyer’’ Top Plus Limited, a company incorporated in the British Virgin Islands with limited liability and an indirect wholly-owned subsidiary of the Company
‘‘CCW Licensing Agreement’’
the licensing agreement dated 1 February 2004 entered into between the Target and Lisport Company Limited (now known as MPM) (as amended by the supplemental agreements dated 29 March 2004, 6 April 2004, 9 July 2004, 26 September 2005 and 20 September 2007 respectively) relating to City Children’s Weekly, which ceased publication on 1 April 2008
‘‘City Children’s Weekly’’ City Children’s Weekly 明報兒童周刊 which the Group ceased to publish on 1 April 2008
‘‘Company’’ One Media Group Limited, a company incorporated in the Cayman Islands with limited liability, the shares of which are listed on the main board of the Stock Exchange
‘‘Completion’’
completion of the Acquisition under the Sale and Purchase Agreement
‘‘Consideration’’
the consideration payable by the Buyer for the Acquisition, being HK$75,600,000
‘‘Conversion Share(s)’’
the Share(s) to be issued by the Company upon conversion of the Convertible Bond

– 1 –

DEFINITION

‘‘Convertible Bond’’

a convertible bond in the principal amount of HK$75,600,000 to be issued by the Company in favour of the Seller or its nominee

‘‘Director(s)’’ the director(s) (including independent non-executive directors) of the Company

‘‘EGM’’ the extraordinary general meeting of the Company to be convened for the purpose of approving the Sale and Purchase Agreement, the issue of the Convertible Bond and the allotment and issue of the Conversion Shares under the Specific Mandate
‘‘Enlarged Group’’ the Group as enlarged by the Target immediately upon Completion
‘‘Group’’ the Company and its subsidiaries
‘‘Hi-Tech Weekly’’ Hi-Tech Weekly 數碼誌尚 which the Group ceased to publish on 1 March 2011
‘‘HK$’’ Hong Kong dollars, the lawful currency of Hong Kong
‘‘HK Magazines’’ City Children’s Weekly, Hi-Tech Weekly and Ming Pao Weekly ‘‘Hong Kong’’ the Hong Kong Special Administrative Region of the PRC
‘‘HTW Licensing Agreement’’

the licensing agreement dated 1 February 2004 entered into between the Target and MPM (as amended by the supplemental agreements dated 29 March 2004, 6 April 2004, 26 September 2005 and 20 September 2007 respectively) relating to Hi-Tech Weekly, which ceased publication on 1 March 2011

‘‘Independent Board Committee’’

the committee of the Board comprising all the independent nonexecutive Directors other than Mr. YU Hon To, David due to his conflict of interest (namely Mr. SIT Kien Ping, Peter and Mr. TAN Hock Seng, Peter) formed to advise the Independent Shareholders in connection with the Sale and Purchase Agreement, the issue of the Convertible Bond and the allotment and issue of the Conversion Shares under the Specific Mandate

‘‘Independent Shareholders’’ Shareholders other than those who are required by the Listing Rules to abstain from voting on the resolution approving the Sale and Purchase Agreement, the issue of the Convertible Bond and the allotment and issue of the Conversion Shares under the Specific Mandate, including (i) Mr. TIONG Kiew Chiong, a director of the Company, MCI, the Seller, the Buyer and the Target and a shareholder of both the Company and MCI holding 1% and approximately 0.21% of the issued share capital of the Company and MCI, respectively, (ii) Comwell Investment Limited, an indirect wholly-owned subsidiary of MCI, which directly holds approximately 73.18% interest in the issued share capital of the Company, (iii) any Shareholder who has a material interest in the transactions contemplated under the Sale and Purchase Agreement or the Instrument and (iv) associates of the persons described in (i) to (iii) above

– 2 –

DEFINITION

‘‘Instrument’’

the instrument constituting the Convertible Bond

‘‘Investec’’

Investec Capital Asia Limited (formerly known as Access Capital Limited), a corporation licensed to carry on Type 1 (dealing in securities), Type 4 (advising on securities), Type 6 (advising on corporate finance) and Type 9 (asset management) regulated activities under the SFO, being the independent financial adviser to the Independent Board Committee and the Independent Shareholders in respect of the Sale and Purchase Agreement, the issue of the Convertible Bond and the allotment and issue of the Conversion Shares under the Specific Mandate

‘‘Last Trading Day’’ 29 February 2012, being the last trading day of the Shares immediately prior to the publication of the Announcement
‘‘Latest Practicable Date’’ 7 May 2012, being the latest practicable date prior to the printing of this circular for ascerting certain information in this circular
‘‘Licensing Agreements’’ collectively the CCW Licensing Agreement, the HTW Licensing Agreement and the MPW Licensing Agreement
‘‘Listing Rules’’ the Rules Governing the Listing of Securities on the Stock Exchange
‘‘MCI’’ Media Chinese International Limited, an exempted company incorporated in Bermuda with limited liability, the shares of which are dual-listed on the Stock Exchange and Bursa Malaysia Securities Berhad
‘‘MCI Group’’ MCI and its subsidiaries
‘‘Ming Pao Weekly’’ Ming Pao Weekly 明報周刊 published by the Group in Hong Kong
‘‘MPM’’ Ming Pao Magazines Limited, a company incorporated in Hong Kong with limited liability and a direct wholly-owned subsidiary of the Buyer
‘‘MPW Licensing Agreement’’ the licensing agreement dated 1 February 2004 entered into between the Target and MPM (as amended by the supplemental agreements dated 29 March 2004, 6 April 2004, 26 September 2005 and 20 September 2007 respectively) relating to Ming Pao Weekly
‘‘New Contents’’ all editorial and other contents of all those issues of HK Magazines which have been published from 1 February 2004

– 3 –

DEFINITION

‘‘Past Contents’’ all editorial and other contents of all those issues of the HK Magazines which were published prior to 1 February 2004
‘‘PRC’’ or ‘‘China’’ the People’s Republic of China ‘‘Roma’’ Roma Appraisals Limited, an independent business valuation company
‘‘Sale and Purchase Agreement’’ the sale and purchase agreement dated 29 February 2012 entered into between the Buyer and the Seller in relation to the Acquisition
‘‘Seller’’ Ming Pao Holdings Limited, a company incorporated in Hong Kong with limited liability and an indirect wholly-owned subsidiary of MCI
‘‘SFO’’ Securities and Futures Ordinance, Chapter 571 of the Laws of Hong Kong
‘‘Share(s)’’ ordinary share(s) of HK$0.001 each in the share capital of the Company
‘‘Shareholder(s)’’ shareholder(s) of the Company ‘‘Specific Mandate’’ a specific mandate to be sought at the EGM for the allotment and issue of up to 84,000,000 Conversion Shares, and such other number of Conversion Shares into which the Convertible Bonds are convertible as a result of adjustment(s) to the conversion price of the Convertible Bond from time to time in accordance with the Instrument
‘‘Stock Exchange’’ The Stock Exchange of Hong Kong Limited ‘‘Takeovers Code’’ the Code on Takeovers and Mergers approved by the Securities and Futures Commission of Hong Kong as amended from time to time
‘‘Target’’ Ming Pao Finance Limited, a company incorporated in the British Virgin Islands with limited liability and an indirect wholly-owned subsidiary of MCI
‘‘Trademarks’’ the trademarks as described in the Licensing Agreements for the publication of the HK Magazines
‘‘US$’’ US dollars, the lawful currency of the United States of America ‘‘%’’ per cent.

– 4 –

LETTER FROM THE BOARD

==> picture [100 x 38] intentionally omitted <==

ONE MEDIA GROUP LIMITED 萬華媒體集團有限公司

(incorporated in the Cayman Islands with limited liability)

(Stock Code: 426)

Non-executive Director:

Tan Sri Datuk Sir TIONG Hiew King (Chairman)

Executive Directors:

Mr. TIONG Kiew Chiong (Deputy Chairman) Mr. LAM Pak Cheong

Registered Office: Clifton House 75 Fort Street P.O. Box 1350 GT George Town Grand Cayman Cayman Islands

Independent Non-executive Directors:

Mr. YU Hon To, David Mr. SIT Kien Ping, Peter Mr. TAN Hock Seng, Peter

Head Office in Hong Kong: 16th Floor, Block A Ming Pao Industrial Centre 18 Ka Yip Street Chai Wan Hong Kong

Hong Kong, 10 May 2012

To the Shareholders

Dear Sir or Madam,

MAJOR AND CONNECTED TRANSACTION AND

NOTICE OF EXTRAORDINARY GENERAL MEETING

INTRODUCTION

Reference is made to the prospectus of the Company dated 30 September 2005, the announcements of the Company dated 21 September 2007 and 28 June 2010 and the circular of the Company dated 20 July 2010, relating to the licensing of the Trademarks and the Past Contents by the Target to MPM, an indirect wholly-owned subsidiary of the Company, pursuant to the Licensing Agreements, which constitute continuing connected transactions for the Company under the Listing Rules.

Reference is also made to the Announcement in relation to, among other things, the Sale and Purchase Agreement, the issue of the Convertible Bond and the allotment and issue of the Conversion Shares under the Specific Mandate.

– 5 –

LETTER FROM THE BOARD

The purpose of this circular is to provide you with, among other things, (i) details of the Sale and Purchase Agreement, the issue of the Convertible Bond and the allotment and issue of the Conversion Shares under the Specific Mandate; (ii) the advice from the Independent Board Committee to the Independent Shareholders; (iii) the advice from the independent financial adviser to the Independent Board Committee and the Independent Shareholders; and (iv) a notice of the EGM to approve the Sale and Purchase Agreement, the issue of the Convertible Bond and the allotment and issue of the Conversion Shares under the Specific Mandate.

MAJOR AND CONNECTED TRANSACTION

Background

On 29 February 2012, the Buyer entered into the Sale and Purchase Agreement with the Seller pursuant to which the Seller as legal and beneficial owner shall sell, and the Buyer shall purchase, the entire issued share capital of the Target which owns the Trademarks and the Past Contents, subject to the terms and conditions therein.

The Sale and Purchase Agreement

Date:

29 February 2012

Parties:

(1) The Seller, an indirect wholly-owned subsidiary of MCI; and
(2) The Buyer, an indirect wholly-owned subsidiary of the Company.

Equity interest acquired:

Under the Sale and Purchase Agreement, the Seller as legal and beneficial owner shall sell, and the Buyer shall purchase the entire issued share capital of the Target, at the Consideration.

Conditions precedent:

Completion of the Sale and Purchase Agreement is subject to the fulfillment of all of the following conditions:

(1) the passing by the Independent Shareholders in general meeting of an ordinary resolution approving the Sale and Purchase Agreement and the transactions contemplated thereunder, the issue of the Convertible Bond and the allotment and issue of the Conversion Shares under the Specific Mandate;
(2) the Seller, the Buyer and the Target having obtained all other necessary consents, approvals or waivers which may be required for the execution and performance of the Sale and Purchase Agreement, if applicable;

– 6 –

LETTER FROM THE BOARD

(3) the warranties given by the Seller in the Sale and Purchase Agreement being true and accurate in all respects as at Completion; and
(4) save as provided in the Sale and Purchase Agreement, no material adverse change to the Target’s assets or financial condition having occurred on or prior to Completion.

Consideration:

The Consideration shall be HK$75,600,000 and shall be satisfied by the issue of the Convertible Bond by the Company in favour of the Seller or its nominee upon Completion.

The Consideration was determined with reference to the valuation of the Trademarks and the Past Contents of HK$76,000,000 as at 30 November 2011 conducted by Roma by adopting a relief-fromroyalty method. The Board (excluding the independent non-executive Directors) believes that the Consideration is fair and reasonable.

Completion:

Completion shall take place on 1 April 2012 or such date as the parties may agree in writing.

Upon Completion, the Target, which owns the Trademarks and the Past Contents, will become a wholly-owned subsidiary of the Buyer and the Licensing Agreements, which have been entered into between the Target and MPM, will be within members of the Group. It is an intention of the parties that the Licensing Agreements shall continue to have effect after Completion.

The shareholding structure of the Group prior to the Acquisition is shown as follows:

==> picture [253 x 203] intentionally omitted <==

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

MCI
100% 73.18%
Seller the Company
100% 100%
Target Buyer
direct interest
indirect interest
----- End of picture text -----

– 7 –

LETTER FROM THE BOARD

The shareholding structure of the Group after Completion is shown as follows:

==> picture [253 x 215] intentionally omitted <==

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

MCI
100% 73.18%
Seller the Company
100%
Buyer
100%
direct interest
indirect interest Target
----- End of picture text -----

CONVERTIBLE BOND

The principal terms of the Convertible Bond are summarized as follows:

Issuer:

The Company

Principal amount of the Convertible Bond:

HK$75,600,000

Issue price:

100% of the principal amount of the Convertible Bond

Interest:

The Convertible Bond will bear interest at the rate of one (1) per cent. per annum, calculated daily on the basis of a 365 day year, and shall be payable half-yearly in arrears

Maturity date:

Being the third anniversary of the date of issue of the Convertible Bond

Conversion period:

Bondholder may exercise the conversion rights attaching to the Convertible Bond at any time following the issue of the Convertible Bond and up to the close of business on the maturity date in amounts of not less than HK$9,000,000 and in integral multiples of HK$9,000,000 on each conversion, save that if at any time, the outstanding principal amount of the Convertible Bond is less than HK$9,000,000, the whole (but not part only) of the outstanding principal amount of the Convertible Bond may be converted

– 8 –

LETTER FROM THE BOARD

Conversion price:

Ranking of Shares:

Conversion restrictions:

The price at which each Share shall be issued upon the exercise of conversion rights attaching to the Convertible Bond shall be HK$0.90, subject to adjustments in the event of, among others, consolidation, subdivision or reclassification, capitalization of profits or reserves, capital distribution, rights issue and other dilutive events

The Conversion Shares to be issued upon exercise of the conversion rights attaching to the Convertible Bond shall rank pari passu in all respects with all other existing Shares in issue on the date of the relevant conversion notice

The Bondholder shall not have the right to convert the whole or part of the outstanding principal amount of the Convertible Bond into Shares to the extent that immediately after such conversion:

(1) there will not be sufficient public float of the Shares as required under the Listing Rules; or
(2) the Bondholder whether alone or together with parties acting in concert with it would be obliged to make a general offer under the Takeovers Code in force from time to time

Redemption:

Repayment:

Listing:

Voting rights:

Transferability:

The Company shall not be entitled to redeem in whole or in part the outstanding principal amount of the Convertible Bond until the maturity date

Payment of the outstanding principal amount of the Bond (if any) together with all accrued and unpaid interest thereon will be made on the maturity date by the Company to the Bondholder

No listing will be sought for the Convertible Bond on the Stock Exchange or any other stock exchange

Prior to conversion of the Convertible Bond into Shares, the Bondholder will not be entitled to attend or vote at any shareholders’ meetings of the Company by reason only of its being the Bondholder

The Convertible Bond may only be transferred by execution of a form of transfer previously agreed between the Company and the Bondholder

– 9 –

LETTER FROM THE BOARD

Status:

The Convertible Bond will constitute general, unconditional and unsecured obligations of the Company and will rank pari passu with all other present and future unsecured and unsubordinated obligations of the Company except for obligations accorded preference by mandatory provisions of applicable law

The conversion price of the Convertible Bond represents:

(1) a premium of approximately 111.8% to the closing price of HK$0.425 per Share as quoted on the Stock Exchange on the Last Trading Day;
(2) a premium of approximately 146.6% to the average closing price of HK$0.365 per Share as quoted on the Stock Exchange for the last five consecutive trading days up to and including the Last Trading Day;
(3) a premium of approximately 157.1% to the average closing price of HK$0.350 per Share as quoted on the Stock Exchange for the last ten consecutive trading days up to and including the Last Trading Day; and
(4) a premium of approximately 149.3% to the net asset value per Share (based on the published interim financial information of the Company as at 30 September 2011) of HK$0.361 per Share.

The Conversion Shares which fall to be issued assuming full conversion of the Convertible Bond will represent:

(1) approximately 21% of the existing issued share capital of the Company; and
(2) approximately 17.36% of the issued share capital of the Company as enlarged by the issue of the Conversion Shares upon full conversion of the Convertible Bond.

The Company will apply to the Listing Committee of the Stock Exchange for the listing of, and permission to deal in, the Conversion Shares upon the exercise of the conversion rights attaching to the Convertible Bond.

Conversion of the Convertible Bond

As at the Latest Practicable Date, the total number of issued Shares is 400,000,000, and Mr. TIONG Kiew Chiong, who is a director of the Company, MCI, the Seller, the Buyer and the Target and a shareholder of both the Company and MCI, was interested in 4,000,000 Shares, representing 1% of the issued share capital of the Company, and Comwell Investment Limited, which is an indirect whollyowned subsidiary of MCI, was interested in 292,700,000 Shares, representing approximately 73.18% of the issued share capital of the Company. Assuming the Convertible Bond is fully converted, the Seller or its nominee will be issued 84,000,000 new Shares. The allotment and issue of the Conversion Shares upon exercise by the Bondholder of the conversion rights attaching to the Convertible Bond will not result in change of control of the Company.

– 10 –

LETTER FROM THE BOARD

The table below shows the shareholding structure of the Company immediately before and after the completion of the conversion (assuming no additional Shares will be issued before the conversion is fully implemented and the conversion is implemented in full):

Name of Shareholders MCI Group(Note 1) Mr. TIONG Kiew Chiong(Note 2) Mr. LAM Pak Cheong(Note 2) Mr. TAN Hock Seng, Peter(Note 2) Public Shareholders Total	Shareholding immediately before the completion of the conversion in full Shares % 292,700,000 73.18 4,000,000 1.00 3,000,000 0.75 200,000 0.05 100,100,000 25.02 400,000,000 100.00	Shareholding immediately after the completion of the conversion in full Shares % 376,700,000 77.83 4,000,000 0.83 3,000,000 0.62 200,000 0.04 100,100,000 20.68(Note 3) 484,000,000 100.00

Notes:

(1) As at the Latest Practicable Date, Comwell Investment Limited, an indirect wholly-owned subsidiary of MCI, was interested in approximately 73.18% of the issued share capital of the Company. Assuming completion of the conversion in full, Comwell Investment Limited and the Seller, each being an indirect wholly-owned subsidiary of MCI, is interested in approximately 60.47% and approximately 17.36% of the issued share capital of the Company, respectively.
(2) Mr. TIONG Kiew Chiong, Mr. LAM Pak Cheong and Mr. TAN Hock Seng, Peter are Directors.
(3) The Seller (being the Bondholder) or its nominee shall not have the right to convert the whole or part of the outstanding principal amount of the Convertible Bond into Shares to the extent that immediately after such conversion there will not be sufficient public float of the Shares as required under the Listing Rules.

ALLOTMENT AND ISSUE OF THE CONVERSION SHARES UNDER THE SPECIFIC MANDATE

Upon full exercise of conversion rights attaching to the Convertible Bond, a total of 84,000,000 new Shares are required to be issued by the Company. The Conversion Shares to be issued pursuant to conversion of the Convertible Bond will be, if approved by the Shareholders at the EGM, allotted and issued under the Specific Mandate.

ADJUSTMENTS TO CONVERSION PRICE OF THE CONVERTIBLE BOND

Adjustments to the conversion price of the Convertible Bond may be required under the relevant terms of the Instrument. Further announcement, if required, will be made by the Company in this regard.

INFORMATION ON THE GROUP, THE BUYER, THE MCI GROUP, THE SELLER AND THE TARGET

The Company is an investment holding company. The Group is principally engaged in media business in the Greater China region, including but not limited to magazine publishing and digital media business. Publications include, among others, Ming Pao Weekly and ‘‘Top Gear 極速誌’’.

– 11 –

LETTER FROM THE BOARD

The Buyer is principally engaged in the business of investment holding.

The MCI Group is principally engaged in the businesses of publishing and distributing newspapers, magazines and books and providing travel and travel related services.

The Seller is principally engaged in the businesses of investment holding and provision of management services to other members of the MCI Group.

The Target is the exclusive owner of the Trademarks and the Past Contents and its main business activity is the licensing of the Trademarks and the Past Contents to MPM pursuant to the Licensing Agreements. The validation period of the trademarks of City Children’s Weekly and Ming Pao Weekly is from 23 February 2004 to 22 February 2014 while the validation period of the trademark of Hi-Tech Weekly is from 28 July 2005 to 27 July 2015. Before the expiry of the respective validation period of the Trademarks, the Target, as the registered owner, will renew the Trademarks by submitting the relevant forms and paying the renewal fees to the Trade Marks Registry, Intellectual Property Department of Hong Kong. Based on the past experience, the Board is of the view that there will not be any impediment on renewing the Trademarks.

The revenue of the Target represented mainly the royalty fees received pursuant to the Licensing Agreements, while the Target also derived revenue from licensing the New Contents and the Past Contents to the subsidiaries (other than MPM) of MCI which was permitted under the Licensing Agreements. The Company intends to terminate the licensing of the New Contents and the Past Contents to these subsidiaries of MCI upon Completion.

Based on the audited financial statements of the Target as at 30 November 2011, the net asset value of the Target as at 30 November 2011 was approximately HK$9,070,000 and the net profit before taxation and extraordinary items for the Target for the years ended 31 March 2010 and 2011 were approximately HK$11,860,000 and HK$12,443,000, respectively, while the net profit after taxation and extraordinary items for the Target for the years ended 31 March 2010 and 2011 were approximately HK$9,903,000 and HK$10,390,000, respectively.

It is the intention of the Buyer and the Seller that the Target will, immediately before Completion, distribute all its distributable profits as at 31 March 2012 (or such other date as the parties may agree in writing) as dividend to the Seller and therefore the unaudited net asset value of the Target upon Completion is expected to be zero. The Trademarks and the Past Contents, owned by the Target, are to be acquired through the Acquisition by the Buyer at consideration of HK$75,600,000.

REASONS AND BENEFITS OF ENTERING INTO THE SALE AND PURCHASE AGREEMENT AND ISSUING THE CONVERTIBLE BOND

Currently, the Company, through its indirect wholly-owned subsidiary, MPM as licensee, holds the exclusive license to use and sublicense the Trademarks and the non-exclusive license to use the Past Contents, thereby enabling the Group to publish the HK Magazines, by paying 7% of the net revenue derived from the relevant HK Magazines as royalty fees to the Target pursuant to the Licensing Agreements.

– 12 –

LETTER FROM THE BOARD

The Board (excluding the independent non-executive Directors) considers that the Acquisition will enable the Group to own the Trademarks and Past Contents outright and at the same time, without paying the royalty fees to the parties outside the Group under the Licensing Agreements. On the other hand, an amortisation expense on the Trademarks will be incurred. Therefore, on a net basis, this will improve the net profit of the Group attributable to the HK Magazines. The termination of the continuing connected transactions of the Licensing Agreements will also save administrative resources of the Company in complying with the relevant requirements of the Listing Rules in respect of such transactions.

The Consideration will be fully satisfied by the issue of the Convertible Bond. The Board believes that the issue of the Convertible Bond is an appropriate means of financing the Acquisition since it will not impose an immediate cash outflow effect and immediate dilution on basic earning per share (‘‘Basic EPS’’). The Board further believes that any potential dilution on Basic EPS resulted from the issue of the Conversion Shares upon conversion of the Convertible Bond shall be mitigated by future saving in costs.

FINANCIAL EFFECTS OF THE ACQUISITION

Upon Completion, the Company will hold the entire issued share capital of the Target. The Target will become an indirect wholly-owned subsidiary of the Company. The results, assets and liabilities will be consolidated into the accounts of the Group.

Please refer to Appendix IV of this circular for the unaudited pro forma financial information of the Enlarged Group which illustrates the financial effects of the Acquisition on the assets and liabilities of the Group assuming the Completion had taken place on 30 September 2011.

Based on the unaudited pro forma financial information of the Enlarged Group set out in Appendix IV of this circular, the total assets of the Group would increase by approximately 41.9% from approximately HK$180,624,000 to approximately HK$256,224,000 and its total liabilities would increase by approximately 193.9% from approximately HK$36,293,000 to approximately HK$106,679,000. As at 30 September 2011, the Group had no borrowings. Assuming the Acquisition had been completed on 30 September 2011, the Enlarged Group has no borrowings, except for a convertible bond of HK$70,386,000.

Based on the Accountant’s Report of the Target set out in Appendix II, the revenue and profit of the Target during the year ended 31 March 2011 were approximately HK$13,996,000 and HK$10,390,000 respectively. The Directors consider that after the Completion, the Target will contribute to the earnings base and working capital of the Enlarged Group.

FINANCIAL AND TRADING PROSPECTS OF THE ENLARGED GROUP

Given the Board’s positive outlook in the publication industry and having considered the reasons for the Acquisition as stated above, the Board considers it in the interest of the Group to acquire the Target to enable the Enlarged Group to own the Trademarks and Past Contents outright and save the monthly expenses of the royalty fees payable under the Licensing Agreements, and reducing the administrative resources of the Company in complying with the relevant requirements of the Listing Rules in respect of such continuing connected transactions. In addition, the Trademarks and the Past Contents are subject to an amortisation of 30 years. An amortisation expense on the Trademarks will be

– 13 –

LETTER FROM THE BOARD

incurred. However, the Enlarged Group will not have to pay the royalty fees to the parties outside of the Enlarged Group after Completion. On the net basis, this will improve the net profit of the Enlarged Group attributable to the HK Magazines. As one of the market leaders in the magazine publication industry, the Enlarged Group will continue to push forward its business strategies to operate its business and the Directors expect that there will be a steady growth in net revenue generated from Ming Pao Weekly. The Directors (excluding the independent non-executive Directors) expect that the Acquisition will bring forth positive effect on the Enlarged Group’s financial and trading prospects in the future.

The Directors continue to review its existing business from time to time and to strive to improve the business operation and financial position of the Enlarged Group. The Company has no current intention, agreement, arrangement, understanding or negotiation regarding any disposal, termination or scaling down of the Enlarged Group’s existing business.

RISK FACTORS

In light of the change of the Company’s risk profile, the followings risk factors associated with Acquisition may be encountered by the Company:

Failure to renew the Trademarks and inadequate protection of the Enlarged Group’s intellectual property rights

The Enlarged Group will continue to rely heavily on the Trademarks for the publication of HK Magazines after Completion. The Trademarks are critical for the Enlarged Group’s success as the Trademarks are of long history in the publication industry that has already gained the market perception and consumers’ acceptance. The Company will try to ensure protection over the Enlarged Group’s intellectual properties after Completion and will monitor the registration or renewal process of the intellectual properties rights. Should the Enlarged Group fail to renew the Trademarks upon expiry of their respective validation period, though the chance is minimal as the Enlarged Group has a team of staff with relevant experience and expertise to closely monitor the renewal process to ensure on-time renewal, the Enlarged Group may not be able to attract the same category of advertisers even with contents of a similar quality. Consequently, the Enlarged Group’s business, financial condition and results of operation could be adversely affected.

In the course of conducting the business, the Enlarged Group, as the publisher, may not be able to protect its own rights or could be found liable for having infringed third parties’ rights, which might include, among others, intellectual property rights. The Enlarged Group regards the copyright, trademarks and other intellectual property rights that it uses as important to the success of its business, and any unauthorised use of such intellectual property by third parties may adversely affect its business and reputation. The Enlarged Group relies on the protection of the intellectual property laws and contractual arrangements with its employees, clients, business partners and others to protect such intellectual property rights. Despite precautions taken by the Enlarged Group, it may be possible for third parties to infringe the Enlarged Group’s intellectual property rights by copying or otherwise obtaining and using the Enlarged Group’s intellectual property, including text, typography, photograph and design layout. Infringement also extends to use of the Enlarged Group’s publishing titles without authorisation despite there being registrations for the Trademarks. Although the Enlarged Group has never encountered any infringement by third parties, the Enlarged Group is prepared to take appropriate legal action against such third parties if

– 14 –

LETTER FROM THE BOARD

such situations arises so as to uphold its intellectual property rights. However, if the Enlarged Group is unable to protect or safeguard its intellectual property rights, the Enlarged Group’s business, financial condition and results of operation could be adversely affected.

Possible infringement of third parties’ intellectual property and other rights

During the course of business, the Enlarged Group may face claims from time to time for having infringed third parties’ rights including, among others, intellectual property rights. Although so far the Enlarged Group has not encountered such infringements, the Enlarged Group has a team of staff with relevant experience and expertise to verify the contents before publishing and to closely monitor any possible infringements of third parties’ intellectual property rights or other rights so as to take appropriate precautionary measures. However, if any legal proceedings against the Enlarged Group for infringement of intellectual property rights or other rights is successful, the Enlarged Group could be exposed to liabilities including substantial monetary damages and other sanctions. Such sanctions may include a loss of its right to engage in all or part of its business on a temporary or permanent basis. These types of proceedings and their consequences could divert management’s attention to the Enlarged Group’s business and the Enlarged Group’s business, financial condition and results of operation could be adversely affected.

Possible impairment of the intangible assets

The Enlarged Group may face a risk of impairment of the intangible assets (namely the Trademarks) if Ming Pao Weekly ceases to publish. Ming Pao Weekly has been published for over 40 years in Hong Kong. As one of the market leaders, the Enlarged Group has a well-established history in the magazine publication industry. The management of the Enlarged Group who has rich experience in the magazine publication industry will continue to closely manage and operate the business of the Enlarged Group. Although the chance of ceasing publication of Ming Pao Weekly is minimal and remote, should the Enlarged Group fail to operate the business of Ming Pao Weekly, the Enlarged Group’s business, financial condition and results of operation could be adversely affected.

FUND RAISING IN THE PAST 12 MONTHS

The Company has not carried out any capital fund raising activities in the 12 months preceding the Latest Practicable Date.

LISTING RULES IMPLICATIONS

MCI is a controlling shareholder of the Company with an indirect holding of approximately 73.18% of the issued share capital in the Company. As the Seller is an indirect wholly-owned subsidiary of MCI, the Seller is a connected person of the Company as defined in the Listing Rules. As some of the applicable percentage ratios of the Sale and Purchase Agreement exceed 25% but are less than 100% and the total consideration exceed HK$10,000,000, the Sale and Purchase Agreement constitutes a major and non-exempt connected transaction of the Company and is subject to the reporting and announcement requirements as well as the independent shareholders’ approval requirement.

By virtue of their respective interests in the Company, as at the Latest Practicable Date, (i) Mr. TIONG Kiew Chiong, who is a director of the Company, MCI, the Seller, the Buyer and the Target and a shareholder of both the Company and MCI, was interested in 4,000,000 Shares, representing 1% of the

– 15 –

LETTER FROM THE BOARD

issued share capital of the Company; (ii) Comwell Investment Limited, which is an indirect whollyowned subsidiary of MCI, was interested in 292,700,000 Shares, representing approximately 73.18% of the issued share capital of the Company; and (iii) their respective associates, owned voting rights in respect of their Shares will abstain from voting at the EGM on the resolution proposed to be passed to approve the Sale and Purchase Agreement, the issue of the Convertible Bond and the allotment and issue of the Conversion Shares under the Specific Mandate. There is (i) no voting trust or other arrangement or understanding entered into by or binding upon the above Shareholders and their associates; and (ii) no obligation or entitlement of the above Shareholders and their associates as at the Latest Practicable Date, whereby they have or may have temporarily or permanently passed control over the exercise of the voting right in respect of the above Shares to a third party, either generally or on a case-by-case basis. Save and except to the foregoing, no other Shareholders will be required to abstain from voting in relation to the above at the EGM.

VOTING BY POLL

As required under Rule 13.39(4) of the Listing Rules, any vote of shareholders at a general meeting must be taken by poll. Accordingly, all resolutions will be put to vote by way of poll at the EGM. An announcement on the poll results will be made by the Company after the EGM in the manner prescribed under Rule 13.39(5) of the Listing Rules.

ACTION TO BE TAKEN

Each Shareholder who has the right to attend and vote at the EGM, is entitled to appoint one or more proxies, whether they are Shareholders or not, to attend and vote on his behalf at the EGM.

A proxy form for use at the EGM is enclosed herein. Whether or not you intend to attend the EGM, you are requested to complete the proxy form and return it to the head office of the Company at 16th Floor, Block A, Ming Pao Industrial Centre, 18 Ka Yip Street, Chai Wan, Hong Kong as soon as possible and in any event not less than 48 hours before the time appointed for holding of the EGM or any adjournment thereof. Completion and return of the proxy form will not preclude Shareholders from attending and voting at the EGM, or any adjourned meeting, should they so wish.

RECOMMENDATION

The Sale and Purchase Agreement and the Instrument were reviewed and approved at a Board meeting. Mr. TIONG Kiew Chiong is a director of the Company, MCI, the Seller, the Buyer and the Target and a shareholder of both the Company and MCI holding 1% and approximately 0.21% of the issued share capital of the Company and MCI, respectively and he is a distant nephew of Tan Sri Datuk Sir TIONG Hiew King, who is also a non-executive Director, and Dato’ Sri Dr. TIONG Ik King and is therefore also an associate of the substantial shareholders of the Company. Mr. YU Hon To, David is an independent non-executive director of the Company, the Seller and MCI. Pursuant to the Listing Rules, both Mr. TIONG Kiew Chiong and Mr. YU Hon To, David were not entitled to vote on the Sale and Purchase Agreement, the issue of the Convertible Bond and the allotment and issue of the Conversion Shares under the Specific Mandate or counted in the quorum present at the said Board meeting and both Mr. TIONG Kiew Chiong and Mr. YU Hon To, David abstained from voting at the said Board meeting approving the same.

– 16 –

LETTER FROM THE BOARD

The Board (excluding the independent non-executive Directors) considers that the Sale and Purchase Agreement (together with the terms of the Convertible Bond) has been entered into after arm’s length negotiation and the terms of the Sale and Purchase Agreement and the Convertible Bond are on normal commercial terms which are fair and reasonable and in the interests of the Shareholders as a whole.

The Independent Board Committee has been formed to consider, and to advise the Independent Shareholders on, the fairness and reasonableness of the terms of the Sale and Purchase Agreement and the Convertible Bond. Mr. YU Hon To, David, being an independent non-executive director of the Company, the Seller and MCI, was excluded from the Independent Board Committee and was not entitled to vote on the Sale and Purchase Agreement, the issue of the Convertible Bond and the allotment and issue of the Conversion Shares under the Specific Mandate as a member of the Independent Board Committee or counted in the quorum at the said meeting of the Independent Board Committee, due to his conflict of interests. Investec has been appointed as the independent financial adviser of the Company to make recommendations to the Independent Board Committee and the Independent Shareholders in respect of the same.

After taking into account the reasons for and benefits of the Sale and Purchase Agreement, the issue of the Convertible Bond and the allotment and issue of the Conversion Shares under the Specific Mandate and the opinions of Investec, the Independent Board Committee considers that the terms of the Sale and Purchase Agreement and the Convertible Bond are fair and reasonable so far as the Independent Shareholders are concerned. The Sale and Purchase Agreement, the issue of the Convertible Bond and the allotment and issue of the Conversion Shares under the Specific Mandate are in the interests of the Company and its Shareholders as a whole. Accordingly, the Independent Board Committee recommends the Independent Shareholders to vote in favour of the resolution to be proposed at the EGM to approve the Sale and Purchase Agreement, the issue of the Convertible Bond and the allotment and issue of the Conversion Shares under the Specific Mandate.

Accordingly, the Directors (excluding the independent non-executive Directors) recommend that the Independent Shareholders should vote in favour of the relevant resolutions set out in notice of the EGM.

FURTHER INFORMATION

Your attention is drawn to the letter from the Independent Board Committee setting out its recommendation to the Independent Shareholders set out on page 18 of this circular and the advice from Investec to the Independent Board Committee and Independent Shareholders set out on pages 19 to 33 of this circular.

Further information of the Company is set out in appendices of this circular for your information.

By order of the Board

ONE MEDIA GROUP LIMITED TIONG Kiew Chiong Director

– 17 –

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

==> picture [100 x 38] intentionally omitted <==

ONE MEDIA GROUP LIMITED 萬華媒體集團有限公司

(incorporated in the Cayman Islands with limited liability)

(Stock Code: 426)

Hong Kong, 10 May 2012

To the Independent Shareholders

Dear Sir or Madam,

MAJOR AND CONNECTED TRANSACTION

We refer to the circular issued by the Company to the Shareholders of even date (the ‘‘Circular’’) of which this letter forms part. Terms defined in the Circular shall have the same meanings in this letter unless the context otherwise requires.

We have been appointed to form the Independent Board Committee by the Board to consider the terms of the Sale and Purchase Agreement and the Convertible Bond and to advise the Independent Shareholders as to whether, in our opinion, such transactions were and such terms are fair and reasonable insofar as the interests of the Company and the Independent Shareholders as a whole are concerned. Mr. YU Hon To, David, being an independent non-executive director of the Company, the Seller and MCI, was excluded from the Independent Board Committee and was not entitled to vote on the Sale and Purchase Agreement, the issue of the Convertible Bond and the allotment and issue of the Conversion Shares under the Specific Mandate as a member of the Independent Board Committee or counted in the quorum at the said meeting of the Independent Board Committee, due to his conflict of interests. Investec has been appointed as the independent financial adviser to advise us and the Independent Shareholders in this respect.

We wish to draw your attention to the letter from the Board and the letter from Investec as set out in the Circular. Having taking into account the principal factors and reasons considered by and the advice of Investec as set out in its letter of advice, we consider that the terms of the Sale and Purchase Agreement and the Convertible Bond are fair and reasonable so far as the Independent Shareholders are concerned. The Sale and Purchase Agreement, the issue of the Convertible Bond and the allotment and issue of the Conversion Shares under the Specific Mandate are in the interests of the Company and its Shareholders as a whole. Accordingly, we would recommend the Independent Shareholders to vote at the upcoming EGM in favour of the ordinary resolution to approve the Sale and Purchase Agreement, the issue of the Convertible Bond and the allotment and issue of the Conversion Shares under the Specific Mandate.

Yours faithfully, For and on behalf of the Independent Board Committee ONE MEDIA GROUP LIMITED SIT Kien Ping, Peter TAN Hock Seng, Peter

Independent non-executive Directors

– 18 –

LETTER FROM INVESTEC

Set out below is the text of the letter of advice from Investec to the Independent Board Committee and the Independent Shareholders prepared for inclusion in this Circular.

==> picture [158 x 33] intentionally omitted <==

Investec Capital Asia Ltd

Room 3609, 36/F, Two International Finance Centre 8 Finance Street, Central, Hong Kong 香港中環金融街8號國際金融中心二期36樓3609室 Tel/ 電話: (852) 3187 5000 Fax/ 傳真: (852) 2501 0171 www.investec.com

10 May 2012

To the Independent Board Committee and the Independent Shareholders

Dear Sirs,

MAJOR AND CONNECTED TRANSACTION

INTRODUCTION

We refer to our appointment as the independent financial adviser to the Independent Board Committee and the Independent Shareholders in respect of the Sale and Purchase Agreement, details of which are set out in the letter from the Board (the ‘‘Letter from the Board’’) contained in the circular to the Shareholders dated 10 May 2012 (the ‘‘Circular’’), of which this letter forms part. This letter contains our advice to the Independent Board Committee and the Independent Shareholders in respect of the Sale and Purchase Agreement and the transactions contemplated thereunder. Unless the context otherwise requires, terms used in this letter have the same meanings as those defined in the Circular.

On 29 February 2012, the Buyer, an indirect wholly-owned subsidiary of the Company, and the Seller, an indirect wholly-owned subsidiary of MCI, entered into the Sale and Purchase Agreement, pursuant to which the Buyer agreed to purchase the entire issued share capital of the Target from the Seller at the Consideration of HK$75,600,000, which shall be satisfied by the issue of the Convertible Bond by the Company in favour of the Seller or its nominee upon Completion.

MCI is a controlling Shareholder with an indirect holding of approximately 73.18% of the issued share capital of the Company. As the Seller is an indirect wholly-owned subsidiary of MCI, the Seller is a connected person of the Company as defined under the Listing Rules. As some of the applicable percentage ratios in respect of the Sale and Purchase Agreement exceed 25% but are less than 100% and the total consideration exceeds HK$10,000,000, the Sale and Purchase Agreement constitutes a major and non-exempt connected transaction of the Company and is subject to the reporting and announcement requirements as well as the independent shareholders’ approval requirement under the Listing Rules.

By virtue of their respective interests in the Company as at the Latest Practicable Date: (i) Mr. TIONG Kiew Chiong, who is a director of the Company, MCI, the Seller, the Buyer and the Target and a shareholder of both the Company and MCI was interested in 4,000,000 Shares, representing 1% of the issued share capital of the Company; and (ii) Comwell Investment Limited, which is an indirect whollyowned subsidiary of MCI, was interested in 292,700,000 Shares, representing approximately 73.18% of the issued share capital of the Company; and (iii) their respective associates, owned voting rights in respect of their Shares will both abstain from voting at the EGM on the resolution proposed to be passed

– 19 –

LETTER FROM INVESTEC

to approve the Sale and Purchase Agreement, the issue of the Convertible Bond and the allotment and issue of the Conversion Shares under the Specific Mandate. Save and except for the foregoing, no other Shareholder will be required to abstain from voting in relation to the aforesaid resolution at the EGM.

THE INDEPENDENT BOARD COMMITTEE

The Board currently consists of one non-executive Director, namely Tan Sri Datuk Sir TIONG Hiew King; two executive Directors, namely Mr. TIONG Kiew Chiong and Mr. LAM Pak Cheong; and three independent non-executive Directors, namely Mr. YU Hon To, David, Mr. SIT Kien Ping, Peter, and Mr. TAN Hock Seng, Peter.

The Independent Board Committee comprising two of the independent non-executive Directors, namely Mr. SIT Kien Ping, Peter and Mr. TAN Hock Seng, Peter, has been established to consider the terms of the Sale and Purchase Agreement and the Convertible Bond and the transactions contemplated thereunder and to advise the Independent Shareholders as to whether the terms of the Sale and Purchase Agreement and the Convertible Bond and transactions contemplated thereunder are fair and reasonable and in the interests of the Company and the Independent Shareholders as a whole. Mr. YU Hon To, David, being an independent non-executive director of both the Company and MCI, was excluded from the Independent Board Committee and was not entitled to vote on the Sale and Purchase Agreement, the issue of the Convertible Bond and the allotment and issue of the Conversion Shares under the Specific Mandate as a member of the Independent Board Committee or counted in the quorum at the said meeting of the Independent Board Committee, due to his conflict of interests.

We have been appointed as the independent financial adviser to advise the Independent Board Committee and the Independent Shareholders in these respects and to give our opinion in relation to the Sale and Purchase Agreement, the issue of the Convertible Bond and the allotment and issue of the Conversion Shares under the Specific Mandate for the Independent Board Committee’s consideration when making its recommendation to the Independent Shareholders.

Apart from the normal advisory fee payable to us in connection with our appointment, with the approval of the Independent Board Committee, as the independent financial adviser to the Independent Board Committee and the Independent Shareholders, no arrangement exists whereby we shall receive any other fees or benefits from the Company.

BASIS AND ASSUMPTIONS OF THE ADVICE

In formulating our advice, we have relied solely on the statements, information, opinions and representations for matters relating to the Group contained in the Circular and the information and representations provided to us by the Group and/or its senior management staff and/or the Directors. We have assumed that all such statements, information, opinions and representations for matters relating to the Group contained or referred to in the Circular or otherwise provided or made or given by the Group and/or its senior management staff and/or the Directors and for which it is/they are solely responsible were true and accurate and valid at the time they were made and given and continue to be true and valid as at the date of the Circular. We have assumed that all the opinions and representations for matters relating to the Group made or provided by the Directors and/or the senior management staff of the Group contained in the Circular have been reasonably made after due and careful enquiry. We have also sought and obtained confirmation from the Group and/or its senior management staff and/or the Directors that no material facts have been omitted from the information provided and referred to in the Circular.

– 20 –

LETTER FROM INVESTEC

We consider that we have reviewed all currently available information and documents which are available to enable us to reach an informed view and to justify our reliance on the information provided so as to provide a reasonable basis for our opinions. We have no reason to doubt the truth, accuracy and completeness of the statements, information, opinions and representations provided to us by the Group and/or its senior management staff and/or the Directors and their respective advisers or to believe that material information has been withheld or omitted from the information provided to us or referred to in the aforesaid documents. We have not, however, carried out an independent verification of the information provided, nor have we conducted an independent investigation into the business and affairs of the Company, the Target or any of its subsidiaries.

In our assessment of the reasonableness and fairness of the Consideration, we have reviewed the valuation report prepared by Roma and discussed with Roma including but not limited to its expertise, its relationship to the parties to the Sale and Purchase Agreement as well as the terms of its engagement.

PRINCIPAL FACTORS CONSIDERED

In formulating our opinion regarding the Sale and Purchase Agreement, the issue of the Convertible Bond and the allotment and issue of the Conversion Shares under the Specific Mandate, we have taken into consideration the following principal factors:

1. Background information

(i) Information of the Group

The principal business activities of the Group are media business in the Greater China, including but not limited to magazine publishing and digital media business. The following sets out the financial information of the Group for the two financial years ended 31 March 2010 and 2011 and six months ended 30 September 2011, which is extracted from the Company’s annual report for the year ended 31 March 2011 and interim report for the six months ended 30 September 2011 (the ‘‘Interim Report’’).

Turnover — Hong Kong — PRC Group turnover Cost of goods sold Gross profit Profit before tax Profit for the year	For the 31 2010 HK$’000 (audited) 146,361 35,013 181,374 (94,448) 86,926 9,686 5,662	year ended March 2011 HK$’000 (audited) 164,693 35,495 200,188 (96,099) 104,089 27,174 20,406	For the six months ended 30 September 2011 HK$’000 (unaudited) 77,706 19,442 97,148 (45,972) 51,176 10,035 7,186

– 21 –

LETTER FROM INVESTEC

For the two years ended 31 March 2011

Turnover for the year ended 31 March 2011 was approximately HK$200.2 million, representing an increase of approximately 10.4% over the same period in the previous year. The increase was mainly attributable to the increase in advertising revenue from the Group’s operation in Hong Kong as a result of improved consumer sentiment as well as effective sales efforts.

Profit for the year increased by approximately 2.6 times for the year ended 31 March 2011 to approximately HK$20.4 million, which reflected the strong growth in advertising revenue.

For the six months ended 30 September 2011

Turnover for the six months ended 30 September 2011 was approximately HK$77.7 million, representing an increase of approximately 8.8% over the same period in the previous year. The increase was mainly attributable to the strong retail sector of Hong Kong, which drove the advertising revenue of the Group.

Profit for the six months ended 30 September 2011 increased by approximately 27.6% over the same period in the previous year, which was attributable to the increase in turnover from the strong advertising demand driven by robust retail sales in Hong Kong and the increase in advertising revenue from the Group’s automobile magazine published in the PRC driven by the growth in the automobile industry in the PRC.

(ii) Information of the Target

The Target is the exclusive owner of the Trademarks and the Past Contents. The Target has entered into the Licensing Agreements with MPM relating to the HK Magazines to receive 7% of the net revenue derived by the Group from the HK Magazines as royalty fees.

Summarised below is the financial information of the Target for the three financial years ended 31 March 2009, 2010 and 2011, and the eight months ended 30 November 2011 extracted from the financial information of the Target as set out in Appendix II to the Circular.

				Eight months
				ended
	Year	ended 31	March	30 November
	2009	2010	2011	2011
	HK$’000	HK$’000	HK$’000	HK$’000
	(audited)	(audited)	(audited)	(audited)
Revenue	15,786	12,653	13,996	9,696
Profit before income tax	14,480	11,860	12,443	9,211
Net assets	23,455	33,358	1,379	9,070

– 22 –

LETTER FROM INVESTEC

The revenue of the Target represented mainly the royalty fees received from the Licensing Agreements, while the Target also derived revenue from licensing the New Contents and Past Contents to the subsidiaries of MCI (other than the MPM) which was permitted under the Licensing Agreements. The Company intends to terminate the licensing of the New Contents and Past Contents to the subsidiaries of MCI upon Completion. Based on the respective annual reports of the Company for the three years ended 31 March 2011, royalty fees incurred by the Group under the Licensing Agreements amounted to approximately HK$12.3 million, HK$9.8 million and HK$10.9 million respectively. The management of the Company advised that the fluctuations of the royalty fees received by the Target from the Group are mainly related to the fluctuations of the revenue of the Company derived from the publication of the HK Magazines.

The Target incurred general and administrative expenses which mainly consisted of licence and registration fees and administrative expenses.

As at 30 November 2011, the Target had an audited net assets of approximately HK$9.1 million which mainly represented the amount due from fellow subsidiaries of the Target, net of tax and other payables of the Target. As stated in the Letter from the Board, immediately before Completion, it is the intention of the Buyer and the Seller that the Target would distribute all the distributable profits as at 31 March 2012 (or such other date as the parties may agree in writing) as dividend to the Seller. The Trademarks and Past Contents would be the only material asset of the Target immediately before Completion with a valuation of HK$76,000,000 as assessed by Roma, an independent business valuation company.

(iii) Completion

Upon Completion, the Target, which owns the Trademarks and the Past Contents, will become an indirect wholly-owned subsidiary of the Company and the Licensing Agreements, which have been entered into between the Target and MPM, will be within members of the Group. It is the intention of the parties to the Licensing Agreements that the Licensing Agreements shall continue in effect after the Completion.

The shareholding structure of the Group prior to the Acquisition is shown as follows:

==> picture [241 x 192] intentionally omitted <==

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

MCI
100% 73.18%
Seller the Company
100% 100%
Target Buyer
direct interest
indirect interest
----- End of picture text -----

– 23 –

LETTER FROM INVESTEC

The shareholding structure of the Group after the Completion is shown as follows:

==> picture [241 x 204] intentionally omitted <==

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

MCI
100% 73.18%
Seller the Company
100%
Buyer
100%
direct interest
indirect interest Target
----- End of picture text -----

(iv) Reasons and benefits of entering into the Sale and Purchase Agreement

Pursuant to the Licensing Agreements, the Group holds the exclusive licence to use and sublicence the Trademarks and the non-exclusive license to use the Past Contents and is therefore entitled to publish the HK Magazines. The Group pays 7% of the net revenue derived from the relevant HK Magazines as royalty fees to the Target.

As stated in the Letter of the Board, the Board (excluding the independent non-executive Directors) considers that the Acquisition will enable the Group to own the Trademarks and Past Contents outright and at the same time, without paying the royalty fees to the parties outside of the Group under the Licensing Agreements. On the other hand, an amortisation expense on Trademark will be incurred. And thereby, on a net basis, the Acquisition will improve the net profit of the Group attributable to the HK Magazines. The Directors (excluding the independent non-executive Directors) consider the Acquisition would allow the Group to secure ownership of the Trademarks and Past Contents of the HK Magazines, which are important to the operations of the Group, and reduce the Group’s reliance on MCI.

The Licensing Agreements were approved by the Shareholders at the Company’s annual general meeting on 24 August 2010 and their renewal is subject to the reporting, announcement and shareholders’ approval requirements under the Listing Rules. Upon Completion, the transactions under Licensing Agreements would no longer be classified as continuing connected transactions for the Company and therefore it will save administrative resources of the Company in complying with the relevant requirements of the Listing Rules in respect of such transactions.

Taking into account the above, in particular, (i) the Acquisition would enable the Group to become the exclusive owner of the Trademarks and Past Contents of the HK Magazines after Completion; (ii) the saving of royalty fees payable to MCI Group under the Licensing Agreements;

– 24 –

LETTER FROM INVESTEC

and (iii) the saving of administrative resources, we concur with the view of the Directors (excluding the independent non-executive Directors) that the Acquisition is in the interest of the Company.

2. Principal terms of the Sale and Purchase Agreement

Date 29 February 2012

Parties The Buyer, an indirect wholly-owned subsidiary of the Company; and The Seller, an indirect wholly-owned subsidiary of MCI

Equity interest acquired

Under the Sale and Purchase Agreement, the Seller as legal and beneficial owner shall sell, and the Buyer shall purchase the entire issued share capital of the Target, at the Consideration.

Consideration

The Consideration shall be HK$75,600,000 and shall be satisfied by the issue of the Convertible Bond by the Company in favour of the Seller or its nominee upon Completion.

Consideration was determined with reference to the valuation of the Trademarks and Past Contents of HK$76,000,000 as at 30 November 2011 conducted by Roma by adopting a relieffrom-royalty method. The Board (excluding the independent non-executive Directors) is of the view that the Consideration is fair and reasonable.

Evaluation of the Consideration

As the Target’s principal asset is the Trademarks and Past Contents, in assessing the fairness and reasonableness of the Consideration, Roma was appointed to evaluate the value of the Trademarks and Past Contents.

As stated in the valuation report prepared by Roma, the management has not planned to utilise the Past Contents to generate any economic benefits in the foreseeable future, therefore, Roma considered that the fair value of the Past Contents shall be insignificant as at 30 November 2011.

We have reviewed the valuation report prepared by Roma. We have also discussed with Roma and understand that Roma has considered three different generally accepted valuation methods, namely the income-based approach, the market-based approach and the cost-based approach in arriving at the fair value of the Trademarks. Based on our discussion with Roma, Roma considered that it was inappropriate to adopt the cost-based approach for the purpose of valuing the Trademarks as this approach would not reflect the fair value of the Trademarks. Given that most of the important assumptions of the transactions of comparable trademarks were hidden, Roma also considered the market-based approach to be inappropriate. Therefore, Roma considered the income-based approach, in particular, the relief-from-royalty method, as the appropriate approach for the purpose of valuing the Trademarks. Based on our discussion with Roma, we

– 25 –

LETTER FROM INVESTEC

concur with Roma’s view that the adoption of the income-based approach, in particular, the relieffrom-royalty method in arriving at the fair value of the Trademarks is appropriate for the purpose of valuing the Trademarks.

In assessing the fair value of the Trademarks held by the Target, Roma has estimated the future after-tax royalty that would be paid for the Trademarks based on the estimated revenue of Ming Pao Weekly and the existing royalty rate under the MPW Licensing Agreement. As detailed in the valuation report, the future revenue streams are solely based on Ming Pao Weekly as City Children’s Weekly and Hi-Tech Weekly have ceased publication. We also note that the economic lives of the Trademarks are estimated to be thirty years after taking into consideration of, among other factors, the Company’s accounting policy and the Company being a long-established player in the publishing market. Moreover, the Company has responded to the digitalization trend by launching online publication and mobile applications of Ming Pao Weekly which might generate sustainable revenues for the magazine in the medium to long term future. In estimating the future revenue streams of Ming Pao Weekly for the period from 2012 to 2017, we note that Roma has adopted the average historical revenue growth rate of Ming Pao Weekly from 2005 to 2010 (excluding 2009 which was affected by the global economic downturn), while the estimated growth rate from 2018 to the expiry of the estimated economic life of the Trademarks was estimated to be the five-year average inflation rate of Hong Kong.

We have reviewed the valuation report and discussed with Roma and note that the estimated future after-tax royalty is discounted by a discount rate which reflects the expected risks associated with the royalty. Roma has taken into consideration the risk-free rate, being the yield rate of the Hong Kong fifteen-year government bond, the market expected return in Hong Kong, and the average risk coefficient of companies listed on the Stock Exchange with publishing operations similar to the Company. We also note that Roma has also incorporated a size premium, other risk premium, additional risk premium for intangible assets, cost of debt based on the prime rate in Hong Kong and the average debt-to-equity ratios of the comparable companies in arriving at the discount rate. The size premium adopted by Roma was based on a study carried out by an organization with expertise in capital market expectations, while the other risk premium and the additional risk premium were based on Roma’s assessment which reflect the risk and uncertainty of projected royalty streams of the Trademarks. Roma has confirmed that the methodology and parameters used in assessing the fair value of the Trademarks are in alignment with market practice.

As assessed by Roma, the fair value of the Trademarks is valued at HK$76,000,000 as at 30 November 2011 while the fair value of the Past Contents shall be insignificant. As the Target’s principal asset is the Trademark and the Past Contents, we consider it is appropriate to make reference to the fair value of the Trademarks and Past Contents to assess the Consideration. We note that the Consideration of HK$75,600,000 is comparable to the valuation of the Trademarks and Past Contents as assessed by Roma. Details of the valuation report are set out in Appendix V to the Circular.

– 26 –

LETTER FROM INVESTEC

3. The Convertible Bond

I. Principal terms of the Convertible Bond

Issuer: The Company

Principal amount of the HK$75,600,000 Convertible Bond:

Issue price:

100% of the principal amount of the Convertible Bond

Interest:

The Convertible Bond will bear interest at the rate of one (1) per cent. per annum, calculated daily on the basis of a 365 day year, and shall be payable half-yearly in arrears

Maturity date:

Being the third anniversary of the date of issue of the Convertible Bond

Conversion period:

Bondholder(s) may exercise the conversion rights attaching to the Convertible Bond at any time following the issue of the Convertible Bond and up to the close of business on the maturity date in amounts of not less than HK$9,000,000 and in integral multiples of HK$9,000,000 on each conversion, save that if at any time, the outstanding principal amount of the Convertible Bond is less than HK$9,000,000, the whole (but not part only) of the outstanding principal amount of the Convertible Bond may be converted

Conversion price:

Ranking of Shares:

Conversion restrictions:

The Bondholder shall not have the right to convert the whole or part of the outstanding principal amount of the Convertible Bond into Shares to the extent that immediately after such conversion:

(1) there will not be sufficient public float of the Shares as required under the Listing Rules; or

– 27 –

LETTER FROM INVESTEC

(2) the Bondholder whether alone or together with parties acting in concert with it would be obliged to make a general offer under the Takeovers Code in force from time to time

Redemption:

The Company shall not be entitled to redeem in whole or in part the outstanding principal amount of the Convertible Bond until the maturity date

Repayment:

Payment of the outstanding principal amount of the Bond (if any) together with all accrued and unpaid interest thereon will be made on the maturity date by the Company to the Bondholder

Listing: No listing will be sought for the Convertible Bond on the Stock Exchange or any other stock exchange

Voting rights: Prior to conversion of the Convertible Bond into Shares, the Bondholder will not be entitled to attend or vote at any shareholders’ meetings of the Company by reason only of its being the Bondholder

Transferability: The Convertible Bond may only be transferred by execution of a form of transfer previously agreed between the Company and the Bondholder

Status: The Convertible Bond will constitute general, unconditional and unsecured obligations of the Company and will rank pari passu with all other present and future unsecured and unsubordinated obligations of the Company except for obligations accorded preference by mandatory provisions of applicable law

Allotment and issue of the Conversion Shares under the Specific Mandate

The conversion price of the Convertible Bond represents:

(1) a premium of approximately 111.8% to the closing price of HK$0.425 per Share as quoted on the Stock Exchange on the Last Trading Day;

– 28 –

LETTER FROM INVESTEC

(2) a premium of approximately 146.6% to the average closing price of HK$0.365 per Share as quoted on the Stock Exchange for the last five consecutive trading days up to and including the Last Trading Day;
(3) a premium of approximately 157.1% to the average closing price of HK$0.350 per Share as quoted on the Stock Exchange for the last ten consecutive trading days up to and including the Last Trading Day;
(4) a premium of approximately 111.8% over the closing price of HK$0.425 per Share as quoted on the Stock Exchange as at the Latest Practicable Date;
(5) a premium of approximately 150.0% over the audited consolidated net assets value attributable to equity holders of the Company per Share of approximately HK$0.360 as at 31 March 2011; and
(6) a premium of approximately 149.3% over the unaudited consolidated net assets value of the Group attributable to the Shareholders per Share as at 30 September 2011 of approximately HK$0.361.

II. Comparables

In order to assess the fairness and reasonableness of the Convertible Bond with respect to maturity, interest rate/coupon and conversion price, we have attempted to compare them with those of other convertible notes or bonds issued as consideration for acquisitions within three months prior to the date of the Sale and Purchase Agreement by companies listed on the Stock Exchange (the ‘‘Comparables’’), details of which are summarised in the table below. Notwithstanding the Comparables are engaged in different industries, taking into account (i) the Comparables are issuance of convertible notes or bonds for consideration of acquisitions rather than cash consideration; (ii) the principal terms of the issuance under the Comparables including the coupon and conversion price are made with reference to the prevailing market conditions; and (iii) the principal terms of the convertible bonds (i.e. conversion price to market price and interest rate) should be considered in whole rather than in isolation, we are generally of the view that the

– 29 –

LETTER FROM INVESTEC

Comparables, which are issues of convertible notes or bonds as consideration for acquisitions within three months immediately prior to the date of the Sale and Purchase Agreement, are able to reflect the prevailing market conditions and provide a relevant and appropriate reference for our analysis of the terms of the Convertible Bond.

					Conversion price
					premium/
					(discount) to
			Interest		closing share
Announcement		Stock	Rate/	Maturity	price as at last
Date	Company	Code	Coupon	(years)	trading day
1 December 2011	CVM Minerals Limited	705	5%	5	5.0%
2 December 2011	China Fortune Financial Group	290	12%	3	24.2%
	Limited
13 December 2011	Long Success International (Holdings)	8017	0%	2	6.7%
	Limited
21 December 2011	Pacific Plywood Holdings Limited	767	0%	1	24.2%
9 January 2012	Hop Hing Group Holdings Limited	47	4%	Not Fixed	15.9%
12 January 2012	China Daye Non-Ferrous Metals	661	0%	5	35.9%
	Mining Limited
20 January 2012	China Public Healthcare (Holding)	8116	0%	5	(15.5%)
	Limited
30 January 2012	China Ocean Shipbuilding Industry	651	3%	3	30.4%
	Group Limited
23 February 2012	Smart Union Group (Holdings)	2700	0%	3	42.86%
	Limited
	Average		3.3%	3.41	14.8%
	Maximum		12.0%	5.01	42.9%
	Minimum		0.0%	1.01	(15.5%)
	The Convertible Bond		1.0%	3.0	111.8%

Note 1: The calculation of the average, maximum and minimum maturity of the Comparables does not include the Comparables without fixed maturity

(i) Interest rate/coupon

As shown in the above table, the interest rates/coupon of the Comparables range from nil to 12% per annum, with an average of 3.3% per annum. The interest rate of 1% under the Convertible Bond is within the range and below the average of the Comparables.

– 30 –

LETTER FROM INVESTEC

(ii) Maturity

The maturity of the Comparables range from one to five years, with an average of 3.4 years. Two of the Comparables do not have a fixed maturity. The maturity of the Convertible Bond of three years is within the range and comparable to the average of the Comparables.

(iii) Conversion Price

As shown in the above table, the premium/discount of the conversion price to the respective closing share price of the Comparables as at the last trading day, ranges from a discount of approximately 15.5% to a premium of 42.9% with an average premium of approximately 14.8%. The Conversion Price of HK$0.90 represents a significant premium of approximately 111.8% when compared to closing Share price on the Last Trading Day, which is higher than the maximum of the Comparables. This is more favourable to the Company as the Share price of the Company would need to increase significantly before the holder of the Convertible Bond would have incentive to exercise its conversion rights under the Convertible Bond. As such, we consider the Conversion Price to be fair and reasonable.

(iv) Other alternatives

As stated in the Interim Report, as at 30 September 2011, the Group had cash and cash equivalents of approximately HK$81.6 million. We understand from the management of the Company that such amount is set aside, among other things, for the Group’s working capital.

We also understand from the management of the Company that it has explored the possibilities of debt financing with a financial institution. On the basis that (i) bank borrowings of similar amount would require higher interest rates than the interest rate under the Convertible Bond; and (ii) the interest rate would be charged at a floating rate which the Company considers such bank financing would expose the Group to the potential upward movement and volatility of future interest rates, and thus not appropriate as financing means to the Acquisition.

The management of the Company has also considered the possibilities of equity financing, however, after taken into account the current market environment, terms for any potential equity financing might not be favourable to the Company. Therefore, the management of the Company considers equity financing in the current market sentiment is not in the interests of the Company.

(v) Dilution effect of the Convertible Bond

As at the Latest Practicable Date, there were 400,000,000 Shares in issue. If the Convertible Bond is fully converted at the conversion price of HK$0.90 each, a maximum of 84,000,000 Conversion Shares will be allotted and issued upon exercise of the conversion rights attached to the Convertible Bond in full, which represents: (i) approximately 21.00% of the issued share capital of the Company as at the Latest Practicable Date; and (ii) approximately 17.36% of the issued share capital of the Company as enlarged by the issue of the 84,000,000 Conversion Shares. In this connection, the aggregate shareholding interests of the existing Shareholders in the Company will be reduced to approximately 82.64% immediately upon the full conversion of the Convertible Bond.

– 31 –

LETTER FROM INVESTEC

Having considered that (i) the Consideration is comparable to the valuation of the Trademarks and Past Contents by Roma; (ii) the Conversion Price of HK$0.90 is significantly above the Share price of HK$0.425 as at the Latest Practicable Date and represents a higher premium than all Comparables as measured by the premium of the conversion price to the respective closing share price of the Comparables as at the last trading day; (iii) the number of the Conversion Shares to be issued under the Convertible Bond was made with reference to the Consideration and the Conversion Price as discussed above; (iv) other principal terms, such as maturity and interest rate/coupon of Convertible Bond are in line with the Comparables; and (v) the uncertainties around obtaining alternative financing as mentioned under the paragraph headed ‘‘Other alternatives’’ above, we are of the view that the potential dilution on the shareholding interests of the Independent Shareholders, in the event that the Conversion Shares are issued, is acceptable.

4. Possible financial effects of the Acquisition to the Group

(i) Earnings

Upon Completion, the Group would become the exclusive owner of the Trademarks and Past Contents and the royalty fees payable under the Licensing Agreements would be eliminated. Based on the annual report of the Company for the year ended 31 March 2011, such royalty fees amounted to approximately HK$10.9 million. The management of the Company believes that the elimination of the royalty fees payable under the Licensing Agreement would improve the profitability of the Group.

(ii) Assets and liabilities

Based on the unaudited pro forma statement of assets and liabilities of the Enlarged Group as set out in Appendix IV to the Circular and assuming the Completion had taken place on 30 September 2011, as a result of the Acquisition, (a) the total assets would be increased by approximately 41.9% to approximately HK$256.2 million, which is attributable to the Consideration recorded as an intangible asset in the unaudited pro-forma statement; (b) the total liabilities would be increased by approximately 193.9% to approximately HK$106.7 million, which is attributable to the liability component of the Convertible Bond; and (c) the net assets would increase by approximately 3.6% to approximately HK$149.5 million, which represents the equity component of the Convertible Bond.

(iii) Gearing position

As at 30 September 2011, the Group had no interest-bearing borrowings payables. As set out in the unaudited pro forma statement of assets and liabilities of the Enlarged Group in Appendix IV to the Circular, the gearing ratio of the Enlarged Group (which is calculated by aggregation of the interest-bearing borrowings, bank overdraft and Convertible Bond payables divided by the net asset value of the Enlarged Group) would be approximately 47.1%. The management of the Company is of the view that such gearing level is tolerable as (i) the Group had no bank borrowings as at the Latest Practicable Date; (ii) the maturity of the Convertible Bond is three years and there is no immediate adverse effect on the working capital of the Group; (iii) the interest rate of the Convertible Bond is 1% per annum, being HK$756,000 based on the principal amount of the Convertible Bond which is significantly lower than the royalty fees payable to the

– 32 –

LETTER FROM INVESTEC

Target under the Licensing Agreements for the financial year ended 31 March 2011; (iv) the settlement of the Consideration by the issue of the Convertible Bond allows the Company to preserve working capital for the operations of the Company. We concur with this view.

5. Our view

Taking into account the background to and reasons for the Sale and Purchase Agreement, including (i) information of the Target and the Company; (ii) the opportunity for the Group to become the exclusive owner of the Trademarks and Past Contents of the HK Magazines and to save royalty fees through the Acquisition; (iii) the Consideration is comparable to the fair value of the Trademarks and Contents as assessed by an independent valuer; (iv) the conversion price of HK$0.90 per Share under the Convertible Bond represents a significant premium over the closing Share prices during the period as set out above, the audited consolidated net asset value per Share as at 31 March 2011 and the unaudited consolidated net asset value per Share as at 30 September 2011; (v) the interest payable under the Convertible Bond is within range and below the average of the Comparables; (vi) the settlement of the Consideration by the issue of the Convertible Bond allows the Company to preserve working capital for the operations of the Company; and (vii) the Specific Mandate is a condition precedent of the Sale and Purchase Agreement and necessary for the issuance and allotment of the Conversion Shares, we concur with the view of the Directors (excluding the independent non-executive Directors) that the terms of the Sale and Purchase Agreement are fair and reasonable and in the interests of the Company and Independent Shareholders as a whole.

RECOMMENDATION

Having considered the above principal factors and reasons, we are of the opinion that the terms of the Sale and Purchase Agreement (including the Consideration), the issue of the Convertible Bond and the allotment and issue of the Conversion Shares under the Special Mandate are on normal commercial terms and are fair and reasonable so far as the Independent Shareholders are concerned. We also consider the Sale and Purchase Agreement, the issue of the Convertible Bond and the allotment and issue of the Conversion Shares under the Special Mandate to be in the interests of the Group and the Independent Shareholders as a whole, despite the transactions under the Sale and Purchase Agreement are not in the ordinary course of business of the Company. Therefore, we would advise the Independent Board Committee and the Independent Shareholders to vote in favour for the ordinary resolution to approve the Sale and Purchase Agreement, the issue of the Convertible Bond and the allotment and issue of the Conversion Shares under the Special Mandate at the EGM.

Yours faithfully For and on behalf of Investec Capital Asia Limited Jimmy Chung Executive Director

– 33 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

1. THREE-YEAR FINANCIAL INFORMATION

The financial information of the Group for each of the three years ended 31 March 2009, 2010 and 2011 is enclosed in the annual reports of the Company for the years ended 31 March 2009, 2010 and 2011 dated 25 June 2009 (pages 37–87), 25 June 2010 (pages 35–87) and 30 May 2011 (pages 34–87), respectively, and for the six months ended 30 September 2011 is disclosed in the latest unaudited interim report of the Company for the six months ended 30 September 2011 dated 25 November 2011 (pages 1–14), which are published on the website of the Stock Exchange (www.hkex.com.hk) and the website of the Company (www.omghk.com).

2. INDEBTEDNESS

Borrowings and indebtedness

At the close of business on 31 March 2012, being the latest practicable date for the purpose of this statement of indebtedness prior to the printing of this circular, the Enlarged Group had no outstanding borrowings and indebtedness.

Contingent liabilities

At the close of business on 31 March 2012, the Enlarged Group had no material contingent liability.

Disclaimer

Save as aforesaid, at the close of business on 31 March 2012, the Enlarged Group did not have any loan capital issued and outstanding or agreed to be issued, bank overdrafts, loans, debt securities or other similar indebtedness, liabilities under acceptance (other than normal trade bills and payables) or acceptable credits, debentures, mortgages, charges, hire purchase or other finance lease commitments, guarantees or other material contingent liabilities.

Foreign currency amounts have been translated into HK$/RMB at the approximate exchange rates prevailing at the close of business on 31 March 2012.

The Directors have confirmed that there has been no material change in the indebtedness and contingent liabilities of the Enlarged Group since 31 March 2012.

3. WORKING CAPITAL

Taking into account the expected Completion on 5 June 2012 and the internal resources available to the Enlarged Group, the Directors are of the opinion that the Enlarged Group has sufficient working capital for its present requirements, that is for at least the next 12 months from the date of this circular.

– 34 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

4. MANAGEMENT DISCUSSION AND ANALYSIS OF THE RESULTS OF THE GROUP

Set out below is the management discussion and analysis (modified as appropriate) extracted from the annual reports of the Group for the financial years ended 31 March 2009, 2010 and 2011.

Consolidated Income Statements of the Group

For the years ended 31 March 2009, 2010 and 2011

Turnover Cost of goods sold Gross profit Other income Selling and distribution costs Administrative expenses Profit before income tax Income tax expense Profit for the year Profit attributable to: Equity holders of the Company Earnings per share attributable to equity holders of the Company during the year (expressed in HK cents per share) — Basic and diluted Dividends For the year ended 31 March 2009	2011 HK$’000 200,188 (96,099) 104,089 2,955 (45,896) (33,974) 27,174 (6,768) 20,406 20,406 5.1 11,000	2010 HK$’000 181,374 (94,448) 86,926 2,342 (45,689) (33,893) 9,686 (4,024) 5,662 5,662 1.42 44,000	2009 HK$’000 207,941 (108,709) 99,232 5,715 (49,605) (37,487) 17,855 (6,458) 11,397 11,397 2.85 7,000

Results summary

The previous financial year posed a test to publishers’ capability in confronting crises. During this period of unprecedented volatility in both the financial markets and underlying economies, the Group’s consolidated turnover for the year ended 31 March 2009 declined 5% to HK$207,941,000 from HK$219,899,000 in preceding year and profit for the year dropped 5% to HK$11,397,000 from HK$12,020,000 in preceding year. However, the Group will continue to optimize its resources utilization and keep tight cost control.

– 35 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Review of operations

Hong Kong

During the year under review, the Group published three magazines in Hong Kong, namely Ming Pao Weekly, Hi-Tech Weekly, and ‘‘Top Gear 極速誌’’. These titles contributed a combined revenue of HK$180,235,000 for the year ended 31 March 2009 (2008: HK$187,107,000), representing a modest 4% decline when compared to the preceding year, while operating profit rose by 10% to HK$42,830,000 (2008: HK$39,044,000) as a result of the Group’s continuing stringent control over operating costs.

Ming Pao Weekly, the Group’s premier celebrity and lifestyle title, successfully concluded its planned series of marketing events celebrating its 40th anniversary. The events played a pivotal role in raising the title’s profile in an already crowded magazine advertising market in Hong Kong. The marketing events helped advertisers deliver messages, together with our high-quality entertainment and fashion content, more effectively to readers.

Hi-Tech Weekly received solid endorsements on its revamped business model as it maintained its circulation steady after raising its cover price to HK$6 since December 2008. This illustrated readers’ favorable and sustaining support towards the title as the prevailing circulation had been a result of a significant surge when the title first cut its cover price by half to HK$5 in May 2008. This support, while underscoring the title’s on-going efforts in deepening its reach to advertisers in the segment, encouraged the title to expand its business model to embrace non-print opportunities. In February and May 2009, the title co-hosted two ‘‘Gadgets Fair’’ in-mall roadshows with Amoy Plaza in Kowloon Bay and Silvercord in Tsim Sha Tsui respectively. They helped drive significant increases in shopper traffic and sales revenues for retail tenants in these malls during those periods. Hosting of similar events has been developed into a separate business line for the title, leveraging its established support from readers and advertisers.

‘‘Top Gear 極速誌’’, riding on the success of ‘‘Top Gear 汽車測試報告’’ that the Group operates in Mainland China, launched its inaugural issue in October 2008 in Hong Kong. It quickly earned a recognition of a highly professional automobile magazine in Hong Kong. Managed by an experienced editorial team in this segment, it is expected that this title will evolve into one of the Group’s major titles in Hong Kong targeting primarily male readers.

Mainland China

The operation in Mainland China contributed a turnover of HK$27,706,000 (2008: HK$32,792,000) to the Group, representing a 16% decline when compared to the preceding year, while operating loss widened to HK$17,764,000 (2008: HK$12,463,000). The decline in turnover was due to intensifying competition in the infotainment/leisure magazine advertising market in China and reduction in overall advertising spending as advertisers took a wait-and-see attitude in light of the sustaining impact of the global financial crisis in the country. This decline in revenue widened the bottom-line losses for the Group’s operation in Mainland China.

‘‘MING 明日風尚’’, following its revamp in October 2008, enjoyed positive feedbacks from readers and advertisers. It is highly regarded for its premium quality content and positioning as a wide window of information for affluent local Chinese to gain knowledge on cutting-edge foreign

– 36 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

lifestyle. The revamp also helped the title regain businesses from advertisers previously lost to competitors. A decision to raise the cover price to RMB15 from RMB10 since May 2009 received no hurdle from distributors. The raised cover price, despite bringing only a small incremental increase in per copy sales revenue, underscores the steady support the title enjoys from readers and advertisers after its revamp.

‘‘Top Gear 汽車測試報告’’ had been able to maintain a stable operation as China’s market of automobiles has still been relatively robust when compared to the rest of the world.

‘‘Popular Science 科技新時代’’ remains one of the leading magazines in the science infotainment category and continues to have sustaining support from its loyal readership and advertiser clientele.

Liquidity, financial resources and gearing ratio

As at 31 March 2009, the Group’s net current assets amounted to HK$158,141,000 (2008: HK$145,295,000) and the total equity attributable to the equity holders of the Company was HK$166,362,000 (2008: HK$160,612,000).

The Group had no bank borrowings (2008: Nil) and the gearing ratio, which is defined as the ratio of total bank borrowings to the total equity attributable to the equity holders of the Company, was 0% (2008: 0%).

As at 31 March 2009, the Group’s total cash balance was HK$125,951,000 (2008: HK$106,239,000).

Exposure to fluctuations in exchange rates

The Group’s revenues and costs are mainly denominated in Hong Kong dollars, United States dollars and Renminbi. Since the Hong Kong dollar has remained pegged to the United States dollar, the Group does not foresee substantial risks from exposure to United States dollars. For subsidiaries in the PRC, most of the sales and purchases are denominated in Renminbi, the exposure to foreign exchange risk is expected to be minimal.

Contingent liabilities

As at 31 March 2009, the Group did not have any material contingent liabilities or guarantees (2008: Nil).

Employees

As at 31 March 2009, the Group has 242 employees (2008: 243 employees), of which 160 and 82 were stationed in Hong Kong and in the Mainland China respectively. The Group remunerates its employees based on the operating results, individual performance and comparable market statistics. The emoluments of the Directors and senior management are reviewed by the Remuneration Committee regularly.

– 37 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

The Company has implemented share option schemes as an incentive to the Directors and eligible employees. In Hong Kong, the Group participates in the hybrid retirement benefit scheme operated by the Company’s fellow subsidiary and the Mandatory Provident Fund scheme for its employees. In Mainland China, the Group provides to its employees social security plans in relation to retirement, medical care and unemployment and has made the required contributions to the local social insurance authorities in accordance with relevant laws and regulations in Mainland China.

Material acquisitions and disposals

The Group had no material acquisitions or disposals during the year ended 31 March 2009.

For the year ended 31 March 2010

Results summary

The economy of Hong Kong had evidently improved in the second half of the financial year 2009–10 benefiting from the growing economy in China. The Group’s major advertising clients appeared to have enjoyed bigger advertising budgets, which in turn benefited the Group’s businesses. Nonetheless, the advertising income of the Group during the year was still weaker than that of last financial year.

As the recent economic revival had not emerged until the second half of the financial year, the Group’s revenue for the year ended 31 March 2010 was still modest, standing at HK$181,374,000 (2009: HK$207,941,000) or 13% lower than the previous year. Profit before income tax for the year was HK$9,686,000 (2009: HK$17,855,000).

Review of operations

Hong Kong

During the year under review, the Group published three magazines in Hong Kong, namely Ming Pao Weekly, Hi-Tech Weekly, and ‘‘Top Gear 極速誌’’.

Turnover from the operation in Hong Kong for the year was HK$146,361,000 (2009: HK$180,235,000), down 19% or HK$33,874,000 from a record-high base in the previous year that included an additional contribution from the 40th anniversary of Ming Pao Weekly. The decline mainly came from the sharp reduction in advertising revenue of Ming Pao Weekly during the financial crisis, which did not see a strong recovery until the second half of the financial year. The segment profit from the operation in Hong Kong, meanwhile, decreased by HK$10,475,000 to HK$35,950,000 (2009: HK$46,425,000). The decline in profit, nonetheless, was less than the decline in revenue because of the reduction in paper price and the Group’s continuing stringent control over operating costs.

Hi-Tech Weekly experienced a similar pattern of recovery in advertising spending. In addition to the magazine’s efforts in strengthening its content, it continued to put resources in its ‘‘Gadgets Fair’’ event marketing business. It created promotion packages which integrated print advertisements and non-print event initiatives allowing advertisers to interact with their end-

– 38 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

consumers. ‘‘Gadgets Fair’’ events were proven to be highly effective in attracting new advertisers in the consumer electronics segment. Leveraging the successes in content and integrated advertising packages, Hi-Tech Weekly had raised its cover price in December 2008 without suffering any drop in circulation since then. This is an encouraging sign, which shows that Hi-Tech Weekly has gained sustaining and steady support from its readers.

‘‘Top Gear 極速誌’’, despite its short 18-month history, enjoyed its positioning as one of the professional magazines in the auto sector in Hong Kong. The performances in advertising and circulation were in line with the expectations of the management.

Mainland China

Turnover from the operation in Mainland China increased by HK$7,307,000 or 26% to HK$35,013,000 (2009: HK$27,706,000) primarily driven by higher advertising revenues derived from ‘‘Top Gear 汽車測試報告’’ and ‘‘MING 明日風尚’’. Segment loss therefore decreased by HK$745,000 to HK$16,645,000 (2009: HK$17,390,000).

‘‘MING 明日風尚’’ continued to provide a channel of modern foreign lifestyle information for affluent local Chinese. Its positioning is unique in the lifestyle magazine sector in China, broadly divided into three mainstream categories, namely man, woman and fashion & beauty. Besides, ‘‘Hong Kong Voyage 優遊香港’’, a guide of high-end shopping and food and beverages in Hong Kong, received positive responses from readers and advertisers. This guide was distributed as a supplement of ‘‘MING 明日風尚’’ in Mainland China and was also available for sale in Hong Kong.

‘‘Top Gear 汽車測試報告’’ continued to benefit from the buoyant auto sector in Mainland China with steady advertising and circulation revenues. This title continued to focus on the highend imported cars segment. The Group is gradually integrating the editorial functions of this title into that of Top Gear Hong Kong. As a result, the resources can be more efficiently managed.

‘‘Popular Science 科技新時代’’ focuses on providing state-of-the-art science and technology content to readers in Mainland China and continues to have sustaining support from its loyal readership and advertiser clientele.

Liquidity, financial resources and gearing ratio

As at 31 March 2010, the Group’s net current assets amounted to HK$160,222,000 (2009: HK$158,141,000) and the total equity attributable to the equity holders of the Company was HK$167,058,000 (2009: HK$166,362,000). The Group had no bank borrowings (2009: Nil) and the gearing ratio, which is defined as the ratio of total bank borrowings to the total equity attributable to the equity holders of the Company, was 0% (2009: 0%).

As at 31 March 2010, the Group’s total cash balance was HK$125,365,000 (2009: HK$125,951,000).

– 39 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Exposure to fluctuations in exchange rates

Contingent liabilities

As at 31 March 2010, the Group did not have any material contingent liabilities or guarantees (2009: Nil).

Employees

As at 31 March 2010, the Group has 225 employees (2009: 242 employees), of which 143 and 82 were stationed in Hong Kong and Mainland China, respectively. The Group remunerates its employees based on the operating results, individual performance and comparable market statistics. The emoluments of the directors and senior management are reviewed by the Remuneration Committee regularly. The Company has implemented share option schemes as an incentive to the Directors and eligible employees.

In Hong Kong, the Group participates in the hybrid retirement benefit scheme operated by the Company’s fellow subsidiary and the Mandatory Provident Fund scheme for its employees. In Mainland China, the Group provides to its employees social security plans in relation to retirement, medical care and unemployment and has made the required contributions to the local social insurance authorities in accordance with relevant laws and regulations in Mainland China.

Material acquisitions and disposals

The Group had no material acquisitions or disposals during the year ended 31 March 2010

For the year ended 31 March 2011

Results summary

Hong Kong’s economy has continued to improve and the Group’s businesses derived benefits from this improvement. The advertising revenue of the Group, especially Hong Kong segment, experienced a satisfactory growth during the financial year. Meanwhile, direct costs and other operating costs were contained at the same level as the previous year. The Group’s revenue for financial year ended 31 March 2011 was HK$18,814,000 or 10% higher than that of the previous year at HK$200,188,000 (2010: HK$181,374,000). The Group achieved remarkable results and registered a profit before income tax for the year of HK$27,174,000, up HK$17,488,000 or 181% from HK$9,686,000 of the previous year.

– 40 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Review of operations

Hong Kong

The Group has a strong operation platform in Hong Kong. During the year under review, the turnover from the operation in Hong Kong, which accounted for 82% of the Group’s revenue, was HK$164,693,000 (2010: HK$146,361,000), up HK$18,332,000 or 13% from the previous year. The increase mainly came from the growth in advertising revenue contributed by the improved consumer sentiments as well as effective sales efforts. The segment profit from the operation in Hong Kong surged by HK$14,578,000 or 41% to HK$50,528,000 (2010: HK$35,950,000).

With effect from March 2011, the Group discontinued the operation of Hi-Tech Weekly. This decision came as part of the management’s vigilant response to the rapidly changing operating environment and would allow the Group to consolidate its resources to cater to opportunities in more profitable segments.

During the year, Hong Kong’s sustaining improvement in its economy gave rise to strong momentum for retail sales of luxury and branded goods, fueling the robust advertising revenue growth of Ming Pao Weekly, as this flagship title of the Group stayed firm on its positioning as a clean and chic source of lifestyle and entertainment news for readers in the high-income class. The unique positioning of ‘‘Top Gear 極速誌’’ as the one of the most authoritative Chinese-language motor magazine, with a strong international editorial backing, secured loyal supports from advertisers of motor-related and high-end merchandises.

Mainland China

Turnover from the operation in Mainland China for the year slightly rose by 1% year-on-year or HK$482,000 to HK$35,495,000 (2010: HK$35,013,000). The operating loss during the year reduced further by HK$2,507,000 or 15% to HK$14,138,000 (2010: HK$16,645,000). This improvement was attributable to the ongoing cost-containment measures and the focus on realigning the operation structure.

With the editorial direction and content production driven by the team in Mainland China, ‘‘MING 明日風尚’’ had increasingly established its positioning as a conduit of metropolitan lifestyle infotainment reading for the expanding middle class readers. The rapidly growing auto market in Mainland China and the urge of Chinese consumers for state-of-the-art motorsport technology news helped sustain steady support for ‘‘Top Gear 汽車測試報告’’. ‘‘Popular Science 科技新時代’’ stayed firm on its direction to bring science news, and topical feature coverage of interest to Chinese readers.

Liquidity, financial resources and gearing ratio

As at 31 March 2011, the Group’s net current assets amounted to HK$136,853,000 (2010: HK$160,222,000) and the total equity attributable to the equity holders of the Company was HK$143,971,000 (2010: HK$167,058,000). The Group had no bank borrowings (2010: Nil) and the gearing ratio, which is defined as the ratio of total bank borrowings to the total equity attributable to the equity holders of the Company, was 0% (2010: 0%).

– 41 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Exposure to fluctuations in exchange rates

Contingent liabilities

As at 31 March 2011, the Group did not have any material contingent liabilities or guarantees (2010: Nil).

Employees and emolument policy

As at 31 March 2011, the Group has 226 employees (2010: 225 employees), of which 130 and 96 were stationed in Hong Kong and in Mainland China, respectively. The Group remunerates its employees based on the operating results, individual performance and comparable market statistics. The emoluments of the Directors and senior management are reviewed by the Remuneration Committee regularly. The Company has implemented share option schemes as an incentive to the Directors and eligible employees.

Material acquisitions and disposals

The Group had no material acquisitions or disposals during the year ended 31 March 2011. As disclosed in the announcement of the Company dated 5 August 2011 and the circular of the Company dated 26 August 2011, Sky Success Enterprises Limited, a wholly-owned subsidiary of the Company acquired the entire issued share capital of Media Connect Investment Limited from MediaNet Resources Limited, a wholly-owned subsidiary of MCI, which was completed on 30 September 2011.

– 42 –

FINANCIAL INFORMATION OF THE TARGET

APPENDIX II

The following is the text of a report received from the Company’s reporting accountant, PricewaterhouseCoopers, Certified Public Accountants, Hong Kong, for the purpose of incorporation in this circular.

==> picture [67 x 48] intentionally omitted <==

10 May 2012

The Directors One Media Group Limited

Dear Sirs,

We report on the financial information of Ming Pao Finance Limited (the ‘‘Target’’), which comprises the balance sheets of the Target as at 31 March 2009, 2010 and 2011, and 30 November 2011, and the statements of comprehensive income, the statements of changes in equity and the statements of cash flows of the Target for each of the years ended 31 March 2009, 2010 and 2011, and the eight months ended 30 November 2011 (the ‘‘Relevant Periods’’) and a summary of significant accounting policies and other explanatory information. This financial information has been prepared by the directors of One Media Group Limited (the ‘‘Company’’) and is set out in Sections I to III below for inclusion in Appendix II of the circular of the Company dated 10 May 2012 (the ‘‘Circular’’) in connection with the proposed acquisition of the Target by the Company.

The Target was incorporated in the British Virgin Islands on 24 January 1991 with limited liability and is principally engaged in holding trademarks of publishing titles and licensing the trademarks to its fellow subsidiaries.

No audited financial statements of the Target have been prepared since the date of establishment as it is not subject to statutory audit requirement under the relevant rules and regulations in the jurisdiction on incorporation.

The directors of the Target during the Relevant Periods are responsible for the preparation of the financial statements of the Target that give a true and fair view in accordance with International Financial Reporting Standards (‘‘IFRSs’’) issued by the International Accounting Standards Board (the ‘‘IASB’’), and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

The financial information has been prepared based on the unaudited financial statements of the Target with no adjustment made thereon.

– 43 –

FINANCIAL INFORMATION OF THE TARGET

APPENDIX II

Directors’ responsibility for the financial information

The directors of the Company are responsible for the preparation of the financial information that gives a true and fair view in accordance with IFRSs and accounting policies adopted by the Company and its subsidiaries (together, the ‘‘Group’’) as set out in the annual report of the Company for the year ended 31 March 2011 and the interim report of the Company for the period ended 30 September 2011.

Reporting accountant’s responsibility

Our responsibility is to express an opinion on the financial information and to report our opinion to you. We carried out our procedures in accordance with the Auditing Guideline 3.340 ‘‘Prospectuses and the Reporting Accountant’’ issued by the Hong Kong Institute of Certified Public Accountants (‘‘HKICPA’’).

Opinion

In our opinion, the financial information gives, for the purpose of this report, a true and fair view of the state of affairs of the Target as at 31 March 2009, 2010 and 2011, and 30 November 2011 and of the Target’s results and cash flows for the Relevant Periods then ended.

Review of interim comparative financial information

We have reviewed the interim comparative financial information set out in Sections I to II below included in Appendix II of the Circular which comprises the statement of comprehensive income, the statement of changes in equity and the statement of cash flows of the Target for the eight months ended 30 November 2010 and a summary of significant accounting policies and other explanatory information.

The directors of the Company are responsible for the preparation and presentation of the interim comparative financial information in accordance with the accounting policies set out in Section II below and the accounting policies adopted by the Group as set out in the annual report of the Company for the year ended 31 March 2011 and the interim report of the Company for the period ended 30 September 2011.

Our responsibility is to express a conclusion on the interim comparative financial information based on our review. We conducted our review in accordance with International Standard on Review Engagements 2410, ‘‘Review of Interim Financial Information Performed by the Independent Auditor of the Entity’’ issued by the International Auditing and Assurance Standards Board. A review of interim comparative financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Based on our review, nothing has come to our attention that causes us to believe that the interim comparative financial information, for the purpose of this report, is not prepared, in all material respects, in accordance with the accounting policies set out in Section II below.

– 44 –

FINANCIAL INFORMATION OF THE TARGET

APPENDIX II

I. FINANCIAL INFORMATION OF THE TARGET

The following is the financial information of the Target prepared by the directors of the Company as at 31 March 2009, 2010, 2011 and 30 November 2011 and for each of the years ended 31 March 2009, 2010 and 2011 and the eight months ended 30 November 2010 and 2011 (the ‘‘Financial Information’’):

Balance Sheets

As at 31 March	As at 31 March	As at 30 November
2009 HK$’000 21,840 879 736 23,455 23,455 — 23,455 23,455 — — — — 23,455 23,455 23,455	2010 HK$’000 31,997 929 432 33,358 33,358 — 33,358 33,358 — — — — 33,358 33,358 33,358	2011 HK$’000 9,629 1,065 —
		10,694
		10,694
		— 9,070
		9,070
		8 1,616
		1,624
		1,624
		10,694
		9,070
		9,070

– 45 –

FINANCIAL INFORMATION OF THE TARGET

APPENDIX II

Statements of Comprehensive Income

Note Revenue 7 Other income Administrative expenses 8 Profit before income tax Income tax expense 9 Total comprehensive income for the year/period Attributable to: Equity holder of the Target Dividends 10	Year ended 31 March 2009 2010 2011 HK$’000 HK$’000 HK$’000 15,786 12,653 13,996 — — — (1,306) (793) (1,553) 14,480 11,860 12,443 (2,364) (1,957) (2,053) 12,116 9,903 10,390 12,116 9,903 10,390 30,000 — 42,369	Year ended 31 March 2009 2010 2011 HK$’000 HK$’000 HK$’000 15,786 12,653 13,996 — — — (1,306) (793) (1,553) 14,480 11,860 12,443 (2,364) (1,957) (2,053) 12,116 9,903 10,390 12,116 9,903 10,390 30,000 — 42,369	Eight months ended 30 November 2010 2011 HK$’000 HK$’000 (unaudited) 9,334 9,696 — 400 (1,114) (885) 8,220 9,211 (1,356) (1,520) 6,864 7,691 6,864 7,691 6,300 —
	2009 HK$’000 15,786 — (1,306) 14,480 (2,364) 12,116 12,116 30,000	2010 HK$’000 12,653 — (793) 11,860 (1,957) 9,903 9,903 —	2010 HK$’000 (unaudited) 9,334 — (1,114) 8,220 (1,356) 6,864 6,864 6,300

– 46 –

FINANCIAL INFORMATION OF THE TARGET

APPENDIX II

Statements of Changes in Equity

Balance at 1 April 2008 Comprehensive income Profit for the year Total comprehensive income Transaction with equity holder Interim dividend relating to the year ended 31 March 2009 distributed during the year Total transaction with equity holder Balance at 31 March 2009 Balance at 1 April 2009 Comprehensive income Profit for the year Total comprehensive income Balance at 31 March 2010 Balance at 1 April 2010 Comprehensive income Profit for the period Total comprehensive income Transaction with equity holder First interim dividend relating to the year ended 31 March 2011 distributed during the period Total transaction with equity holder Balance at 30 November 2010 (unaudited) Balance at 1 April 2010 Comprehensive income Profit for the year Total comprehensive income	Share capital HK$’000 — — — — — — — — — — — — — — — — — — —	Retained earnings HK$’000 41,339 12,116 12,116 (30,000) (30,000) 23,455 23,455 9,903 9,903 33,358 33,358 6,864 6,864 (6,300) (6,300) 33,922 33,358 10,390 10,390	Total HK$’000 41,340 12,116 12,116 (30,000) (30,000) 23,455 23,455 9,903 9,903 33,358 33,358 6,864 6,864 (6,300) (6,300) 33,922 33,358 10,390 10,390

– 47 –

FINANCIAL INFORMATION OF THE TARGET

APPENDIX II

Transaction with equity holder First interim dividend relating to the year ended 31 March 2011 distributed during the year Second interim dividend relating to the year ended 31 March 2011 distributed during the year Third interim dividend relating to the year ended 31 March 2011 distributed during the year Total transaction with equity holder Balance at 31 March 2011 Balance at 1 April 2011 Comprehensive income Profit for the period Total comprehensive income Balance at 30 November 2011	Share capital HK$’000 — — — — — — — — —	Retained earnings HK$’000 (6,300) (34,957) (1,112) (42,369) 1,379 1,379 7,691 7,691 9,070	Total HK$’000 (6,300) (34,957) (1,112) (42,369) 1,379 1,379 7,691 7,691 9,070

– 48 –

FINANCIAL INFORMATION OF THE TARGET

APPENDIX II

Statements of Cash Flows

Note Cash flows from operating activities Profit before income tax Changes in working capital: Amount due from the immediate holding company Amount due from a fellow subsidiary Other payables Net cash generated from operating activities Net increase in cash and cash equivalents Cash and cash equivalents at beginning of the year/ period Cash and cash equivalents at end of the year/period	Year ended 31 March 2009 2010 2011 HK$’000 HK$’000 HK$’000 14,480 11,860 12,443 (15,315) (11,810) (12,409) 835 (50) (81) — — 47 — — — — — — — — — — — —	Year ended 31 March 2009 2010 2011 HK$’000 HK$’000 HK$’000 14,480 11,860 12,443 (15,315) (11,810) (12,409) 835 (50) (81) — — 47 — — — — — — — — — — — —	Eight months ended 30 November 2010 2011 HK$’000 HK$’000 (unaudited) 8,220 9,211 (8,033) (9,117) (187) (54) — (40) — — — — — — — —
	2009 HK$’000 14,480 (15,315) 835 — — — — —	2010 HK$’000 11,860 (11,810) (50) — — — — —	2010 HK$’000 (unaudited) 8,220 (8,033) (187) — — — — —

– 49 –

FINANCIAL INFORMATION OF THE TARGET

APPENDIX II

II. NOTES TO THE FINANCIAL INFORMATION

1 General information

Ming Pao Finance Limited (the ‘‘Target’’) is a limited liability company incorporated in the British Virgin Islands. The registered office of the Target is located at P.O. Box 71, Craigmuir Chambers, Road Town, British Virgin Islands.

The Target’s principal activities are the holding of trademarks of publishing titles and licensing the trademarks to its fellow subsidiaries.

Media Chinese International Limited (‘‘MCIL’’), a Bermuda limited liability company, is the ultimate holding company of the Target.

The Financial Information is presented in Hong Kong dollars (HK$), unless otherwise stated. The Financial Information has been approved for issue by the Board of Directors on 10 May 2012.

2 Principal accounting policies

The principal accounting policies applied in the preparation of the Financial Information are set out below. These policies have been consistently applied to all the years/periods presented, unless otherwise stated.

2.1 Basis of preparation

The principal accounting policies applied in the preparation of the Financial Information are in accordance with International Financial Reporting Standards (‘‘IFRS’’). The Financial Information has been prepared under the historical cost convention, except as modified by the accounting policies stated below.

The preparation of Financial Information in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Target’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the Financial Information are disclosed in note 4.

Changes in accounting policy and disclosures

(a) New and amended standards effective for the financial year beginning 1 April 2011

The following revised standard is mandatory for the first time for the financial year beginning 1 April 2011 that is relevant to the Target but would not be expected to have a material impact.

. IAS 24 (Revised), ‘‘Related Party Disclosures’’ introduces an exemption from all of the disclosure requirements of IAS 24 for transactions among government related entities and the government. Those disclosures are replaced with a requirement to disclose:
The name of the government and the nature of their relationship;
The nature and amount of any individually significant transactions; and
The extent of any collectively-significant transactions qualitatively or quantitatively.

– 50 –

FINANCIAL INFORMATION OF THE TARGET

APPENDIX II

(b) New and amended standards effective for the financial year beginning 1 April 2012

The following new standards, amendments and interpretations have been issued but are not effective for the financial year beginning 1 April 2011 and have not been early adopted by the Target:

IAS 1 (Amendment) Presentation of Items of Other Comprehensive Income IAS 12 (Amendment) Deferred Tax: Recovery of Underlying Assets IAS 19 (2011) (Amendment) Employee Benefits IAS 27 (2011) Separate Financial Statements IAS 28 (2011) Investments in Associates and Joint Ventures IFRS 1 (Amendment) Severe Hyperinflation and Removal of Fixed Dates for First-time Adopters IFRS 7 (Amendment) Disclosures — Transfers of Financial Assets IFRS 9 Financial Instruments IFRS 10 Consolidated Financial Statements IFRS 11 Joint Arrangements IFRS 12 Disclosure of Interests in Other Entities IFRS 13 Fair Value Measurement IFRIC-Int 20 Stripping costs in the Production Phase of a surface mine

The Target is in the process of assessing the impact of these new IFRSs but is not yet in a position to state whether these new IFRSs would have a material impact on the Financial Information of the Target.

2.2 Foreign currency translation

(a) Functional and presentation currency

Items included in the Financial Information of the Target are measured using the currency of the primary economic environment in which the Target operates (the ‘‘functional currency’’). The Financial Information is presented in Hong Kong dollars (HK$), which is the Target’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 profit or loss.

2.3 Share capital

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

2.4 Financial assets

The Target classifies its financial assets as loans and receivables. The classification depends on the purposes for which the financial assets were acquired. Management determines the classification of its financial assets at initial recognition.

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 arise when the Target provides money, goods or services directly to a debtor with no intention of trading the receivable.

– 51 –

FINANCIAL INFORMATION OF THE TARGET

APPENDIX II

Regular purchases and sales of financial assets are recognised on the trade-date — the date on which the Target 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 vale through profit or loss. Financial assets are derecognised w hen the rights to receive cash flows from the investments have expired or have been transferred and the Target has transferred substantially all risks and rewards of ownership.

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

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 receivables is established when there is objective evidence that the Target will not be able to collect all amounts due according to the original terms of receivables. The amount of the provision is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the effective interest rate. The amount of the provision is recognised in the statement of comprehensive income.

2.5 Current and deferred income tax

The tax expense for the period comprises current and deferred tax. Tax is recognised in the profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case the tax is also recognised in other comprehensive income or directly in equity, respectively.

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 country where the Target operates and generates taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.

Deferred income taxation 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 Financial Information statements. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantively 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.

2.6 Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable, and represents amounts receivable for services rendered, stated net of discounts returns and value added taxes. The Target recognises revenue when the amount of revenue can be reliably measured; when it is probable that future economic benefits will flow to the entity; and when specific criteria have been met for each of the Target’s activities, as described below. The Target bases its estimates of return on historical results, taking into consideration the type of customer, the type of transaction and the specifics of each arrangement.

Royalty fee income is recognised on an accruals basis in accordance with the substance of the relevant agreements.

2.7 Dividend distribution

Dividend distribution to the Target’s shareholders is recognised as a liability in the Target’s Financial Information in the period in which the dividends are approved by the Target’s shareholders or directors, where appropriate.

– 52 –

FINANCIAL INFORMATION OF THE TARGET

APPENDIX II

2.8 Related parties

For the purposes of the Financial Information, parties are considered to be related to the Target if the Target has the ability, directly or indirectly, to control the party or exercises significant influence over the party in making financial and operating decisions, or vice versa, or where the Target and the party are subject to common control or common significant influence. Related parties may be individuals or other entities.

3 Financial risk management

3.1 Financial risk factors

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

(a) Credit risk

The Target’s credit risk arises from the amounts due from the immediate holding company and a fellow subsidiary, which the management believes the risk of loss to be remote.

(b) Liquidity risk

The liquidity risk of the Target is not significant. The table below analyses the Target’s financial liabilities into relevant maturity groupings 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.

Within 1 year Other payables	As at 31 March	As at 31 March	2011 HK$’000 8	As at 30 November
	2009 HK$’000 —	2010 HK$’000 —		2011 HK$’000 8

3.2 Capital risk management

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

The Target has no debt, and its capital is contributed by the profits generated from the operating entities.

4 Critical accounting estimates and judgements

Estimates and judgements 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 circumstance.

4.1 Critical accounting estimates and assumptions

The Target makes estimates and judgements concerning the future based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The resulting accounting estimates will, by definition, seldom equal the related actual results. The key assumptions concerning the future and other key sources of estimation uncertainty at the balance sheet date, 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.

– 53 –

FINANCIAL INFORMATION OF THE TARGET

APPENDIX II

Impairment of amounts due from a fellow subsidiary/immediate holding company

Management determines the provision for impairment of amounts due from a fellow subsidiary/ immediate holding company based on the net asset values of these entities. The Target reassesses the provision at the end of each reporting period. Significant judgment is exercised on the assessment of the collectability from these entities. In making its judgment, management considers a wide range of factors such as results of payment trends including subsequent payments, future earnings prospects and financial position of these entities.

5 Financial instruments by category

The accounting policies for financial instruments have been applied to the line items below:

As at 31 March	As at 31 March	As at 30 November
2009 2010 HK$’000 HK$’000 — — As at 31 March		2011 HK$’000 8
		As at 30 November
2009 US$’000 10 HK$’000 —	2010 US$’000 10 HK$’000 —	2011 US$’000 10
		HK$’000 —

7 Revenue

An analysis of revenue is as follows:

Royalty fee income	Year ended 31 March 2009 2010 2011 HK$’000 HK$’000 HK$’000 15,786 12,653 13,996	Year ended 31 March 2009 2010 2011 HK$’000 HK$’000 HK$’000 15,786 12,653 13,996	Eight months ended 30 November	Eight months ended 30 November
	2009 HK$’000 15,786	2010 HK$’000 12,653	2010 HK$’000 (unaudited) 9,334	2011 HK$’000 9,696

Royalty fee income is set at 7% of the net revenue derived from the magazines published under the titles held by the Target. The rate is mutually agreed between the relevant parties at arm’s length basis.

– 54 –

FINANCIAL INFORMATION OF THE TARGET

APPENDIX II

8 Expenses by nature

Trademark registration and renewal fees	Year ended 31 March 2009 2010 2011 HK$’000 HK$’000 HK$’000 660 170 680	Eight months ended 30 November
		2010 2011 HK$’000 HK$’000 (unaudited) 534 70

9 Income tax expense

Hong Kong profits tax was provided at the rate of 16.5% for all the years/periods ended on the estimated assessable profit for the years/periods. The amount of income tax charged to the statement of comprehensive income represents:

Current income tax Over provision in prior year	Year ended 31 March 2009 2010 2011 HK$’000 HK$’000 HK$’000 2,389 1,957 2,053 (25) — — 2,364 1,957 2,053	Year ended 31 March 2009 2010 2011 HK$’000 HK$’000 HK$’000 2,389 1,957 2,053 (25) — — 2,364 1,957 2,053	Eight months ended 30 November	Eight months ended 30 November
	2009 HK$’000 2,389 (25) 2,364	2010 HK$’000 1,957 — 1,957	2010 HK$’000 (unaudited) 1,356 — 1,356	2011 HK$’000 1,520 —
				1,520

The tax on the Target’s profit before tax differs from the theoretical amount that would arise using the weighted average tax rate applicable to profits as follows:

Year ended 31 March 2009 2010 2011 HK$’000 HK$’000 HK$’000 14,480 11,860 12,443 2,389 1,957 2,053 (25) — — 2,364 1,957 2,053	Year ended 31 March 2009 2010 2011 HK$’000 HK$’000 HK$’000 14,480 11,860 12,443 2,389 1,957 2,053 (25) — — 2,364 1,957 2,053	Eight months ended 30 November	Eight months ended 30 November
2009 HK$’000 14,480 2,389 (25) 2,364	2010 HK$’000 11,860 1,957 — 1,957	2010 HK$’000 (unaudited) 8,220 1,356 — 1,356	2011 HK$’000 9,211
			1,520 —
			1,520

– 55 –

FINANCIAL INFORMATION OF THE TARGET

APPENDIX II

10 Dividends

Interim dividend of HK$300,000 per ordinary share, relating to the year ended 31 March 2009 First interim dividend of HK$630,000 per ordinary share, relating to the year ended 31 March 2011 Second interim dividend of HK$3,495,700 per ordinary share, relating to the year ended 31 March 2011 Third interim dividend of HK$111,244 per ordinary share, relating to the year ended 31 March 2011	Year ended 31 March 2009 2010 2011 HK$’000 HK$’000 HK$’000 30,000 — — — — 6,300 — — 34,957 — — 1,112 30,000 — 42,369	Year ended 31 March 2009 2010 2011 HK$’000 HK$’000 HK$’000 30,000 — — — — 6,300 — — 34,957 — — 1,112 30,000 — 42,369	Eight months ended 30 November	Eight months ended 30 November
	2009 HK$’000 30,000 — — — 30,000	2010 HK$’000 — — — — —	2010 HK$’000 (unaudited) — 6,300 — — 6,300	2011 HK$’000 — — — —
				—

11 Related party transactions

(a) Transactions with related parties

The Target had significant related party transactions which were carried at in the normal course of business as follows:

Royalty fee income from a fellow subsidiary (note i) Administrative expenses recharged by the immediate holding company (note ii) Gain on disposal of a trademark to a fellow subsidiary	Year ended 31 March 2009 2010 2011 HK$’000 HK$’000 HK$’000 15,786 12,653 13,996 640 617 867 — — —	Year ended 31 March 2009 2010 2011 HK$’000 HK$’000 HK$’000 15,786 12,653 13,996 640 617 867 — — —	Eight months ended 30 November	Eight months ended 30 November
	2009 HK$’000 15,786 640 —	2010 HK$’000 12,653 617 —	2010 HK$’000 (unaudited) 9,334 575 —	2011 HK$’000 9,696 810 400

Note i: Royalty fee income is set at 7% of the net revenue derived from the magazines published under the titles held by the Target. The rate is mutually agreed between the relevant parties at arm’s length basis.

Note ii: The transactions are charged based on terms mutually agreed between the relevant parties.

– 56 –

FINANCIAL INFORMATION OF THE TARGET

APPENDIX II

Note iii: None of the directors has received or will receive any fees or emoluments in respect of their services to the Target.

(b) Year end balances

Receivables from related parties — Immediate holding company — A fellow subsidiary	As at 31 March	As at 31 March	2011 HK$’000 512 1,011	As at 30 November
	2009 HK$’000 21,840 879	2010 HK$’000 31,997 929		2011 HK$’000 9,629 1,065

The balances are unsecured, interest-free, and repayable on demand.

12 Ultimate holding company

As at 31 March 2009, 2010 and 2011, and 30 November 2011, the directors regard Media Chinese International Limited, a limited liability company incorporated in Bermuda and dual listed on Bursa Malaysia Securities Berhad and The Stock Exchange of Hong Kong Limited, as being the ultimate holding company.

III. SUBSEQUENT FINANCIAL STATEMENTS

No audited financial statements have been prepared by the Target in respect of any period subsequent to 30 November 2011 and up to the date of this report. No dividend or distribution has been declared or made by the Target in respect of any period subsequent to 30 November 2011.

Yours faithfully, PricewaterhouseCoopers Certified Public Accountants Hong Kong

– 57 –

MANAGEMENT DISCUSSION AND ANALYSIS ON THE TARGET

APPENDIX III

MANAGEMENT DISCUSSION AND ANALYSIS ON THE TARGET

The Target was incorporated in the British Virgin Islands with limited liability on 24 January 1991. and is an indirect wholly-owned subsidiary of MCI. Up to the Latest Practicable Date, the Target has been the exclusive owner of the Trademarks and the Past Contents and its main business activity is the entering into of the Licensing Agreements.

Both the Trademarks and the Past Contents are internally generated. The Target only incurred minimal registration fees to own the Trademarks, while the Past Contents were obtained by the Target through licensing the Trademarks and in return obtaining all editorial and other contents of all those issues of HK Magazines which have been published under the Trademarks. Accordingly, they carried no values on the balance sheet.

FOR THE YEAR ENDED 31 MARCH 2009

Results summary

During the year ended 31 March 2009, the Target’s revenue decreased 24% to HK$15,786,000 compared to last financial year because of the global financial crisis. The profit for the year also reduced 22% to HK$12,116,000 compared to last financial year as a result of the decrease of the Target’s revenue.

Capital structure, liquidity, financial resources and gearing ratio

The Target funded its operations mainly from royalty income received under the licensing arrangements. As at 31 March 2009, the Target had no cash and cash equivalents and no external borrowings and the gearing ratio was nil. All the cash receipts and payments were carried out by the immediate holding company, the Seller, on behalf of the Target.

Exposure to fluctuations in exchange rates

The Target’s revenues and costs are denominated in Hong Kong dollars and it does not foresee any risk from exposure to fluctuations in exchange rates.

Contingent liabilities

As at 31 March 2009, the Target did not have material contingent liabilities or guarantees (2008: Nil).

Pledge of assets

As at 31 March 2009, the Target did not pledge any asset for borrowings.

Employees

As at 31 March 2009, the Target did not have any employee (2008: Nil).

Material acquisitions and disposals

The Target had no material acquisitions or disposals during the year ended 31 March 2009.

– 58 –

MANAGEMENT DISCUSSION AND ANALYSIS ON THE TARGET

APPENDIX III

Charge on assets

As at 31 March 2009, the Target had no charges on assets.

Future plans for material investments or capital assets

As at 31 March 2009, the Target had no significant investment and future plan for material investments or capital assets.

FOR THE YEAR ENDED 31 MARCH 2010

Results summary

During the year ended 31 March 2010, the Target’s revenue decreased 20% to HK$12,653,000 compared to last financial year because of the continuation of the global financial crisis and gradual economic recovery during the second half of the financial year. The profit for the year also reduced 18% to HK$9,903,000 compared to last financial year as a result of the decrease of the Target’s revenue.

Capital structure, liquidity, financial resources and gearing ratio

The Target funded its operations mainly from royalty income received under the licensing arrangements. As at 31 March 2010, the Target had no cash and cash equivalents and no external borrowings and the gearing ratio was nil. All the cash receipts and payments were carried out by the immediate holding company, the Seller, on behalf of the Target.

Exposure to fluctuations in exchange rates

The Target’s revenues and costs are denominated in Hong Kong dollars and it does not foresee any risk from exposure to fluctuations in exchange rates.

Contingent liabilities

As at 31 March 2010, the Target did not have material contingent liabilities or guarantees (2009: Nil).

Pledge of assets

As at 31 March 2010, the Target did not pledge any asset for borrowings.

Employees

As at 31 March 2010, the Target did not have any employee (2009: Nil).

Material acquisitions and disposals

The Target had no material acquisitions or disposals during the year ended 31 March 2010.

Charges on assets

As at 31 March 2010, the Target had no charges on assets.

– 59 –

APPENDIX III MANAGEMENT DISCUSSION AND ANALYSIS ON THE TARGET

Future plans for material investments or capital assets

As at 31 March 2010, the Target had no significant investment and future plans for material investments or capital assets.

FOR THE YEAR ENDED 31 MARCH 2011

Results summary

During the year ended 31 March 2011, the Target’s revenue increased 11% to HK$13,996,000 compared to last financial year because of strong economic recovery in Hong Kong. The royalty income of the Target experienced a satisfactory growth during the financial year. The profit for the year also increased 5% to HK$10,390,000 compared to last financial year as a result of the increase of the Target’s revenue.

Capital structure, liquidity, financial resources and gearing ratio

The Target funded its operations mainly from royalty income received under the licensing arrangements. As at 31 March 2011, the Target had no cash and cash equivalents and no external borrowings and the gearing ratio was nil. All the cash receipts and payments are carried out by its immediate holding company, the Seller, on behalf of the Target.

Exposure to fluctuations in exchange rates

The Target’s revenues and costs are denominated in Hong Kong dollars and it does not foresee any risk from exposure to fluctuations in exchange rates.

Contingent liabilities

As at 31 March 2011, the Target did not have material contingent liabilities or guarantees (2010: Nil).

Pledge of assets

As at 31 March 2011, the Target did not pledge any asset for borrowings.

Employees

As at 31 March 2011, the Target did not have any employee (2010: Nil).

Material acquisitions and disposals

The Target had no material acquisitions or disposals during the year ended 31 March 2011.

Charges on assets

As at 31 March 2011, the Target had no charges on assets.

Future plans for material investments or capital assets

As at 31 March 2011, the Target had no significant investment and future plans for material investments or capital assets.

– 60 –

MANAGEMENT DISCUSSION AND ANALYSIS ON THE TARGET

APPENDIX III

FOR THE EIGHT MONTHS ENDED 30 NOVEMBER 2011

Results summary

During the eight months ended 30 November 2011, the Target’s revenue increased 4% to HK$9,696,000 compared last corresponding period because the Hong Kong market recorded steady economic growth during the period. The profit for the period also increased 12% to HK$7,691,000 compared last corresponding period as a result of the increase of the Target’s revenue.

Capital structure, liquidity, financial resources and gearing ratio

The Target funded its operations mainly from royalty income received under the licensing arrangements. As at 30 November 2011, the Target had no cash and cash equivalents and no external borrowings and the gearing ratio was nil. All the cash receipts and payments were carried out by the immediate holding company, the Seller, on behalf of the Target.

Exposure to fluctuations in exchange rates

The Target’s revenues and costs are denominated in Hong Kong dollars and it does not foresee any risk from exposure to fluctuations in exchange rates.

Contingent liabilities

As at 30 November 2011, the Target did not have material contingent liabilities or guarantees (31 March 2011: Nil).

Pledge of assets

As at 30 November 2011, the Target did not pledge any asset for borrowings.

Employees

As at 30 November 2011, the Target did not have any employee (31 March 2011: Nil).

Material acquisitions and disposals

The Target had no material acquisitions or disposals during the eight months ended 30 November 2011.

Charges on assets

As at 30 November 2011, the Target had no charges on assets.

Future plans for material investments or capital assets

As at 30 November 2011, the Target had no significant investment and future plans for material investments or capital assets.

– 61 –

APPENDIX IV

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

A. UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

The following is an illustrative unaudited pro forma statement of assets and liabilities of the Enlarged Group which has been prepared on the basis of the notes set out below for the purpose of illustrating the effects of the Acquisition, as if the Acquisition had taken place on 30 September 2011, assuming that there is no conversion or redemption of the Convertible Bond.

This unaudited pro forma statement of assets and liabilities has been prepared for illustrative purposes only and because of its hypothetical nature, it may not give a true picture of the financial position of the Enlarged Group had the Acquisition been completed as at 30 September 2011 or any future date.

(a) Unaudited pro forma statement of assets and liabilities of the Enlarged Group

Pro	forma adjustments Other adjustment Other adjustment HK$’000 HK$’000 Note 3 Note 4 — — — 75,600 — — — — — 75,600 — — — — (10,694) — — — (10,694) — (10,694) 75,600	Unaudited pro forma statement of assets and liabilities of the Enlarged Group HK$’000 4,724 78,683 25,800 56
Assets and liabilities of the Target as at 30 November 2011 HK$’000 Note 2 — — — — — — — 10,694 — 10,694 10,694	Other adjustment HK$’000 Note 3 — — — — — — — (10,694) — (10,694) (10,694)
		109,263
		11,655 53,654 — 81,652
		146,961
		256,224

– 62 –

APPENDIX IV

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

Pro forma adjustments

LIABILITIES Non-current liabilities Convertible bonds Long service payment obligations Current liabilities Trade and other payables Amount due to fellow subsidiaries Current income tax liabilities Total liabilities Net assets	Consolidated assets and liabilities of the Company as at 30 September 2011 HK$’000 Note 1 — 28 28 28,573 3,281 4,411 36,265 36,293 144,331	Assets and liabilities of the Target as at 30 November 2011 HK$’000 Note 2 — — — 8 — 1,616 1,624 1,624 9,070	Other adjustment HK$’000 Note 3 — — — (8) — (1,616) (1,624) (1,624) (9,070)	Other adjustment HK$’000 Note 4 70,386 — 70,386 — — — — 70,386 5,214	Unaudited pro forma statement of assets and liabilities of the Enlarged Group HK$’000 70,386 28
					70,414
					28,573 3,281 4,411
					36,265
					106,679
					149,545

(b) Notes to unaudited pro forma statement of assets and liabilities of the Enlarged Group
The figures are extracted from the consolidated balance sheet of the Company as at 30 September 2011 as set out in the published unaudited interim report of the Company for the six months ended 30 September 2011.
The figures are extracted from the audited balance sheet of the Target as at 30 November 2011 set out in the financial information section of the accountant’s report in Appendix II of this circular.

– 63 –

APPENDIX IV

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

The adjustment represents the assignment of the Target’s right to receive the royalty fees payable by its fellow subsidiary to its immediate holding company, the settlement of all liabilities including the tax liabilities by the Target, and the distribution of the interim dividend to the Target’s immediate holding company immediately before the completion of the Acquisition pursuant to the Sale and Purchase Agreement.
The adjustment represents the issuance of the Convertible Bond with a principal amount of HK$75,600,000 as the consideration for the acquisition of the Target as if the Completion had taken place on 30 September 2011. Pursuant to IFRS 2 Share Based Payment, the Convertible Bond is recognised at the fair value of the acquired asset which corresponds to the principal amount of the Convertible Bond. By way of issuing the Convertible Bond, the Company has granted the Seller the right to choose whether the transaction is settled in cash or by issuing Shares. Accordingly, the Convertible Bond is split into debt component and equity component. Based on the valuation conducted by an independent business valuation company, the fair value of the liability component is estimated to be HK$70,386,000, as if the Convertible Bond was issued on 30 September 2011; and the remainder of the Convertible Bond amounting to HK$5,214,000 was recognised and included in shareholders’ equity.

The Trademarks and the Past Contents acquired are subject to an amortisation of 30 years.

Since the fair value of the Convertible Bond and the Trademarks and the Past Contents as at the date of Completion may be different from the respective fair value used in the preparation of the above unaudited pro forma statement of assets and liabilities, the final amount of the Convertible Bond and the Trademarks may be different from the estimated amount as shown in this Appendix and the difference may be significant.

No adjustment has been made to reflect any trading result or other transaction of the Company and the Target entered into subsequent to the six months ended 30 September 2011 and the eight months ended 30 November 2011 respectively.

– 64 –

APPENDIX IV UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

B. REPORT FROM THE REPORTING ACCOUNTANT ON UNAUDITED PROFORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

The following is the text of a report received from PricewaterhouseCoopers, Certified Public Accountants, Hong Kong, for the purpose of incorporation in this circular.

==> picture [67 x 48] intentionally omitted <==

ACCOUNTANT’S REPORT ON UNAUDITED PRO FORMA STATEMENT OF ASSETS AND LIABILITIES TO THE DIRECTORS OF ONE MEDIA GROUP LIMITED

We report on the unaudited pro forma financial information set out on pages 62 to 64 under the heading of ‘‘Unaudited Pro Forma Financial Information of the Enlarged Group’’ (the ‘‘Unaudited Pro Forma Financial Information’’) in Appendix IV of the circular dated 10 May 2012 (the ‘‘Circular’’) of One Media Group (the ‘‘Company’’), in connection with the proposed acquisition of Ming Pao Finance Limited (the ‘‘Acquisition’’) by the Company. The Unaudited Pro Forma Financial Information has been prepared by the directors of the Company, for illustrative purposes only, to provide information about how the Acquisition might have affected the relevant financial information of the Company and its subsidiaries (hereinafter collectively referred to as the ‘‘Group’’). The basis of preparation of the Unaudited Pro Forma Financial Information is set out on pages 63 to 64 of the Circular.

Respective Responsibilities of Directors of the Company and the Reporting Accountant

It is the responsibility solely of the directors of the Company to prepare the Unaudited Pro Forma Financial Information in accordance with paragraph 4.29 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the ‘‘Listing Rules’’) and Accounting Guideline 7 ‘‘Preparation of Pro Forma Financial Information for Inclusion in Investment Circulars’’ issued by the Hong Kong Institute of Certified Public Accountants (the ‘‘HKICPA’’).

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

– 65 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

APPENDIX IV

Basis of Opinion

We conducted our engagement in accordance with Hong Kong Standard on Investment Circular Reporting Engagements 300 ‘‘Accountants’ Reports on Pro Forma Financial Information in Investment Circulars’’ issued by the HKICPA. Our work, which involved no independent examination of any of the underlying financial information, consisted primarily of comparing the consolidated statement of assets and liabilities as at 30 September 2011 as set out in the ‘‘Pro forma Financial Information’’ section of this circular with the financial information of the Company for the six months ended 30 September 2011 as set out in the 2011 interim report of the Company, considering the evidence supporting the adjustments and discussing the Unaudited Pro Forma Financial Information with the directors of the Company.

We planned and performed our work so as to obtain the information and explanations we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the Unaudited Pro Forma Financial Information has been properly compiled by the directors of the Company on the basis stated, that such basis is consistent with the accounting policies of the Group and that the adjustments are appropriate for the purposes of the Unaudited Pro Forma Financial Information as disclosed pursuant to paragraph 4.29(1) of the Listing Rules.

The Unaudited Pro Forma Financial Information is for illustrative purposes only, based on the judgements and assumptions of the directors of the Company, and, because of its hypothetical nature, does not provide any assurance or indication that any event will take place in the future and may not be indicative of the financial position of the Group as at 30 September 2011 or any future date.

Opinion

In our opinion:

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

PricewaterhouseCoopers Certified Public Accountants Hong Kong, 10 May 2012

– 66 –

APPENDIX V

VALUATION REPORT

==> picture [73 x 42] intentionally omitted <==

Unit 3806, 38/F, China Resources Building, 26 Harbour Road, Wan Chai, Hong Kong Tel (852) 2529 6878 Fax (852) 2529 6806 E-mail [email protected] http://www.roma-international.com

10 May 2012

One Media Group Limited 16/F, Block A, Ming Pao Industrial Centre, 18 Ka Yip Street, Chai Wan, Hong Kong

Case Ref: KY/IA582/APR11

Dear Sir/Madam,

Re: Valuation of Fair Value of the Intangible Assets

In accordance with the instructions from One Media Group Limited (hereinafter referred to as the ‘‘Company’’), we have performed the valuation of the fair value of the intangible assets (hereinafter together referred to as the ‘‘Intangible Assets’’) owned by Ming Pao Finance Limited (hereinafter referred to as the ‘‘Business Enterprise’’) as at 30 November 2011 (hereinafter referred to as the ‘‘Date of Valuation’’).

This report states the purpose and basis of valuation, scope of work, economic and industry overviews, overviews of the Business Enterprise and the Intangible Assets, major assumptions, valuation methodology, limiting conditions, and presents our opinion of value.

1. PURPOSE OF VALUATION

This report is prepared solely for the use of the directors and management of the Company. In addition, Roma Appraisals Limited (hereinafter referred to as ‘‘Roma Appraisals’’) acknowledges that this report may be made available to the Company for public documentation purpose and included in the Company’s circular only.

Roma Appraisals assumes no responsibility whatsoever to any person other than the Company in respect of, or arising out of, the contents of this report. If others choose to rely in any way on the contents of this report they do so entirely on their own risk.

2. SCOPE OF WORK

Our valuation conclusion is based on the assumptions stated herein and the information provided by the management of the Company and/or its representative(s) (together referred as the ‘‘Management’’).

– 67 –

VALUATION REPORT

APPENDIX V

In preparing this report, we have had discussions with the Management in relation to the development and prospect of the publishing industry in Hong Kong, and the development, operations and other relevant information of the Intangible Assets. As part of our analysis, we have reviewed such financial information and other pertinent data concerning the Intangible Assets provided to us by the Management and have considered such information and data as attainable and reasonable.

We have no reason to believe that any material facts have been withheld from us, however, we do not warrant that our investigations have revealed all of the matters which an audit or more extensive examination might disclose.

3. ECONOMIC OVERVIEW

3.1 Overview of the Economy in Hong Kong

Hong Kong has long been a free market economy highly dependent on international trade and finance. For this reason, it was heavily exposed to the global economic turmoil that began in 2008 which resulted in a sharp drop of the Gross Domestic Product (‘‘GDP’’) of Hong Kong in the first quarter of 2009. Since then, the economy of Hong Kong has been recovering. The GDP of Hong Kong in the second quarter in 2011 was approximately HK$448,441 million, a 0.6% decrease over the last quarter and 10.5% higher than the same quarter in 2010. The preliminary GDP for the third quarter of 2011 is estimated to be HK$487,390 million, which is 8.8% higher than the same period in previous year. Figure 1 and figure 2 illustrate the trend of Hong Kong’s GDP over the past few quarters.

Figure 1 — Hong Kong’s Quarterly GDP from the First Quarter of 2008 to the Second Quarter of 2011

HK$ million

==> picture [373 x 198] intentionally omitted <==

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

500,000
450,000
400,000
350,000
300,000
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
2008 2009 2010 2011
----- End of picture text -----

Source: Hong Kong Census and Statistics Department

– 68 –

VALUATION REPORT

APPENDIX V

Figure 2 — Percentage Change of Hong Kong’s GDP from the First Quarter of 2008 to the Second Quarter of 2011

==> picture [380 x 198] intentionally omitted <==

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

15%
10%
5%
0%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
2008 2009 2010 2011
-5%
-10%
-15%
----- End of picture text -----

Source: Hong Kong Census and Statistics Department

3.2 Inflation in Hong Kong

The inflation rate in Hong Kong was volatile in the past five years. According to the International Monetary Fund, the inflation rate in Hong Kong in 2006 and 2007 stayed at 2.0%, and then increased sharply to 4.3% in 2008. The inflation rate dropped again to 0.6% in 2009. It rebounded in 2010 and reached 2.3%. The five-year average inflation rate from 2006 to 2010 is 2.2%, which was considered as the long-term inflation rate in Hong Kong. Figure 3 shows the historical trend of Hong Kong’s inflation rate from 2006 to 2010.

Figure 3 — Hong Kong’s Inflation Rate from 2006 to 2010

==> picture [379 x 213] intentionally omitted <==

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

%
4.5
4.0
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0.0
2006 2007 2008 2009 2010
----- End of picture text -----

Source: International Monetary Fund

– 69 –

VALUATION REPORT

APPENDIX V

4. INDUSTRY OVERVIEW

4.1 Overview of the Publishing Industry in Hong Kong

Hong Kong has a well-developed publishing industry which is served by a great variety of products such as newspaper, magazines and books, in Chinese, English and other languages, and by local and international publishers. There are many different types of publications in Hong Kong, such as general news, celebrity news, sports, fashion and design and food magazines.

Most publications in Hong Kong are run under commercial principles. Audience often determines what is provided by the publications. Due to the fierce competition in the publishing market and a strong favor towards leisure and entertainment readings by the audience, infotainment becomes the mainstream of the publications in Hong Kong. Under the notions of press freedom and social responsibility, government intervention in the industry is minimal and regulation largely relies on self-discipline of the publishers.

Hong Kong’s publishing industry is gradually adapting to digitalization trend. More publishers start launching online publications and mobile applications. E-books and e-magazines are gaining popularity as smartphones prevail in Hong Kong. The use of digital technology enables the publishers to reach more clients, even those overseas. Printed media is gradually merging with other forms of media, with text, graphics and videos transmitted through the internet. Digitalization should provide numerous opportunities for the development of the industry.

A more digitalized reading habit would hurt the sales of printed media. The transition to digital media is just a matter of time and publishers are cautious in launching their e-business. This digital transition is still in its infancy, the number of e-books published in Hong Kong in 2010 took up only 2% of the total market share, according to a news article from South China Morning Post. A major obstacle of the development of e-publications is that e-readers are not popular in Hong Kong, and mobile devices have been the main distribution channels. Sales revenues have to be shared with application platforms and sales agents. Another major problem is piracy as it is relatively easy to search for infringed copies of the publications. It is, therefore, important for publishers to balance the costs and benefits of launching e-publications.

5. THE BUSINESS ENTERPRISE

The Business Enterprise is the exclusive owner of the trademarks Ming Pao Weekly, City Children’s Weekly and Hi-Tech Weekly (hereinafter collectively referred to as the ‘‘Trademarks’’) and all editorial and other contents of all issues of Ming Pao Weekly, City Children’s Weekly and Hi-Tech Weekly published prior to 1 February 2004 (hereinafter collectively referred to as the ‘‘Past Contents’’).

6. BASIS OF VALUATION

Our valuation is conducted on a fair value basis. Fair value is defined as ‘‘the estimated amount for which an asset could be exchanged, or a liability settled, between willing parties in an arm’s length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and ’’ without compulsion .

– 70 –

VALUATION REPORT

APPENDIX V

7. THE INTANGIBLE ASSETS

The International Valuation Standards define intangible assets as: ‘‘assets that manifest themselves by their economic properties; they do not have physical substance; they grant rights and privileges to their own; and usually generate income for their owner. Intangible assets can be categorized as arising from: rights, relationships, grouped intangibles or intellectual property’’. Moreover, an intangible asset can also be defined as ‘‘a claim to future benefits that does not have a physical or financial embodiment’’.

As for the Business Enterprise, the Intangible Assets identified were the Trademarks and the Past Contents.

7.1 The Trademarks

A trademark is defined as any word, name, symbol or device or any combination thereof to identify and distinguish goods of the owner, including a unique product, from those manufactured or sold by others and to indicate the source of the goods. A trademark is also an assurance of quality. Goods or services with a given trademark can give consumers an impression on the quality of them.

The Trademarks Ming Pao Weekly, City Children’s Weekly and Hi-Tech Weekly were registered with the Trade Marks Registry of the Intellectual Property Department in Hong Kong.

– 71 –

VALUATION REPORT

APPENDIX V

7.1.1 Ming Pao Weekly

Trade Mark Number : 300163430 Class & Specification : Classes 16 and 41 Date of Registration : 23 February 2004 Validation Period : 10 years from the date of registration Children’s’ss Weekly Trade Mark Number : 300163412AA Class & Specification : Classes 16 and 41 Date of Registration : 23 February 2004 Validation Period : 10 years from the date of registration Trade Mark Number : 300163412AB Class & Specification : Classes 16 and 41 Date of Registration : 23 February 2004 Validation Period : 10 years from the date of registration Trade Mark Number : 300414206 Class & Specification : Classes 16, 35 and 41 Date of Registration : 4 May 2005 Validation Period : 10 years from the date of registration Weekly Trade Mark Number : 300466010 Application Number : 300163421 Class & Specification : Classes 16 and 35 Date of Registration : 28 July 2005 Validation Period : 10 years from the date of registration Trade Mark Number : 300466029 Application Number : 300163421 Class & Specification : Classes 16 and 35 Date of Registration : 28 July 2005 Validation Period : 10 years from the date of registration

7.1.2 City Children’s’ss Weekly

7.1.3 Hi-Tech Weekly

7.2 The Past Contents

The Past Contents refer to all editorial and other contents of all issues of Ming Pao Weekly, City Children’s Weekly and Hi-Tech Weekly published prior to 1 February 2004.

As advised by the Management, the Business Enterprise currently has not planned to utilize the Past Contents to generate any economic benefits in the foreseeable future, therefore, we considered that the fair value of the Past Contents should be insignificant as at the Date of Valuation.

– 72 –

VALUATION REPORT

APPENDIX V

8. INVESTIGATION AND ANALYSIS

Our investigation included discussions with members of the Management in relation to the development and prospect of the publishing industry in Hong Kong, the development, operations and other relevant information of the Intangible Assets. In addition, we have made relevant inquiries and obtained further information and statistical figures regarding the publish industry from external public sources as we considered necessary for the purpose of the valuation.

As part of our analysis, we have reviewed such financial information and other pertinent data concerning the Intangible Assets provided to us by the Management and have considered such information and data as attainable and reasonable. We have also consulted other sources of financial and business information.

The valuation of the Intangible Assets requires consideration of all pertinent factors, which may or may not affect the fair value. The factors considered in the valuation include, but are not necessarily limited to, the following:

. The nature and prospect of the Intangible Assets;
. The financial condition of the Business Enterprise;
. The economic outlook in general and the specific economic environment and market elements affecting the business, industry and market;
. Relevant licenses and agreements of the Trademarks;
. The business risk of the Intangible Assets such as the ability in maintaining competent technical and professional personnel; and
. Investment returns and market transactions of entities engaged in similar intangible assets.

9. VALUATION METHODOLOGY

There are generally three accepted approaches to obtain the fair value of the Trademarks, namely the Market-Based Approach, Income-Based Approach and Cost-Based Approach. Each of these approaches is appropriate in one or more circumstances, and sometimes, two or more approaches may be used together. Whether to adopt a particular approach will be determined by the most commonly adopted practice in valuing intangible assets that are similar in nature.

9.1 Market-Based Approach

The Market-Based Approach values an intangible asset by comparing prices at which other intangible assets in a similar nature changed hands in arm’s length transactions. The underlying theory of this approach is that one would not pay more than one would have to for an equally desirable alternative. By adopting this approach, the valuer will first look for valuation indication of prices of other similar intangible assets in companies that have been sold recently.

– 73 –

VALUATION REPORT

APPENDIX V

The right transactions employed in analyzing indications of values need to be sold at an arm’s length basis, assuming that the buyers and sellers are well informed and have no special motivations or compulsions to buy or to sell.

9.2 Income-Based Approach

The Income-Based Approach focuses on the economic benefits due to the income producing capability of the intangible asset. The underlying theory of this approach is that the value of an intangible asset can be measured by the present worth of the economic benefits to be received over the useful life of the intangible asset. Based on this valuation principle, the Income-Based Approach estimates the future economic benefits and discounts them to their present values using a discount rate appropriate for the risks associated with realizing those benefits.

Alternatively, this present value can be calculated by capitalizing the economic benefits to be received in the next period at an appropriate capitalization rate. This is subject to the assumption that the intangible asset will continue to maintain stable economic benefits and growth rate.

9.3 Cost-Based Approach

The Cost-Based Approach values an intangible asset by aggregating the costs of developing the asset to its current condition, or replacing that asset.

9.4 Trademark Valuation

In the process of the valuation on the Trademarks, we have taken into account of the uniqueness of its operation and the industry in which it participates. The Market-Based Approach was not adopted in this case because most of the important assumptions of the transactions of comparable trademarks were hidden. The Cost-Based Approach was also not adopted because it could not reflect the fair value of the Trademarks. We have therefore considered the adoption of the Income-Based Approach in arriving at the fair value of the Trademarks. In particular, we have adopted the relief-from-royalty method.

The relief-from-royalty method is based upon the incremental after-tax royalty accruing to the owner by virtue of the fact that the owner does not have to pay a fair royalty to a third party for the use of that asset. Accordingly, a portion of the Trademarks’ earnings, equal to the after-tax royalty that would have been paid for use of the Trademarks can be attributed to the Trademarks. The value of the Trademarks was derived by discounting the future after-tax royalty attributable to the Trademarks to present value using a discount rate that is appropriate for the expected risks associated with realizing the royalty.

In applying the relief-from-royalty method, we had to determine a fair royalty rate for the Trademarks. The best evidence is to inquire whether the owner of the Trademarks has granted any licensees to other companies to use the Trademarks.

– 74 –

VALUATION REPORT

APPENDIX V

9.4.1 Discount Rate

In calculating the discount rate, we first obtained the weighted average cost of capital (‘‘WACC’’) of the Business Enterprise, which was calculated by the formula below:

WACC = We x Re + Wd x Rd x (1 - Tc)

In which Re = Cost of equity; Rd = Cost of debt; We = Weight of equity value to enterprise value; Wd = Weight of debt value to enterprise value; and Tc = Corporate tax rate.

The cost of equity was calculated by using the following formula:

Re = Rf + β x Market Risk Premium + Other Risk Premium

In which Re = Cost of equity; Rf = Risk-free rate; and β = Beta coefficient.

The discount rate of the Trademarks was calculated by the following formula:

Discount Rate = WACC + Additional Premium for Intangible Asset

The risk-free rate, market expected return and the betas of the comparable companies were obtained from Bloomberg as at the Date of Valuation.

The risk-free rate of 1.52% adopted was the yield rate of Hong Kong 15-year government bond. The market expected return of Hong Kong was 13.61% and the market risk premium is calculated by market expected return minus the risk-free rate, arriving at 12.09%.

The beta coefficient measures the risk of the Business Enterprise relative to the market. We estimated the beta coefficient of 0.87 by taking the average of the beta coefficients of listed companies which their operations are related to magazine publishing businesses in Hong Kong. The comparable companies include Oriental Press Group Limited (Stock Code: 18.HK), Next Media Limited (Stock Code: 282.HK), Hong Kong Economic Times Holdings Limited (Stock Code: 423.HK), One Media Group Limited (Stock Code: 426.HK), New Media Group Holdings Limited (Stock Code: 708.HK) and Sing Tao News Corporation Limited (Stock Code: 1105.HK).

Stocks of smaller companies are usually less liquid and have lower valuations because they have a higher cost of capital and higher returns on average due to higher size premiums. A size premium study has been conducted by Ibbotson Associates, Inc., a leading authority on asset allocation with expertise in capital market expectations and portfolio

– 75 –

VALUATION REPORT

APPENDIX V

implementation, to analyze the relationship between size premium and company size on a thousand companies listed in the New York Stock Exchange, American Stock Exchange and National Association of Securities Dealers Automated Quotations. The results of the study illustrated that the Business Enterprise was classified as a company of micro-capitalization and thus a size premium of 4.07% was added in determining the cost of equity.

We have also considered risk factors specific to the business operations of the Business Enterprise. Since there is fierce competition in the publishing industry with the threat of new entrants, a specific risk premium of 2.00% was added to reflect the uncertainty of the royalty streams in the financial projections. Hence, we arrived at 18.10% of cost of equity.

The cost of debt of 5.00% adopted was the Hong Kong prime rate extracted from Bloomberg as at the Date of Valuation. The debt-to-equity ratio of 8.39% was estimated by taking the average of the debt-to-equity ratios of the abovementioned comparable companies. With the corporate tax rate of Hong Kong of 16.50%, the after-tax cost of debt was calculated as 4.18%. Furthermore, additional premium for intangible assets of 2.00% was adopted to reflect that intangible assets are generally viewed as to be riskier than business entities.

Accounting for the above items, we concluded the discount rate of 19.02% as at the Date of Valuation.

In determining the fair value of the Trademarks, two specific assumptions have been considered together with the aforesaid major assumptions, which are listed below:

. Royalty rate of 7.00% based on the prevailing royalty agreements of Ming Pao Weekly was adopted; and
. The economic lives of the Trademarks were assumed to be 30 years.

It is noted that the Company is one of the long-established market players in the publishing market. As discussed with the management of the Company, the best estimate of the economic lives of the Trademarks was 30 years, which is also consistent to the Company’s accounting policy.

With reference to the historical information of the Trademarks as provided by the Management, the revenues contributed by the three magazines Ming Pao Weekly, City Children’s Weekly and Hi-Tech Weekly grew steadily at an average rate of 3.62% from 2005 to 2010 (excluding 2009 which was the year of global economic downturn). Besides, online publications and mobile applications of these magazines have been launched to the market in order to act in concert with the digitalization trend. It is convincible that these magazines will generate sustainable revenues in medium to long term future as the industry undergoes a digitalization transition.

As advised by the Management, there was no substantial obstacle to renew the Trademarks upon expiry in the future. By considering the nature, development and market position of the Trademarks in the publishing industry, the estimated economic lives of the Trademarks were 30 years.

– 76 –

VALUATION REPORT

APPENDIX V

10. MAJOR ASSUMPTIONS

We have adopted certain specific assumptions in our valuation and the major ones are as follows:

. As advised by the Management, City Children’s Weekly and Hi-Tech Weekly ceased publication on 1 April 2008 and 1 March 2011 respectively. Therefore, only Ming Pao Weekly has been included in the valuation such that the future revenue streams are solely based on Ming Pao Weekly;
. The future streams of Ming Pao Weekly were estimated on a pre-tax basis;
. With reference to the average growth rate of historical revenues contributed by Ming Pao Weekly from 2005 to 2010 (excluding 2009 which was the year of global economic downturn), the future revenue streams of Ming Pao Weekly from 2012 to 2017 was assumed to grow steadily at 6.14%. From 2018 to the expiry of the estimated economic life of the Trademarks, the growth rate of the future revenue streams of Ming Pao Weekly was assumed to slow down to 3.40%, which was the average 5-average future Hong Kong inflation rate sourced from the International Monetary Fund;
. The future after-tax royalty in each year was derived based on the future pre-tax revenue of Ming Pao Weekly in the corresponding year, the royalty rate of 7.00% adopted and the corporate tax rate in Hong Kong of 16.50%;
. The economic lives of the Trademarks were estimated as 30 years with reference to the best estimate of the Management, the Company’s accounting policy, and the nature, development and market position of the Trademarks;
. All relevant legal approvals and business certificates or licenses to operate the business in the localities in which the Business Enterprise operates or intends to operate would be officially obtained and renewable upon expiry;
. There will be sufficient supply of technical staff in the industry in which the Business Enterprise operates, and the Business Enterprise will retain competent management, key personnel and technical staff to support its ongoing operations and developments;
. There will be no major changes in the current taxation laws in the localities in which the Business Enterprise operates or intends to operate and that the rates of tax payable shall remain unchanged and that all applicable laws and regulations will be complied with;
. There will be no major changes in the political, legal, economic or financial conditions in the localities in which the Business Enterprise operates or intends to operate, which would adversely affect the revenues attributable to and profitability of the Intangible Assets; and
. Interest rates and exchange rates in the localities for the operation of the Business Enterprise will not differ materially from those presently prevailing.

– 77 –

VALUATION REPORT

APPENDIX V

11. INFORMATION REVIEWED

Our opinion requires consideration of relevant factors affecting the fair value of the Intangible Assets. The factors considered included, but were not necessarily limited to, the following:

. Financial statements of the Business Enterprise;
. Historical information of the Intangible Assets;
. Market trends of the publishing industry in Hong Kong;
. Registration and related documents of the Trademarks;
. General descriptions in relation to the Intangible Assets; and
. Economic outlook in Hong Kong.

We have discussed the details with the Management. We have also conducted research from various sources to verify the reasonableness and fairness of information provided and we believe that such information is reasonable and reliable. We have assumed the accuracy of information provided and relied to a considerable extent on such information in arriving at our opinion.

12. LIMITING CONDITIONS

The valuation reflects facts and conditions existing at the Date of Valuation. Subsequent events have not been considered and we are not required to update our report for such events and conditions.

To the best of our knowledge, all data set forth in this report are reasonable and accurately determined. The data, opinions, or estimates identified as being furnished by others that have been used in formulating this analysis were gathered from reliable sources; yet, no guarantee is made nor liability assumed for their accuracy.

We have relied to a considerable extent on information provided by the Management in arriving at our opinion of value. We are not in the position to verify the accuracy of all information provided to us. However, we have no reason to doubt the truth and accuracy of the information provided to us and to doubt that any material facts have been omitted from the information provided. No responsibilities for the operation and financial information that have not been provided to us are accepted.

We have not investigated the title to or any legal liabilities of the Intangible Assets and have assumed no responsibility for the title to the Intangible Assets valued.

We would particularly point out that our valuation was based on the information such as the company background, business nature and market share of the Business Enterprise provided to us.

Our conclusion of the fair value was derived from generally accepted valuation procedures and practices that rely substantially on the use of various assumptions and the consideration of many uncertainties, not all of which can be easily quantified or ascertained.

– 78 –

VALUATION REPORT

APPENDIX V

We assume no responsibility whatsoever to any person other than the directors and management of the Company in respect of, or arising out of, the content of this report. If others choose to rely in any way on the contents of this report, they do so entirely on their own risk. The title of this report shall not pass to the Company until all professional fee has been paid in full.

13. REFERENCES

The list of sources of information cited in this report is stated as follows:

. Bloomberg;
. Hong Kong Census and Statistics Department;
. Hong Kong Trade Development Council;
. International Monetary Fund; and
. South China Morning Post.

14. REMARKS

Unless otherwise stated, all monetary amounts stated in this valuation report are in Hong Kong Dollars (HK$).

We hereby confirm that we have neither present nor prospective interests in the Company and its holding companies, subsidiaries and associated companies, or the values reported herein.

15. OPINION OF VALUE

Based on the investigation and analysis stated above and on the valuation method employed, the fair value of the Trademarks as at the Date of Valuation, in our opinion, was reasonably stated as HK$76,000,000 (HONG KONG DOLLARS SEVENTY SIX MILLION ONLY).

Yours faithfully, For and on behalf of

Roma Appraisals Limited

Kelvin Luk H.C. Kwan MIBA CFA Director Head of Valuation

Note:

Mr. Luk is a member of the Institute of Business Appraisers. He has over 6 years of experience in valuation and consultation related to similar assets or companies engaged in similar business activities worldwide as that of the Business Enterprise.

Mr. Kwan is a member of the CFA Institute. He has over 10 years of experience in valuation of similar assets or companies engaged in similar business activities as that of the Business Enterprise.

This report is co-authorised by Ms. Angela Kwan, Mr. Terry Hui, and Mr. Stephen Chan.

– 79 –

LETTER FROM PRICEWATERHOUSECOOPERS

APPENDIX VI

The following is the text of a report received from PricewaterhouseCoopers, Certified Public Accountants, Hong Kong, for the purpose of incorporation in this circular.

==> picture [67 x 48] intentionally omitted <==

REPORT FROM REPORTING ACCOUNTANT ON DISCOUNTED FUTURE ESTIMATED CASH FLOWS IN CONNECTION WITH THE FAIR VALUE OF THE TRADEMARKS OWNED BY MING PAO FINANCE LIMITED

TO THE BOARD OF DIRECTORS OF ONE MEDIA GROUP LIMITED

We have been engaged to report on the calculations of the discounted future estimated cash flows on which the valuation dated 30 November 2011 prepared by Roma Appraisals Limited in respect of the appraisal of the fair value of the Trademarks (the ‘‘Fair Value’’) owned by Ming Pao Finance Limited (the ‘‘Target Company’’) is based. The Fair Value is set out in Appendix V of the circular of One Media Group Limited (the ‘‘Company’’) dated 10 May 2012 (the ‘‘Circular’’) in connection with the acquisition by the Company of a 100% equity interest in the Target Company by the Company. The Fair Value based on the discounted future estimated cash flows is regarded as a profit forecast under Rule 14.61 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the ‘‘Listing Rules’’).

Directors’ Responsibility for the Discounted Future Estimated Cash Flows

The directors of the Company are responsible for the preparation of the discounted future estimated cash flows in accordance with the bases and assumptions determined by the directors and as set on page 77 of the Circular. This responsibility includes carrying out appropriate procedures relevant to the preparation of the discounted future estimated cash flows for the Fair Value and applying an appropriate basis of preparation; and making estimates that are reasonable in the circumstances.

Reporting Accountant’s Responsibility

It is our responsibility to report, as required by paragraph 29(2) of Appendix 1B of the Listing Rules, on the calculations of the discounted future estimated cash flows on which the Fair Value is based. We are not reporting on the appropriateness and validity of the bases and assumptions on which the discounted future estimated cash flows are based and our work does not constitute any valuation of the Trademarks or the Target Company.

– 80 –

LETTER FROM PRICEWATERHOUSECOOPERS

APPENDIX VI

We conducted our work in accordance with the Hong Kong Standard on Assurance Engagements 3000 ‘‘Assurance Engagements Other Than Audits or Reviews of Historical Financial Information’’. This standard requires that we comply with ethical requirements and plan and perform the assurance engagement to obtain reasonable assurance on whether the discounted future estimated cash flows, so far as the calculations are concerned, has been properly compiled in accordance with the bases and assumptions as set out on page 77 of the Circular. We reviewed the arithmetical calculations and the compilation of the discounted future estimated cash flows in accordance with the bases and assumptions.

The discounted cash flows do not involve the adoption of accounting policies. The discounted cash flows depend on future events and on a number of assumptions which cannot be confirmed and verified in the same way as past results and not all of which may remain valid throughout the period. Our work has been undertaken for the purpose of reporting solely to you under paragraph 29(2) of Appendix 1B of the Listing Rules and for no other purpose. We accept no responsibility to any other person in respect of our work, or arising out of or in connection with our work.

Opinion

Based on the foregoing, in our opinion, the discounted future estimated cash flows, so far as the calculations are concerned, has been properly compiled in all material respects in accordance with the bases and assumptions made by directors of the Company as set out on page 77 of the Circular.

PricewaterhouseCoopers Certified Public Accountants Hong Kong, 10 May 2012

– 81 –

LETTER FROM GUANGDONG SECURITIES LIMITED

APPENDIX VII

10 May 2012

The following is the text of the letter from Guangdong Securities Limited, the Company’s financial advisers in connection with the projection underlying the fair value of the Trademarks in the valuation report prepared by Roma.

==> picture [213 x 34] intentionally omitted <==

The Board of Directors One Media Group Limited

16th Floor, Block A Ming Pao Industrial Centre 18 Ka Yip Street Chaiwan, Hong Kong

Dear Sirs,

Terms used in this letter have the same meanings as defined elsewhere in the circular of One Media Group Limited dated 10 May 2012 (the ‘‘Circular’’), of which this letter forms part, unless the context requires otherwise. We refer to the valuation dated 30 November 2011 prepared by Roma in relation to the appraisals of the fair value of the Trademarks (the ‘‘Fair Value’’). According to the valuation report from Roma as set out in Appendix V to the Circular, the Fair Value has been arrived at based on the relief-from-royalty method, which takes into account the projection on incremental after-tax royalty accruing to the owner by virtue of the fact that the owner does not have to pay a fair royalty to a third party for the use of the Trademarks for the period from 1 December 2011 to 30 November 2041 (the ‘‘Projection’’).

We have reviewed the Projection and other relevant information and documents, for which you as the Directors are solely responsible, and discussed with you and Roma the relevant information and documents provided by you which formed part of the bases and assumptions upon which the Projection has been made. In addition, we have considered the report addressed to the Board from PricewaterhouseCoopers as set out in Appendix VI to the Circular regarding the accounting policies and the arithmetical accuracy of the calculations upon which the Projection has been made.

On the basis of the foregoing, we are of the opinion that the Projection, for which the Directors are solely responsible, has been prepared after due and careful enquiry.

Yours faithfully For and on behalf of Guangdong Securities Limited Graham Lam

Managing Director

– 82 –

GENERAL INFORMATION

APPENDIX VIII

1. RESPONSIBILITY STATEMENT

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

2. SHARE CAPITAL

The authorised and issued and fully paid up share capital of the Company as at the Latest Practicable Date was as follows:

Authorised:	HK$
4,000,000,000 Shares	4,000,000
Issued and fully paid:
400,000,000 Shares	400,000

The authorised and issued and fully paid up share capital of the Company upon the conversion of the Convertible Bonds or issue of the Conversion Shares up to the minimum public float requirement (with the balance of the Consideration held as unconverted Convertible Bonds) will be as follows:

Authorised: 4,000,000,000 Shares Issued and fully paid: 400,000,000 Shares in issue as at the Latest Practicable Date 84,000,000 Conversion Shares to be issued upon conversion of the Convertible Bond 484,000,000 Shares	HK$ 4,000,000 400,000 84,000
	484,000

3. DISCLOSURE OF INTERESTS

As at the Latest Practicable Date, the interests or short positions of the Directors, chief executives of the Company or their respective associates 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 were notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests or short positions which they are taken or deemed to have under such provisions of the SFO), or which were required, pursuant to section 352 of the SFO, to be entered in the register

– 83 –

GENERAL INFORMATION

APPENDIX VIII

referred to therein, or which were required, pursuant to the Model Code for Securities Transactions by Directors of Listed Companies (the ‘‘Model Code’’), to be notified to the Company and the Stock Exchange, were as follows:

(a) Interests in the Company’s shares

Number of shares/underlying shares held

						Percentage of
				Interests in		issued ordinary
				underlying		shares as at
			Total	shares		Latest
	Personal	Corporate	interests in	pursuant to	Aggregate	Practicable
Name of Director	interests	interests	shares	share options	interest	Date
				(Note)
Tan Sri Datuk Sir
TIONG Hiew King	—	292,700,000	292,700,000	1,250,000	293,950,000	73.49%
Mr. TIONG Kiew Chiong	4,000,000	—	4,000,000	1,250,000	5,250,000	1.31%
Mr. LAM Pak Cheong	—	3,000,000	3,000,000	1,000,000	4,000,000	1.00%
Mr. YU Hon To, David	—	—	—	150,000	150,000	0.04%
Mr. SIT Kien Ping, Peter	—	—	—	150,000	150,000	0.04%
Mr. TAN Hock Seng, Peter	200,000	—	200,000	150,000	350,000	0.09%

All the interests stated above represent long positions in the Shares.

Note: These represent share options granted by the Company to the relevant Directors under a pre-IPO share option scheme conditionally approved by MCI and conditionally approved and adopted by the Company on 26 September 2005 to subscribe for shares of the Company.

(b) Interests in shares in MCI

Number of shares held

					Approximate
					percentage of
					issued ordinary
					shares in MCI
				Total	as at Latest
	Personal	Family	Corporate	interests in	Practicable
Name of Director	interests	interests	interests	shares	Date
Tan Sri Datuk Sir
TIONG Hiew King	87,109,058	234,566	796,734,373	884,077,997	52.40%
Mr. TIONG Kiew Chiong	3,607,783	—	—	3,607,783	0.21%

All the interests stated above represent long positions in the share of MCI.

Save as disclosed herein, as at the Latest Practicable Date, none of the Directors and chief executives of the Company and their respective associates had any interests or short positions in any shares, underlying shares or debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) which were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests

– 84 –

GENERAL INFORMATION

APPENDIX VIII

and short positions which they are deemed or taken to have under provisions of the SFO), or which were required, pursuant to Section 352 of the SFO, to be entered in the register referred to therein, or which were required, pursuant to the Model Code, to be notified to the Company and the Stock Exchange.

No contract or arrangement subsisting at the date hereof in which a Director is materially interested and which is significant in relation to the business of the Enlarged Group.

As at the Latest Practicable Date, none of the Directors had any interest, direct or indirect, in any asset which, since 31 March 2011, the date to which the latest published audited financial statements of the Group were made up, have been acquired or disposed of by or leased to any member of the Group or are proposed to be acquired or disposed of by or leased to any member of the Enlarged Group.

As at the Latest Practicable Date, save as disclosed in the notes to paragraph 4 below, none of the Directors was a director or employee of a company which had any interest or short position in the shares and 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.

4. SUBSTANTIAL SHAREHOLDERS

As at the Latest Practicable Date, so far as is known to or can be ascertained after reasonable enquiry by the Directors, the persons (not being a Director or chief executive of the Company) who had an interest or short position in the shares and 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 were as follows:

			Percentage of
	Number of		issued ordinary
	ordinary		shares as at Latest
Name of shareholder	shares held	Capacity	Practicable Date
Comwell Investment Limited	292,700,000	Beneficial owner	73.18%
(Note)	(Long position)

Note: Comwell Investment Limited is an indirect wholly-owned subsidiary of MCI. Tan Sri Datuk Sir TIONG Hiew King, a director of MCI, is deemed interested in MCI in an aggregate of 52.40% by virtue of his personal interests, family interests and corporate interests. Dato’ Sri Dr. TIONG Ik King, a director of MCI, is deemed interested in MCI in an aggregate of 15.63% by virtue of his personal interests and corporate interests.

In addition, MCI is directly held as to 9.14% by Zaman Pemimpin Sdn Bhd (‘‘Zaman’’). 49% of the interest in Zaman is held by Globegate Alliance Sdn Bhd, a company jointly owned by Ms. LU Mee Bing and Salmiah Binti SANI.

Save as disclosed above, there is no person known to the Directors, who, as at the Latest Practicable Date, had an interest or short position in the shares and 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, or who was directly or indirectly interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any other members of the Group.

– 85 –

GENERAL INFORMATION

APPENDIX VIII

5. SERVICE AGREEMENTS

As at the Latest Practicable Date, none of the Directors has entered or proposed to enter into a service contract with any member of the Enlarged Group which is not terminable by the employer within one year without payment of compensation (other than statutory compensation).

6. LITIGATION

None of the members of the Enlarged Group is engaged in any litigation or arbitration of material importance and no litigation or claim of material importance is known to the Directors to be pending or threatened against any member of the Enlarged Group.

7. MATERIAL CHANGES

The Directors are not aware of any material adverse change in the financial or trading position of the Group since 31 March 2011, the date to which the latest published audited financial statements of the Group were made up.

8. EXPERT

The following is the qualification of the experts who have given an opinion or advice contained in this circular:

Name Qualification Investec A corporation licensed to carry on Type 1 (dealing in securities), Type 4 (advising on securities), Type 6 (advising on corporate finance) and Type 9 (asset management) regulated activities under the SFO and the independent financial adviser to the Independent Board Committee and the Independent Shareholders PricewaterhouseCoopers Certified Public Accountants Roma Business valuation company Guangdong Securities A corporation licensed to carry on Type 1 (dealing in securities), Limited Type 2 (dealing in futures contracts), Type 4 (advising on securities), Type 6 (advising on corporate finance) and Type 9 (asset management) regulated activities under the SFO

As at the Latest Practicable Date, each of Investec, PricewaterhouseCoopers, Roma and Guangdong Securities Limited had no shareholding in any member of the Group or the right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for shares in any member of the Group.

Each of Investec, PricewaterhouseCoopers, Roma and Guangdong Securities Limited has given and has not withdrawn its written consent to the issue of this circular with the reference to its name and its letter in the form and context in which they appear.

– 86 –

GENERAL INFORMATION

APPENDIX VIII

As at the Latest Practicable Date, each of Investec, PricewaterhouseCoopers, Roma and Guangdong Securities Limited had no interest, direct or indirect, in any assets which since 31 March 2011, the date to which the latest published audited financial statements of the Group were made up, have been acquired or disposed of by or leased to any member of the Group, or are proposed to be acquired or disposed of by or leased to any member of the Enlarged Group.

9. COMPETING BUSINESS

MCI is a publicly listed company in Hong Kong and Malaysia. It is an investment holding company and the principal activities of the MCI Group is the publishing, printing and distribution of Chinese language newspapers, magazines and books, and the provision of travel and travel related services in Hong Kong, North America, Malaysia and other Southeast Asian countries (‘‘Remaining Business’’). The substantial shareholders of MCI are Tan Sri Datuk Sir TIONG Hiew King (who is also a non-executive Director) and Dato’ Sri Dr. TIONG Ik King, both being executive directors of MCI. In addition, Mr. TIONG Kiew Chiong is an executive director of both MCI and the Company. As the contents and demographic readership of the publications of the Group and those of MCI Group are different, the Directors consider that there is a clear delineation between the businesses of the MCI Group and the Group and that there is no direct competition between the Remaining Business and the business of the Group. In addition, the Group is carrying on its business independently of, and at arm’s length with, the MCI Group.

10. MATERIAL CONTRACTS

Save for the following material contracts, the Enlarged Group has not entered into any material contract (not being contracts entered into in the ordinary course of business of the Enlarged Group) within the two years immediately preceding the date of this circular:

(a) the sale and purchase agreement dated 5 August 2011 entered into between Sky Success Enterprises Limited, a wholly-owned subsidiary of the Company, as buyer and MediaNet Resources Limited, a wholly-owned subsidiary of MCI, as seller in relation to the acquisition of the entire issued share capital of Media Connect Investment Limited for a consideration of HK$25,800,000; and
(b) the Sale and Purchase Agreement.

11. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be available for inspection at the head office of the Company at 16th Floor, Block A, Ming Pao Industrial Centre, 18 Ka Yip Street, Chai Wan, Hong Kong during normal business hours from the date of this Circular to 24 May 2012 (both dates inclusive):

(a) the memorandum and articles of association of the Company;
(b) the material contracts as referred to in the section headed ‘‘Material Contracts’’ in this appendix;
(c) the letter from the Board, the text of which is set out in this circular;

– 87 –

GENERAL INFORMATION

APPENDIX VIII

(d) the letter from the Independent Board Committee to the Independent Shareholders, the text of which is set out in the section headed ‘‘Letter from the Independent Board Committee’’ in this circular;
(e) the letter from Investec to the Independent Board Committee and the Independent Shareholders, the text of which is set out in the section headed ‘‘Letter from Investec’’ in this circular;
(f) the annual reports of the Company for the two financial years ended 31 March 2011 and the interim report of the Company for the six months ended 30 September 2011;
(g) the accountant’s report from PricewaterhouseCoopers in respect of the historial financial information of the Target for the three financial years ended 31 March 2009, 2010 and 2011 and the eight months ended 30 November 2011, the text of which is set out in Appendix II to this circular;
(h) the accountant’s report in relation to the unaudited pro forma financial information of the Enlarged Group from PricewaterhouseCoopers, the text of which is set out in Appendix IV to this circular;
(i) the valuation report from Roma, the text of which is set out in Appendix V to this circular;
(j) the letter from PricewaterhouseCoopers on discounted future estimated cash flows in connection with the fair value of the Trademarks, the text of which is set out in Appendix VI to this circular;
(k) the letter from Guangdong Securities Limited to the Company, the text of which is set out in Appendix VII to this circular;
(l) the circular of the Company dated 26 August 2011; and
(m) this circular.

12. MISCELLANEOUS

(a) The company secretary of the Company is Mr. YEUNG Ying Fat, a member of the Hong Kong Institute of Certified Public Accountants.
(b) The registered office of the Company is situated at Clifton House, 75 Fort Street, P.O. Box 1350 GT, George Town, Grand Cayman, Cayman Islands and the Head office and principal place of business in Hong Kong is at 16th Floor, Block A, Ming Pao Industrial Centre, 18 Ka Yip Street, Chai Wan, Hong Kong.
(c) The principal share registrar and transfer office of the Company is Appleby Trust (Cayman) Limited, Clifton House, 75 Fort Street, P.O. Box 1350 GT, George Town, Grand Cayman, Cayman Islands.
(d) The Hong Kong branch share registrar and transfer office of the Company is Tricor Investor Services Limited, 26th Floor, Tesbury Centre, 28 Queen’s Road East, Hong Kong.
(e) In the event of inconsistency, the English text of this circular shall prevail over the Chinese text thereof.

– 88 –

NOTICE OF EGM

==> picture [100 x 38] intentionally omitted <==

ONE MEDIA GROUP LIMITED 萬華媒體集團有限公司

(incorporated in the Cayman Islands with limited liability)

(Stock Code: 426)

NOTICE OF EXTRAORDINARY GENERAL MEETING

NOTICE IS HEREBY GIVEN that the Extraordinary General Meeting (‘‘EGM’’) of One Media Group Limited (the ‘‘Company’’) will be held at 15th Floor, Block A, Ming Pao Industrial Centre, 18 Ka Yip Street, Chai Wan, Hong Kong on Monday, 28 May 2012 at 4:00 p.m. to consider and, if thought fit, pass with or without amendments, the following resolution as ordinary resolution of the Company:

ORDINARY RESOLUTION

‘‘THAT:

the terms of the Sale and Purchase Agreement (as defined in the Company’s circular dated 10 May 2012 despatched by the Company to its shareholders (the ‘‘Circular’’) and the details of which are set out in the Circular), a copy of which has been produced to the meeting marked ‘‘A’’ and signed by the chairman of the meeting for identification purpose, and the transactions contemplated under the Sale and Purchase Agreement be and are hereby approved, ratified and confirmed;
the terms of the Convertible Bond (as defined in the Circular) as set out in the Instrument (as defined in the Circular and the details of which are set out in the Circular), a copy of which has been produced to the meeting marked ‘‘B’’ and signed by the chairman of the meeting for identification purpose, and the issue of the Convertible Bond contemplated under the Instrument be and are hereby approved;
subject to and conditional upon, among others, the Listing Committee of The Stock Exchange of Hong Kong Limited granting the listing of and permission to deal in the shares of HK$0.001 each (the ‘‘Shares’’) in the share capital of the Company to be allotted and issued upon the conversion of the Convertible Bond, the directors of the Company (the ‘‘Directors’’) be and are hereby authorised to allot and issue an aggregate of up to approximately 84,000,000 new Shares (the ‘‘Conversion Shares’’) in the authorised share capital of the Company at HK$0.90 per Conversion Share, subject to adjustments and credited as fully paid upon conversion of the Convertible Bond, that the Conversion Shares shall, when allotted and issued, rank pari passu in all respects with all other Shares in issue on the date of such allotment and issue, and that the Directors be and are hereby authorised to do such acts and things and to sign and execute all such further documents (in case of execution of documents under seal, to do so by one Director and the company secretary of the Company or by two Directors) and to take such steps as the Directors consider necessary, desirable or expedient in connection with the allotment and issue of the Conversion Shares;

– 89 –

NOTICE OF EGM

conditional upon the passing of resolutions (1) to (3) above and the completion of the Sale and Purchase Agreement, the Directors be and are hereby granted a Specific Mandate (as defined in the Circular) to exercise the powers of the Company to allot, issue and deal with the Conversion Shares upon exercise of the conversion rights under the Convertible Bond; and
the Directors be and are hereby authorised to do all such acts and things and execute all such documents as they may in their absolute discretion consider necessary or desirable to give effect to the Sale and Purchase Agreement and the Instrument and the transactions contemplated thereby or incidental thereto.’’

By Order of the Board ONE MEDIA GROUP LIMITED YEUNG Ying Fat Secretary

Hong Kong, 10 May 2012

Notes:

Any member of the Company entitled to attend and vote at the meeting is entitled to appoint one or more proxies to attend and vote instead of him. A proxy need not be a member of the Company.
Where there are joint registered holders of any share, any one of such persons may vote at the EGM, either personally or by proxy, in respect of such share of the Company as if he were solely entitled thereto; but if more than one such joint holders be present at the EGM personally or by proxy, that one of the said persons so present whose name stands first on the register of members of the Company in respect of such share shall alone be entitled to vote in respect thereof.
To be valid, the proxy form, together with any power of attorney or other authority (if any) under which it is signed, or a notarially certified copy thereof, must be lodged with the head office of the Company at 16th Floor, Block A, Ming Pao Industrial Centre, 18 Ka Yip Street, Chai Wan, Hong Kong not less than 48 hours before the time appointed for holding the meeting or any adjournment thereof.
Completion and return of the proxy form will not preclude you from attending the EGM and voting in person if you so wish. In the event that you attend the EGM after having lodged the proxy form, it will be deemed to have been revoked.

– 90 –

AI assistant

One Media Group Limited — Proxy Solicitation & Information Statement 2012

49209_rns_2012-05-09_eb9c8372-8669-4ac5-a110-58f9dfb240e7.pdf

ONE MEDIA GROUP LIMITED 萬 華 媒 體 集 團 有 限 公 司

MAJOR AND CONNECTED TRANSACTION

AND

NOTICE OF EXTRAORDINARY GENERAL MEETING

DEFINITION

DEFINITION

DEFINITION

DEFINITION

ONE MEDIA GROUP LIMITED 萬 華 媒 體 集 團 有 限 公 司

Non-executive Director:

To the Shareholders

MAJOR AND CONNECTED TRANSACTION AND

NOTICE OF EXTRAORDINARY GENERAL MEETING

INTRODUCTION

LETTER FROM THE BOARD

MAJOR AND CONNECTED TRANSACTION

Background

The Sale and Purchase Agreement

Date:

Parties:

Equity interest acquired:

Conditions precedent:

Consideration:

Completion:

CONVERTIBLE BOND

Conversion of the Convertible Bond

LETTER FROM THE BOARD

ALLOTMENT AND ISSUE OF THE CONVERSION SHARES UNDER THE SPECIFIC MANDATE

ADJUSTMENTS TO CONVERSION PRICE OF THE CONVERTIBLE BOND

INFORMATION ON THE GROUP, THE BUYER, THE MCI GROUP, THE SELLER AND THE TARGET

REASONS AND BENEFITS OF ENTERING INTO THE SALE AND PURCHASE AGREEMENT AND ISSUING THE CONVERTIBLE BOND

LETTER FROM THE BOARD

FINANCIAL EFFECTS OF THE ACQUISITION

FINANCIAL AND TRADING PROSPECTS OF THE ENLARGED GROUP

LETTER FROM THE BOARD

RISK FACTORS

Failure to renew the Trademarks and inadequate protection of the Enlarged Group’s intellectual property rights

Possible infringement of third parties’ intellectual property and other rights

Possible impairment of the intangible assets

FUND RAISING IN THE PAST 12 MONTHS

LISTING RULES IMPLICATIONS

LETTER FROM THE BOARD

VOTING BY POLL

ACTION TO BE TAKEN

RECOMMENDATION

LETTER FROM THE BOARD

FURTHER INFORMATION

ONE MEDIA GROUP LIMITED 萬 華 媒 體 集 團 有 限 公 司

MAJOR AND CONNECTED TRANSACTION

Investec Capital Asia Ltd

MAJOR AND CONNECTED TRANSACTION

INTRODUCTION

LETTER FROM INVESTEC

THE INDEPENDENT BOARD COMMITTEE

BASIS AND ASSUMPTIONS OF THE ADVICE

PRINCIPAL FACTORS CONSIDERED

1. Background information

(i) Information of the Group

For the two years ended 31 March 2011

(ii) Information of the Target

LETTER FROM INVESTEC

(iii) Completion

LETTER FROM INVESTEC

(iv) Reasons and benefits of entering into the Sale and Purchase Agreement

2. Principal terms of the Sale and Purchase Agreement

Equity interest acquired

Consideration

Evaluation of the Consideration

3. The Convertible Bond

Allotment and issue of the Conversion Shares under the Specific Mandate

II. Comparables

LETTER FROM INVESTEC

(i) Interest rate/coupon

(ii) Maturity

(iii) Conversion Price

(iv) Other alternatives

(v) Dilution effect of the Convertible Bond

One Media Group Limited Proxy Solicitation & Information Statement 2012

ONE MEDIA GROUP LIMITED 萬華媒體集團有限公司

ONE MEDIA GROUP LIMITED 萬華媒體集團有限公司

ONE MEDIA GROUP LIMITED 萬華媒體集團有限公司