Pacific Basin Shipping Limited - Proxy Solicitation & Information Statement 2008

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 licensed securities dealer, bank manager, solicitor, professional accountant or other professional adviser.

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

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

This circular appears for information purposes only and does not constitute an invitation or offer to acquire, purchase or subscribe for the securities of the Company.

==> picture [216 x 125] intentionally omitted <==

VERY SUBSTANTIAL ACQUISITION

A notice convening a special general meeting of the Company to be held at Rooms 20042005, 20/F., World Trade Centre, 280 Gloucester Road, Causeway Bay, Hong Kong on 14 March 2008, at 11:30 a.m. is set out on pages 143 to 144 of this circular. If you are not able to attend and/or vote at the meeting, you are requested to complete the accompanying form of proxy in accordance with the instructions printed thereon and return it to the Company’s branch share registrar in Hong Kong, Tricor Tengis Limited at 26th Floor, Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong as soon as possible and in any event not later than 48 hours before the time appointed for the holding of the special general meeting or any adjournment thereof. Completion and return of the form of proxy will not preclude you from attending and voting at the special general meeting or any adjournment thereof should you so wish.

26 February 2008

for identification purpose only

		Page
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		1
Letter from the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		4
Appendix I	– Financial information of the Group. . . . . . . . . . . . . . . . . . . . . . . . . . .	23
Appendix II	– Accountants’ report on the Target Group . . . . . . . . . . . . . . . . . . . . . .	82
Appendix III	– Management discussion and analysis on
	the Target Group and the Group. . . . . . . . . . . . . . . . . . . . . . . . . . . .	98
Appendix IV	– Pro forma financial information of the Enlarged Group. . . . . . . .	106
Appendix V	– Property valuation of the Enlarged Group. . . . . . . . . . . . . . . . . . . . .	119
Appendix VI	– Valuation of the Rights. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	129
Appendix VII	– General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	136
Notice of the SGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		143

DEFINITIONS

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

“Acquisition”	the acquisition of the entire issued share capital of
	Target Company pursuant to the terms and conditions
	of the Agreement
“Agreement”	the sale and purchase agreement dated 21 December
	2007 entered into between the Company and the
	Vendors
“Assets Ratio”	the assets ratio as defined under Rule 14.07(1) of the
	Listing Rules
“associate(s)”	has the meaning ascribed to it under the Listing Rules
“BMI”	BMI Appraisals Limited, an independent valuation
	firm
“Board”	the board of Directors
“Business Day”	a day (excluding Saturdays) on which banks in Hong
	Kong are generally open for business in Hong Kong
	and “Business Days” shall be construed accordingly
“BVI”	the British Virgin Islands
“Company”	Rising Development Holdings Limited, a company
	incorporated in Bermuda with limited liability whose
	shares are listed on the Main Board of the Stock
	Exchange (Stock code: 1004)
“Completion”	the completion of the Acquisition
“connected persons”	has the meaning as ascribed in the Listing Rules
“Consideration”	the aggregate consideration of HK$1,137 million
	payable by the Company to the Vendors for the
	Acquisition
“Convertible Notes”	the convertible notes in the aggregate amount of
	HK$837 million to be issued by the Company at
	Completion

– 1 –

DEFINITIONS

“Conversion Shares”	an aggregate of 2,989,285,700 new Shares to be issued
	by the Company upon conversion in full by the holders
	of the Convertible Notes of the conversion rights
	attaching to the Convertible Notes at the initial
	conversion price of HK$0.28 per Share
“Dongcheng”	東晟企業管理顧問(深圳)有限公司(Dongcheng
	Enterprise Management Consultant (Shenzhen)
	Limited), a company incorporated in the PRC on 7
	August 2007 and is a wholly owned subsidiary of the
	Target Company
“Director(s)”	the director(s) of the Company
“Enlarged Group”	the Group immediately after completion of the
	Acquisition
“Group”	the Company and its subsidiaries
“Latest Practicable Date”	21 February 2008, being the latest practicable date prior
	to the printing of this circular for ascertaining certain
	information contained herein
“Listing Committee”	the listing sub-committee of the Stock Exchange
“Listing Rules”	the Rules Governing the Listing of Securities on the
	Stock Exchange
“Mine”	陝西省寧陝縣旬陽壩釩礦(vanadium mine located in
	Xunyangba County, Ningshan Town, Shanxi Province)
“Purchaser”	Perfect Fair Limited, a company incorporated in the
	BVI and wholly-owned by the Company
“PRC”	the People’s Republic of China
“PRC Company”	陝西久權礦業有限公司(Shanxi Jiuquan Mining
	Company Limited), a company incorporated in the
	PRC on 7 April 2004
“Rights”	the mining, exploration and exploitation rights over
	the Mine
“Sale Shares”	the 10 shares of and in the Target Company held and
	beneficially owned by the Vendors, representing the
	entire issued share capital of the Target Company

– 2 –

DEFINITIONS

“SFC”	the Securities and Futures Commission of Hong Kong
“SGM”	the special general meeting of the Company to be
	convened to approve the Acquisition
“Share(s)”	ordinary share(s) of HK$0.02 each in the share capital
	of the Company
“Shareholders”	the shareholder(s) of the Company
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“Takeovers Codes”	the Codes on Takeovers and Mergers and Share
	Repurchases
“Target Company”	Oriental Harvest Development Limited, a company
	incorporated in the BVI on 19 October 2006 and will
	be interested in 80% equity capital of the PRC
	Company through a wholly owned subsidiary upon
	completion of the Transfer
“Target Group”	the Target Company and its subsidiaries upon
	completion of the Transfer
“Transfer”	the transfer of 80% equity capital of the PRC Company
	from an independent third party to Dongcheng
“V2O5”	Vanadium Oxide, a chemical compound commonly
	used for industrial purposes
“Vendors”	Mr. Wang Hong, Mr. Chen JianJun and Mr. Zou
	QuanBo
“HK$”	Hong Kong dollar(s), the lawful currency of Hong
	Kong
“RMB”	Renminbi, the lawful currency of PRC
“%”	per cent.

In this circular, for purpose of illustration only, amount quoted in RMB have been converted into Hong Kong dollars at the rate of RMB1 to HK$1. Such exchange rate has been used, where applicable, for purposes of illustration only and does not constitute a representation that any amounts were or may have been exchanged at this or any other rates or at all. The English names of 陝西久權礦業有限公司 (Shanxi Jiuquan Mining Company Limited), 中國地質科學院礦產資源研究中心 (The Institute of Mineral Resources of Chinese Academy of Geological Sciences) and 東晟企業管理顧問 ( 深圳 ) 有限公司 (Dongcheng Enterprise Management Consultant (Shenzhen) Limited) are unofficial translations and are for reference only.

– 3 –

LETTER FROM THE BOARD

==> picture [216 x 125] intentionally omitted <==

Executive Directors:

Mr. Lai Leong (Chairman) Mr. Lee Yuk Lung (Deputy Chairman) Mr. Kong Shan, David

Registered office: Clarendon House 2 Church Street Hamilton HM11 Bermuda

Independent Non-Executive Directors: Mr. Fok Ho Yin, Thomas Mr. Tso Hon Sai, Bosco Mr. Tsui Ching Hung

Head office and principal place of

business in Hong Kong: Rooms 2004-2005, 20/F. World Trade Centre 280 Gloucester Road Causeway Bay Hong Kong

26 February 2008

To the Shareholders:

Dear Sir or Madam,

VERY SUBSTANTIAL ACQUISITION

INTRODUCTION

On 10 January 2008, the Board announced that on 21 December 2007, the Company and the Purchaser (a wholly owned subsidiary of the Company) entered into the Agreement with the Vendors, under which, the Vendors conditionally agreed to sell and the Purchaser, conditionally agreed to purchase, the Sale Shares at the Consideration, based on HK$4,728 per tonne V2O5 for the expected 300,761 tonnes of vanadium reserves. The consideration of HK$1,137 million for the Acquisition (subject to adjustments as set out below) is to be satisfied at Completion as to HK$300 million by cash and as to HK$837 million by the issue of the Convertible Notes by the Company to the Vendors and/or their respective nominees in the proportion to the Vendors’ respective equity interests in the Target Company.

The purpose of this circular is to give you, among other things, (i) further details of the Acquisition and (ii) the notice of the SGM and the proxy form.

for identification purpose only

– 4 –

LETTER FROM THE BOARD

THE AGREEMENT

1. The Parties and the Date

On 21 December 2007, the Company and the Purchaser entered into the Agreement and details of which are set out below:

Parties:

(1) Vendor 1 : Mr. Wang Hong Vendor 2 : Mr. Chen JianJun Vendor 3 : Mr. Zou QuanBo (jointly and severally the “Vendors”)
(2) Purchaser : Perfect Fair Limited
(3) Target Company : Oriental Harvest Development Limited (4) Listed Company : Rising Development Holdings Limited

To the best knowledge of the Directors having made reasonable enquiries, the Vendors are parties independent of and not connected with the Company and its connected persons. There is no prior transaction and relationship between the Vendors and the Company.

As at the Latest Practicable Date, the Target Company is owned as to 10%, 40% and 50% by Mr. Wang Hong, Mr. Chen JianJun and Mr. Zou QuanBo respectively.

The existing shareholding structure chart of the Target Group (assuming the Transfer is completed) is as follows:

==> picture [254 x 222] intentionally omitted <==

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

Wang Hong Chen JianJun Zou QuanBo
10% 40% 50%
Target Company
100%
Independent
Dongcheng
third party
80% 20%
PRC Company
100%
The Rights
----- End of picture text -----

– 5 –

LETTER FROM THE BOARD

2. Asset to be Acquired

Under the Agreement, the Purchaser has conditionally agreed to acquire from the Vendors the entire issued share capital of Target Company together with a shareholders’ loan of HK$10,026,000, the Target Company will indirectly own 80% interest in the PRC Company upon completion of the Transfer, which in turn will be the beneficial and registered owner of 100% interest of the Rights at a consideration of HK$1,137 million. The remaining 20% of interest in of the PRC Company is held by a party independent of and not connected with the Company and its connected persons.

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

==> picture [206 x 249] intentionally omitted <==

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

The Company
100%
Purchaser
100%
Target Company
100%
Independent
Dongcheng
third party
80% 20%
PRC Company
100%
The Rights
----- End of picture text -----

3. The Consideration and its Basis

Consideration

The consideration of HK$1,137 million for the Acquisition (subject to adjustments as set out below) is to be satisfied at Completion as to HK$300 million by cash and as to HK$837 million by the issue of the Convertible Notes by the Company to the Vendors and/or their respective nominees in the proportion to the Vendors’ respective equity interests in the Target Company. Upon full conversion of the Convertible Notes to be issued to the Vendors and/or their respective nominees, an aggregate of 2,989,285,700 Conversion Shares will be issued to the Vendors subject to the conversion restrictions as set out below.

– 6 –

LETTER FROM THE BOARD

The consideration for the Acquisition will be settled in the following manner:

(a) A deposit of HK$227.4 million (refundable with interests of 2% per annum) has been paid by the Company to the Vendors as at the date of signing of the Agreement;
(b) The remaining cash consideration of HK$72.6 million will be payable by the Company at Completion;
(c) The remaining balance of the consideration of up to HK$837 million will be payable by the issue of the Convertible Notes by the Company to the Vendors (being HK$83.7 million to Mr. Wang Hong, HK$334.8 million to Mr. Chen JianJun and HK$418.5 million to Mr. Zou QuanBo) and/or their respective nominees at Completion.

The cash consideration of HK$300 million has been/will be financed by internal resources of the Group.

Adjustment to Consideration

The Consideration payable shall be adjusted downwards (but not upwards) as follows:

A = (HK$4,728 per tonne V2O5 equivalent of vanadium reserves) x (B – C) x 80%

Where:

A = amount to be deducted from the Consideration
B = 300,761 tonnes V2O5 equivalent of vanadium reserves
C = the amount V2O 5 equivalent of vanadium reserves of the Mine as indicated in the technical report prepared by a technical adviser to be appointed by the Purchaser in its sole discretion

The price per tonne as shown in the above adjustment formula is determined by dividing the valuation of the Rights of HK$1,580,000,000 (as referred to in the paragraph “Basis of the Consideration” below) over the guaranteed V2O5 equivalent vanadium reserves of 300,761 tonnes V2O5 equivalent and after allowed for the discount of Consideration to the attributable value in the Target Company of approximately 10% (as referred to in the paragraph “Basis of the Consideration” below).

– 7 –

LETTER FROM THE BOARD

PROVIDED THAT:

(1) If C is greater than or equal to B, there shall be no adjustment to the Consideration; and
(2) A shall first be deducted from the amount of cash payable and if A is more than HK$300,000,000, the Agreement will terminate at the option of the Purchaser.

Basis of Consideration

The consideration of HK$1,137 million was determined after arm’s length negotiations between the Company and the Vendors, and taking into consideration of (i) the preliminary estimated value of the Target Company by BMI based on market approach method (being the estimated amount for which an asset should exchange on the date of valuation between a willing buyer and a willing seller in an arm’s length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion) which is not less than RMB1,580 million (equivalent to HK$1,580 million); and (ii) 80% of the effective interest in the Target Company to be held by the Company; (iii) the total estimated vanadium reserve of the Rights of approximately 300,761 tonnes V2O5 equivalent determined by a geology survey institute (an Independent Third Party) in the PRC, namely 中國地質科學院礦產資源研究中心 (The Institute of Mineral Resources of Chinese Academy of Geological Sciences) in December 2007; (iv) the adjustment clauses to the Consideration; and (v) the present price of the vanadium and the future outlook of the vanadium industry as discussed below.

After discussion with BMI, the Directors are of the view that the valuation approach does not fall under Rule 14.62 of the Listing Rules as the valuation report does not contain any profit forecast as defined under Rule 14.61 of the Listing Rules. The valuation report of the Rights is set out in the section “Appendix VI – Valuation of the Rights” of this circular.

The Conversion Shares under the Agreement represent (a) approximately 82.2% of the existing issued share capital of the Company; and (b) approximately 45.1% of the issued share capital of the Company as enlarged by an aggregate of 2,989,285,700 Conversion Shares.

The Consideration represents a discount of 10% to the effective interests of 80% to be held by the Group in the preliminary estimated value of the Target Company amounting to approximately HK$1,580 million as mentioned above. The Consideration also represents a discount of 5% to the effective interests of 80% to be held by the Group in the finalized estimated value of the Target Company amounting to approximately HK$1,500 million as set out in the section “Appendix VI – Valuation of the Rights” of this circular.

– 8 –

LETTER FROM THE BOARD

Principal terms of the Convertible Notes

Total principal amount : HK$837,000,000.00

Maturity date : The Convertible Notes is due and will mature on the third anniversary of the date of issuance of the Convertible Notes. Unless previously redeemed, purchased and cancelled or converted, all of outstanding Convertible Notes will be converted into ordinary shares of the Company on the maturity date.
Interest : 1 per cent. per annum on the principal amount of the Convertible Notes outstanding

Conversion rights

: The holder(s) of the Convertible Notes will have the right at any time commencing on the Business Day after the date of issuance of the Convertible Notes but before the Maturity Date, to convert the whole or part of the principal amount of the Convertible Notes into the Shares, provided that the principal amount to be so converted shall be at least HK$1,000,000 on each such conversion, save that if at any time the outstanding principal amount of the Convertible Notes is less than HK$1,000,000, the whole (but not part only) of such outstanding principal amount of the Convertible Notes may be converted.
Conversion restriction : The holder(s) of the Convertible Notes shall not have the right to convert the whole or part of the principal amount of the Convertible Notes into Shares to the extent that immediately after such conversion the holder(s) of the Convertible Notes together with parties acting in concert with it, taken together will, directly or indirectly, control or be interested in 30% or more of the voting rights of the Company which the holder(s) of the Convertible Notes would be obliged to make a general offer under Takeovers Code in force from time to time.

Further, the holder(s) of the Convertible Notes shall not have the right to convert the whole or part of the principal amount of the Convertible Notes 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.

The conversion restrictions will be valid for the entire term of the Convertible Notes.

– 9 –

LETTER FROM THE BOARD

Conversion price

: HK$0.28 per Share, subject to adjustment for general dilutive events such as subdivision or consolidation of Shares, bonus issues, rights issues and other dilutive events.
Conversion price reset : The conversion price shall be adjusted once and for once only within the period during which the Convertible Notes remains outstanding to HK$0.20 in the event that the holder(s) of the Convertible Notes shall notify and prove to the satisfaction of the Company in writing that the average trading price of the Shares on the Stock Exchange for 10 consecutive trading days immediately prior to the relevant reset date is less than HK$0.20.
Conversion Shares : Assuming full conversion of the Convertible Notes, the Company will issue 2,989,285,700 new Shares at HK$0.28, representing (a) approximately 82.2% of the Company’s total issued share capital as at Latest Practicable Date and (b) approximately 45.1% of the Company’s issued share capital as enlarged by the issuance of the Conversion Shares.

The Conversion Shares will rank pari passu in all respects with the existing Shares in issue. The Company will apply to the Listing Committee of the Stock Exchange for the listing of, and permission to deal in, the Conversion Shares.

Transferability : The Convertible Notes may be assigned or transferred to any party or parties.

The Company will undertake to the Stock Exchange that it will disclose to the Stock Exchange any dealings by any of the connected persons as defined in the Listing Rules from time to time in the Convertible Notes immediately upon the Company becoming aware of such dealings.

Voting rights

: Holder(s) of the Convertible Notes (or any part thereof) will not be entitled to attend or vote at any Shareholders’ and/or warrantholders’ meetings of the Company by reason only of it being a holder of the Convertible Notes (or any part thereof).
Listing and trading of : No application will be made for the listing of and Convertible Notes permission to deal in the Convertible Notes on the Stock Exchange or any other stock exchange.

– 10 –

LETTER FROM THE BOARD

4. Conditions Precedent of the Sale and Purchase Agreement

The Completion is subject to the following conditions precedent:

(1) having obtained the approval by the Shareholders of the Agreement and the transactions contemplated thereunder (including but not limited to (i) the Acquisition; (ii) the issue of the Convertible Notes to the Vendors and/or their respective nominee; and (iii) the issue and allotment of the Conversion Shares upon the exercise of the conversion rights attached to the Convertible Notes as required by the Listing Rules);
(2) having complied to the satisfaction of the Stock Exchange and where applicable, the SFC with all requirements under the Listing Rules and, where applicable, the Takeovers Codes in relation to the issue of the Convertible Notes and the issue and allotment of the Conversion Shares upon the exercise of the conversion rights under the Convertible Notes and other transactions contemplated in the Agreement;
(3) the Shares remaining listed and traded on the Main Board of the Stock Exchange at all times from the date of the Agreement up to (and including) the completion of the transactions contemplated therein, save for any temporary suspension not exceeding twelve consecutive Business Days, or such longer period as may be required by the SFC or the Stock Exchange in connection with the review and approval of the documents relating to the Agreement by the SFC or the Stock Exchange prior to their release or publication, and no indication being received prior to the Completion from the SFC or the Stock Exchange to the effect that the listing of the Shares on the Main Board of the Stock Exchange shall or may be withdrawn or objected to;
(4) having obtained any necessary waiver, consent, approval, licence, authorisation, permission, order and exemption (if required) from the relevant governmental or regulatory authorities or other third parties which are necessary in connection with the execution and performance of the Agreement and any of the transactions contemplated under the Agreement, including but not limited to (where required) the Bermuda Monetary Authority granting its permission to the issue of the Convertible Notes and the issue and allotment of the Conversion Shares upon the exercise of the conversion rights attached to the Convertible Notes;
(5) where required, the Listing Committee of the Stock Exchange having approved the issuance of the Convertible Notes;
(6) the Transfer having been completed and Dongcheng, being wholly owned by the Target Company, becoming the registered and beneficial owner of 80% interest in the PRC Company;

– 11 –

LETTER FROM THE BOARD

(7) the Listing Committee of the Stock Exchange having granted the listing of and permission to deal in the Conversion Shares (either unconditionally or subject only to conditions which the Vendors have no reasonable objection);
(8) the Company having obtained a legal opinion in a form and substance acceptable to the Company prepared by British Virgin Islands lawyers acceptable to the Company confirming the shareholding structure of the Target Company;
(9) the Company having obtained an official reserve report in a form and substance acceptable to the Company prepared and issued by a firm of independent valuers nominated by the Company and, where required, approved by the Stock Exchange showing the total vanadium reserves under the Rights at Completion will be not less than 294,416 tonnes V2O5 equivalent;
(10) the Company having obtained an official valuation report in a form and substance acceptable to the Company prepared and issued by a firm of independent valuers nominated by the Company showing the value of the Rights being not less than HK$1,422,000,000.00 (the “Valuation Report”);
(11) the Company having obtained a legal opinion in a form and substance acceptable to the Company prepared by a PRC legal adviser acceptable to the Company on (i) the Transfer having been duly completed and all legal formality has been complied with; and (ii) the legality, validity and enforceability of the mining permit in respect of the Rights and the rights thereunder including but not limited to the PRC Company being a beneficial owner of 100% interests in the Rights and the related exploration and exploitation rights;
(12) the Company having obtained a technical report in a form and substance acceptable to the Company prepared and issued by a firm of independent technical consultants nominated by the Company and, where required, approved by the Stock Exchange, showing that the total vanadium reserves in the Rights with no material deviation to the Reserve Report and Valuation Report;
(13) the Vendors’ warranties being true and correct in all material respects as at Completion by reference to the facts and circumstances subsisting at that date; and
(14) the Purchaser being satisfied with the results of its legal and financial due diligence in respect of the Target Group by notifying the Vendors in writing.

In the event that the Conditions are not fulfilled or waived at the discretion of the Company on or before 30 June 2008 or such later date as the parties may agree in writing, the Agreement shall lapse and become null and void, and the parties shall be released from all their respective obligations thereunder.

As at the Latest Practicable Date, only condition numbered 10 above had been fulfilled.

– 12 –

LETTER FROM THE BOARD

THE INFORMATION ABOUT THE COMPANY, THE VENDORS AND THE TARGET GROUP

1. Principal Activities of The Company

The Company is an investment holding company and its subsidiaries are principally engaged in trading in securities, the manufacture and sale of fur garments and the sale of fur skins, which the Group will continue to engage in after Completion of the Acquisition. The Acquisition represents a new business activity in the field of mining natural resources for the Company but the Company will continue with its existing operation and there is expected to be diversification of the Company’s business if completion of the Acquisition takes place.

2. Principal Activities of the Target Group

Information on the PRC Company

The PRC Company is a company incorporated in the PRC on 7 April 2004 with a registered capital of RMB2,800,000 which has been fully paid. The major asset owned by the PRC Company is the Mine.

Based on the preliminary indication from the Vendors, the PRC Company has finalised its exploration and currently, does not carry out any further exploration activities. The PRC Company has obtained the relevant exploitation rights licence, i.e. the mining permit (採礦許可證 612400510022) dated 13 August 2005, showing that the vanadium mine has a mining right with 3 year validation period from August 2005 to August 2008. According to the preliminary indications from the Vendors and the PRC legal advisers appointed by the Company, the Directors are of the view that there is no obstacle for the PRC Company to renew the relevant mining permit. In addition, one of the conditions precedent of the Agreement is that the Purchaser being satisfied with the results of its legal and financial due diligence in respect of the Target Group by notifying the Vendors in writing. As such, the Company will perform legal due diligence and seek PRC legal opinion to assure that there is no material obstacle regarding the extension of the mining permit before Completion.

The principal activity of the PRC Company is the exploitation of ore and production and sale of V2O5 equivalent (upon completion of building a refinery). As the principal activity of the PRC Company involves the exploitation of ore and does not include any exploration, a technical report will not be included in this circular as Rule 18.04 is only applicable if the activities include exploration for natural resources.

– 13 –

LETTER FROM THE BOARD

The PRC Company has already commenced the project of building Phase I of a refinery with the daily production capacity of 500 tonnes ores. It is expected that the Phase I of the refinery will be completed after ten months upon receiving the capital contribution from the shareholders of the PRC Company. Based on the existing business plan, it is the present intention of the Company that upon Completion, to procure the PRC Company to continue the building of Phase I of the refinery. The PRC Company proposed to further contribute approximately RMB60 million (80% of this amount is expected to be funded by the Company’s internal resources to the Target Company and the PRC Company after Completion and the remaining 20% is to be funded by the independent third party who holds 20% interest in the PRC Company) for the Phase I of the refinery. Upon completion of the Phase I of the refinery, the PRC Company will commence (a) the mining of ores from the Mine by itself or outsource the mining operations to some other professional exploitation mining companies; and (b) the production and sale of the V2O5 equivalent, which will be extracted from the ores explored from the Mine after the refining process. Depending on the market and business conditions, the PRC Company proposed to invest another RMB40 million (80% of this amount is expected to be funded by the Group’s internal resources and if considered necessary, future equity and/or debt financing of the Group and the remaining 20% is to be funded by the independent third party who holds 20% interest in the PRC Company) to construct the Phase II of the refinery and the completion of Phase II of the refinery will double the daily production capacity to 1,000 tonnes ores. As at the Latest Practicable Date, the Company has no capital commitment at this stage.

Based on the reserve report dated December 2007 prepared by 中國地質科學院礦產資源研究中心 (The Institute of Mineral Resources of Chinese Academy of Geological Sciences), a PRC independent geology survey institute, the vanadium reserves of the vanadium mine owned by the PRC Company are as follows:

		Metallic Quantity
Mineralized body no.	Quantity of Ore	of V2O5
	(Tonnes)	(Tonnes)
I	4,876,950	45,843
II	6,189,792	68,088
III	7,589,010	98,657
IV	8,015,766	88,173
Total	26,671,518	300,761

According to the management account of the PRC Company prepared under the generally accepted accounting principles of the PRC (“PRC GAAP”) provided by the Vendors, the net asset value (including capital reserve) of the PRC Company as at 31 December 2007 is approximately RMB7.53 million. Both the losses before and after tax of the PRC Company for the year ended 31 December 2007 are approximately RMB1.35 million and both the losses before and after tax of the PRC Company for the year ended 31 December 2006 are approximately RMB1.36 million.

– 14 –

LETTER FROM THE BOARD

Information on the Target Company

The Target Company is an investment holding company incorporated in the British Virgin Islands on 19 October 2006 and is currently wholly owned by the Vendors. Upon Completion, the Target Company will be consolidated into the accounts of the Company. As at the Latest Practicable Date, save for its indirect 80% interest in the PRC Company through Dongcheng upon completion of the Transfer, the Target Company and Dongcheng does not engage in other material business or own other major assets.

According to the consolidated audited account of the Target Group, the consolidated net asset value of the Target Group as at 31 December 2007 is approximately HK$3.24 million. Both the profits before and after tax of the Target Group from the incorporation date to 31 December 2007 are approximately HK$1.38 million.

According to the management account of the Target Company prepared under the PRC GAAP and provided by the Vendors, the net deficiency of the Target Company as at 31 December 2007 is approximately RMB0.02 million. Both the losses before and after tax of the Target Company from the incorporation date to 31 December 2007 are approximately RMB0.02 million.

According to the management account of Dongcheng prepared under the PRC GAAP and provided by the Vendors, the net asset value of Dongcheng as at 31 December 2007 is approximately RMB9.46 million. Both the losses before and after tax of the Target Company from the incorporation date to 31 December 2007 are approximately RMB0.03 million.

REASONS FOR THE ACQUISITION

Vanadium is a valuable metal and is commonly applied to produce alloy with steel, iron, aluminium and titanium. Vanadium alloy can be used in the production of catalysts, dying agents, electric cells, etc. In order to make products stronger, lighter, and safer and more fuel efficient there will be ever increasing demand for the metal and the need for significant increases in sustainable, cost effective vanadium production. Vanadium’s primary use is as a steel hardening agent. When used in the steelmaking process vanadium increases the strength and corrosion resistance of steel. The demand for vanadium, therefore, is strongly dependent on steel production rates.

– 15 –

LETTER FROM THE BOARD

Historically the price of vanadium has followed a spike-crash-shakeout pattern, with long periods of depressed prices followed by brief price spikes. Large vanadium producers are generally supply inelastic and they continue high levels of production through bust cycles. This creates excess supplies and depresses the market further. Following modest average annual growth of around 1% through the 1990s, world vanadium consumption has risen significantly since 2002, reflecting both higher world steel production and higher unit vanadium consumption as the share of high-strength steels in total steel output rises. Despite the set-back resulting from high prices in 2005, world demand for vanadium rose by 7.5% from 79,800 tonnes V2O5 equivalent in 2003 to a peak level of 98,900 tonnes in 2006.

The outlook for vanadium consumption through 2010 appears optimistic. World consumption may show short-term fluctuations in line with steel production, but is forecast to show underlying growth of 5-6% to reach 118,600 tonnes V2O5 equivalent in 2010. Highstrength steels will continue to provide the main area of growth as increasing emphasis is placed on life-cycle costs in the construction industry, on reducing weight and improving fuel efficiency in the transport industry, and on the use of higher-performance materials to withstand aggressive environments in the oil and gas industry.

Due to the wide application of vanadium, the Directors consider that the Acquisition enables the Company to diversify into the promising mineral sector and will benefit the Company in the future.

Having considered the matters referred to in the paragraph “Basis of Consideration”, as set out above, the Directors consider that the terms and conditions of the Acquisition are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

The Agreement has no provision for the appointment by the Vendors or their nominees to be directors of the Company or any of its subsidiaries. The Company plans to recruit additional personnel with relevant qualification and experience in mining industry to oversee the Group’s investment in the Target Company.

FINANCIAL IMPACT OF THE ACQUISITION

Immediately following Completion, the Company will be indirectly interested in the entire issued share capital of the Target Company and the results of the Target Group will be fully consolidated into the accounts of the Group.

According to the audited consolidated balance sheet of the Group, the Group had audited total assets and total liabilities of approximately HK$447.08 million and HK$119.73 million respectively as at 31 March 2007. Assuming the Acquisition had been completed at 31 March 2007 and based on the audited consolidated balance sheet of the Group as at 31 March 2007, the audited consolidated balance sheet of the Target Group as at 31 December 2007, the unaudited pro forma total assets and total liabilities attributable to the Shareholders as set out in the unaudited pro forma consolidated balance sheet of the Enlarged Group contained in Appendix IV to this circular, will be increased to approximately HK$1,285.7 million and HK$879.43 million as at 31 March 2007 respectively.

– 16 –

LETTER FROM THE BOARD

The Group recorded a net profit of approximately HK$63.68 million for the year ended 31 March 2007 as set out in the audited consolidated income statement of the Group contained in Appendix I to this circular. Assuming the Acquisition had been completed on 1 April 2006, based on the audited consolidated income statement of the Group for the year ended 31 March 2007 and the audited income statement of the Target Group for the year ended 31 December 2007, a profit of HK$32.21 million will be attributable to the Shareholders for the year ended 31 March 2007 as set out in the unaudited pro forma consolidated income statement of the Enlarged Group contained in Appendix IV to this circular.

FINANCIAL AND TRADING PROSPECT OF THE ENLARGED GROUP

For the year ended 31 March 2007, the Group recorded turnover of approximately HK$359.57 million, and net profit for the year of approximately HK$63.68 million.

Investment Business

The Group remains its optimistic view on the economic growth of both Hong Kong and PRC. The management believes the Group’s investment business is heading to the right direction. Yet the Group will carefully review its portfolio in order to maximize the returns for shareholders. Subject to the market situation, the Group will constantly review and adjust the investment level between securities and fixed income investment. The Group will continue to adopt a prudent yet aggressive investment strategy as usual.

Fur Skin Business

As foreseen by the Group, the price of fur skins has been experiencing a big adjustment over the year. The Group will continue to take a conservative strategy in dealing with the skin trading business. The Group trusts that this measure would be the most appropriate way to protect the best interest of the Shareholders. When the international price of fur skins has been corrected to a reasonable level, the Group shall pick up the business in a professional manner.

Manufacture and Sales of Fur Garments

The demand for fur garments at ODM basis from most mature markets remains sluggish. The Group will try its best endeavour to expand the fur garment business at the retail level with its own brand. The Group has closed down its own production earlier this year and this measure could allow the Group to expand its production capacity of fur garments through outsourcing. This could also allow the Group to take advantage of the individual technical specialty from each of the Group’s manufacturing partner. As the economic growth of PRC continues, the demand for fur garments in China market becomes increasingly important. The Group will consider to penetrating into the China and other retail markets.

– 17 –

LETTER FROM THE BOARD

Business Diversification

Apart from investment and fur business, the Group will be looking for other possible opportunities to diversify its businesses. The Group believes that pursuing a diversified business strategy would be a good way to generate more opportunities and long-term revenue under the current economic environment.

In particular, in view of the escalating demand, and hence prices, for natural resources in the PRC, the Directors are optimistic about the future prospect of the demand for natural resources industry taking into account the sustainable economic growth of the PRC. In this connection, the Company entered into the Agreement and planned to engage in the vanadium related business.

CHANGES IN SHAREHOLDING STRUCTURE

The following chart sets out the effects of the Conversion Shares on the shareholding structure of the Company based on the issued share capital and shareholding structure of the Company as at the Latest Practicable Date and assuming Completion having taking place and conversion in full of the Convertible Notes into Conversion Shares at the conversion price of HK$0.28 per Share, without taking into account issue of new Shares, if any, after the Latest Practicable Date and prior to Completion:

Oriental Day International Limited Vendors Public Shareholders Total	As at the Latest Practicable Date Number of Approximate Shares (%) 1,915,065,000 52.66 0 0.00 1,721,275,000 47.34 3,636,340,000 100.00	Upon Completion and full conversion of the Convertible Notes at the conversion price of HK$0.28 (Notes 1 and 2) Number of Approximate Shares (%) 1,915,065,000 28.90 1,987,687,714 29.99 2,722,873,000 41.11 6,625,625,714 100.00	Upon Completion and full conversion of the Convertible Notes at the conversion price of HK$0.28 (Notes 1 and 2) Number of Approximate Shares (%) 1,915,065,000 28.90 1,987,687,714 29.99 2,722,873,000 41.11 6,625,625,714 100.00
			100.00

Notes:

No Conversion Shares will be issued to the holder(s) of the Convertible Notes if the holder(s) of the Convertible Notes together with parties acting in concert with it, taken together will, directly or indirectly, control or be interested in 30% or more of the voting rights of the Company.
As at the Latest Practicable Date, the Company has no outstanding options, warrants, derivatives, convertible notes or other securities of the Company convertible into or giving rights to subscribe for Shares.

Application will be made by the Company to the Stock Exchange for the approval of the listing of and the permission to deal in the Conversion Shares on the Stock Exchange.

– 18 –

LETTER FROM THE BOARD

Dilution effect on Shareholders

In view of the potential dilution effect on existing Shareholders on exercise of conversion rights attaching to the Convertible Notes, for so long as any of the Convertible Notes is outstanding, the Company will keep Shareholders informed of the level of dilution and details of conversion after issue of the Convertible Notes as follows:

the Company will make a monthly announcement (the “Monthly Announcement”) on the websites of the Stock Exchange and the Company. Such announcement will be made on or before the fifth Business Day following the end of each calendar month and will include the following details in a table form:
(a) whether there is any conversion of the Convertible Notes during the relevant month. If there is a conversion, details thereof including the conversion date, number of new Shares issued, conversion price for each conversion. If there is no conversion during the relevant month, a negative statement to that effect;
(b) the amount of outstanding Convertible Notes after the conversion, if any;
(c) the total number of Shares issued pursuant to other transactions, including Shares issued pursuant to exercise of options under any share option scheme(s) of the Company;
(d) the total issued share capital of the Company as at the commencement and the last day of the relevant month;
in addition to the Monthly Announcement, if the cumulative amount of Conversion Shares issued pursuant to the conversion of the Convertible Notes reaches 5% of the issued share capital of the Company as disclosed in the last Monthly Announcement or any subsequent announcement made by the Company in respect of the Convertible Notes (as the case may be) (and thereafter in a multiple of such 5% threshold), the Company will make an announcement on the websites of the Stock Exchange and the Company including details as stated in (i) above for the period commencing from the date of the last Monthly Announcement or any subsequent announcement made by the Company in respect of the Convertible Notes (as the case may be), up to the date on which the total amount of Shares issued pursuant to the conversion amounts to 5% of the issued share capital of the Company as disclosed in the last Monthly Announcement or any subsequent announcement made by the Company in respect of the Convertible Notes (as the case may be); and

– 19 –

LETTER FROM THE BOARD

if the Company forms the view that any issue of new Shares will trigger the disclosure requirements under Rule 13.09 of the Listing Rules, then the Company is obliged to make such disclosures regardless of the issue of any announcements in relation to the Convertible Notes as mentioned in (i) and (ii) above.

RISKS ASSOCIATED WITH THE ACQUISITION

When considering the terms of Acquisition, the Directors have taken into account the following risks associated with the Acquisition:

The price of vanadium is subject to the demand and supply of the domestic and international market which are affected by numerous factors beyond the Company’s control.
The renewal of the existing mining permit of the Mine held by the PRC Company which will be due in August 2008 is subject to the approval of the relevant government authorities.
The reserves estimated by the technical consultants may be inaccurate and have large deviation to the actual reserves which in turn may affect the valuation of the Rights.
Mining and processing operations are subject to a number of operating risks and hazards which are beyond the Company’s control and may affect the production of the PRC Company.

IMPLICATIONS OF THE LISTING RULES

As the applicable percentage ratio as defined in the Listing Rules of the Acquisition exceeds 100%, the Agreement constitutes a very substantial acquisition for the Company under the Listing Rules. The SGM will be held to consider and, if thought fit, approve the resolution in respect of the Acquisition. As no Shareholder has any material interest in the Acquisition, no Shareholder is required to abstain from voting in the SGM in respect of the resolution to approve the Acquisition.

SGM

The SGM will be held at Rooms 2004-2005, 20/F., World Trade Centre, 280 Gloucester Road, Causeway Bay, Hong Kong on 14 March 2008 at 11:30 a.m. to consider and, if thought fit, to approve, among other matters, the Acquisition and the transactions contemplated thereunder.

– 20 –

LETTER FROM THE BOARD

A notice convening a special general meeting of the Company to be held at Rooms 2004-2005, 20/F., World Trade Centre, 280 Gloucester Road, Causeway Bay, Hong Kong on 14 March 2008, at 11:30 a.m. is set out on pages 143 to 144 of this circular. If you are not able to attend and/or vote at the meeting, you are requested to complete the accompanying form of proxy in accordance with the instructions printed thereon and return it to the Company’s branch share registrar in Hong Kong, Tricor Tengis Limited at 26th Floor, Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong as soon as possible and in any event not later than 48 hours before the time appointed for the holding of the special general meeting or any adjournment thereof. Completion and return of the form of proxy will not preclude you from attending and voting at the special general meeting or any adjournment thereof should you so wish.

To the best knowledge of the Directors, none of the Vendors hold any Shares as at the Latest Practicable Date. On such basis, no Shareholder is required to abstain from voting at the SGM.

PROCEDURE TO DEMAND A POLL AT GENERAL MEETING

According to Bye-law 73 of the Bye-laws, at any general meeting a resolution put to the vote of the meeting shall be decided on a show of hands unless a poll is (before or on the declaration of the result of the show of hands or on the withdrawal of any other demand for a poll) demanded. A poll may be demanded as follow:

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

– 21 –

LETTER FROM THE BOARD

RECOMMENDATION

The Directors consider that the terms of the Agreement are fair and reasonable to the Company and in the interest of the Shareholders as a whole. Accordingly, the Directors recommend the Shareholders to vote in the favour of the ordinary resolutions to be proposed at the SGM to approve the Acquisition, the Agreement and the transaction contemplated thereunder.

GENERAL

Your attention is drawn to the information set out in the appendices to this circular and the notice of the SGM.

Yours faithfully, For and on behalf of the Board of Rising Development Holdings Limited Lai Leong Chairman

– 22 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

1. SUMMARY OF AUDITED FINANCIAL INFORMATION OF THE GROUP

A summary of the published results and of the assets and liabilities of the Group for the last three financial years, as extracted from the audited financial statements, is set out below:

CONSOLIDATED INCOME STATEMENT

For the year ended 31 March

Note TURNOVER 8 Cost of sales Gross profit Other income and gains 8 – Income from investments – Others Fair value gains on investment properties 18 Selling and distribution expenses Operating and administrative expenses Other operating expenses PROFIT FROM OPERATING ACTIVITIES Finance costs 9 Share of loss of an associate PROFIT BEFORE TAX 10 Tax 11 PROFIT FOR THE YEAR ATTRIBUTABLE TO SHAREHOLDERS DIVIDENDS 13 EARNINGS PER SHARE 16 Basic Diluted	2007 HK$’000 359,576 (319,379) 40,197 41,048 4,843 3,280 (4,613) (13,889) – 70,866 (7,346) (10) 63,510 170 63,680 19,472 HK10.46 cents N/A	2006 HK$’000 (restated) 208,281 (172,079) 36,202 30,278 4,719 4,530 (6,108) (13,761) – 55,860 (2,782) (48) 53,030 (6,604) 46,426 18,491 HK7.68 cents HK7.65 cents	2005 HK$’000 (restated) 184,271 (148,094) 36,177 20,669 4,201 5,071 (6,193) (14,074) (1,850) 44,001 (396) – 43,605 (3,774) 39,831 21,905 HK6.67 cents HK6.63 cents

– 23 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

CONSOLIDATED BALANCE SHEET

As at 31 March

Note NON-CURRENT ASSETS Property, plant and equipment 17 Investment properties 18 Prepaid land lease payments 19 Interest in an associate 21 Available-for-sale financial assets 22 Other investments CURRENT ASSETS Inventories 23 Prepaid land lease payments 19 Prepayments, deposits and other receivable Derivative financial instruments 31 Trade receivables 24 Financial assets at fair value through profit or loss 25 Other investments Cash and cash equivalents 26 CURRENT LIABILITIES Bank overdraft, unsecured Short-term bank loans – secured 27 – unsecured 27 Trust receipt loans, secured 27 Other loans, secured 28 Trade payables Customers’ deposits Other payables and accruals 29 Current portion of finance lease payable 30 Tax payable NET CURRENT ASSETS TOTAL ASSETS LESS CURRENT LIABILITIES	2007 HK$’000 6,812 30,380 881 20 251,642 – 289,735 ----------------- 10,261 23 6,183 3,061 629 107,538 – 29,648 157,343 ----------------- – 110,982 – – – 134 2,878 2,291 – 479 116,764 ----------------- 40,579 ----------------- 330,314	2006 HK$’000 (restated) 6,723 27,100 904 30 194,035 – 228,792 ----------------- 63,297 23 4,037 162 1,883 106,178 – 24,537 200,117 ----------------- 43 82,300 5,766 7,727 – 3,124 39,051 1,248 10 6,937 146,206 ----------------- 53,911 ----------------- 282,703	2005 HK$’000 (restated) 7,108 20,480 927 – – 112,724
			141,239 ----------------- 49,374 23 3,035 – 2,490 – 83,264 69,255
			207,441 ----------------- – 36,899 10,300 8,000 6,195 657 – 25,675 15 3,730
			91,471 ----------------- 115,970 -----------------
			257,209

– 24 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

Note NON-CURRENT LIABILITIES Finance lease payable Deferred tax liabilities 32 NET ASSETS CAPITAL AND RESERVES Share capital 33 Reserves 34 Proposed dividends 13 TOTAL EQUITY	2007 HK$’000 – 2,963 2,963 ----------------- 327,351 60,829 254,964 11,558 327,351	2006 HK$’000 (restated) – 2,354 2,354 ----------------- 280,349 60,879 208,512 10,958 280,349	2005 HK$’000 (restated) 10 1,471
			1,481 -----------------
			255,728

			39,826 203,954 11,948
			255,728

The Company’s consolidated financial statements for the years ended 31 March 2005, 31 March 2006 and 31 March 2007 were audited by Li, Tang, Chen & Co. and the relevant auditor’s reports did not contain any qualifications. Under the prevailing Hong Kong Financial Reporting Standards, the terms “extraordinary items” and “exceptional items” are no longer in use.

– 25 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

2. AUDITED FINANCIAL STATEMENTS OF THE GROUP

Set out below are the audited consolidated financial statements of the Group together with accompanying notes as extracted from the annual report of the Group for the year ended 31 March 2007:

CONSOLIDATED INCOME STATEMENT

For the year ended 31st March

Note TURNOVER 8 Cost of sales Gross profit Other income and gains 8 – Income from investments – Others Fair value gains on investment properties 18 Selling and distribution expenses Operating and administrative expenses Other operating expenses PROFIT FROM OPERATING ACTIVITIES Finance costs 9 Share of loss of an associate PROFIT BEFORE TAX 10 Tax 11 PROFIT FOR THE YEAR ATTRIBUTABLE TO SHAREHOLDERS DIVIDENDS 13 EARNINGS PER SHARE 16 Basic Diluted	2007 HK$’000 359,576 (319,379) 40,197 41,048 4,843 3,280 (4,613) (13,889) – 70,866 (7,346) (10) 63,510 170 63,680 19,472 HK10.46 cents N/A	2006 HK$’000 (restated) 208,281 (172,079) 36,202 30,278 4,719 4,530 (6,108) (13,761) – 55,860 (2,782) (48) 53,030 (6,604) 46,426 18,491 HK7.68 cents HK7.65 cents

– 26 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

CONSOLIDATED BALANCE SHEET

As at 31st March, 2007

Note NON-CURRENT ASSETS Property, plant and equipment 17 Investment properties 18 Prepaid land lease payments 19 Interest in an associate 21 Available-for-sale financial assets 22 CURRENT ASSETS Inventories 23 Prepaid land lease payments 19 Prepayments, deposits and other receivables Derivative financial instruments 31 Trade receivables 24 Financial assets at fair value through profit or loss 25 Cash and cash equivalents 26 CURRENT LIABILITIES Bank overdraft, unsecured Short-term bank loans – secured 27 – unsecured 27 Trust receipt loans, secured 27 Trade payables 28 Customers’ deposits Other payables and accruals 29 Current portion of finance lease payable 30 Tax payable NET CURRENT ASSETS TOTAL ASSETS LESS CURRENT LIABILITIES NON-CURRENT LIABILITIES Deferred tax liabilities 32 NET ASSETS	2007 HK$’000 6,812 30,380 881 20 251,642 289,735 10,261 23 6,183 3,061 629 107,538 29,648 157,343 – 110,982 – – 134 2,878 2,291 – 479 116,764 40,579 330,314 2,963 327,351	2006 HK$’000 (restated) 6,723 27,100 904 30 194,035
		228,792
		63,297 23 4,037 162 1,883 106,178 24,537
		200,117
		43 82,300 5,766 7,727 3,124 39,051 1,248 10 6,937
		146,206
		53,911
		282,703 2,354
		280,349

– 27 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

Note CAPITAL AND RESERVES Share capital 33 Reserves 34 Proposed dividends 13 TOTAL EQUITY	2007 HK$’000 60,829 254,964 11,558 327,351	2006 HK$’000 (restated) 60,879 208,512 10,958
		280,349

– 28 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the year ended 31st March, 2007

At 1st April, 2005 Shares issued under share option scheme Issue of bonus shares Realised on disposal of available-for-sale financial assets Deficit on revaluation Final dividend paid Profit for the year Dividends –note 13 At 31st March, 2006 At 1st April, 2006 Repurchase of shares Realised on disposal of available-for-sale financial assets Surplus on revaluation Final dividend paid Profit for the year Dividends –note 13 At 31st March, 2007	Share capital HK$’000 39,826 760 20,293 – – – – – 60,879 60,879 (50 ) – – – – – 60,829	Share Asset Exchange Investment premium Contributed revaluation fluctuation revaluation account surplus reserve reserve reserve HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 48,252 5,830 2,595 118 4,226 1,534 – – – – (20,293 ) – – – – – – – – (2,204 ) – – – – (2,414 ) – – – – – – – – – – – – – – – 29,493 5,830 2,595 118 (392 ) 29,493 5,830 2,595 118 (392 ) (113 ) – – – – – – – – (1,652 ) – – – – 4,009 – – – – – – – – – – – – – – – 29,380 5,830 2,595 118 1,965	Statutory reserve fund HK$’000 12 – – – – – – – 12 12 – – – – – – 12	Retained profits HK$’000 142,921 – – – – (227 ) 46,426 (18,264 ) 170,856 170,856 – – – – 63,680 (19,472 ) 215,064	Proposed dividends HK$’000 11,948 – – – – (11,948 ) – 10,958 10,958 10,958 – – – (10,958 ) – 11,558 11,558	Total HK$’000 255,728 2,294 – (2,204 ) (2,414 ) (12,175 ) 46,426 (7,306 ) 280,349 280,349 (163 ) (1,652 ) 4,009 (10,958 ) 63,680 (7,914 ) 327,351

– 29 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

CONSOLIDATED CASH FLOW STATEMENT

For the year ended 31st March, 2007

CASH FLOWS FROM OPERATING ACTIVITIES Profit before tax Adjustments for: Share of loss of an associate Interest expenses Dividend income from available-for-sale financial assets Dividend income from financial assets at fair value through profit or loss Interest income from investment in available-for-sale financial assets Bank interest income Other interest income Fair value gain on investment properties Reversal of revaluation deficit on buildings for own use previously recognised in income statement Depreciation Recognition of prepaid land lease payments Reversal of revaluation deficit on property, plant and equipment previously recognised in income statement Loss/(gain) on disposal of property, plant and equipment Net realised gain on available-for-sale financial assets Unrealised gain on investments in financial assets at fair value through profit or loss Net realised and unrealised gain on derivative financial instruments Operating profit before working capital changes Decrease/(increase) in inventories Increase in prepayments, deposits and other receivables Decrease in trade receivables Decrease/(increase) in financial assets at fair value through profit or loss Decrease in trust receipt loans (Decrease)/increase in trade payables (Decrease)/increase in customers’ deposits Increase/(decrease) in other payables and accruals Cash from operations Interest paid Hong Kong profits tax paid Net cash from operating activities	2007 HK$’000 63,510 10 7,346 (27) (3,672) (16,512) (584) (42) (3,280) – 483 23 (648) 44 (2,571) (14,271) (3,995) 25,814 53,036 (2,146) 1,254 12,911 (7,727) (2,990) (36,173) 1,043 45,022 (7,346) (5,680) 31,996 ----------------	2006 HK$’000 (restated) 53,030 48 2,782 (87) (2,739) (9,244) (1,168) (1) (4,530) (157) 606 23 – (124) (6,256) (11,453) (162) 20,568 (13,923) (1,002) 607 (11,463) (273) 2,467 15,074 (450) 11,605 (2,782) (2,511) 6,312 ----------------

– 30 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

Note CASH FLOWS FROM INVESTING ACTIVITIES Dividend income from available-for-sale financial assets Dividend income from financial assets at fair value through profit or loss Interest income from investment in available-for-sale financial assets Bank interest income Other interest income Net settlement of derivative financial instruments Purchases of property, plant and equipment Proceeds from disposal of property, plant and equipment Purchases of investment properties Acquisition of available-for-sale financial assets Acquisition of an associate Proceeds from disposal of available-for-sale financial assets Net cash used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES Payment for repurchase of shares Exercise of share options Dividend paid Capital element of finance lease rental payments Acquisition of short-term bank loans Repayment of other loans Repayment of short-term bank loans Net cash from financing activities NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR CASH AND CASH EQUIVALENTS AT END OF YEAR ANALYSIS OF BALANCES OF CASH AND CASH EQUIVALENTS Cash and bank balances 26 Bank overdraft, unsecured	2007 HK$’000 27 3,672 16,512 584 42 1,096 (133) 166 – (119,267) – 66,588 (30,713) ---------------- (163) – (18,872) (10) 28,682 – (5,766) 3,871 ---------------- 5,154 24,494 29,648 29,648 – 29,648	2006 HK$’000 (restated) 87 2,739 9,244 1,168 1 – (64) 124 (2,090) (148,553) (78) 68,879 (68,543) ---------------- – 2,294 (19,481) (15) 249,278 (6,195) (208,411) 17,470 ---------------- (44,761) 69,255 24,494 24,537 (43) 24,494

– 31 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

BALANCE SHEET

As at 31st March, 2007 Note NON-CURRENT ASSETS Interests in subsidiaries 20 Available-for-sale financial assets 22 CURRENT ASSETS Prepayments, deposits and other receivables Financial assets at fair value through profit or loss 25 Derivative financial instruments 31 Cash and cash equivalents 26 CURRENT LIABILITIES Bank overdraft, unsecured Short term bank loans, secured 27 Other payables and accruals 29 Tax payable NET CURRENT ASSETS NET ASSETS CAPITAL AND RESERVES Share capital 33 Reserves 34 Proposed dividends 13 TOTAL EQUITY	2007 HK$’000 65,865 243,842 309,707 4,238 107,538 3,061 26,619 141,456 – 87,681 211 404 88,296 53,160 362,867 60,829 290,480 11,558 362,867	2006 HK$’000 (restated) 63,503 186,235
		249,738
		2,326 106,178 162 16,095
		124,761
		36 54,100 581 1,384
		56,101
		68,660
		318,398

		60,879 246,561 10,958
		318,398

– 32 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

NOTES TO FINANCIAL STATEMENTS

1. CORPORATE INFORMATION

Rising Development Holdings Limited was incorporated in Bermuda on 8th August, 1997 as an exempted company with limited liability under the Companies Act (as amended) of Bermuda. The principal office of the Company is located at 16th Floor, World Tech Centre, 95 How Ming Street, Kwun Tong, Kowloon, Hong Kong.

During the year, the Group was engaged in investment holding, trading in equity securities, the manufacture and sale of fur garments and the sale of fur skins.

In the opinion of the directors, the ultimate holding company is Rising Global Asset Limited, which is incorporated in the British Virgin Islands (“BVI”).

The financial statements are presented in Hong Kong dollars which is the same as the functional currency of the Company. All values are rounded to the nearest thousand except when otherwise indicated.

2. BASIS OF PREPARATION AND CONSOLIDATION

These financial statements have been prepared in accordance with all applicable Hong Kong Financial Reporting Standards (“HKFRSs”) (which also includes Hong Kong Accounting Standards (“HKASs”) and Interpretations) issued by the Hong Kong Institute of Certified Public Accountants (“HKICPA”), accounting principles generally accepted in Hong Kong and the disclosure requirements of the Hong Kong Companies Ordinance. They have been prepared under the historical cost convention, except for buildings, investment properties and certain financial assets, which have been measured at fair value.

During the current year, the Group included trading in equity securities under “financial assets at fair value through profit or loss” as one of its principal activities and accordingly, the directors considered it more appropriate to reclassify its proceeds from trading in equity securities and related cost under turnover and cost of sales respectively, and also to present the related financial information under a separate segment of “Trading in equity securities” to better reflect the underlying nature of these balances and allow a more appropriate presentation of the Group’s results. In the corresponding period in 2006, trading of equity securities incurred has been reclassified. The comparative amounts of segment information have been restated to conform with the current year’s presentation.

The consolidated financial statements included the financial statements of the Company and its subsidiaries for the year ended 31st March, 2007. The results of subsidiaries are consolidated from the date of acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases. All significant intercompany transactions and balances within the Group are eliminated on consolidation.

3. IMPACT OF NEW AND REVISED HONG KONG FINANCIAL REPORTING STANDARDS

The HKICPA has issued certain new and revised HKFRSs that are first effective for the current accounting period of the Group. The Group has adopted the new and revised HKFRSs below, which are relevant to its operations in the preparation of the financial statements.

Amendment to HKAS 39 Financial Instruments: Recognition and Measurement – Cash Flow Hedge Accounting of Forecast Intragroup Transactions, which allows the designation of an intragroup transaction as a hedged item when the foreign currency risk of the transaction would affect the consolidated financial statements.
Amendment to HKAS 39 Financial Instruments: Recognition and Measurement – The Fair Value Option, which amends the definition of financial instruments classified at fair value through profit or loss and restricts the ability to designate financial instruments as part of this category.

– 33 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

Amendment to HKAS 39 Financial Instruments: Recognition and Measurement & HKFRS 4 Insurance Contracts –Financial Guarantee Contracts, which requires the recognition of issued financial guarantees at fair value irrespective of the legal form.
HKFRS-Int 4 Determining whether an Arrangement contains a Lease, which requires application of lease accounting in accordance with HKAS 17 “Leases” on all arrangements that convey the right to use specific assets irrespective of their legal form.

The adoption of these new and revised HKFRSs has no material effect on the Group’s results and financial position for the current or prior accounting periods reflected in these financial statements.

4. IMPACT OF ISSUED BUT NOT YET EFFECTIVE HONG KONG FINANCIAL REPORTING STANDARDS

The Group has not applied the following new and revised HKFRSs, that have been issued but are not yet effective, in these financial statements:

		Effective for
		accounting periods
		beginning on or after
HKFRS 7	Financial Instruments: Disclosures	1st January, 2007
Amendment to HKAS 1	Presentation of Financial Statements	1st January, 2007
	– Capital Disclosures
HK(IFRIC)-Int 8	Scope of HKFRS 2	1st May, 2006
HK(IFRIC)-Int 9	Reassessment of Embedded Derivatives	1st June, 2006
HK(IFRIC)-Int 10	Interim Financial Reporting and Impairment	1st November, 2006
HK(IFRIC)-Int 11	HKFRS 2 – Group and Treasury Share
	Transactions	1st March, 2007
HK(IFRIC)-Int 12	Service Concession Arrangements	1st January, 2008
HKFRS 8	Operating Segments	1st January, 2008

The Group is in the process of making an assessment of what the impact of these amendments, new standards and new interpretations would be in the period of initial application, but yet in a position to state whether these amendments, new standards and new interpretations would have a significant impact on the Group’s results of operations and financial position.

5. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Revenue recognition:

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

(a) on the sale of goods, when the significant risks and rewards of ownership have been transferred to the buyer, provided that the Group maintains neither managerial involvement to the degree usually associated with ownership, nor effective control over the goods sold;
(b) sale of securities, on a trade date basis;
(c) rental income, on a straight line basis over the lease terms;
(d) interest income, on an accrual basis using the effective interest method by applying the rate that discounts the estimated future cash receipts through the expected life of the financial instrument to the net carrying amount of the financial assets;
(e) dividend income, when the right to receive payment is established.

– 34 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

Subsidiaries:

A subsidiary is a company whose financial and operating policies the Company controls, directly or indirectly, so as to obtain benefits from its activities.

The results of subsidiaries are included in the Company’s income statement to the extent of dividends received and receivable. The Company’s interests in subsidiaries are stated at cost less any impairment losses.

Associate:

An associate is an entity, not being a subsidiary or a jointly-controlled entity, in which the Group has a long term interest of generally not less than 20% of the equity voting rights and over which it is in a position to exercise significant influence.

The Group’s share of the post-acquisition results of an associate is included in the consolidated income statement. The Group’s interest in an associate is stated in the consolidated balance sheet at the Group’s share of net assets under the equity method of accounting, less any impairment losses.

Impairment of assets:

Where an indication of impairment exists, or when annual impairment testing for an asset is required (other than inventories, financial assets, deferred tax assets, investment properties and goodwill), the asset’s recoverable amount is estimated. An asset’s recoverable amount is calculated as the higher of the asset’s or cash-generating unit’s value in use and its fair value less costs to sell, and is determined for an individual asset, unless the asset does not generate cash inflows, that are largely independent of those from other assets or groups of assets, in which case, the recoverable amount is determined for the cash-generating unit to which the asset belongs.

An impairment loss is recognised only if the carrying amount of an asset exceeds its recoverable amount. In assessing value in use, the estimate future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. An impairment loss is charged to the income statement in the year in which it arises.

An assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. If such indication exists, the recoverable amount is estimated. A previously recognised impairment loss of an asset other than goodwill is reversed only if there has been a change in the estimates used to determine the recoverable amount of that asset, however not to an amount higher than the carrying amount that would have been determined (net of any depreciation/amortisation), had no impairment loss been recognised for the asset in prior years. A reversal of such impairment loss is credited to the income statement in the period in which is arises.

Related parties:

A party is considered to be related to the Group if:

(a) the party, directly or indirectly through one or more intermediaries, (i) controls, is controlled by, or is under common control with, the Group; (ii) has an interest in the Group that gives it significant influence over the Group; or (iii) has joint control over the Group;
(b) the party is an associate;
(c) the party is a jointly-controlled entity;
(d) the party is a member of the key management personnel of the Group or its parent;
(e) the party is a close member of the family of any individual referred to in (a) or (d); or

– 35 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

(f) the party is an entity that is controlled, jointly controlled or significantly influenced by or for which significant voting power in such entity resides with, directly or indirectly, any individual referred to in (d) or (e).

Property, plant and equipment:

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

Buildings are stated in the balance sheet at their revalued amount, being the fair value at the date of revaluation less any subsequent accumulated depreciation and any subsequent accumulated impairment losses. Revaluations are performed with sufficient regularity such that the carrying amount does not differ materially from that which would be determined using fair values at the balance sheet date.

Any revaluation increase arising on revaluation of buildings is credited to the asset revaluation reserve, except to the extent that it reverses a revaluation decrease of the same asset previously recognised as an expense, in which case the increase is credited to the income statement to the extent of the decrease previously charged. A decrease in net carrying amount arising on revaluation of an asset is dealt with as an expense to the extent that it exceeds the balance, if any, on the asset revaluation reserve relating to a previous revaluation of that asset. On the subsequent sale or retirement of a revalued asset, the attributable revaluation surplus is transferred to retained profits.

Depreciation is calculated on the straight-line basis to write off the cost or valuation of each property, plant and equipment to its residual value over its estimated useful life. The principal annual rates are used for this purpose are as follows:

Buildings	The shorter of the lease terms and 50 years
Leasehold improvements	The shorter of the lease terms and 5 years
Plant and machinery	3 to 5 years
Furniture, fixtures and motor vehicles	3 to 5 years

Where parts of an item of property, plant and equipment have different useful lives, the cost of that item is allocated on a reasonable basis among the parts and each part is depreciated separately.

Residual values, useful lives and depreciation method are reviewed, and adjusted if appropriate, at each balance sheet date.

An item of property, plant and equipment is derecognised upon disposal of when no future economic benefits are expected from its use or disposal. Any gain or loss on disposal or retirement recognised in the income statement in the year the asset is derecognised is the difference between the net sales proceeds and the carrying amount of the relevant asset.

Investment properties:

Investment properties are interests in land and buildings held to earn rental income and/or for capital appreciation, rather than for use in the production or supply of goods or services or for administrative purposes; or for sale in the ordinary course of business. Such properties are measured initially at cost, including transaction costs. Subsequent to initial recognition, investment properties are stated at fair value, which reflects market conditions at the balance sheet date.

– 36 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

Gains or losses arising from changes in the fair values of investment properties are included in the income statement in the year in which they arise.

Any gains or losses on the retirement or disposal of an investment property are recognised in the income statement in the year of the retirement or disposal.

Leases:

Leases that transfer substantially all the rewards and risks of ownership of assets to the Group, other than legal title are accounted for as finance leases. At the inception of a finance lease, the cost of the leased asset is capitalised at the present value of the minimum lease payments and recorded together with the obligation, excluding the interest element, to reflect the purchase and financing. Assets held under capitalised finance leases are included in property, plant and equipment and depreciated over the shorter of the lease terms and the estimated useful lives of the assets. The finance costs of such leases are charged to the income statement so as to provide a constant periodic rate of charge over the lease terms.

Leases where substantially all the rewards and risks of ownership of assets remain with the lessor are accounted for as operating leases. Where the Group is the lessor, assets leased by the Group under operating leases are included in non-current assets and rentals receivable under the operating leases are credited to the income statement on the straight-line basis over the lease terms. Where the Group is the lessee, rentals payable under the operating leases are charged to the income statement on the straight-line basis over the lease terms.

Prepaid land lease payments under operating leases are initially stated at cost and subsequently recognised on the straight-line basis over the lease terms. When the lease payments cannot be allocated reliably between the land and buildings elements, the entire lease payments are included in the cost of the land and buildings as a finance lease in property, plant and equipment.

Investments and other financial assets:

Financial assets in the scope of HKAS 39 are classified as financial assets at fair value through profit or loss, loans and receivables or available-for-sale financial assets, as appropriate. When financial assets are recognised initially, they are measured at fair value, plus, in the case of investments not at fair value through profit or loss, directly attributable transaction costs. The Group determines the classification of its financial assets after initial recognition and, where allowed and appropriate, re-evaluates this designation at the balance sheet date.

All regular way purchases and sales of financial assets are recognised on the trade date i.e., the date that the Group commits to purchase the asset. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the period generally established by regulation or convention in the marketplace.

Financial assets at fair value through profit or loss:

Financial assets classified as held for trading are included in the category “financial assets at fair value through profit or loss”. Financial assets are classified as held for trading if they are acquired for the purpose of sale in the near term. Gains or losses on investments held for trading are recognised in the income statement.

Loans and receivables:

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Such assets are carried at amortised cost using the effective interest method. Gains and losses are recognised in the income statement when the loans and receivables are derecognised or impaired, as well as through the amortisation process.

– 37 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

Available-for-sale financial assets:

Available-for-sale financial assets are non-derivative that are either designated or not classified as any of the other categories. At each balance sheet date subsequent to initial recognition, available-for-sale financial assets are measured at fair value. Changes in fair value are recognised in equity, until the financial asset is disposed of or is determined to be impaired, at which time, the cumulative gain or loss previously recognised in equity is removed from equity and recognised in profit or loss. Any impairment losses on available-for-sale financial assets are recognised in profit or loss. Impairment losses on available-for-sale equity investments will not reverse to profit or loss in subsequent periods. For available-for-sale debt investments, impairment losses are subsequently reversed if an increase in the fair value of the investment can be objectively related to an event occurring after the recognition of the impairment loss.

For available-for-sale equity investments that do not have a quoted market price in an active market and whose fair value cannot be reliably measured and derivatives that are linked to and must be settled by delivery of such unquoted equity instruments, they are measured at cost less any identified impairments losses at each balance sheet date subsequent to initial recognition. An impairment loss is recognised in profit or loss when there is objective evidence that the asset is impaired. The amount of the impairment loss is measured as the difference between the carrying amount of the asset and the present value of the estimated future cash flows discounted at the current market rate of return for a similar financial asset. Such impairment losses will not reverse in subsequent periods.

Impairment of financial assets:

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

Assets carried at amortised cost:

If there is objective evidence that an impairment loss on loans and receivables carried at amortised cost has been incurred, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate (i.e., the effective interest rate computed at initial recognition). The carrying amount of the asset is reduced either directly or through the use of an allowance account. The amount of the impairment loss is recognised in profit or loss.

The Group first assesses whether objective evidence of impairment exists individually for financial assets that are individually significant, and individually or collectively for financial assets that are not individually significant. If it is determined that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, the asset is included in a group of financial assets with similar credit risk characteristics and that group is collectively assessed for impairment. Assets that are individually assessed for impairment and for which an impairment loss is or continues to be recognised are not included in a collective assessment of impairment.

If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed. Any subsequent reversal of an impairment loss is recognised in the income statement, to the extent that the carrying value of the asset does not exceed its amortised cost at the reversal date.

Assets carried at cost:

If there is objective evidence that an impairment loss on an unquoted equity instrument that is not carried at fair value because its fair value cannot be reliably measured has been incurred, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discontinued at the current market rate of return for a similar financial asset. Impairment losses on these assets are not reversed.

– 38 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

Available-for-sale financial assets:

If an available-for-sale asset is impaired, an amount comprising the difference between its cost (net of any principal payment and amortisation) and its current fair value, less any impairment loss previously recognised in profit or loss, is transferred from equity to the income statement. Impairment losses on equity instruments classified as available-for-sale are not reversed through profit or loss.

Derecognition of financial assets:

A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is derecognised where:

the rights to receive cash flows from the asset have expired;
the Group retains the rights to receive cash flows from the asset, but has assumed an obligation to pay in full without material delay to a third party under a “pass-through” arrangement; or
the Group has transferred its rights to receive cash flows from the asset and either (a) has transferred substantially all the risks and rewards of the asset, or (b) has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

Where the Group has transferred its rights to receive cash flows from an asset and has neither transferred nor retained substantially all the risks and rewards of the asset nor transferred control of the asset, the asset is recognised to the extent of the Group’s continuing involvement in the asset. Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Group could be required to repay.

Where continuing involvement takes the form of a written and/or purchased option (including a cash-settled option or similar provision) on the transferred asset, the extent of the Group’s continuing involvement is the amount of the transferred asset that the Group may repurchase, except in the case of a written put opinion (including a cash-settled option or similar provision) on an asset measured at fair value, where the extent of the Group’s continuing involvement is limited to the lower of the fair value of the transferred asset and the option exercise price.

Interest-bearing loans and borrowings:

All loans and borrowings are initially recognised at the fair value of the consideration received less directly attributable transaction costs.

After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the effective interest method.

Gains and losses are recognised in net profit or loss when the liabilities are derecognised as well as through the amortisation process.

Derecognition of financial liabilities:

A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires.

When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and a recognition of a new liability, and the difference between the respective carrying amounts is recognised in profit or loss.

– 39 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

Derivative financial instruments:

The Group invests in certain derivative financial instruments, such as forward exchange contracts, for trading purpose. Such derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently remeasured at fair value. Derivatives are carried as assets when the fair value is positive and as liabilities when the fair value is negative.

Any gains or losses arising from changes in fair value of derivatives are taken directly to the profit or loss for the year.

Financial guarantee contracts:

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

Income tax:

Income tax comprises current and deferred tax. Income tax is recognised in the income statement, or in equity if it relates to items that are recognised in the same or a different period, directly in equity.

Current tax assets and liabilities for the current and prior years are measured at the amount expected to be recovered from or paid to the taxation authorities.

Deferred tax is provided, using the liability method, on all temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred tax liabilities are recognised for all taxable temporary differences, except:

where the deferred tax liability arises from goodwill or the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and
in respect of taxable temporary differences associated with investments in subsidiaries, associate, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

Deferred tax assets are recognised for all deductible temporary differences, carryforward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carryforward of unused tax credits and unused tax losses can be utilised except:

where the deferred tax asset relating to the deductible temporary differences arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and

– 40 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

in respect of deductible temporary differences associated with investments in subsidiaries and associate, deferred tax assets are only recognised to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised.

The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Conversely, previously unrecognised deferred tax assets are reassessed at each balance sheet date and are recognised to the extent that it is probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the balance sheet date.

Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.

Employee benefits:

(i) The Group operates a defined contribution retirement benefits scheme for those employees who are eligible and have elected to participate in the scheme. The assets of the scheme are held separately from those of the Group in an independently administered fund. Contributions are made based on a percentage of the participating employees’ basic salaries and are charged to the income statement as they become payable in accordance with the rules of the scheme. When an employee leaves the scheme prior to his/her interest in the Group’s employer contributions vesting fully, the ongoing contributions payable by the Group may be reduced by the relevant amount of forfeited contributions.

In addition, the Group also operates a defined contribution Mandatory Provident Fund (“MPF”) retirement benefit scheme under the Mandatory Provident Fund Schemes Ordinance. Contributions to the MPF scheme are made based on a percentage of the employees’ basic salaries and are charged to the income statement as they become payable in accordance with the rules of the MPF scheme. The Group’s employer contributions are fully and immediately vested in favour of the employees.

(ii) The Company’s subsidiaries which operate in the Mainland are required to pay social security insurance premium to local authority for their employees. The insurance premium is calculated at certain percentage on the staff payroll. Social security insurance can provide retirement and unemployment benefits to the employees.

Inventories:

Inventories are stated at the lower of cost and net realisable value after allowances for obsolete or slow-moving items. Cost is determined on the first-in, first-out basis and, in the case of work in progress and finished goods, comprises direct materials, direct labour and an appropriate proportion of overheads based on a normal level of operating activity. Net realisable value is based on estimated selling prices less any estimated costs to be incurred to completion and disposal.

Foreign currencies:

These financial statements are presented in Hong Kong dollars, which is the Company’s functional and presentation currency. Each entity in the Group determines its own functional currency and items included in the financial statements of each entity are measured using that functional currency. Foreign currency transactions are initially recorded using the functional currency rates ruling at the date of the transactions. Monetary assets and liabilities denominated in foreign

– 41 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

currencies are retranslated at the functional currency rates of exchange ruling at the balance sheet date. All differences are taken to profit or loss. Non-monetary items that are measured in the terms of historical cost in a foreign currency are translated using the exchange rates at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined.

The functional currencies of certain overseas subsidiaries are currencies other than the Hong Kong dollar. As at the balance sheet date, the assets and liabilities of these entities are translated into the presentation currency of the Company at the exchange rates ruling at the balance sheet date and, their income statements are translated into Hong Kong dollars at the weighted average exchange rates for the year. The resulting exchange differences are included in the exchange fluctuation reserve. On disposal of a foreign entity, the deferred cumulative amount recognised in equity relating to that particular foreign operation is recognised in the income statement.

For the purpose of the consolidated cash flow statement, the cash flows of overseas subsidiaries are translated into Hong Kong dollars at the exchange rates at the dates of the cash flows. Frequently recurring cash flows of overseas subsidiaries which arise throughout the year are translated to Hong Kong dollars at the weighted average exchange rates for the year.

Equity share-based payment transactions:

The fair value of services received determined by reference to the fair value of share options granted at the grant date is expensed on a straight-line basis over the vesting period, with a corresponding increase in equity (Employee share-based compensation reserve).

At the time when the share options are exercised, the amount previously recognised in employee share-based compensation reserve will be transferred to share premium. When the share options are still not exercised at the expiry date, the amount previously recognised in employee sharebased compensation reserve will be transferred to retained profits.

Cash and cash equivalents:

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

Provisions:

A provision is recognised when a present obligation (legal or constructive) has arisen as a result of a past event and it is probable that a future outflow of resources will be required to settle the obligation, provided that a reliable estimate can be made of the amount of the obligation.

When the effect of discounting is material, the amount recognised for a provision is the present value at the balance sheet date of the future expenditures expected to be required to settle the obligation. The increase in the discounted present value amount arising from the passage of time is included in finance costs in the income statement.

Dividends:

Interim dividends are simultaneously proposed and declared, because the Company’s bye-laws grant the directors the authority to declare interim dividends. Consequently, interim dividends are recognised immediately as a liability when they are proposed and declared.

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

– 42 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

6. SUMMARY ACCOUNTING JUDGEMENTS AND ESTIMATES

Judgements

In the process of applying the Group’s accounting policies, management has made the following judgements, apart from those involving estimations, which have the most significant effect on the amounts recognised in the financial statements.

Operating lease commitments – Group as lessor

The Group has entered into commercial property leases on its investment property portfolio. The Group has determined that it retains all the significant risks and rewards of ownership of these properties which are leased out on operating leases.

Classification between investment properties and owner-occupied properties

The Group determines whether a property qualifies as an investment property, and has developed criteria in making that judgement. Investment property is a property held to earn rentals or for capital appreciation or both. Therefore, the Group considers whether a property generates cash flows largely independently of the other assets held by the Group.

Impairment assessment for trade receivables

The policy for impairment assessment for trade receivables of the Group is based on the evaluation of collectability and an aging analysis of trade receivables and on the judgement of the management. A considerable amount of judgement is required in assessing the ultimate realisation of these receivables, including the current creditworthiness and the past collection history of each customer. If the financial conditions of customers of the Group are deteriorate, resulting in an impairment of their ability to make payments, additional provision may be required.

7. SEGMENT INFORMATION

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

The Group’s operating businesses are structured and managed separately, according to the nature of their operations and the products and services they provide. Each of the Group’s business segments represents a strategic business unit that offers products and services which are subject to risks and returns that are different from those of other business segments. Summary details of the business segments are as follows:

(a) Trading in equity securities comprise proceeds from trading in equity securities and investment income from equity securities.
(b) Investments comprise dividend and interest income from investments and gain or loss on investments other than equity securities.
(c) Manufacture and sales of fur garments.
(d) Trading of fur skins.
(e) Others comprise rental income from investment properties and the Group’s management services business, which provide management services to Group companies.

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

Intersegment sales and transfers are transacted at the terms agreed between the parties and with reference to third party prices.

– 43 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

(a) Business segments:

The following tables present revenue, profit and expenditure and certain asset and liability information for the Group’s business segments.

2007 Segment revenue: Sales to external customers Intersegment sales Income from investments Other revenue Total revenue Segment results Interest income Unallocated expenses Profit from operating activities Finance costs Share of loss of an associate Profit before tax Tax Profit attributable to shareholders 2006 (restated) Segment revenue: Sales to external customers Intersegment sales Income from investments Other revenue Total revenue Segment results Interest income Unallocated expenses Profit from operating activities Finance costs Share of loss of an associate Profit before tax Tax Profit attributable to shareholders	Trading in Manufacture equity and sales of securities Investments fur garments HK$’000 HK$’000 HK$’000 76,945 – 56,919 – – – 17,944 23,104 – – – 1,191 94,889 23,104 58,110 23,775 21,161 7,397 44,600 – 71,155 – – – 14,192 16,086 – – – 807 58,792 16,086 71,962 19,044 16,086 9,156	Trading of fur skins HK$’000 225,712 31,310 – 2,511 259,533 14,345 92,526 39,934 – 2,027 134,487 5,622	Others Eliminations Consolidated HK$’000 HK$’000 HK$’000 – – 359,576 – (31,310 ) – – – 41,048 4,337 (3,822 ) 4,217 4,337 (35,132 ) 404,841 4,959 71,637 626 (1,397 ) 70,866 (7,346 ) (10 ) 63,510 170 63,680 – – 208,281 – (39,934 ) – – – 30,278 5,104 (4,388 ) 3,550 5,104 (44,322 ) 242,109 6,279 56,187 1,169 (1,496 ) 55,860 (2,782 ) (48 ) 53,030 (6,604 ) 46,426

– 44 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

2007 Segment assets Segment liabilities Unallocated liabilities Total liabilities Other segment information: Depreciation Capital expenditure Loss on disposal of property, plant and equipment Net realised gain on investments in available- for-sale financial assets Unrealised gain on investments in financial assets at fair value through profit or loss Fair value gains on investment properties 2006 (restated) Segment assets Segment liabilities Unallocated liabilities Finance lease payable Total liabilities Other segment information: Depreciation Capital expenditure Gain on disposal of property, plant and equipment Net realised gain on investments in available- for-sale financial assets Unrealised gain on investments in financial assets at fair value through profit or loss Fair value gains on investment properties	Trading in Manufacture equity and sales of securities Investments fur garments HK$’000 HK$’000 HK$’000 134,157 241,458 38,604 – (87,893 ) (38,385 ) – – 457 – – 13 – – 44 – 2,571 – 14,271 – – – 3,280 – 122,273 158,688 44,490 – (62,616 ) (36,814 ) – – (10 ) – – 606 – – 64 – – 124 – 6,256 – 11,453 – – – 4,530 –	Trading of fur skins HK$’000 16,407 (2,908 ) 11 46 – – – – 59,551 (47,680 ) – – – – – – –	Others Eliminations Consolidated HK$’000 HK$’000 HK$’000 42,365 (25,913 ) 447,078 (15,975 ) 25,913 (119,248 ) (479 ) (119,727 ) 15 483 74 133 – 44 – 2,571 – 14,271 – 3,280 54,357 (10,450 ) 428,909 (4,953 ) 10,450 (141,613 ) (6,937 ) – (10 ) (148,560 ) – 606 – 64 – 124 – 6,256 – 11,453 – 4,530

Note: As described in note 2, a separate segment of “Trading in equity securities” was included to better reflect the Group’s principal activities for the current year.

– 45 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

(b) Geographical segments:

The following tables present revenue, profit and certain asset and expenditure information for the Group’s geographical segments.

2007 Segment revenue: Sales to external customers Segment results 2006(restated) Segment revenue: Sales to external customers Segment results 2007 Other segment information: Segment assets Capital expenditure 2006(restated) Other segment information: Segment assets Capital expenditure	Hong Kong and Mainland China HK$’000 308,795 65,037 143,877 47,901 Hong Kong and Mainland China HK$’000 446,557 133 427,708 64	Japan HK$’000 17,680 2,298 19,252 2,476 Japan HK$’000 328 – 449 –	North America HK$’000 19,830 2,577 24,172 3,110 North America HK$’000 169 – 497 –	Others Consolidated HK$’000 HK$’000 13,271 359,576 1,725 71,637 20,980 208,281 2,700 56,187 Others Consolidated HK$’000 HK$’000 24 447,078 – 133 255 428,909 – 64	Others Consolidated HK$’000 HK$’000 13,271 359,576 1,725 71,637 20,980 208,281 2,700 56,187 Others Consolidated HK$’000 HK$’000 24 447,078 – 133 255 428,909 – 64

					133

					428,909

					64

– 46 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

8. TURNOVER, OTHER INCOME AND GAINS

Turnover represents the net invoiced value of goods sold, after allowances for returns and trade discounts and proceeds from trading in equity securities during the year.

An analysis of the Group’s turnover, other income and gains is as follows:

Turnover Sales of fur skins and fur garments Proceeds from trading in equity securities Other income and gains Income from investments: Interest income from investments in available-for-sale financial assets Dividend income from available-for-sale financial assets Dividend income from financial assets at fair value through profit or loss Net realised gain on investments in available-for-sale financial assets Net realised gain on investments in equity-linked notes Unrealised gain on investments in financial assets at fair value through profit or loss Net realised and unrealised gain on derivative financial instruments Others: Gross rental income Gain on disposal of property, plant and equipment Bank interest income Other interest income Reversal of revaluation deficit on buildings for own use previously recognised in income statement Exchange gain Provision for bad debts written back Others	2007 HK$’000 282,631 76,945 359,576 16,512 27 3,672 2,571 – 14,271 3,995 41,048 ---------------- 486 – 584 42 648 923 – 2,160 4,843 ---------------- 405,467	2006 HK$’000 (restated) 163,681 44,600
		208,281

		9,244 87 2,739 6,256 337 11,453 162
		30,278 ---------------- 384 124 1,168 1 157 677 572 1,636
		4,719 ----------------
		243,278

– 47 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

9. FINANCE COSTS

Interest on bank loans and overdrafts Interest on trust receipts loans Interest on other loans Total finance costs	Group 2007 2006 HK$’000 HK$’000 6,833 1,833 513 648 – 301 7,346 2,782	Group 2007 2006 HK$’000 HK$’000 6,833 1,833 513 648 – 301 7,346 2,782
		2,782

10. PROFIT BEFORE TAX

The Group’s profit before tax is arrived at after charging/(crediting):

	2007	2006
	HK$’000	HK$’000
Cost of inventories sold	242,963	134,267
Depreciation
– Owned assets	483	591
– Leased assets	–	15
	483	606
Recognition of prepaid land lease payments	23	23
Minimum lease payments under operating
lease on land and buildings	544	639
Pension contributions	139	172
_Less:_Forfeited contributions	(21)	(67)
Net pension contributions	118	105
Auditors’ remuneration	335	320
Staff costs (excluding directors’ remuneration)	7,786	9,678
Gross rental income	(486)	(384)
_Less:_Outgoings	103	68
Net rental income	(383)	(316)
Write-down of inventories	2,826	3,348
Loss on disposal of property, plant and equipment	44	–
Exchange loss	4	–

– 48 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

11. TAX

Hong Kong profits tax has been provided at the rate of 17.5% (2006: 17.5%) on the estimated assessable profits arising in Hong Kong during the year.

Hong Kong profits tax – current year – (over)/underprovision in respect of prior years Deferred –note 32 Income tax (credit)/expense	Group 2007 2006 HK$’000 HK$’000 4,213 3,410 (4,992) 2,311 (779) 5,721 609 883 (170) 6,604	Group 2007 2006 HK$’000 HK$’000 4,213 3,410 (4,992) 2,311 (779) 5,721 609 883 (170) 6,604
		3,410 2,311
		5,721 883 6,604

A reconciliation of the income tax (credit)/expense applicable to profit before tax using the statutory rate to the tax charge at the effective tax rate is as follows:

Profit before tax Tax at the statutory tax rate Income not subject to tax Expenses not deductible for tax (Under)/overprovision of profits tax for the year (Over)/underprovision of profits tax in respect of prior years Unrecognised tax loss Utilisation of tax losses Unrecognised temporary difference Others Income tax (credit)/expense at the Group’s effective rate	Group 2007 2006 HK$’000 % HK$’000 % 63,510 53,030 11,114 17.50 9,280 17.50 (7,184) (11.31) (4,380) (8.26) 901 1.42 227 0.42 (19) (0.03) (199) (0.38) (4,992) (7.86) 2,311 4.36 69 0.11 – – – – (686) (1.29) (88) (0.14) – – 29 0.05 51 0.10 (170) (0.26) 6,604 12.45

12. PROFIT FOR THE YEAR ATTRIBUTABLE TO SHAREHOLDERS

The profit for the year attributable to shareholders dealt with in the financial statements of the Company is HK$61,147,000 (2006: HK$49,877,000) (note 34).

– 49 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

13. DIVIDENDS

Interim – HK1.3 cents (2006: HK1.2 cents) per ordinary share Proposed final – HK1.9 cents (2006: HK1.8 cents) per ordinary share Adjustment to 2006 final dividend	Group and Company 2007 2006 HK$’000 HK$’000 7,914 7,306 11,558 10,958 19,472 18,264 – 227 19,472 18,491	Group and Company 2007 2006 HK$’000 HK$’000 7,914 7,306 11,558 10,958 19,472 18,264 – 227 19,472 18,491
		18,264 227
		18,491

14. DIRECTORS’ REMUNERATION

Directors’ remuneration for the year, disclosed pursuant to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited and section 161 of the Hong Kong Companies Ordinance, is as follows:

Fees Other emoluments Basic salaries, housing benefits, other allowances and benefits in kind Discretionary bonuses Share-based payments Retirement benefits contributions	Group 2007 2006 HK$’000 HK$’000 390 390 ---------------- ---------------- 2,253 2,173 129 443 – – 36 35 2,418 2,651 ---------------- ---------------- 2,808 3,041	Group 2007 2006 HK$’000 HK$’000 390 390 ---------------- ---------------- 2,253 2,173 129 443 – – 36 35 2,418 2,651 ---------------- ---------------- 2,808 3,041
		2,651 ----------------
		3,041

(a) Independent non-executive directors

The fees paid to independent non-executive directors during the year were as follows:

Chan Wing Yuen, Hubert Ho Man Kay, Angela Fan Sai Yee	2007 HK$’000 120 135 135 390	2006 HK$’000 120 150 120
		390

There was no other emoluments payable to the independent non-executive directors during the year (2006: Nil).

– 50 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

(b) Executive directors

2007 Ng Ngan Lung, Freddy Mui Chi Hung, Clarence Chui May Ling, Margaret 2006 Ng Ngan Lung, Freddy Chong Hong Sang, Kenneth_(i) Mui Chi Hung, Clarence Chui May Ling, Margaret(ii)_	Fees HK$’000 – – – – – – – – –	Salaries, allowances and other Retirement benefits Discretionary benefits Total in kind bonuses contributions remuneration HK$’000 HK$’000 HK$’000 HK$’000 1,200 – 12 1,212 702 120 12 834 351 9 12 372 2,253 129 36 2,418 925 – 12 937 585 360 10 955 629 83 12 724 34 – 1 35 2,173 443 35 2,651	Salaries, allowances and other Retirement benefits Discretionary benefits Total in kind bonuses contributions remuneration HK$’000 HK$’000 HK$’000 HK$’000 1,200 – 12 1,212 702 120 12 834 351 9 12 372 2,253 129 36 2,418 925 – 12 937 585 360 10 955 629 83 12 724 34 – 1 35 2,173 443 35 2,651
			2,418

			937 955 724 35
			2,651

Notes:

(i) Resigned on 23rd February, 2006

(ii) Appointed on 23rd February, 2006

(c) The number of directors whose emoluments fell within the following band is as follows:

	Number of directors
	2007	2006
Nil – HK$1,000,000	5	7
HK$1,000,000 – HK$1,500,000	1	–

No directors of the Company waived any emoluments and no emoluments were paid by the Group to any of the directors of the Company as an inducement to join or upon joining the Group or as compensation for loss of office.

– 51 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

15. FIVE HIGHEST PAID EMPLOYEES

The five highest paid individuals during the year included three (2006: three) directors, details of whose emoluments are disclosed above. The details of the remuneration of two (2006: two) remaining individuals, highest paid employees for the year are as follows:

Basic salaries, housing benefits, other allowances and benefits in kind Retirement benefits contributions	2007 HK$’000 970 21 991	2006 HK$’000 1,253 12
		1,265

The emoluments fell within the following band:

	Number of	individuals
	2007	2006
Nil – HK$1,000,000	2	2

None of the highest paid individuals of the Group waived any emoluments and no emoluments were paid by the Group to any of such individuals as an inducement to join or upon joining the Group or as compensation for loss of office.

16. EARNINGS PER SHARE

The calculation of basic earnings per share is based on the profit from ordinary activities attributable to shareholders for the year of approximately HK$63,680,000 (2006: HK$46,426,000) and on the weighted average of 608,671,000 (2006: 604,833,500) ordinary shares in issue during the year. The weighted average number of ordinary shares for the purpose of basic earnings per share for the year ended 31st March, 2006 had been adjusted for the bonus issue on 26th August, 2005.

The diluted earnings per share for the year ended 31st March, 2007 is not presented as the company does not have dilutive potential ordinary shares for the year ended 31st March, 2007 (2006: The calculation of diluted earnings per share for the year ended 31st March, 2006 is based on the profit from ordinary activities attributable to shareholders for the year of approximately HK$46,426,000 and on the weighted average of 604,833,500 ordinary shares in issue during the year, as used in the basic earnings per share calculation, plus the weighted average of 928,000 ordinary shares deemed to be issued at no consideration if all outstanding share options had been exercised).

– 52 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

17. PROPERTY, PLANT AND EQUIPMENT

Group

Cost or valuation: Balance at 1.4.2005 Additions Disposals Surplus on revaluation Balance at 31.3.2006 Additions Disposals Written off Surplus on revaluation Balance at 31.3.2007 Accumulated depreciation: Balance at 1.4.2005 Provided during the year Disposals Written back on revaluation Balance at 31.3.2006 Provided during the year Disposals Eliminated on written off Written back on revaluation Balance at 31.3.2007 Net carrying amount At 31.3.2007 At 31.3.2006	Leasehold Buildings improvements HK$’000 HK$’000 5,870 5,768 – – – – 40 – 5,910 5,768 – 70 – – – – 530 – 6,440 5,838 ----------- ----------- – 5,555 117 82 – – (117) – – 5,637 118 94 – – – – (118) – – 5,731 ----------- ----------- 6,440 107 5,910 131	Furniture, Plant and fixtures and machinery motor vehicles HK$’000 HK$’000 3,136 9,082 21 43 – (2,736) – – 3,157 6,389 – 63 – (130) (391) (559) – – 2,766 5,763 ----------- ----------- 2,873 8,320 78 329 – (2,736) – – 2,951 5,913 78 193 – (72) (270) (529) – – 2,759 5,505 ----------- ----------- 7 258 206 476	Total HK$’000 23,856 64 (2,736) 40 21,224 133 (130) (950) 530 20,807 ----------- 16,748 606 (2,736) (117) 14,501 483 (72) (799) (118) 13,995 ----------- 6,812 6,723

The Group’s buildings included above are held in Hong Kong under medium term leases.

At 31st March, 2007, the Group’s buildings were revalued on an open market, existing use basis by DTZ Debenham Tie Leung Limited, an independent firm of professional valuers, at HK$6,440,000 (2006: HK$5,910,000). The surplus arising on revaluation, amounting to HK$530,000 (2006: HK$40,000), has been credited to the consolidated income statement.

Had the Group’s buildings been carried at historical cost less accumulated depreciation, their carrying value would have been approximately HK$6,376,000 (2006: HK$6,527,000).

At the balance sheet date, the Group’s buildings were pledged to secure general banking facilities granted to the Group.

– 53 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

18. INVESTMENT PROPERTIES

Valuation: At beginning of year Additions during the year Surplus on revaluation At end of year	Group 2007 2006 HK$’000 HK$’000 27,100 20,480 – 2,090 3,280 4,530 30,380 27,100	Group 2007 2006 HK$’000 HK$’000 27,100 20,480 – 2,090 3,280 4,530 30,380 27,100
		27,100

The Group’s investment properties are held in Hong Kong under the following lease terms:

	2007	2006
	HK$’000	HK$’000
Medium term leases	30,380	27,100

At 31st March, 2007, the Group’s investment properties were revalued on an open market, existing use basis by DTZ Debenham Tie Leung Limited, an independent firm of professional valuers, at HK$30,380,000 (2006: HK$27,100,000). The surplus arising on revaluation, amounting to HK$3,280,000 (2006: HK$4,530,000), has been credited to the consolidated income statement.

The Group’s investment properties are leased or held to be leased out to third parties under operating leases, further summary details of which are included in note 35 to the financial statements.

At the balance sheet date, all the Group’s investment properties were pledged to secure general banking facilities granted to the Group.

19. PREPAID LAND LEASE PAYMENTS

Carrying amount at 1st April Recognised during the year Carrying amount at 31st March Current portion as shown under current assets Non-current portion	Group 2007 2006 HK$’000 HK$’000 927 950 (23) (23 904 927 (23) (23 881 904	Group 2007 2006 HK$’000 HK$’000 927 950 (23) (23 904 927 (23) (23 881 904
		927 (23
		904

The leasehold land is held under medium term leases and is situated in Hong Kong.

– 54 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

20. INTERESTS IN SUBSIDIARIES

Unlisted shares, at cost Due from subsidiaries Loans from subsidiaries Loans to subsidiaries Due to subsidiaries	Company 2007 2006 HK$’000 HK$’000 83,368 83,368 7,387 6,855 10,449 17,015 (9,257) (828) (26,082) (42,907) 65,865 63,503

The balances with and loans from/to subsidiaries are unsecured, interest-free and have no fixed terms of repayment.

Particulars of the subsidiaries are as follows:

			Percentage
	Place of		of equity
	incorporation/	Paid-up	attributable to
Name	and operations*	share capital	the Company	Principal activities
Directly held
Rising Group	BVI	Ordinary	100%	Investment holding
International Limited		US$4,000
Indirectly held
Cassaya Trading Limited	Republic of	Ordinary	100%	Dormant
	Mauritius	US$1
Rising Manufacturing	Macau	Ordinary	100%	Trading of fur and
Macao Commercial		MOP$25,000		leather skins and
Offshore Limited				acting as purchase
				agent
Rising Group Limited	Hong Kong	Ordinary	100%	Dormant
		HK$10,000
Rising Development	Hong Kong	Ordinary	100%	Trading of fur, leather
Limited		HK$100		and textile garments
		Non-voting		and property holding
		deferred**
		HK$5,000,000
Frede Derick Limited	Hong Kong	Ordinary	100%	Dormant
		HK$100
Rising Manufacturing	Hong Kong/PRC	Ordinary	100%	Manufacturing and
Limited		HK$10,000		trading of fur garments
Cepa Distribution	Hong Kong	Ordinary	100%	Property investment
Limited		HK$5,000
		Non-voting
		deferred**
		HK$1,000,000

– 55 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

			Percentage
	Place of		of equity
	incorporation/	Paid-up	attributable to
Name	and operations*	share capital	the Company	Principal activities
Wellike Services Co.,	Hong Kong	Ordinary	100%	Dormant
Limited		HK$10,000
Wing Lee Agency	Hong Kong	Ordinary	100%	Provision of agency
Limited		HK$100		services
Cepa Network Limited	Hong Kong	Ordinary	100%	Dormant
		HK$10,000
Mega Asset Development	BVI	Ordinary	100%	Investment holding
Limited		US$1

* Where different

** The non-voting deferred shares carry no rights to dividends, no rights to vote at general meetings and no rights to receive any surplus in a return of capital in a winding-up or otherwise.

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

21. INTEREST IN AN ASSOCIATE

	Group
	2007	2006
	HK$’000	HK$’000
Share of net assets	20	30

Particulars of the Group’s associate as at 31st March, 2007 are as follows:

				Percentage of
				equity attributable
	Form of	Class of	Place of	to the Group/
	business	issued	incorporation/	proportion of	Principal
Name	structure	shares held	and operations	voting power held	activity
HR Investment	Incorporated	Ordinary share	Hong Kong	50	No trading
Company Limited		of HK$1 each

– 56 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

The following table illustrates the summarized financial information of the Group’s associate extracted from its audited accounts:

	2007	2006
	HK$’000	HK$’000
Assets	47	89
Liabilities	(7)	(29)
Loss after tax	(20)	(96)

22. AVAILABLE-FOR-SALE FINANCIAL ASSETS

At fair value: Equity securities listed outside Hong Kong Debt securities quoted outside Hong Kong At cost: Equity securities unlisted outside Hong Kong	Group 2007 2006 HK$’000 HK$’000 28,517 1,650 215,325 184,585 243,842 186,235 ------------ ------------ 7,800 7,800 ------------ ------------ 251,642 194,035	Company 2007 2006 HK$’000 HK$’000 28,517 1,650 215,325 184,585 243,842 186,235 ------------ ------------ – – ------------ ------------ 243,842 186,235	Company 2007 2006 HK$’000 HK$’000 28,517 1,650 215,325 184,585 243,842 186,235 ------------ ------------ – – ------------ ------------ 243,842 186,235
			186,235 ------------ – ------------
			186,235

At the balance sheet date, the above unlisted equity investments are not stated at fair value but at cost less any impairment loss because they do not have a quoted market price in an active market and the fair value cannot be reliably measured.

23. INVENTORIES

Raw materials Work in progress Finished goods	Group 2007 2006 HK$’000 HK$’000 3,775 56,897 – 2,165 6,486 4,235 10,261 63,297	Group 2007 2006 HK$’000 HK$’000 3,775 56,897 – 2,165 6,486 4,235 10,261 63,297
		63,297

All the inventories were stated at cost.

– 57 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

24. TRADE RECEIVABLES

The Group’s trading terms with its customers are mainly on credit. The Group allows an average credit period of 30 to 60 days for its trade debtors. Trade receivables are non-interest-bearing.

An aging analysis of trade receivables at the balance sheet date was as follows:

Current to 30 days 31 days to 60 days Over 60 days	2007 HK$’000 335 179 115 629	Group 2006 % HK$’000 53 1,136 29 447 18 300 100 1,883	% 60 24 16
			100

25. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS

	Group and	Company
	2007	2006
	HK$’000	HK$’000
At fair value:
Equity securities listed in Hong Kong	107,538	106,178

26. CASH AND CASH EQUIVALENTS

Cash and bank balances Time deposits	Group 2007 2006 HK$’000 HK$’000 4,574 9,628 25,074 14,909 29,648 24,537	Company 2007 2006 HK$’000 HK$’000 1,545 1,186 25,074 14,909 26,619 16,095	Company 2007 2006 HK$’000 HK$’000 1,545 1,186 25,074 14,909 26,619 16,095
			16,095

Cash and bank balances include the following amounts denominated in a currency other than the Company’s functional currency, HK dollars:

	Group	Group	Company	Company
	2007	2006	2007	2006
Euro dollars	EUR29,351	EUR13,357	EUR16,351	EUR272
United States dollars	US$134,275	US$1,111,586	US$32,762	US$525,119
Renminbi	RMB349,114	RMB53,984	–	–

Cash at banks earns interest at floating rates based on daily bank deposit rates. Short-term time deposits are made for varying periods of between one day and three months depending on the immediate cash requirements of the Group, and earn interest at the respective short term time deposit rates.

– 58 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

27. BANKING FACILITIES/BORROWINGS

At the balance sheet date, the Group’s banking facilities were secured by a corporate guarantee given by the Company and certain listed equity and quoted debt securities, leasehold land and buildings and certain investment properties of the Group.

The trust receipt loans and short-term bank loans amounting to HK$Nil and HK$110,982,000 respectively (2006: trust receipt loans of HK$7,727,000 and short-term bank loans of HK$82,300,000) have been utilized by the Group at 31st March, 2007.

All of the bank loans are variable-rate borrowings which carry interest ranging from 0.875% to 5.5% per annum (2006: 3.165% to 5.82% per annum). Interest rates are repricing weekly and monthly. All of the bank loans are repayable within one year.

Bank borrowings include the following amounts denominated in a currency other than the Group’s and Company’s functional currency, HK dollars:

	Group	Group	Company	Company
	2007	2006	2007	2006
Japanese Yen	JPY386,493,549	–	JPY386,493,549	–
United States dollars	–	US$1,738,488	–	–
Euro dollars	EUR837,189	EUR1,416,636	EUR837,189	EUR1,416,636

28. TRADE PAYABLES

An aging analysis of trade payables at the balance sheet date was as follows:

Current to 30 days 31 days to 60 days Over 60 days	2007 HK$’000 38 36 60 134	Group 2006 % HK$’000 28 2,928 27 98 45 98 100 3,124	% 94 3 3
			100

The trade payables are non-interest-bearing and normally settled on 30 to 90 days terms.

29. OTHER PAYABLES AND ACCRUALS

Amount due to an investee company Others	Group 2007 2006 HK$’000 HK$’000 931 – 1,360 1,248 2,291 1,248	Company 2007 2006 HK$’000 HK$’000 – – 211 581 211 581	Company 2007 2006 HK$’000 HK$’000 – – 211 581 211 581
			581

Amount due to an investee company is unsecured, non-interest bearing and have no fixed terms of repayment.

– 59 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

30. FINANCE LEASE PAYABLE

The Group had no finance lease payable at 31st March, 2007 (2006: The Group leased certain of its furniture and fixtures for its operation and such lease was classified as finance lease and had remaining lease term of one year).

At the balance sheet date, the future minimum lease payments under finance lease and their present value were as follows:

Amounts payable: Within one year After one year but within two years Total minimum finance lease payments Future finance charges Total net finance lease payables Portion classified as current liabilities Non-current portion	Minimum lease payments 2007 HK$’000 – – – – – – –	Group Present value of Minimum minimum lease lease payments payments 2006 2007 HK$’000 HK$’000 10 – – – 10 – – 10 (10) –	Present value of minimum lease payments 2006 HK$’000 10 –
			10

31. DERIVATIVE FINANCIAL INSTRUMENTS

	Group and	Company
	2007	2006
	HK$’000	HK$’000
Forward exchange contracts	3,061	162

The carrying amounts of forward exchange contracts are the same as their fair values.

Major terms of the forward exchange contracts are as follows:

Forward exchange contracts At 31st March, 2007

	Last	Contracted	Fair value gain
Notional amount	expiration dates	exchange rates	as at 31st March, 2007
			HK$’000
Buy US$10,000,000	3rd May, 2007	HK$7.7332/US$1	782
Buy US$19,434,000	12th October, 2007	HK$7.7185/US$1	947
Buy US$20,000,000	5th November, 2007	HK$7.6970/US$1	1,332
			3,061

– 60 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

At 31st March, 2006

	Last	Contracted	Fair value gain/(loss)
Notional amount	expiration dates	exchange rates	as at 31st March, 2006
			HK$’000
Buy US$19,437,000	20th March, 2007	HK$7.7174/US$1	255
Buy US$10,000,000	20th September, 2006	HK$7.7398/US$1	(93)
			162

The above derivatives are measured at fair value at each balance sheet date, their fair values are determined based on the valuation provided by banks or financial institutions at the balance sheet date.

32. DEFERRED TAX LIABILITIES

The followings are the major deferred tax liabilities and assets recognised and movements thereon during the current and prior years:

Deferred tax liabilities:

Group Accelerated tax depreciation HK$’000 At 1st April, 2005 400 Charged to consolidated income statement 90 At 31st March, 2006 and 1st April, 2006 490 Charged to consolidated income statement (18) At 31st March, 2007 472	Revaluation of properties HK$’000 1,071 793 1,864 627 2,491	Total HK$’000 1,471 883
		2,354 609
		2,963

There was no income tax consequences attaching to the payment of dividends by the Company to its shareholders.

The Group has unrecognised tax losses of approximately HK$96,000 (2006: HK$64,000), which is subject to approval from the Hong Kong Inland Revenue Department, can be carried forward to offset against future taxable income with no expiry date.

– 61 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

33. SHARE CAPITAL

Authorised: At 1st April, 2005 Increase of ordinary shares_(Note a) At 31st March, 2006 and 31st March, 2007 Issued and fully paid: At 1st April, 2005 Shares issued under share option scheme(Note b) Issue of bonus shares(Note c) At 31st March, 2006 Repurchase of shares(Note d)_ At 31st March, 2007	Number of shares of HK$0.10 each 1,000,000,000 2,000,000,000 3,000,000,000 398,264,000 7,600,000 202,932,000 608,796,000 (500,000) 608,296,000	Amount HK$’000 100,000 200,000
		300,000

		39,826 760 20,293
		60,879 (50
		60,829

Except above, during the year, neither the Company nor any of its subsidiaries purchased, sold or redeemed any of the Company’s listed shares.

Notes:

(a) Increase in authorised share capital

By an ordinary resolution passed at the annual general meeting held on 26th August, 2006, the Company’s authorised ordinary share capital was increased to HK$300,000,000 by the creation of an additional 2,000,000,000 ordinary shares of HK$0.10 each, ranking pari passu with the existing ordinary shares of the Company in all respects.

(b) During the year ended 31st March, 2006 the Company issued and allotted 7,600,000 ordinary shares of HK$0.1 each of the Company for cash at HK$0.29 and HK$0.38 per share respectively as a result of the exercise of share options.
(c) A bonus issue on the basis of one (1) bonus share for every two (2) ordinary shares held by the shareholders whose names appear on the Register of Members at the close of business on 19th August, 2005 was approved by the shareholders at the annual general meeting of the Company held on 26th August, 2005. On 26th August, 2005, the company issued 202,932,000 new shares of HK$0.1 each pursuant to the bonus issue.
(d) During the year, the Company purchased its own ordinary shares on The Stock Exchange of Hong Kong Limited as follows:

	Number
	of shares	Highest price	Lowest price	Aggregate
Month/year	repurchased	paid per share	paid per share	price paid
		HK$	HK$	HK$’000
December, 2006	500,000	0.33	0.32	163

The repurchased shares were cancelled and accordingly, the issued share capital of the company was reduced by the nominal value of these shares. The premium paid on the repurchase of the shares of HK$113,000 was charged against the share premium account.

– 62 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

Share options scheme

On 30th July, 2004, the share option scheme adopted by the Company on 9th October, 1997 (the “Old Scheme”) was terminated and a new share option scheme (the “New Scheme”) was adopted by the shareholders of the Company. As a result, the Company can no longer grant any further options under the Old Scheme. However, all options granted prior to the termination of the Old Scheme will remain in full force and effect. The purpose of the New Scheme is to provide incentives or rewards to participants thereunder for their contribution to the Group and/or to enable the Group to recruit and retain high-calibre employees and attract human resources that are valuable to the Group. Eligible participants of the New Scheme include employees (including executive directors), the non-executive directors (including independent non-executive directors), suppliers of goods or services, customers, shareholders of the Group and persons or entity that provides research, development or other technological support to the Group. Unless otherwise terminated or amended, the New Scheme will remain in force for 10 years from date of adoption.

Pursuant to the New Scheme, the total number of shares which may be issued upon exercise of all outstanding options granted and yet to be exercised under the New Scheme and any other share option schemes of the Company must not in aggregate exceed 30% of the issued share capital of the Company from time to time. The maximum number of shares issuable under share options to each eligible participant within any 12 month period is limited to 1% of the Company’s shares in issue at any time. The offer of a grant of share options may be accepted within 28 days from the date of the offer with consideration of HK$1.00 being payable by the grantee. The exercise period of the share options granted is determinable by the directors, but no later than 10 years from the date of the offer. The subscription price for the shares in respect of which options are granted is determinable by the directors, but may not be less than the highest of (1) the closing price of the Company’s shares as stated in the Stock Exchange’s daily quotation sheet on the date of grant of the option; (2) the average closing price of the Company’s shares as stated in the Stock Exchange’s daily quotation sheets for the five trading days immediately preceding the date of grant of the option; and (3) the nominal value of the Company’s shares.

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

No share option has been granted by the Company under the New Scheme during the years ended 31st March, 2006 and 31st March, 2007.

34. RESERVES

(a) Group

The amounts of the Group’s reserves and the movements therein for the current and prior years are presented in the consolidated statement of changes in equity on page 30 of the financial statements.

– 63 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

(b) Company

Share Investment premium Contributed revaluation account surplus reserve HK$’000 HK$’000 HK$’000 At 1st April, 2005 48,252 83,168 4,226 Shares issued under share option scheme 1,534 – – Issue of bonus shares (20,293) – – Realised on disposal of available-for-sale financial assets – – (2,204) Deficit on revaluation – – (2,414) Final dividend paid – – – Profit for the year –note 12 – – – Dividend –note 13 – – – At 31st March, 2006 and 1st April, 2006 29,493 83,168 (392) Shares repurchased (113) – – Realised on disposal of available-for-sale financial assets – – (1,652) Gain on revaluation – – 4,009 Profit for the year –note 12 – – – Dividend –note 13 – – – At 31st March, 2007 29,380 83,168 1,965	Retained profits HK$’000 102,906 – – – – (227) 49,877 (18,264) 134,292 – – – 61,147 (19,472) 175,967	Total HK$’000 238,552 1,534 (20,293) (2,204) (2,414) (227) 49,877 (18,264) 246,561 (113) (1,652) 4,009 61,147 (19,472) 290,480

The contributed surplus of the Group arose as a result of the Group reorganization carried out on 12th September, 1997 and represents the difference between the nominal value of shares of the subsidiaries acquired pursuant to the Group reorganization, over the nominal value of the Company’s shares issued in exchange therefore.

The contributed surplus of the Company arose as a result of the same Group reorganization scheme and represents the excess of the then combined net assets of the subsidiaries acquired, over the nominal value of the Company’s shares issued in exchange therefore. Under the Companies Act 1981 (as amended) of Bermuda, the Company may make distributions to its members out of the contributed surplus under certain circumstances.

35. OPERATING LEASE ARRANGEMENTS

(a) As lessor

The Group leases its investment properties (note 18 to the financial statements) under operating lease arrangements, with leases negotiated for terms ranging from one to two years. The terms of the leases generally also require the tenants to pay security deposits.

– 64 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

At the balance sheet date, the Group had total future minimum lease receivable under non-cancellable operating leases with its tenants falling due as follows:

Within one year In the second to fifth years, inclusive	Group 2007 2006 HK$’000 HK$’000 154 299 – 90 154 389	Group 2007 2006 HK$’000 HK$’000 154 299 – 90 154 389
		389

(b) As lessee

The Group leases certain properties under operating lease arrangements. Leases for properties are negotiated for terms ranging from two to three years.

At the balance sheet date, the Group had total future minimum lease payments under non-cancellable operating leases falling due as follows:

Within one year In the second to fifth years, inclusive	Group 2007 2006 HK$’000 HK$’000 – 469 – 664 – 1,133	Group 2007 2006 HK$’000 HK$’000 – 469 – 664 – 1,133
		1,133

36. COMMITMENTS

In addition to the operating lease commitments detailed in note 35 above, the Group had the following commitments at the balance sheet date:

		Group		Company	Company
		2007	2006	2007	2006
		HK$’000	HK$’000	HK$’000	HK$’000
Contracted	but not provided for:
Acquisition	of property	8,820	–	–	–

37. CONTINGENT LIABILITIES

At the balance sheet date, the Group did not have any significant contingent liabilities.

As at 31st March, 2007, there were contingent liabilities in respect of guarantees given to banks by the Company to secure a banking facilities made available to wholly owned subsidiaries.

As at the balance sheet date, the directors do not consider it probable that a claim will be made against the Company under the guarantees. The maximum liability of the Company at the balance sheet date under the guarantees issued is the facility drawn down by the subsidiaries of HK$23,300,000 (2006: HK$39,410,000).

The Company has not recognised any deferred income in respect of the guarantees as their fair values cannot be reliably measured and their transaction prices were HK$Nil (2006: HK$Nil).

– 65 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

38. RELATED PARTY TRANSACTIONS

During the year, the Group and the Company entered into the following significant transactions with related parties:

Compensation of key management personnel of the Group and of the Company:

The emoluments of directors and other members of key management of the Group and the Company during the year were as follows:

Short-term benefits Post-employment benefits	Group 2007 2006 HK$’000 HK$’000 (restated) 2,772 3,006 36 35 2,808 3,041	Company 2007 2006 HK$’000 HK$’000 390 390 – – 390 390	Company 2007 2006 HK$’000 HK$’000 390 390 – – 390 390
			390

Further details of directors’ emoluments are included in note 14 to the financial statements.

The emoluments of directors and key executives are determined by the remuneration committee having regard to the performance of individuals and market trends.

39. FINANCIAL RISK MANAGEMENT OBJECTIVE AND POLICIES

The Group’s principal financial instruments comprise bank loans, cash and short-term deposits. The main purpose of these financial instruments is to raise funds for the Group’s operations. The Group has various other financial assets and liabilities such as trade receivables and trade payables, which arise directly from its operations.

The main risks arising from the Group’s financial instruments are cash flow interest rate risk, foreign currency risk, credit risk and liquidity risk. The board reviews and agrees policies for managing each of these risks and they are summarized below.

Cash flow interest rate risk

The Group’s exposure to the risk of changes in market interest rates relates primarily to the Group’s debt obligations. The Group does not use derivative financial instruments to hedge its debt obligations. However, management monitors the related cash flow interest rate risk exposure closely and will consider hedging significant cash flow interest rate risk exposure should the need arise.

Foreign currency risk

Certain subsidiaries of the Company have foreign currency sales and purchases, which expose the Group to foreign currency risk. In order to mitigate the foreign currency risk, foreign currency forward contract are entered into in respect of highly probable foreign currency forecast sales or purchases in accordance with the Group’s risk management policies.

Certain trade receivables and payables and borrowings of the Group are denominated in foreign currencies. The Group currently does not have a foreign currency hedging policy. However, the management monitors foreign exchange exposure and will consider hedging significant foreign currency exposure should the need arises.

– 66 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

Credit risk

The Group’s credit risk is primarily attributable to trade and other receivables. Management has a credit policy in place and the exposures to these credit risks are monitored on an ongoing basis. The Group does not have a significant concentration of credit risk. In addition, certain customers are required to pay customers’ deposits and receivable balances are monitored on an ongoing basis and therefore the Group’s exposure to bad debts is not significant.

Liquidity risk

For the management of the Group’s liquidity risk, the Group monitors and maintains a sufficient level of cash and cash equivalents deemed adequate by management to finance the Group’s operations and mitigate the effects of fluctuation in cash flows. Management reviews and monitors its working capital requirements regularly.

Fair value

The fair values of cash and cash equivalents, trade receivables, prepayments, deposits and other receivables, other loans, trade payables, other payables and accruals are not materially different from their carrying amounts because of the immediate or short term maturity of these financial instruments. The carrying amounts of bank borrowings approximate to their fair values.

As set out in note 20, the Company had amounts due from/to subsidiaries. It is not practical to estimate the fair values of the amounts due to the related party nature of these instruments.

40. COMPARATIVE FIGURES

During the year, the Group included trading in equity securities under “financial assets at fair value through profit or loss” as one of its principal activities and accordingly, reclassify its proceeds from trading in equity securities and related costs under turnover and cost of sales respectively, and also to present the related financial information under a separate segment of “Trading in equity securities” to better reflect the underlying nature of these balances and allow a more appropriate presentation of the Group’s results. The comparative amounts have been restated to conform with the current year’s presentation.

In addition, derivative financial instruments included in prepayments, deposits and other receivables as at 31st March, 2006 and customers’ deposits included in other payables and accruals as at 31st March, 2006 have been separately stated in the balance sheet to conform with the current year’s presentation.

41. APPROVAL OF THE FINANCIAL STATEMENTS

The financial statements were approved and authorised for issue by the board of directors on 5th June, 2007.

– 67 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

3. UNAUDITED FINANCIAL STATEMENTS OF THE GROUP FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2007

Set out below are the unaudited consolidated financial statements of the Group together with accompanying notes as extracted from the interim report of the Group for the six months ended 30 September 2007:

CONDENSED CONSOLIDATED INCOME STATEMENT

For the six months ended 30 September 2007

Note
TURNOVER
2
Cost of sales
Gross profit
Other income and gains
– Income from investments
3
– Others
3
Fair value gains on investment
properties
Loss on disposal of available-for-sale
financial assets
Selling and distribution expenses
Operating and administrative expenses
Non-operating expenses
Finance costs
4
Share of loss of an associate
PROFIT BEFORE TAX
5
Tax
6
PROFIT FOR THE PERIOD
ATTRIBUTABLE TO EQUITY
HOLDERS OF THE COMPANY
PROPOSED INTERIM DIVIDEND
7
EARNINGS PER SHARE
8
Basic
Diluted

(Unaudited)
Six months ended
30 September
2007
2006
HK$’000
HK$’000
159,260
144,466
(124,358)
(126,600)
34,902
17,866
30,474
15,926
4,024
1,961
850
–
(7,811)
–
(2,654)
(2,092)
(10,907)
(7,126)
–
(857)
(3,284)
(3,725)
(2)
(9)
45,592
21,944
(7,793)
(869)
37,799
21,075
–
7,914
HK6.22 cents
HK3.46 cents
N/A
N/A

– 68 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

CONDENSED CONSOLIDATED BALANCE SHEET

As at 30 September 2007 and 31 March 2007

(Unaudited) 30 September 2007 Note HK$’000 NON-CURRENT ASSETS Property, plant and equipment 9 372 Investment properties 10 66,487 Prepaid land lease payments – Interest in an associate 19 Available-for-sale financial assets 11 106,002 172,880 CURRENT ASSETS Inventories 639 Prepaid land lease payments – Prepayments, deposits and other receivables 12 88,980 Derivative financial instruments 3,629 Trade receivables 13 1,221 Financial assets at fair value through profit or loss 14 48,403 Cash and cash equivalents 66,638 209,510 CURRENT LIABILITIES Short-term bank loans – secured – Trade payables 15 15 Customers’ deposits 321 Other payables and accruals 3,196 Tax payable 8,104 11,636 NET CURRENT ASSETS 197,874 TOTAL ASSETS LESS CURRENT LIABILITIES 370,754 NON-CURRENT LIABILITIES Deferred tax liabilities 6,959 NET ASSETS 363,795 CAPITAL AND RESERVES Share capital 16 60,726 Reserves 303,069 Proposed final dividend – TOTAL EQUITY 363,795	(Audited) 31 March 2007 HK$’000 6,812 30,380 881 20 251,642
	289,735
	10,261 23 6,183 3,061 629 107,538 29,648
	157,343
	110,982 134 2,878 2,291 479
	116,764
	40,579
	330,314 2,963
	327,351

	60,829 254,964 11,558
	327,351

– 69 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

CONDENSED CONSOLIDATED CASH FLOW STATEMENT

For the six months ended 30 September 2007

Net cash used in operating activities Net cash from/(used in) investing activities Net cash (used in)/from financing activities Net increase in cash and cash equivalents Cash and cash equivalents at 1 April Cash and cash equivalents at 30 September Analysis of balances of cash and cash equivalents Cash and bank balances	(Unaudited) Six months ended 30 September 2007 2006 HK$’000 HK$’000 (92,081) (12,762) 251,592 (2,636) (122,521) 22,101 36,990 6,703 29,648 24,494 66,638 31,197 66,638 31,197

– 70 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

At 1 April 2007 Repurchase of shares Realized on disposal of available-for-sale financial assets Surplus/(Deficit) on revaluation Deferred tax charged 2007 final dividend paid Profit for the period At 30 September 2007 At 1 April 2006 Realized on disposal of available-for-sale financial assets Surplus on revaluation 2006 final dividend paid Profit for the period At 30 September 2006	Share capital HK$’000 60,829 (103 ) – – – – – 60,726 Share capital HK$’000 60,879 – – – – 60,879	(Unaudited) Six months ended 30 September 2007 Share Asset Exchange Investment Statutory premium Contributed revaluation fluctuation revaluation reserve account surplus reserve reserve reserve fund HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 29,380 5,830 2,595 118 1,965 12 (269 ) – – – – – – – – – (1,551 ) – – – 21,863 – (5,931 ) – – – (3,826 ) – – – – – – – – – – – – – – – 29,111 5,830 20,632 118 (5,517 ) 12 (Unaudited) Six months ended 30 September 2006 Share Asset Exchange Investment Statutory premium Contributed revaluation fluctuation revaluation reserve account surplus reserve reserve reserve fund HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 29,493 5,830 2,595 118 (392) 12 – – – – (2,042 ) – – – – – 3,978 – – – – – – – – – – – – – 29,493 5,830 2,595 118 1,544 12	Retained profits HK$’000 215,064 – – – – 20 37,799 252,883 Retained profits HK$’000 170,856 – – – 21,075 191,931	Proposed final dividend HK$’000 11,558 – – – – (11,558 ) – – Proposed final dividend HK$’000 10,958 – – (10,958 ) – –	Total HK$’000 327,351 (372 ) (1,551 ) 15,932 (3,826 ) (11,538 ) 37,799 363,795 Total HK$’000 280,349 (2,042 ) 3,978 (10,958 ) 21,075 292,402

– 71 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

NOTES TO CONDENSED INTERIM FINANCIAL STATEMENTS

1. BASIS OF PREPARATION AND ACCOUNTING POLICIES

The unaudited condensed interim consolidated financial statements are prepared in accordance with Hong Kong Accounting Standard (“HKAS”) 34 “Interim Financial Reporting” issued by the Hong Kong Institute of Certified Public Accountants (the “HKICPA”) and Appendix 16 of the Rules Governing the Listing of Securities (the “Listing Rules”) on The Stock Exchange of Hong Kong Limited (the “Stock Exchange”).

The unaudited condensed consolidated financial statements have been prepared under the historical cost convention, except for buildings, investment properties and certain financial assets, which have been measured at fair value or revalued amounts.

The accounting policies and method of computation used in the preparation of these condensed interim consolidated financial statements are consistent with those adopted in the annual financial statements for the year ended 31 March 2007.

During the period, the Group has applied, for the first time, a number of new Hong Kong Financial Reporting Standards (“HKFRSs”), HKASs and interpretations issued by the HKICPA, which are effective for accounting periods commencing on or after 1 April 2007. The adoption of these new standards had no material effect on the results or financial position of the Group for the current or prior accounting periods. Accordingly, no prior period adjustment has been recognised.

The Group has not early adopted the following standards or interpretations that have been issued but are not yet effective. The Directors anticipate that the adoption of such standards and interpretations will not result in substantial changes to the Group’s accounting policies.

HKAS 23 (Revised) Borrowing costs[1] HKFRS 8 Operating Segments[1] HK (IFRIC) – INT 12 Service Concession Arrangements[2] HK (IFRIC) – INT 13 Customer Loyalty Programmes[3] HK (IFRIC) – INT 14 HKAS 19 – The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction[2]

1 Effective for annual periods beginning on or after 1 January 2009 2 Effective for annual periods beginning on or after 1 January 2008 3 Effective for annual periods beginning on or after 1 July 2008

– 72 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

2. SEGMENT INFORMATION

The following tables present revenue, profit and expenditure information for the Group’s business and geographical segments:

(a) Business segments:

2007 Segment revenue: Sales to external customers Intersegment sales Income from investments Other revenue Total revenue Segment results Interest income Unallocated expenses Profit from operating activities Finance costs Share of loss of an associate Profit before tax Tax Profit attributable to equity holders of the Company	(Unaudited) 6 months ended 30 September 2007 Manufacture Trading in and sales of Trading of securities Investments fur garments fur skins Others HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 151,229 – 6,788 1,243 – – – – 566 – 20,504 9,970 – – – – 1,538 1,271 33 2,027 171,733 11,508 8,059 1,842 2,027 52,471 (1,144 ) (1,734 ) (1,422 ) 459	Elimination Consolidated HK$’000 HK$’000 – 159,260 (566 ) – – 30,474 (1,800 ) 3,069 (2,366 ) 192,803 48,630 955 (707 ) 48,878 (3,284 ) (2 ) 45,592 (7,793 ) 37,799

– 73 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

2006 (restated) Segment revenue: Sales to external customers Intersegment sales Income from investments Other revenue Total revenue Segment results Interest income Unallocated expenses Profit from operating activities Finance costs Share of loss of an associate Profit before tax Tax Profit attributable to equity holders of the Company	(Unaudited) 6 months ended 30 September 2006 Manufacture Trading in and sales of Trading of securities Investments fur garments fur skins Others HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 18,132 – 31,271 95,063 – – – – 21,102 – 4,908 11,018 – – – – – 267 1,446 810 23,040 11,018 31,538 117,611 810 6,008 8,951 4,107 6,532 545	Elimination Consolidated HK$’000 HK$’000 – 144,466 (21,102 ) – – 15,926 (748 ) 1,775 (21,850 ) 162,167 26,143 186 (651 ) 25,678 (3,725 ) (9 ) 21,944 (869 ) 21,075

Note: A separate segment of “others”, which was included in “investment and others” in 2006 interim report, was included to better reflect the Group’s principal activities for the current period. Certain comparative figures have been reclassified to conform with the current period’s presentation.

– 74 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

(b) Geographical segments:

Hong Kong 2007 and Mainland China HK$’000 Segment revenue: Sales to external customers 153,227 Segment results 50,172 Hong Kong 2006 and Mainland China HK$’000 Segment revenue: Sales to external customers 114,204 Segment results 24,145	(Unaudited) 6 months ended 30 September 2007 North Japan America Others Consolidated HK$’000 HK$’000 HK$’000 HK$’000 973 857 4,203 159,260 (249) (219) (1,074) 48,630 (Unaudited) 6 months ended 30 September 2006 North Japan America Others Consolidated HK$’000 HK$’000 HK$’000 HK$’000 10,635 10,727 8,900 144,466 702 708 588 26,143	(Unaudited) 6 months ended 30 September 2007 North Japan America Others Consolidated HK$’000 HK$’000 HK$’000 HK$’000 973 857 4,203 159,260 (249) (219) (1,074) 48,630 (Unaudited) 6 months ended 30 September 2006 North Japan America Others Consolidated HK$’000 HK$’000 HK$’000 HK$’000 10,635 10,727 8,900 144,466 702 708 588 26,143

		26,143

– 75 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

3. OTHER INCOME AND GAINS

Income from investments: Interest income from investments in available-for-sale financial assets Dividend income from available-for-sale financial assets Dividend income from financial assets at fair value through profit or loss Net realised gain on investments in available-for-sale financial assets Unrealised gain on investments in financial assets at fair value through profit or loss Net realised and unrealized gain on derivative financial instruments Others: Gross rental income Bank interest income Other interest income Exchange gain Others	6 months ended 30 September 2007 2006 HK$’000 HK$’000 8,260 8,196 269 27 1,736 2,456 – 2,277 18,768 2,452 1,441 518 30,474 15,926 ---------------- ---------------- 226 210 955 186 – 111 1,295 327 1,548 1,127 4,024 1,961 ---------------- ---------------- 34,498 17,887	6 months ended 30 September 2007 2006 HK$’000 HK$’000 8,260 8,196 269 27 1,736 2,456 – 2,277 18,768 2,452 1,441 518 30,474 15,926 ---------------- ---------------- 226 210 955 186 – 111 1,295 327 1,548 1,127 4,024 1,961 ---------------- ---------------- 34,498 17,887
		15,926 ---------------- 210 186 111 327 1,127
		1,961 ----------------
		17,887

4. FINANCE COSTS

Interest on bank loans and overdrafts Interest on trust receipt loans	6 months ended 30 September 2007 2006 HK$’000 HK$’000 3,284 3,014 – 711 3,284 3,725	6 months ended 30 September 2007 2006 HK$’000 HK$’000 3,284 3,014 – 711 3,284 3,725
		3,725

– 76 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

5. PROFIT BEFORE TAX

This is stated after charging the following:

Charging Cost of inventories sold Cost of securities sold Total cost of sales Depreciation Operating lease rentals on lands and buildings Staff costs (including directors’ remuneration)	6 months ended 30 September 2007 2006 HK$’000 HK$’000 10,645 109,568 113,713 17,032 124,358 126,600 97 363 95 292 5,992 6,071	6 months ended 30 September 2007 2006 HK$’000 HK$’000 10,645 109,568 113,713 17,032 124,358 126,600 97 363 95 292 5,992 6,071
		126,600 363 292 6,071

6. TAX

Hong Kong profits tax has been provided at the rate of 17.5% (2006: 17.5%) on the estimated assessable profits arising in Hong Kong during the period.

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

	6 months ended	6 months ended
	30 September
	2007	2006
	HK$’000	HK$’000
Hong Kong profits tax	7,793	869

There was no material unprovided deferred tax for the period.

7. PROPOSED INTERIM DIVIDEND

		6 months ended	6 months ended
		30 September
		2007	2006
		HK$’000	HK$’000
Interim	dividend proposed HKNil cents
(2006:	HK1.3 cents) per ordinary share	–	7,914

The Board does not recommend the payment of any interim dividend for the six months ended 30 September 2007 (2006: HK1.3 cents).

8. EARNINGS PER SHARE

The calculation of basic earnings per share is based on the Group’s profit attributable to equity holders of the Company of HK$37,799,000 (2006: HK$21,075,000). The basic earnings per share is based on the weighted average of 607,268,000 (2006: 608,796,000) ordinary shares in issue during the period.

No diluted earnings per share was presented for the six months ended 30 September 2007 as there were no potential dilutive ordinary shares in existence during the period.

– 77 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

9. PROPERTY, PLANT AND EQUIPMENT

During the six months ended 30 September 2007, the Group acquired furniture, fixtures and leasehold improvement with cost of HK$136,000 (six months ended 30 September 2006: HK$62,000). Motor vehicles with net book value of HK$34,000 were disposed of during the six months ended 30 September 2007 (six months ended 30 September 2006: HK$56,000), resulting in a loss on disposal of approximately HK$14,000 (six months ended 30 September 2006: HK$4,000).

10. INVESTMENT PROPERTIES

On 22 July 2007, the Group ended owner-occupation of leasehold land and buildings and resolved that such properties are to be held for capital appreciation. Accordingly, such portions were transferred from property, plant and equipment and prepaid land lease payments to investment properties at fair value of HK$29,200,000 on 22 July 2007. The fair value was determined by DTZ Debenham Tie Leung Limited, an independent firm of professional valuers on an open market, existing use basis.

During the six months ended 30 September 2007, the Group acquired an investment property at a consideration of HK$9,800,000 (six months ended 30 September 2006: HK$Nil). The Group also disposed of certain of its investment properties with net carrying amount of HK$4,150,000 to independent third parties (six months ended 30 September 2006: HK$Nil), resulting in no gain or loss on disposals (six months ended 30 September 2006: HK$Nil).

11. AVAILABLE-FOR-SALE FINANCIAL ASSETS

At fair value: Securities listed outside Hong Kong Debt securities quoted outside Hong Kong At Cost: Equity securities unlisted outside Hong Kong	(Unaudited) 30 September 2007 HK$’000 – 98,202 98,202 ---------------- 7,800 ---------------- 106,002	(Audited) 31 March 2007 HK$’000 28,517 215,325
		243,842 ---------------- 7,800 ----------------
		251,642

12. PREPAYMENTS, DEPOSITS AND OTHER RECEIVABLES

These amounts mainly included the receivables from sales of available-for-sale financial assets amounting to approximately HK$82,708,000 (2006: HK$Nil), which were fully received on 2 October 2007.

– 78 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

13. TRADE RECEIVABLES

The Group’s trading terms with its customers are mainly on credit. The Group allows an average credit period of 30 to 60 days for its trade debtors. Trade receivables are non-interest-bearing.

An aging analysis of trade receivables at the balance sheet date was as follows:

Current to 30 days 31 days to 60 days Over 60 days	(Unaudited) 30 September 2007 HK$’000 % 19 2 – – 1,202 98 1,221 100	(Audited) 31 March 2007 HK$’000 % 335 53 179 29 115 18 629 100	(Audited) 31 March 2007 HK$’000 % 335 53 179 29 115 18 629 100
			100

14. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS

	(Unaudited)	(Audited)
	30 September	31 March
	2007	2007
	HK$’000	HK$’000
At fair value:
Securities listed in Hong Kong	48,403	107,538

15. TRADE PAYABLES

An aging analysis of trade payables at the balance sheet date was as follow:

Current to 30 days 31 days to 60 days Over 60 days	(Unaudited) 30 September 2007 HK$’000 % 13 87 – 0 2 13 15 100	(Audited) 31 March 2007 HK$’000 % 38 28 36 27 60 45 134 100	(Audited) 31 March 2007 HK$’000 % 38 28 36 27 60 45 134 100
			100

– 79 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

16. SHARE CAPITAL

Note Authorised Ordinary shares of HK$0.1 each At 1 April 2007 and 30 September 2007 (b) Issued and fully paid At 1 April 2007 Repurchase of shares (a) At 30 September 2007 (b)	Number of shares 3,000,000,000 608,296,000 (1,028,000) 607,268,000	Amount HK$’000 300,000

		60,829 (103
		60,726

Except above, during the period, neither the Company nor any of its subsidiaries purchased, sold or redeemed any of the Company’s listed shares.

Notes:

(a) During the period, the Company purchased its own ordinary shares on The Stock Exchange of Hong Kong Limited as follows:

	Number of	Highest	Lowest	Aggregate
	shares	price paid	price paid	price
Month/year	repurchased	per share	per share	paid
		HK$	HK$	HK$’000
April 2007	1,028,000	0.375	0.36	372

The repurchased shares were cancelled and accordingly, the issued share capital of the company was reduced by the nominal value of these shares. The premium paid on the repurchase of the shares of HK$269,000 was charged against the share premium account.

(b) Subsequent to the balance sheet date, by ordinary resolution passed at a special general meeting held on 19 December 2007 for the share subdivision in connection with each existing issued and unissued share subdivided into five subdivided shares, the authorised share capital of the Company remained at HK$300,000,000 but comprised 15,000,000,000 subdivided shares of HK$0.02 each. On the basis that 727,268,000 shares of HK$0.1 each (including 120,000,000 shares of HK$0.1 each mentioned in Note 18(b) below) were in issue, 3,636,340,000 subdivided shares of HK$0.02 each would be in issue as at the date of this interim report.

17. BANKING FACILITIES/CONTINGENT LIABILITIES

At 30 September 2007 and 31 March 2007, the Group did not have any significant contingent liabilities. At 30 September 2007, short-term bank loans amounting to HK$Nil (At 31 March 2007: short-term bank loans of HK$110,982,000) have been utilized by the Group.

– 80 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

18. SUBSEQUENT EVENTS

Subsequent to the balance sheet date, the following events took place:

(a) The Group disposed of certain properties with total carrying amount of HK$15,250,000 to independent third parties at total considerations of HK$16,800,000.
(b) The Company on 18 December 2007, raised about HK$171 million by means of a placing and subscription of 120,000,000 ordinary shares of HK$0.1 each which was subsequently used as refundable deposit for the acquisition of a controlling stake in a mining company in the PRC pursuant to a sale and purchase agreement signed on 21 December 2007 which such acquisition would constitute a very substantial acquisition for the Company.

4. WORKING CAPITAL

The Directors are of the opinion that in the absence of unforeseen circumstances and after taking into account the current cash and bank balances and resources of the Enlarged Group and the available banking facilities and the fund raised which will be used for the Acquisition, the Enlarged Group has sufficient working capital for its present requirements for at least 12 months from the date of this circular.

5. INDEBTEDNESS

As at 31 December 2007, being the latest practicable date for the purpose of ascertaining information contained in this indebtedness statement prior to the printing of this circular, the Enlarged Group had no outstanding borrowings.

Save as aforesaid and apart from intra-Group liabilities, the Group did not have any mortgages, charges, debentures, loan capital, bank loan and overdrafts, debt securities or other similar indebtedness, finance leases or hire purchase commitments, liabilities under acceptances or acceptances creditors, or any guarantees, or other material contingent liabilities outstanding at the close of business on 31 December 2007.

For the purpose of the indebtedness statement, foreign currency amounts have been translated into Hong Kong dollars at the approximate rates of exchange prevailing as at 31 December 2007.

6. MATERIAL CHANGES

The Directors are not aware of any material adverse change in the financial or trading position or prospects of the Group since 31 March 2007, the date to which the latest published audited accounts of the Company were made up.

– 81 –

APPENDIX II ACCOUNTANTS’ REPORT ON THE TARGET GROUP

A. ACCOUNTANTS’ REPORT

The following is the text of a report, prepared for the sole purpose of inclusion in this circular, received from the independent reporting accountants, Li, Tang, Chen & Co.

==> picture [178 x 40] intentionally omitted <==

26 February 2008

The Board of Directors

Rising Development Holdings Limited

Room 2004-05 20/F., World Trade Centre 280 Gloucester road Causeway Bay Hong Kong

Dear Sirs,

We set out below our report on the financial information regarding Oriental Harvest Development Limited (the “Target Company”) and its subsidiaries, (hereinafter collectively referred to as the “Target Group”), including the consolidated balance sheet of the Target Group as at 31 December 2007, the consolidated income statement, consolidated cash flow statement, consolidated statement of changes in equity and the notes thereto of the Target Group for the period from 19 October 2006 (date of incorporation) to 31 December 2007 (the “Relevant Period”) (collectively the “Financial Information”) prepared for inclusion in the circular of Rising Development Holdings Limited (the “Company”), dated 26 February 2008 (the “Circular”) in connection with the conditional sale and purchase agreement dated 21 December 2007 (the “S & P Agreement”) entered into among the Company, Mr. Wang Hong, Mr. Chen JianJun and Mr. Zou QuanBo pursuant to which the Company would acquire 100% interest in the Target Company at an aggregate consideration of approximately HK$1,137,000,000 (the “Consideration”).

The Consideration shall be satisfied by the Company by (i) Paying cash in aggregate amounts of HK$300,000,000 to Mr. Wang Hong, Mr. Chen JianJun and Mr. Zou QuanBo and (ii) issuing convertible notes in aggregate amounts of HK$837,000,000 by the Company to Mr. Wang Hong, Mr. Chen JianJun and Mr. Zou QuanBo.

The Target Company was incorporated in the British Virgin Islands with limited liability on 19 October 2006 with an authorised share capital of US$50,000 divided into 50,000 ordinary shares of US$1 each. The registered office of the Target Company is located at the office of Portcullis TrustNet (BVI) Limited, Portcullis TrustNet Chambers, P.O. Box 3444, Road Town, Tortola, British Virgin Islands. The principal activity of the Target Company is investment holding. The Target Company is owned by Wang Hong, Chen JianJun and Zou QuanBo, with equity interests of 10%, 40% and 50% respectively.

– 82 –

APPENDIX II ACCOUNTANTS’ REPORT ON THE TARGET GROUP

The Target Company has adopted 31 December as its financial year-end date. No audited financial statements of the Target Company were prepared since its incorporation.

Dongcheng Enterprise Management Consultant (Shenzhen) Limited (“Dongcheng”), a 100% owned subsidiary of the Target Company, was established in PRC on 7 August 2007. The registered office of Dongcheng is located at 深圳市羅湖區深南東路 5002號信興廣場地王商業中心寫字樓 301 (Office 301, Xinxing Diwang Commercial Centre, No. 5002, Shennandonglu, Lowu District, Shenzhen). The principal activity of Dongcheng is investment holding.

陝西久權礦業有限公司 (Shanxi Jiuquan Mining Company Limited (“Jiuquan”), a 80% owned subsidiary of Dongcheng was established in PRC on 7 April 2004. The registered office of Jiuquan is located at 寧陝縣旬陽壩鎮 (Xunyangba County, Ningshan Town, Shanxi Province). The principal activity of Jiuquan is exploitation of Ore and production and sale of V2O5 equivalents.

Basis of preparation

The Financial Information has been prepared by the directors of the Target Company based on the financial statements for the Relevant Period, on the basis as set out in Note 2 below. The Financial Information has been prepared in accordance with Hong Kong Financial Reporting Standards which also include Hong Kong Accounting Standards and Interpretations issued by the Hong Kong Institute of Certified Public Accountants (the “HKICPA”) and accounting principles generally accepted in Hong Kong.

Directors’ responsibility for the Financial Information

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

Reporting accountants’ responsibility

Our responsibility is to express an opinion on the Financial Information based on our audit. We conducted our audit in accordance with Hong Kong Standards on Auditing issued by the HKICPA. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance as to whether the Financial Information is free from material misstatement. We have also carried out additional procedures as necessary in accordance with Auditing Guideline 3.340 “Prospectuses and the Reporting Accountant” issued by the HKICPA.

– 83 –

APPENDIX II ACCOUNTANTS’ REPORT ON THE TARGET GROUP

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

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

Opinion

In our opinion, for the purpose of this report, the Financial Information gives a true and fair view of the state of affairs of the Target Group as at 31 December 2007 and of the results and cash flows of the Target Group for the Relevant Period in accordance with Hong Kong Financial Reporting Standards.

– 84 –

APPENDIX II ACCOUNTANTS’ REPORT ON THE TARGET GROUP

B. FINANCIAL INFORMATION

Consolidated income statement of the Target Group

		For the period from
		19 October 2006
		(Date of incorporation)
		to 31 December 2007
	Note	HK$’000
Turnover	4	–
Other revenue	5	5
Discount on acquisition of a subsidiary		1,511
Operating and administrative expenses		(133)
Profit for the period	6	1,383
Attributable to
Equity holder of the Target Company		1,393
Minority interest		(10)
		1,383
Earnings per share	8
Basic		139.3
Diluted		N/A

All of the operations of the Target Group are classed as continuing.

The accompanying notes form an integral part of the Financial Information.

– 85 –

APPENDIX II ACCOUNTANTS’ REPORT ON THE TARGET GROUP

Consolidated balance sheet of the Target Group

		As at
		31 December 2007
	Note	HK$’000
ASSETS
Non-current assets
Property, plant and equipment	9	7,955
		------------
Current assets
Inventories	10	126
Amount due from other	13	5,148
Cash and cash equivalents	11	42
		5,316
		------------
Total assets		13,271
EQUITY
Capital and reserves attributable to
the equity holder of the Target Company
Share capital	12	1
Reserves		1,623
Total equity		1,624
MINORITY INTEREST		1,615
		3,239
		------------
LIABILITIES
Current liabilities
Accrued expenses		6
		------------
Non-current liability
Loan from a shareholder	13	10,026
		------------
Total liabilities		10,032
		------------
Total equity and liabilities		13,271

The accompanying notes form an integral part of the Financial Information.

– 86 –

APPENDIX II ACCOUNTANTS’ REPORT ON THE TARGET GROUP

Consolidated statement of changes in equity of the Target Group

Issue of shares upon incorporation Exchange adjustment Profit for the period Acquisition of a subsidiary	Share Exchange capital reserve HK$’000 HK$’000 1 – – 230 – – – – 1 230	Retained earnings HK$’000 – – 1,393 – 1,393	Total equity HK$’000 1 230 1,393 – 1,624	Minority interest HK$’000 – – (10) 1,625 1,615	Total HK$’000 1 230 1,383 1,625
					3,239

The accompanying notes form an integral part of the Financial Information.

– 87 –

APPENDIX II ACCOUNTANTS’ REPORT ON THE TARGET GROUP

Consolidated cash flow statement of the Target Group

		For the period from
		19 October 2006
		(Date of incorporation)
		to 31 December 2007
	Note	HK$’000
Cash flows from operating activities
Profit before taxation		1,383
Adjustment for:
Interest income		(5)
Discount on acquisition of a subsidiary		(1,511)
Operating profit before working
capital changes		(133)
Decrease in inventories		46
Increase in amount due from other		(5,148)
Increase in loan from a shareholder		10,026
Net cash from operating activities		4,791
		------------
Cash flows from investing activities
Purchase of property,
plant and equipment		(71)
Interest income		5
Acquisition of a subsidiary	14	(4,683)
Net cash used in investing activities		(4,749)
		------------
Net increase in cash and cash equivalents
and cash and cash equivalents at
the end of the period	11	42

– 88 –

APPENDIX II ACCOUNTANTS’ REPORT ON THE TARGET GROUP

C. NOTE TO THE FINANCIAL INFORMATION

1. GENERAL INFORMATION

The principal activity of the Target Company is investment holding. The principal activity of its subsidiary is exploitation of ore and production and sale of V2O5 equivalent.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

These Financial Information have been prepared in accordance with Hong Kong Financial Reporting Standards (“HKFRSs”) (which also include Hong Kong Accounting Standards (“HKASs”) and Interpretations) issued by the HKICPA and accounting principles generally accepted in Hong Kong. The accounting policies of the Target Group are materiality consistent with the Company’s accounting policies. They have been prepared under the historical cost convention.

The presentation of Financial Information in conformity with HKFRSs requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

The Target Group has not early applied the following new/revised standards and interpretation that have been issued but are not yet effective. The directors anticipate that the adoption of such standards and interpretations will not result in changes to the Group’s accounting policies.

		Effective for
		accounting period
		beginning on or after
HKFRS 8	Operating Segments	1 January 2009
HKAS 23 (Revised)	Borrowing Costs	1 January 2009
HK(IFRIC) - Int 12	Service Concession Arrangements	1 January 2008
HK(IFRIC) - Int 13	Customer Loyalty Programmes	1 July 2008
HK(IFRIC) - Int 14	HKAS 19 – Defined Benefit Asset,	1 January 2008
	Minimum Funding Requirements
	and their interaction

The accounting policies set out below have been applied consistently to the Relevant Period presented in this Financial Information.

– 89 –

APPENDIX II ACCOUNTANTS’ REPORT ON THE TARGET GROUP

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Target Company and entities controlled by the Target Company (its subsidiaries). Control is achieved where the Target Company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.

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

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

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

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

Goodwill

Goodwill arising on the acquisitions of subsidiaries represents the excess of the cost of the acquisition over the group’s interest in the net fair value of the identifiable assets and liabilities and contingent liabilities of the relevant subsidiaries at the date of acquisition. Such goodwill is carried at cost less any accumulated impairment losses.

For the purpose of impairment testing, goodwill arising from an acquisition is allocated to each of the relevant cash-generating units, or groups of cash-generating units, that are expected to benefit from the synergies of the acquisition. A cash-generating unit to which goodwill has been allocated is tested for impairment annually, and whenever there is an indication that the unit may be impaired. For goodwill arising on an acquisition in a financial period, the cash-generating unit to which goodwill has been allocated is tested for impairment before the end of that financial period. When the recoverable amount of cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated to reduce the carrying amount of any goodwill allocated to the unit first, and then to the other assets of the unit pro rata on the basis of the carrying amount of each asset in the unit. Any impairment loss for goodwill is recognised directly in the income statement. An impairment loss for goodwill is not reserved in subsequent periods.

On subsequent disposal of a subsidiary, the attributable amount of goodwill capitalised is included in the determination of the amount of profit or loss on disposal.

Revenue recognition

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

Interest income is recognised as it accrues using the effective interest method.

– 90 –

APPENDIX II ACCOUNTANTS’ REPORT ON THE TARGET GROUP

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Subsidiary

A subsidiary is an entity controlled by the Target Group. Control exists when the Target Group has the power to govern the financial and operating policies of an entity so as to obtain benefits from their activities. In assessing control, potential voting rights that presently exercisable are taken into account.

The results of subsidiaries are included in the Target Group’s income statement to the extent of dividends received and receivable. The Target Group’s interest in subsidiaries are stated at cost less any impairment losses.

Impairment of assets

Where an indication of impairment exists, or when annual impairment testing for an asset is required (other than inventories and financial assets), the asset’s recoverable amount is estimated. An asset’s recoverable amount is calculated as the higher of the asset’s or cash-generating unit’s value in use and its fair value less costs to sell, and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets, in which case, the recoverable amount is determined for the cash-generating unit to which the asset belongs.

An impairment loss is recognised only if the carrying amount of an asset exceeds its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. An impairment loss is charged to the income statement in the period in which it arises, unless the asset is carried at a revalued amount, in which case the impairment loss is accounted for in accordance with the relevant accounting policy for that revalued asset.

Property, plant and equipment

– 91 –

APPENDIX II ACCOUNTANTS’ REPORT ON THE TARGET GROUP

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Buildings The shorter of the lease terms and 50 years Equipment 5 years

Where parts of an item of property, plant and equipment have different useful lives, the cost of that item is allocated on a reasonable basis among the parts and each part is depreciated separately.

Residual values, useful lives and depreciation method are reviewed, and adjusted if appropriate, at each balance sheet date.

Income tax

Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities.

Deferred tax liabilities are recognised for all taxable temporary differences, except:

where the deferred tax liability arises from goodwill or the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and
in respect of taxable temporary differences associated with investments in subsidiaries, associate, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

– 92 –

APPENDIX II ACCOUNTANTS’ REPORT ON THE TARGET GROUP

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

where the deferred tax asset relating to the deductible temporary differences arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and
in respect of deductible temporary differences associated with investments in subsidiaries and associate, deferred tax assets are only recognised to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised.

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

Inventories

Cash and cash equivalents

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

Foreign currencies

These financial statements are presented in Hong Kong dollars, which is the Group’s functional and presentation currency. Each entity in the Group determines its own functional currency and items included in the financial statements of each entity are measured using that functional currency. Foreign currency transactions are initially recorded using the functional currency rates ruling at the date of the transactions. Monetary assets and liabilities denominated in foreign currencies are retranslated at the functional currency rates of exchange ruling at the balance sheet date. All differences are taken to profit or loss. Non-monetary items that are measured in the terms of historical cost in a foreign currency are translated using the exchange rates at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined.

– 93 –

APPENDIX II ACCOUNTANTS’ REPORT ON THE TARGET GROUP

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

The functional currencies of certain overseas subsidiaries are currencies other than the Hong Kong dollar. As at the balance sheet date, the assets and liabilities of these entities are translated into the presentation currency of the Group at the exchange rates ruling at the balance sheet date and, their income statements are translated into Hong Kong dollars at the weighted average exchange rates for the year. The resulting exchange differences are included in the exchange fluctuation reserve. On disposal of a foreign entity, the deferred cumulative amount recognised in equity relating to that particular foreign operation is recognised in the income statement.

For the purpose of the consolidated cash flow statement, the cash flows of overseas subsidiaries are translated into Hong Kong dollars at the exchange rates at the dates of the cash flows. Frequently recurring cash flows of overseas subsidiaries which arise throughout the period are translated to Hong Kong dollars at the weighted average exchange rates for the period.

Provisions

3. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

The Group’s principal financial instruments comprise cash.

The main risks arising from the Target Group’s financial instruments are cash flow interest rate risk, foreign currency risk and liquidity risk. The board reviews and agrees policies for managing each of these risks and they are summarized below.

Foreign currency risk

Certain receivables of the Target Group are denominated in foreign currencies. The Target Group currently does not have a foreign currency hedging policy. However, the management monitors foreign exchange exposure and will consider hedging significant foreign currency exposure should the need arises.

Liquidity risk

For the management of the Target Group’s liquidity risk, the Target Group monitors and maintains a sufficient level of cash and cash equivalents deemed adequate by management to finance the Target Group’s operations and mitigate the effects of fluctuation in cash flows. Management reviews and monitors its working capital requirements regularly.

Fair value

The fair values of financial instruments are not materially different from their carrying amounts because of the immediate or short term maturity of these financial instruments.

4. TURNOVER AND SEGMENT INFORMATION

The Target Group did not generate any turnover during the Relevant Period. According to HKAS 14 “Segment Reporting”, no business and geographical segmental information were presented.

– 94 –

APPENDIX II ACCOUNTANTS’ REPORT ON THE TARGET GROUP

5. OTHER REVENUE

Revenue recognised during the period was as follow:

	For the period from	For the period from
	19 October 2006
	(Date of incorporation)
	to 31 December 2007
		HK$’000
Bank interest income		5

PROFIT FOR THE PERIOD
	For the period from
	19 October 2006
	(Date of incorporation)
	to 31 December 2007
		HK$’000
Profit for the period is stated after charging:
Auditors’ remuneration		–
Directors’ remuneration		–
Rental expenses		31

6. PROFIT FOR THE PERIOD

7. TAXATION

No provision for profits tax has been made as the Target Group did not have any assessable profit for the Relevant Period.

There are no material unprovided deferred tax assets and liabilities as at the balance sheet date.

8. EARNING PER SHARE

The calculation of basic earning per share is based on the profit for the period attributable to equity holders of the company of HK$1,393,000 and 10 ordinary shares in issue during the Relevant Period.

No diluted earning per share is presented for the Relevant Period as no diluted events occurred during the Relevant Period.

9. PROPERTY, PLANT AND EQUIPMENT

Cost or valuation: Balance at 19.10.2006 (date of incorporation) Acquisition of a subsidiary Balance at 31.12.2007 Accumulated depreciation: Charge for the period and balance at 31.12.2007 Net carrying amount: At 31.12.2007	Construction Building Equipment in progress HK$’000 HK$’000 HK$’000 – – – 7,347 3 605 7,347 3 605 – – – 7,347 3 605	Total HK$’000 – 7,955
		7,955 –

		7,955

– 95 –

APPENDIX II ACCOUNTANTS’ REPORT ON THE TARGET GROUP

10. INVENTORIES

		As at
	31 December 2007
		HK$’000
Raw materials		126

All the inventories were stated at cost.
CASH AND CASH EQUIVALENTS
		As at
	31 December 2007
		HK$’000
Cash and bank balances		42

Cash and bank balances include the following amounts denominated in a currency other than
the Target Group’s functional currency, HK dollars:
		As at
	31 December 2007
Renminbi		RMB39,000

Cash at banks earns interest at floating rates based on daily bank	deposit rates.

11. CASH AND CASH EQUIVALENTS

12. SHARE CAPITAL

	As at
	31 December 2007
	HK$’000
Authorised:
50,000 ordinary shares of US$1 each	390
Issued and fully paid:
10 ordinary shares of US$1 each	1

The Target Company was incorporated in the British Virgins Islands with an authorised share capital of US$50,000 divided into 50,000 ordinary shares of US$1 each.

13. AMOUNTS DUE FROM OTHER/LOAN FROM A SHAREHOLDER

The amounts due from other/a shareholder represent non-trade advances which are unsecured, interest-free and have no fixed terms of repayment. The carrying amounts of the amount due from other/a shareholder approximate to their fair values.

– 96 –

APPENDIX II ACCOUNTANTS’ REPORT ON THE TARGET GROUP

14. ACQUISITION OF A SUBSIDIARY

The net assets acquired in the transaction, and the discount on acquisition arising, are as follows:

Cash at bank Property, plant and equipment Stock Accrued expenses Minority interest Discount on acquisition Total consideration satisfied by cash Net cash outflow arising on acquisition: Cash consideration paid Cash and cash equivalents acquired	HK$’000 74 7,603 165 (6) 7,836 (1,567) (1,512) 4,757 4,757 (74) 4,683

15. CONTINGENT LIABILITIES AND COMMITMENT

The Target Group did not have any significant contingent liabilities and commitment as at the balance sheet date.

16. SUBSEQUENT EVENTS

No significant subsequent event took place subsequent to 31 December 2007.

D. SUBSEQUENT FINANCIAL STATEMENTS

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

Yours faithfully, Li, Tang, Chen & Co. Certified Public Accountants Hong Kong

– 97 –

APPENDIX III

MANAGEMENT DISCUSSION AND ANALYSIS ON THE TARGET GROUP AND THE GROUP

MANAGEMENT DISCUSSION AND ANALYSIS ON TARGET GROUP

Set out below is the management discussion and analysis on Target Group for the period from 19 October 2006 (date of incorporation) to 31 December 2007:

Revenue

During the period under review, Target Group recorded a gain on bank interest income of approximately HK$5,000 and a gain on discount on acquisition of a subsidiary of approximately HK$1,511,000.

Operating and administrative expenses

During the period under review, the Target Group incurred operating and administrative expenses of HK$133,000.

Net profit for the period

As a result of the foregoing, the Target Group recorded a profit of approximately HK$1,383,000.

Business Review and Prospects

Historically the price of vanadium has followed a spike-crash-shakeout pattern, with long periods of depressed prices followed by brief price spikes. Large vanadium producers are generally supply inelastic and they continue high levels of production through bust cycles. This creates excess supplies and depresses the market further. Following modest average annual growth of around 1% through the 1990s, world vanadium consumption has risen significantly since 2002, reflecting both higher world steel production and higher unit vanadium consumption as the share of highstrength steels in total steel output rises. Despite the set-back resulting from high prices in 2005, world demand for vanadium rose by 7.5% from 79,800 tonnes V2O5 equivalent in 2003 to a peak level of 98,900 tonnes in 2006.

– 98 –

APPENDIX III

MANAGEMENT DISCUSSION AND ANALYSIS ON THE TARGET GROUP AND THE GROUP

The outlook for vanadium consumption through 2010 appears optimistic. World consumption may show short-term fluctuations in line with steel production, but is forecast to show underlying growth of 5-6% to reach 118,600 tonnes V2O5 equivalent in 2010. High-strength steels will continue to provide the main area of growth as increasing emphasis is placed on life-cycle costs in the construction industry, on reducing weight and improving fuel efficiency in the transport industry, and on the use of higher-performance materials to withstand aggressive environments in the oil and gas industry.

Due to the wide application of vanadium, the Directors consider that the Acquisition enables the Company to diversify into the promising mineral sector and will benefit the Company in the future.

Exchange risk

The majority of Target Group’s assets and liabilities is in Hong Kong dollars. As such, the fluctuation of foreign currencies did not have a significant impact on the performance, results and operations of Target Group.

Capital structure, liquidity, financial resources and gearing ratio

Target Group had cash balances of approximately HK$42,000 and borrowings from a shareholder of HK$10,026,000 with no bank borrowing as at 31 December 2007.

As at 31 December 2007, the borrowings of Target Group amounted to approximately HK$10,026,000 were unsecured and interest free.

Target Group’s gearing ratio, calculated as total liabilities over total assets, was approximately 75.59% as at 31 December 2007.

Treasury policies

Target Group consistently maintains a prudent financial policy and its operations are generally financed by shareholders’ loans and banking facilities.

Charges on assets

As at 31 July 2007, no asset of the Target Group has been pledged.

Contingent liabilities

As at 31 December 2007, Target Group had no significant contingent liabilities and outstanding litigation.

– 99 –

APPENDIX III

MANAGEMENT DISCUSSION AND ANALYSIS ON THE TARGET GROUP AND THE GROUP

Capital commitments

The Target Group did not have any capital commitments outstanding as at 31 December 2007.

Significant investments, material acquisitions and disposals

Target Group did not have any significant investment, material acquisition and disposal during the period.

Employees

Target Group has not had any employee during the period.

MANAGEMENT DISCUSSION AND ANALYSIS ON THE GROUP

Set out below is the management discussion and analysis on the Group for three years ended 31 March 2007:

For the year ended 31 March 2005

Manufacture and Sale of Fur Garment and Trading of Fur Skin

Regional Market

The Group recorded a turnover of approximately HK$184,271,000 for the year ended 31 March 2005, an increase of 56.5% when compared to the figure of the corresponding period last year of approximately HK$117,774,000. Turnover mainly attributed to the export business, of which approximately HK$23,809,000 (13%) from Japan; approximately HK$21,399,000 (12%) from North America; approximately HK$119,908,000 (65%) from Hong Kong, Macau and Mainland China and approximately HK$19,155,000 (10%) from other regions.

Product Range

The ratio analysis for major product range attributable to the Group’s turnover for the year ended 31 March 2005 is as follows: 39.3% for fur garments (2004: 53.6%); 60.7% for fur skin trading (2004: 46.4%). Turnover from fur skin trading recorded an increase of 104.6% when compared to the corresponding period last year.

– 100 –

APPENDIX III

MANAGEMENT DISCUSSION AND ANALYSIS ON THE TARGET GROUP AND THE GROUP

Liquidity and Financial Resources

The Group generally derives cash for operation from internal cash flow and facilities from Hong Kong banks. As at 31 March 2005, the Group had cash and cash equivalents of approximately HK$69,255,000. As at 31 March 2005, the Group’s bank and other borrowings amounting to HK$55,199,000 and HK$6,195,000 respectively, and shareholders’ funds amounted to HK$267,165,000. Accordingly, the gearing ratio, which was calculated by total borrowings divided by shareholders’ funds, was 23%. As far as financial position is concerned, the Group continues to adopt a cautious policy. There are no long-term debts and the Group has sufficient funds for future business expansions and diversification in investments.

Capital Structure

As at 31 March 2005, the outstanding loans were on a floating rate and short term basis. Basically, except loans that were raised to hedge specific investments, certain loans were drawn down in foreign currencies. The currencies of general bank loans were mainly drawn down in United States Dollars or in Hong Kong Dollars. All of the bank loans are variable-rate borrowings which carry interest ranging from 2.74% to 3.25% per annum. The combination of cash on hand, together with cash inflow from operation and current financial asset, should enable the Group to satisfy its debt repayment commitments and working capital requirements.

In respect of financial position, the Group continues to adopt a cautious policy. There are no long-term debts and the Group has sufficient funds for future business expansions and diversification in investments.

Charges on Assets

As at 31 March 2005, the Group’s banking facilities were secured by a corporate guarantee given by the Company, certain listed equity and debt securities, its leasehold properties and certain investment properties.

Significant Investments and Material Acquisitions

There were no material acquisition and disposal of subsidiaries and associated companies during the year ended 31 March 2005.

Contingent Liabilities

The Group did not have any significant contingent liabilities as at 31 March 2005.

Foreign Exchange Exposure

The Group’s businesses are mainly conducted in US Dollars and Renminbi, with minimal exposure to fluctuations in foreign exchanges.

– 101 –

APPENDIX III

MANAGEMENT DISCUSSION AND ANALYSIS ON THE TARGET GROUP AND THE GROUP

Employees

As at 31 March 2005, the Group employed around 20 employees in Hong Kong and approximately 300 employees in the Mainland. The Group’s remuneration policies are based primarily on the prevailing market wages and the performance of individual employees. Fringe benefits, including provident fund, Mandatory Provident Fund, medical benefits and training are provided. The Group has also established a discretionary bonus scheme for its management and staff with awards determined annually based upon the performance of the Group and individual employees.

For the year ended 31 March 2006

Investment

The Group recorded a revenue from investment of approximately HK$37,066,000 (2005: HK$20,669,000) for the year ended 31 March 2006, of which approximately HK$9,244,000 (2005: HK$7,708,000) was from interest income; approximately HK$2,826,000 (2005: HK$1,358,000) was from dividend income; approximately HK$13,381,000 (2005: HK$3,505,000) was from net realised gain on investment and approximately HK$11,615,000 (2005: HK$8,098,000) was from unrealised gain on investment.

Manufacture and Sale of Fur Garment and Trading of Fur Skin

Regional Market

The Group recorded a turnover of approximately HK$163,681,000 for the year ended 31 March 2006, a decrease of 11% compared to the corresponding period last year of approximately HK$184,271,000. Turnover was mainly attributed to the export business, of which approximately HK$19,252,000 (11.8%) was from Japan; approximately HK$24,172,000 (14.8%) was from North America; approximately HK$99,277,000 (60.6%) was from Hong Kong, Macau and Mainland China and approximately HK$20,980,000 (12.8%) was from other regions.

Product Range

The ratio analysis for major product range attributable to the Group’s turnover for the year ended 31 March 2006 was as follows: 43.5% for fur garments (2005: 39.3%); 56.5% for fur skin trading (2005: 60.7%).

Liquidity and Financial Resources

The Group generally derives cash for operation from internal cash flow and facilities from Hong Kong banks. As at 31 March 2006, the Group had cash and bank balances of approximately HK$24,537,000. As at 31 March 2006, the Group’s bank

– 102 –

APPENDIX III MANAGEMENT DISCUSSION AND ANALYSIS ON THE TARGET GROUP AND THE GROUP

borrowings amounted to approximately HK$95,836,000. The borrowings were on short term basis to fund the Group’s working capital requirements. Shareholders’ funds amounted to approximately HK$280,349,000. Accordingly, the gearing ratio, which was calculated by total borrowings divided by shareholders’ funds, was 34%.

Capital Structure

As at 31 March 2006, the outstanding loans were on a floating rate and short term basis. Basically, the currencies of bank loans were mainly drawn down in United States Dollars or in Hong Kong Dollars. Certain borrowings were drawn in Japanese Yen for specific investment hedging purpose. All of the bank loans are variable-rate borrowings which carry interest ranging from 3.165% to 5.82% per annum. The combination of cash on hand, together with cash inflow from operation and liquidated financial assets, should enable the Group to satisfy its debt repayment commitments and working capital requirements. As far as financial position is concerned, the Group continues to adopt a cautious policy. There are no long-term debts and the Group has sufficient funds for future business expansions and diversification in investments.

Charges on Assets

Significant Investments and Material Acquisitions

There were no material acquisition and disposal of subsidiaries and associated companies during the year ended 31 March 2006.

Foreign Exchange Exposure

The Group’s businesses are mainly conducted in United States dollars and Renminbi, with minimal exposure to fluctuations in foreign exchanges.

Employees

As at 31 March 2006, the Group employed around 20 employees in Hong Kong and approximately 200 employees in the Mainland. The Group’s remuneration policies are based primarily on the prevailing market wages and the performance of individual employees. Fringe benefits, including provident fund, Mandatory Provident Fund, medical benefits and training are provided. The Group has also established a discretionary bonus scheme for its management and staff with awards determined annually based upon the performance of the Group and individual employees.

– 103 –

APPENDIX III

MANAGEMENT DISCUSSION AND ANALYSIS ON THE TARGET GROUP AND THE GROUP

Contingent Liabilities

The Group had no contingent liabilities as at 31 March 2006.

For the year ended 31 March 2007

Manufacture and Sale of Fur Garment and Trading of Fur Skin

Regional Market

The Group recorded a turnover of approximately HK$359,576,000 for the year ended 31 March 2007, an increase of 73% compared to the corresponding period last year of approximately HK$208,281,000 (restated). The regional analysis for turnover was as follows: approximately HK$308,795,000 (86%) was from Hong Kong and Mainland China (2006: approximately HK$143,877,000 (restated) (69%)); approximately HK$17,680,000 (5%) was from Japan (2006: approximately HK$19,252,000 (9%); approximately HK$19,830,000 (6%) was from North America (2006: approximately HK$24,172,000 (12%)) and approximately HK$13,271,000 (3%) was from other regions (2006: approximately HK$20,980,000 (10%)).

Product Range

The ratio analysis for major product range accounting for the Group’s turnover for the year ended 31 March 2007 was as follows: approximately HK$76,945,000 (21%) for trading in securities (2006: approximately HK$44,600,000 (restated) (22%)); approximately HK$56,919,000 (16%) for fur garments (2006: approximately HK$71,155,000 (34%)) and approximately HK$225,712,000 (63%) for fur skin trading (2006: approximately HK$92,526,000 (44%)).

Liquidity and Financial Resources

The Group generally derives cash for operation from internal cash flow and facilities from Hong Kong banks. As at 31 March 2007, the Group had cash and bank balances of approximately HK$29,648,000. As at 31 March 2007, the Group’s bank borrowings amounted to approximately HK$110,982,000. The borrowings were on short term basis to fund the Group’s working capital requirements. Shareholders’ funds amounted to approximately HK$327,351,000. Accordingly, the gearing ratio, which was calculated by total borrowings divided by shareholders’ funds, was 34%.

Capital Structure

As at 31 March 2007, the outstanding loans were on a floating rate and short term basis. Basically, except loans that were raised to hedge specific investments, certain loans were drawn down in foreign currencies. The currencies of general bank loans were mainly drawn down in United States Dollars or in Hong Kong Dollars. All of the bank loans are variable-rate borrowings which carry interest ranging from 0.875% to 5.5% per annum. The combination of cash on hand, together with cash inflow from operation and current financial asset, should enable the Group to satisfy its debt repayment commitments and working capital requirements.

– 104 –

APPENDIX III

MANAGEMENT DISCUSSION AND ANALYSIS ON THE TARGET GROUP AND THE GROUP

Charges on Assets

Significant Investments and Material Acquisitions

There were no material acquisition and disposal of subsidiaries and associates during the year ended 31 March 2007.

Foreign Exchange Exposure

The Group’s businesses are mainly conducted in United States dollars and Renminbi, with minimal exposure to fluctuations in foreign exchanges.

Employees

As at 31 March 2007, the Group employed around 25 employees in Hong Kong and Mainland China. The Group’s remuneration policies are based primarily on the prevailing market wages and the performance of individual employees. Fringe benefits, including provident fund, Mandatory Provident Fund, medical benefits and training are provided. The Group has also established a discretionary bonus scheme for its management and staff with awards determined annually based upon the performance of the Group and individual employees.

Contingent Liabilities

The Group had no contingent liabilities as at 31 March 2007.

– 105 –

APPENDIX IV

PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

The following is the unaudited pro forma financial information of the Enlarged Group as if the Acquisition has been completed.

==> picture [178 x 40] intentionally omitted <==

26 February 2008

The Board of Directors

Rising Development Holdings Limited

Room 2004-05 20/F., World Trade Centre 280 Gloucester road Causeway Bay Hong Kong

Dear Sirs,

We report on the unaudited pro forma financial information of Rising Development Holdings Limited (the “Company”) and its subsidiaries (hereinafter collectively referred to as the “Group”), Oriental Harvest Development Limited (the “Target Company”) and its subsidiaries (the “Target Group”) (together with the Group hereinafter referred to as the “Enlarged Group”) set out in pages 108 to 118 under the heading of “Unaudited Pro Forma Financial Information on the Enlarged Group” (the “Unaudited Pro Forma Financial Information”) in Appendix IV of the Company’s circular dated 26 February 2008 (the “Circular”) in connection with the proposed acquisition of 100% equity interest of the Target Company (“the Acquisition”). The Unaudited Pro Forma Financial Information has been prepared by the directors of the Company, for illustrative purpose only, to provide information about how the Acquisition might have affected the financial information presented, for inclusion as Appendix IV to the Circular. The basis of preparation of the Unaudited Pro Forma Financial Information is set out on page 108 of Appendix IV to this Circular.

Respective responsibilities of directors of the company and reporting accountants

It is the responsibilities 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 with reference to Accounting Guideline 7 “Preparation of Pro Forma Financial Information for Inclusion in Investment Circulars” issued by the Hong Kong Institute of Certified Public Accountants (the “HKICPA”).

– 106 –

APPENDIX IV

PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

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.

Basis of opinion

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

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

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

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

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.

Yours faithfully, Li, Tang, Chen & Co. Certified Public Accountants Hong Kong

– 107 –

APPENDIX IV

PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

A. UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

Introduction to the unaudited pro forma financial information of the Enlarged Group

The following is the unaudited pro forma financial information of the Enlarged Group as if the Acquisition has been completed on 31 March 2007 for the pro forma consolidated balance sheet, and on 1 April 2006 for the pro forma consolidated income statement and pro forma consolidated cash flow statement. The accompanying Pro Forma Financial Information of the Enlarged Group has been prepared to illustrate the effect of the Acquisition of 100% issued share capital of the Target Company at a consideration of HK$1,137,000,000 which shall be satisfied by (i) HK$300,000,000 by cash and (ii) HK$837,000,000 by the issue of the convertible notes by the Company in aggregate amount of HK$83,700,000, HK$334,800,000 and HK$418,500,000 to Mr. Wang Hong, Mr. Chen JianJun and Mr. Zou QuanBo respectively.

The accompanying Pro Forma Financial Information of the Enlarged Group is based on a number of assumptions, estimates, uncertainties and currently available information, and is provided for illustrative purpose. Accordingly, as a result of the uncertain nature of the accompanying Unaudited Pro Forma Financial Information of the Enlarged Group, it may not give a true picture of the actual financial position or results of the Enlarged Group’s operations that would have been attained had the Acquisition actually occurred on the dates indicated herein. Further, the accompanying Unaudited Pro Forma Financial Information of the Enlarged Group does not purport to predict the Enlarged Group’s future financial position or results of operations.

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

(I) Unaudited pro forma consolidated balance sheet of the Enlarged Group

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

– 108 –

APPENDIX IV

PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

(I) Unaudited pro forma consolidated balance sheet of the Enlarged Group (Continued)

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

Audited
Audited
Consolidated
Consolidated
Balance Sheet
Balance Sheet
of the Group
of the Target
as at
Group as at
31 March 2007
31 December 2007
HK$’000
HK$’000
NON-CURRENT
ASSETS
Property, plant and
equipment
6,812
7,955
Investment
properties
30,380
–
Prepaid land lease
payments
881
–
Interest in an
associate
20
–
Available-for-sale
financial assets
251,642
–
Goodwill
–
–
289,735
7,955
---------
---------
CURRENT ASSETS
Inventories
10,261
126
Amount due from
other
–
5,148
Prepaid land lease
payments
23
–
Prepayments,
deposits and other
receivables
6,183
–
Derivative financial
instruments
3,061
–
Trade receivables
629
–
Financial assets at
fair value through
profit or loss
107,538
–
Cash and cash
equivalents
29,648
42
157,343
5,316
---------
---------

Unaudited Pro
Forma Consolidated
Balance Sheet
of the Enlarged
Pro forma
Group as at
Sub-total
adjustments
31 March 2007
HK$’000
HK$’000
Note
HK$’000
14,767
14,767
30,380
30,380
881
881
20
20
251,642
251,642
–
1,135,377
1
1,125,351
(10,026 )
6
297,690
1,423,041
---------
---------
10,387
10,387
5,148
5,148
23
23
6,183
6,183
3,061
3,061
629
629
107,538
107,538
29,690
(300,000 )
1
(270,310 )
162,659
(137,341 )
---------
---------

– 109 –

APPENDIX IV

PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

(I) Unaudited pro forma consolidated balance sheet of the Enlarged Group (Continued)

Audited
Audited
Consolidated
Consolidated
Balance Sheet
Balance Sheet
of the Group
of the Target
as at
Group as at
31 March 2007
31 December 2007
HK$’000
HK$’000
CURRENT
LIABILITIES
Short-term bank
loans-secured
110,982
–
Trade payables
134
–
Customers’ deposits
2,878
–
Other payables and
accruals
2,291
6
Tax payables
479
–
116,764
6
---------
---------
NET CURRENT
ASSETS/(LIABILITIES)
40,579
5,310
TOTAL ASSETS
LESS CURRENT
LIABILITIES
330,314
13,265
NON-CURRENT
LIABILITIES
Convertible notes
–
–
Loan from a
shareholder
–
10,026
Deferred tax
liabilities
2,963
–
2,963
10,026
---------
---------
NET ASSETS
327,351
3,239
CAPITAL AND
RESERVES
Share capital
60,829
1
Reserves
254,964
1,623
Proposed dividends
11,558
–
Minority Interest
–
1,615
TOTAL EQUITY
327,351
3,239

Unaudited Pro
Forma Consolidated
Balance Sheet
of the Enlarged
Pro forma
Group as at
Sub-total
adjustments
31 March 2007
HK$’000
HK$’000
Note
HK$’000
110,982
110,982
134
134
2,878
2,878
2,297
2,297
479
479
116,770
116,770
---------
---------
45,889
(254,111 )
343,579
1,168,930
–
743,301
1
743,301
10,026
(10,026 )
6
–
2,963
16,397
3
19,360
12,989
762,661
---------
---------
330,590
406,269
60,830
60,830
256,587
92,076
1
332,266
(16,397 )
3
11,558
11,558
1,615
1,615
330,590
406,269

– 110 –

APPENDIX IV

PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

(II) Unaudited pro forma consolidated income statement of the Enlarged Group

The following is the unaudited pro forma consolidated income statement of the Enlarged Group, assuming that the Acquisition has been completed on 1 April 2006. The unaudited pro forma consolidated income statement is based on the audited consolidated income statement of the Group for the year ended 31 March 2007 and the audited consolidated income statement of the Target Group for the period from 19 October 2006 (date of incorporation) to 31 December 2007 as set out in Appendix II to this Circular, after making pro forma adjustments relating to the Acquisition that are (i) directly attributable to the transaction; and (ii) factually supportable.

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

– 111 –

APPENDIX IV

PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

(II) Unaudited pro forma consolidated income statement of the Enlarged Group (Continued)

Audited
Audited
Consolidated
Consoldiated
Income
Income
statement
statement
of the Group
of the Target
for the year
Group for the
ended
period ended
31 March 2007
31 December 2007
HK$’000
HK$’000
TURNOVER
359,576
–
Cost of sales
(319,379 )
–
Gross profit
40,197
–
Other income and gains
– Income from investments
41,048
–
– Others
4,843
5
Fair value gains on investment
properties
3,280
–
Selling and distribution expenses
(4,613 )
–
Discount on acquisition of a
subsidiary
–
1,511
Operating and administrative
expenses
(13,889 )
(133 )
PROFIT FROM OPERATING
ACTIVITIES
70,866
1,383
Finance costs
(7,346 )
–
Share of loss of an associate
(10 )
–
PROFIT BEFORE TAX
63,510
1,383
Taxation
170
–
PROFIT BEFORE MINORITY
INTEREST
63,680
1,383
Minority interest
–
10
PROFIT FOR THE YEAR
ATTRIBUTABLE TO
SHAREHOLDERS
63,680
1,393
EARNINGS PER SHARE
Basic
Diluted

Unaudited Pro
Forma
Consolidated
Income
Statement of
the Enlarged Group
Pro forma
for the year ended
Sub-total
adjustments
31 March 2007
HK$’000
HK$’000
Note
HK$’000
359,576
359,576
(319,379 )
(319,379 )
40,197
40,197
41,048
41,048
4,848
4,848
3,280
3,280
(4,613 )
(4,613)
1,511
1,511
(14,022 )
(14,022 )
72,249
72,249
(7,346 )
(38,057 )
4
(45,403 )
(10 )
(10 )
64,893
26,836
170
5,195
5
5,365
65,063
32,201
10
10
65,073
32,211
7
HK1.06 cents
N/A

– 112 –

APPENDIX IV

PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

(III) Unaudited pro forma consolidated cash flow statement of the Enlarged Group

The following is the unaudited pro forma consolidated cash flow statement of the Enlarged Group, assuming that the Acquisition has been completed on 1 April 2006. The unaudited consolidated cash flow statement is based on the audited consolidated cash flow statement of the Group for the year ended 31 March 2007 and the audited consolidated cash flow statements of the Target Group for the period from 19 October 2006 (date of incorporation) to 31 December 2007 as set out in Appendix II to this Circular, after making pro forma adjustments relating to the Acquisition that are (i) directly attributable to the transaction; and (ii) factually supportable.

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

– 113 –

APPENDIX IV

PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

(III) Unaudited pro forma consolidated cash flow statement of the Enlarged Group (Continued)

	Audited	Audited				Unaudited Pro
	Consolidated	Consolidated				Forma
	Cash Flow	Cash Flow				Consolidated Cash
	Statement of	Statement of the				Flow Statement of
	the Group for	Target Group for				the Enlarged Group
	the year ended	the period ended		Pro forma		for the year ended
	31 March 2007	31 December 2007	Sub-total	adjustments		31 March 2007
	HK$’000	HK$’000	HK$’000	HK$’000	Note	HK$’000
Profit before tax	63,510	1,383	64,893	(38,057 )	4	26,836
Adjustments for:
Share of loss of an associate	10	–	10			10
Interest expenses	7,346	–	7,346	38,057	4	45,403
Dividend income from
available-for-sale financial
assets	(27 )	–	(27 )			(27 )
Dividend income from
financial assets at fair value
through profit or loss	(3,672 )	–	(3,672 )			(3,672 )
Interest income from
investment in
available-for-sale financial
assets	(16,512 )	–	(16,512 )			(16,512 )
Bank interest income	(584 )	(5 )	(589 )			(589 )
Other interest income	(42 )		(42 )			(42 )
Fair value gain on investment
properties	(3,280 )	–	(3,280 )			(3,280 )
Depreciation	483	–	483			483
Recognition of prepaid land
lease payments	23	–	23			23
Reversal of revaluation
deficit on property, plant
and equipment previously
recognsied in income
statement	(648 )	–	(648 )			(648 )
Loss/(gain) on disposal of
property, plant and
equipment	44	–	44			44
Net realised gain on
available-for-sale financial
assets	(2,571 )	–	(2,571 )			(2,571 )
Unrealised gain on
investments in financial
assets at fair value through
profit or loss	(14,271 )	–	(14,271 )			(14,271 )
Net realised and unrealized
gain on derivative financial
instruments	(3,995 )	–	(3,995 )			(3,995 )
Discount on acquisition of
subsidiaries	–	(1,511 )	(1,511 )			(1,511 )

– 114 –

APPENDIX IV

PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

(III) Unaudited pro forma consolidated cash flow statement of the Enlarged Group (Continued)

Audited
Audited
Consolidated
Consolidated
Cash Flow
Cash Flow
Statement of
Statement of the
the Group for
Target Group for
the year ended
the period ended
31 March 2007
31 December 2007
HK$’000
HK$’000
Operating profit before
working capital changes
25,814
(133 )
Decrease in inventories
53,036
46
Increase in prepayments,
deposits and other
receivables
(2,146 )
–
Decrease in trade receivables
1,254
–
Decrease/(increase) in
financial assets at fair value
through profit or loss
12,911
–
Decrease in trust receipt loans
(7,727 )
–
(Decrease)/increase in trade
payables
(2,990 )
–
(Decrease)/increase in
customers’ deposits
(36,173 )
–
Increase/(decrease) in other
payables and accruals
1,043
–
Increase in amount due from
other
–
(5,148 )
Increase in loan from
shareholder
–
10,026
---------
---------
Cash from operations
45,022
4,791
Interest paid
(7,346 )
–
Hong Kong profits tax paid
(5,680 )
–
Net cash from operating
activities
31,996
4,791
---------
---------

Unaudited Pro
Forma
Consolidated Cash
Flow Statement of
the Enlarged Group
Pro forma
for the year ended
Sub-total
adjustments
31 March 2007
HK$’000
HK$’000
Note
HK$’000
25,681
25,681
53,082
53,082
(2,146 )
(2,146 )
1,254
1,254
12,911
12,911
(7,727 )
(7,727 )
(2,990 )
(2,990 )
(36,173 )
(36,173 )
1,043
1,043
(5,148 )
(5,148 )
10,026
(10,026 )
6
–
---------
---------
49,813
39,787
(7,346 )
(7,346 )
(5,680 )
(5,680 )
36,787
26,761
---------
---------

– 115 –

APPENDIX IV

PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

(III) Unaudited pro forma consolidated cash flow statement of the Enlarged Group (Continued)

Audited
Audited
Consolidated
Consolidated
Cash Flow
Cash Flow
Statement of
Statement of the
the Group for
Target Group for
the year ended
the period ended
31 March 2007
31 December 2007
HK$’000
HK$’000
CASH FLOWS FROM
INVESTING ACTIVITIES
Dividend income from
available-for- sale
financial assets
27
–
Dividend income from financial
assets at fair value through
profit or loss
3,672
–
Interest income from
investment in
available-for-sale
financial assets
16,512
–
Bank interest income
584
5
Other interest income
42
–
Net settlement of derivative
financial instruments
1,096
–
Purchases of property, plant
and equipment
(133 )
(71 )
Proceeds from disposal of
property, plant and equipment
166
–
Acquisition of available-for-sale
financial assets
(119,267 )
–
Acquisition of subsidiary
–
(4,683 )
Proceeds from disposal of
available–for-sale
financial assets
66,588
–
Net cash used in investing
activities
(30,713 )
(4,749 )
---------
---------
CASH FLOWS FROM
FINANCING ACTIVITIES
Payment for repurchase of shares
(163 )
–
Dividend paid
(18,872 )
–
Capital element of finance lease
rental payments
(10 )
–
Acquisition of short-term
bank loans
28,682
–
Repayment of short-term
bank loans
(5,766 )
–
Net cash from financing
activities
3,871
–
---------
---------

Unaudited Pro
Forma
Consolidated Cash
Flow Statement of
the Enlarged Group
Pro forma
for the year ended
Sub-total
adjustments
31 March 2007
HK$’000
HK$’000
Note
HK$’000
27
27
3,672
3,672
16,512
16,512
589
589
42
42
1,096
1,096
(204 )
(204 )
166
166
(119,267 )
(119,267 )
(4,683 )
(300,000 )
1
(294,657 )
10,026
6
66,588
66,588
(35,462 )
(325,436 )
---------
---------
(163 )
(163 )
(18,872 )
(18,872 )
(10 )
(10 )
28,682
28,682
(5,766 )
(5,766 )
3,871
3,871
---------
---------

– 116 –

APPENDIX IV

PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

(III) Unaudited pro forma consolidated cash flow statement of the Enlarged Group (Continued)

Audited Audited Consolidated Consolidated Cash Flow Cash Flow Statement of Statement of the the Group for Target Group for the year ended the period ended 31 March 2007 31 December 2007 HK$’000 HK$’000 NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS 5,154 42 CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 24,494 – CASH AND CASH EQUIVALENTS AT END OF YEAR 29,648 42 ANALYSIS OF BALANCES OF CASH AND CASH EQUIVALENTS Cash and bank balances 29,648 42	Unaudited Pro Forma Consolidated Cash Flow Statement of the Enlarged Group Pro forma for the year ended Sub-total adjustments 31 March 2007 HK$’000 HK$’000 Note HK$’000 5,196 (294,804 24,494 24,494 29,690 (270,310 29,690 (300,000 ) 1 (270,310	Unaudited Pro Forma Consolidated Cash Flow Statement of the Enlarged Group Pro forma for the year ended Sub-total adjustments 31 March 2007 HK$’000 HK$’000 Note HK$’000 5,196 (294,804 24,494 24,494 29,690 (270,310 29,690 (300,000 ) 1 (270,310
		(270,310

		(270,310

Notes:

Under HKFRS 3 Business Combinations (“HKFRS 3”), the Group will apply the purchase method to account for the Acquisition of the Target Group. In applying the purchase method, the identifiable assets, liabilities and contingent liabilities of the Target Group will be recorded on the consolidated balance sheet of the Group at their fair values at the date of completion. Any goodwill or discount arising on the acquisition will be determined as the excess of deficit of the purchase price to be incurred by the Group over the Group’s interests in the net fair value of the identifiable assets, liabilities and contingent liabilities of the Target Group at the date of completion. Negative goodwill resulting from the business combinations should be recognised immediately in the consolidated income statement.

The adjustments reflect the following:

The total consideration is HK$1,137,000,000 which is to be satisfied by the Company by HK$300,000,000 by cash and HK$837,000,000 by the issue of the convertible notes to Mr. Wang Hong, Chan JianJun and Zou QuanBo.

Issue of Convertible Notes_(note 1(v)) Cash(note 1(ii)) Cost of investment of completion of the Acquisition _Less:_Net assets of the Target Group Goodwill(note 1(i))_	HK$’000 837,000 300,000
	1,137,000 1,623
	1,135,377

– 117 –

APPENDIX IV

PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

(i) Goodwill of approximately HK$1,135,377,000 arising from the Acquisition of the Target Company was derived from the consideration of HK$1,137,000,000 less the net assets of the Target Group acquired amounted to approximately HK$1,623,000. For the purpose of preparing the Pro Forma Financial Information of the Enlarged Group, the carrying value of the net asset of the Target Group as per the Accountants’ Report as set out in Appendix II of the Circular is taken to be the fair value of the Target Group.
(ii) The adjustment of HK$300,000,000 represented the cash consideration, which comprised of HK$30,000,000, HK$120,000,000 and HK$150,000,000 pay to Mr. Wang Hong, Chen JianJun and Zou QuanBo respectively.
(iii) The adjustment of approximately HK$1,000 represented the elimination of the share capital of the Target Group.
(iv) The adjustment of approximately HK$92,076,000 represented (i) the equity component of the convertible notes of approximately HK$93,699,000 minus; (ii) the elimination of pre-acquisition reserves of the Target Group of approximately HK$1,623,000. Please also refer to note 1(v) for the details of the Convertible Notes.
(v) In accordance with Hong Kong Accounting Standards 32 “Financial Instrument: Disclosure and Presentation”, convertible notes should be separated as liability portion and equity portion. In preparing the Unaudited Pro Forma Financial Information, the Convertible Notes with its face value of approximately HK$837,000,000 has taken to be its fair value as if it was issued on 31 March 2007. The adjustment of approximately HK$743,301,000 represented the liability portion of the Convertible Notes based on the calculation of the discounted cash flow method at weighted average effective interest rate of 5.12% per annum in respect of a term of three years. Please refer to note 1(iv) for the details of the equity portion of the convertible notes.
The Group raised about HK$171,000,000 by means of a placing and subscription of 120,000,000 ordinary shares of HK$0.1 each which was announced by the Company on 11 December 2007. The proceeds was subsequently used as refundable deposit for the Acquisition. It contributed HK$12,000,000 and HK$159,000,000 to share capital and share premium respectively.
The adjustment of approximately HK$16,397,000 represented the deferred tax liabilities arising from the Convertible Notes.
In connection with the Acquisition, Convertible Notes in an aggregate amount of approximately HK$837,000,000 should be issued to Mr. Wang Hong, Chen JianJun and Zou QuanBo as part of the Consideration. Assuming the acquisition was completed on 1 April 2006. The imputed interest of Convertible Notes at weighted average effective interest rate of 5.12% per annum is HK$38,057,000.

This unaudited pro forma adjustment will have continuing income statement effect to the Enlarged Group, and the actual amount will vary according to the timing of the conversion and redemption of the whole or any part of the convertible notes and the applicable effective interest rates.

The adjustment of approximately HK$5,195,000 represented the sums of the adjustments of the deferred tax effect on the Convertible Notes in the pro forma income statement for the year ended 31 March 2007.
According to the Sale and Purchase Agreement dated 21 December 2007, the consideration of HK$1,137,000,000 included the shareholder’s loan of HK$10,026,000 as shown in the accounts of the Target Group.
Earnings per share

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

year.
Profit attributable to the equity holders of the Company (HK$’000)	32,211
Weighted average number of ordinary shares in issue (thousands)	3,043,355
Basic earnings per share (HK cents)	1.06

No diluted earnings per share for the year ended 31 March 2007 has been disclosed as the Company had potential ordinary shares in respect of the Convertible Notes note 1(v) which are anti-dilutive during the year.

– 118 –

APPENDIX V PROPERTY VALUATION OF THE ENLARGED GROUP

The following is the text of a letter, summary of values and valuation certificates, prepared for the purpose of incorporation in this circular received from BMI Appraisals Limited, an independent valuer, in connection with its valuations as at 31 December 2007 of the properties held, to be disposed and rented by the Group.

BMI Appraisals Limited 中和邦盟評估有限公司

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

26 February 2008

The Directors Rising Development Holdings Limited

Rooms 2004–2005, 20th Floor World Trade Centre No. 280 Gloucester Road Causeway Bay Hong Kong

Dear Sirs,

INSTRUCTIONS

We refer to your instructions for us to value the properties held, to be disposed and rented by Rising Development Holdings Limited (referred to as the “Company”) and/or its subsidiaries (hereinafter together referred to as the “Group”) located in Hong Kong. We confirm that we have carried out inspections, made relevant enquiries and obtained such further information as we consider necessary for providing you with our opinion of the market values of such properties as at 31 December 2007 (referred to as the “date of valuation”).

BASIS OF VALUATION

Our valuations of each concerned property have been based on the Market Value, which is defined as “the estimated amount for which a property should exchange on the date of valuation between a willing buyer and a willing seller in an arm’s-length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion.”

– 119 –

APPENDIX V PROPERTY VALUATION OF THE ENLARGED GROUP

PROPERTY CATEGORIZATION

In the course of our valuations, the portfolio of properties of the Group is categorized into the following groups:

– Group I Properties held by the Group in Hong Kong – Group II Properties to be disposed by the Group in Hong Kong – Group III Property rented by the Group in Hong Kong

VALUATION METHODOLOGY

In valuing the properties in Groups I and II, we have valued them on an open market basis by the Comparison Approach assuming sales in their existing states with the benefit of vacant possession and by making reference to comparable sales evidence as available in the relevant markets. Appropriate adjustments have then been made to account for the differences between the properties and the comparables in terms of age, time, location, floor level and other relevant factors.

We have attributed no commercial value to the property in Group III, which is rented by the Group, due either to the short-term nature of the lease or the prohibition against assignment or sub-letting or otherwise due to the lack of substantial profit rent.

TITLE INVESTIGATION

We have caused land search to be made at the relevant Land Registry and have been provided with extracts of title document. We have been advised by the Group that no further relevant document have been produced. However, we have neither examined the original document to verify ownership nor to ascertain the existence of any amendment, which do not appear on the extracts handed to us. All documents have been used for reference only.

VALUATION ASSUMPTIONS AND CONSIDERATIONS

Our valuations have also been made on the assumption that the properties are sold in the open market without the benefit of deferred terms contract, leaseback, joint venture, management agreement or any similar arrangement which would serve to affect the values of the properties. In addition, no account has been taken of any option or right of preemption concerning or affecting the sale of the properties and no forced sale situation in any manner is assumed in our valuations.

We have inspected the exterior and wherever possible, the interior of the properties included within the attached valuation certificates. During the course of our inspections, we did not note any serious defects. However, no structural surveys have been made and we are therefore unable to report as to whether the properties are free from rot, infestation or other defects. No tests were carried out on any of the services.

– 120 –

APPENDIX V PROPERTY VALUATION OF THE ENLARGED GROUP

We have relied to a considerable extent on the information provided by the Group and have accepted advice given to us by the Group in such matters as approvals or statutory notices, easements, tenure, particulars of occupancy, floor areas, identification of the properties and all other relevant matters.

We have not carried out detailed on-site measurements to verify the correctness of the floor areas in respect of the properties but have assumed that the floor areas shown on the documents handed to us are correct. Dimensions, measurements and areas included in the valuation certificates are based on information contained in the documents provided to us by the Group and are therefore approximations.

We have had no reason to doubt the truth and accuracy of the information provided to us by the Group. The Group has also advised us that no material facts have been omitted from the information, which would materially affect our ability to reach an informed view, and we have no reason to suspect that any material information has been withheld.

No allowance has been made in our valuations for any charges, mortgages or amounts owing on the properties valued or for any expenses or taxation which may be incurred in effecting a sale. Unless otherwise stated, it is assumed that the properties are free from encumbrances, restrictions and outgoings of an onerous nature, which could affect their values.

Our valuations have been prepared in accordance with the HKIS Valuation Standards on Properties (First Edition 2005) published by the Hong Kong Institute of Surveyors.

Our valuations have been prepared under the generally accepted valuation procedures and are in compliance all the requirements contained in Chapter 5 and Practice Note 12 to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited.

REMARKS

Unless otherwise stated, all money amounts stated are in Hong Kong Dollars (HK$).

Our summary of values and the valuation certificates are attached herewith.

Yours faithfully, For and on behalf of

BMI APPRAISALS LIMITED Dr. Tony C.H. Cheng Joannau W.F. Chan BSc, MUD, MBA (Finance), MSc (Eng), PhD (Econ), BSc. MSc. MRICS MHKIS RPS(GP) MHKIS, MCIArb, AFA, SCIFM, FCIM, MASCE, Director MIET, MIEEE, MASME, MIIE, MAIC Director

Notes:

Dr. Tony C.H. Cheng is a Chartered Surveyor who has about 15 years’ experience in valuations of properties in Hong Kong.

Ms. Joannau W.F. Chan is a Chartered Surveyor who has over 15 years’ experience in valuations of properties in Hong Kong.

– 121 –

APPENDIX V PROPERTY VALUATION OF THE ENLARGED GROUP

SUMMARY OF VALUES

Market Value in existing state Interest as at attributable No. Property 31 December 2007 to the Group HK$ Group I — Properties held by the Group in Hong Kong 1. 16th Floor, 58,000,000 100% World Tech Centre, No. 95 How Ming Street, Kwun Tong, Kowloon, Hong Kong 2. Car Parking Space Nos. L3, L8 & P5, 1,500,000 100% Hung Tai Industrial Buildling, Nos. 37-39 Hung To Road, Kwun Tong, Kowloon, Hong Kong Sub-total: 59,500,000 Group II — Properties to be disposed by the Group in Hong Kong 3. Flat E, 9th Floor, 3,500,000 100% On Ping Mansion, Lei King Wan, No. 62 Lei King Road, Site D, Sai Wan Ho, Hong Kong 4. Flat C, 4th Floor, 2,500,000 100% Block 26, Laguna City, No. 12 East Laguna Street, Cha Kwo Ling, Kwun Tong, Kowloon, Hong Kong Sub-total: 6,000,000	Value attributable to the Group as at 31 December 2007 HK$ 58,000,000 1,500,000
	59,500,000
	3,500,000 2,500,000
	6,000,000

– 122 –

APPENDIX V PROPERTY VALUATION OF THE ENLARGED GROUP

Market Value Value attributable in existing state Interest to the Group as at attributable as at No. Property 31 December 2007 to the Group 31 December 2007 HK$ HK$ Group III — Property rented by the Group in Hong Kong 5. Units 2004-2005, No Commercial Value 100% Nil

Units 2004-2005, No Commercial Value 100% Nil World Trade Centre (also known as The World Trade Centre Building), No. 280 Gloucester Road, Causeway Bay, Hong Kong Sub-total: No Commercial Value Nil Total: 65,500,000 65,500,000

– 123 –

APPENDIX V PROPERTY VALUATION OF THE ENLARGED GROUP

VALUATION CERTIFICATE

Group I — Properties held by the Group in Hong Kong

				Market Value
				in existing state
			Particulars of	as at
No.	Property	Description and Tenure	Occupancy	31 December 2007
				HK$
1.	16th Floor,	The property comprises 10	The property is vacant	58,000,000
	World Tech Centre,	industrial units of a 20-storey	and available for sale.
	No. 95	industrial building		(100% interest
	How Ming Street,	completed in 1992.		attributable to
	Kwun Tong,			the Group:
	Kowloon,	The total gross floor area of		58,000,000)
	Hong Kong	the property is
		approximately 2,212.75 sq.m.
	16,742/427,554th	(or about 23,818 sq.ft.) and
	parts of equal and	its total saleable area is
	undivided shares of	approximately 1,555.37 sq.m.
	and in the	(or about 16,742 sq.ft.).
	Remaining Portion
	of Kwun Tong	The property is held under
	Inland Lot No. 195	Government Lease for a term
		of 21 years renewed for a
		further term of 16 years
		commencing on 1 July 1960
		and is statutorily extended
		until 30 June 2047. The
		current Government rent
		payable for the property is
		an amount equal to 3% of the
		rateable value for the time
		being of the property per
		annum.

Notes:

The owner of the property is Rising Development Limited vide Memorial Nos. UB7823268 and UB7823269 dated 28 June 1999.
Rising Development Limited is a 100%-owned subsidiary of the Company.

– 124 –

APPENDIX V PROPERTY VALUATION OF THE ENLARGED GROUP

				Market Value
				in existing state
			Particulars of	as at
No.	Property	Description and Tenure	Occupancy	31 December 2007
				HK$
2.	Car Parking Space	The property comprises 2	As advised by the Group,	1,500,000
	Nos. L3, L8 & P5,	lorry parking spaces and 1	Car Parking Space Nos.
	Hung Tai Industrial	private car parking space of	L8 and P5 were let on a	(100% interest
	Buildling,	a 16-storey industrial	monthly basis at a total	attributable to
	Nos. 37-39	building including one	monthly rent of HK$8,100	the Group:
	Hung To Road,	basement level completed in	as at the date of	1,500,000)
	Kwun Tong,	1991.	valuation while the
	Kowloon,		remaining parking space
	Hong Kong	The property is held under	is available for lease.
		two Government Leases for
	16/3,850th parts of	terms of 21 years renewed
	equal and	for further terms of 15 years
	undivided shares of	commencing on 1 July 1961
	and in the Kwun	and statutorily extended
	Tong Inland Lot	until 30 June 2047. The
	Nos. 239 and 253	current Government rent
		payable for the property is
		an amount equal to 3% of the
		rateable value for the time
		being of the property per
		annum.

Notes:

The owner of the property is Rising Development Limited vide Memorial Nos. UB5435436, UB5045116 and UB5123242 dated 24 August 1992, 28 September 1991 and 23 November 1991.
Rising Development Limited is a 100%-owned subsidiary of the Company.

– 125 –

APPENDIX V PROPERTY VALUATION OF THE ENLARGED GROUP

Group II — Properties to be disposed by the Group in Hong Kong

				Market Value
				in existing state
			Particulars of	as at
No.	Property	Description and Tenure	Occupancy	31 December 2007
				HK$
3.	Flat E, 9th Floor,	The property comprises a	The property is vacant.	3,500,000
	On Ping Mansion,	residential unit of a 20-storey
	Lei King Wan,	residential building of a		(100% interest
	No. 62	residential development		attributable to
	Lei King Road,	known as “Lei King Wan”		the Group:
	Site D,	completed in 1988.		3,500,000)
	Sai Wan Ho,
	Hong Kong	The gross floor area of the
		property is approximately
	28/19,135th parts of	61.22 sq.m. (or about
	equal and	659 sq.ft.) and its saleable
	undivided shares of	area is approximately 51.65
	and in the Inland	sq.m. (or about 556 sq.ft.).
	Lot No. 8612
	(the “lot”)	The property is held under a
		Condition of Grant No. 11800
		for a term of 75 years
		commencing on 25 July 1975
		and renewable for a further
		term of 75 years. The current
		Government rent payable for
		the lot is HK$1,000 per
		annum.

Notes:

The owner of the property is CEPA Distribution Limited vide Memorial No. 05041801270078 dated 31 March 2005 at a consideration of HK$2,700,000.
The property is subject to an Agreement for Sale and Purchase in favour of Au Chung Ming and kwan Suk Mee (Joint Tenant) vide Memorial No. 07121902710074 dated 30 November 2007.
CEPA Distribution Limited is a 100%-owned subsidiary of the Company.

– 126 –

APPENDIX V PROPERTY VALUATION OF THE ENLARGED GROUP

Market Value in existing state Particulars of as at No. Property Description and Tenure Occupancy 31 December 2007 HK$ 4. Flat C, 4th Floor, The property comprises a As advised by the Group, 2,500,000 Block 26, residential unit on 4th floor the property was let for a Laguna City, of a 26-storey residential term of 1 year (100% interest No. 12 building of a development commencing on 1 July attributable to East Laguna Street, known as “Laguna City”, 2007 to 30 June 2008 at a the Group: Cha Kwo Ling, completed in 1991. monthly rent of HK$7,500 2,500,000) Kwun Tong, inclusive of rates and Kowloon, The gross floor area of the management fees as at Hong Kong property is approximately the date of valuation. 61.69 sq.m. (or about 7/52,361st parts of 664 sq.ft.) and its saleable equal and area is approximately 48.49 undivided shares of sq.m. (or about 522 sq.ft.). and in the New Kowloon Inland Lot The property is held under a No. 6055 Conditions of Exchange No. UB12004 for a term of 99 years less 3 days commencing on 1 July 1898 and statutorily extended until 30 June 2047. The current Government rent payable for the property is an amount equal to 3% of the rateable value for the time being of the property per annum.

Notes:

The owner of the property is CEPA Distribution Limited vide Memorial No. 06040701840047 dated 27 March 2006 at a consideration of HK$2,050,000.
Pursuant to a Preliminary Agreement for Sale and Purchase entered into between CEPA Distribution Limited and Kam Hung Industrial (HK) Co., Ltd. dated 14 December 2007, the former has transfer the ownership rights of the property to the latter at a consideration of HK$2,300,000.
CEPA Distribution Limited is a 100%-owned subsidiary of the Company.

– 127 –

APPENDIX V PROPERTY VALUATION OF THE ENLARGED GROUP

Group III — Property rented by the Group in Hong Kong

				Market Value
				in existing state
			Particulars of	as at
No.	Property	Description and Tenure	Occupancy	31 December 2007
				HK$
5.	Units 2004-2005,	The property comprises two	The property is occupied	No Commercial
	World Trade Centre	office units of a 39-storey	by the Group for office	Value
	(also known as	office building completed in	use.
	The World Trade	1975.		(100% interest
	Centre Building),			attributable to
	No. 280	The gross floor area of the		the Group:
	Gloucester Road,	property is approximately		Nil)
	Causeway Bay,	418.99 sq.m. (or about 4,510
	Hong Kong	sq.ft.).
		The property is rented by
		Rising Development Limited
		from Deluxe Plan Enterprises
		Limited under a tenancy
		agreement dated 28
		December 2007 for a term of
		2 years commencing on 6
		November 2007 and expiring
		on 5 November 2009 at a
		monthly rent of HK$137,550
		for office use, exclusive of
		service and management
		charges and rates.

Notes:

The property is owned by Deluxe Plan Enterprises Limited vide Memorial No. UB8365333 dated 4 April 2001.
Rising Development Limited is a 100%-owned subsidiary of the Company.

– 128 –

APPENDIX VI

VALUATION OF THE RIGHTS

The following is the text of a letter prepared for the purpose of incorporation in this circular received from BMI Appraisals Limited, an independent valuer, in connection with its valuation as at 31 October 2007 of the market value of 陝西省寧陝縣旬陽壩釩礦 .

BMI Appraisals Limited 中和邦盟評估有限公司

26 February 2008

The Directors

Rising Development Holdings Limited Rooms 2004-2005, 20th Floor World Trade Centre No. 280 Gloucester Road Causeway Bay Hong Kong

Dear Sirs,

INSTRUCTIONS

We refer to the instructions from Rising Development Holdings Limited (referred to as “the Company”) for us to provide our opinion on the market value of 陝西省寧陝縣旬陽壩釩礦 (vanadium mine located in Xunyangba County, Ningshan Town, Shanxi Province) (referred to as the “Asset”) as at 31 October 2007 (the “date of valuation”).

This report includes the background of the Asset, a brief industry overview, the basis of valuation and assumptions. It also explains the valuation methodology applied and presents our conclusion of value.

PURPOSE OF VALUATION

We understand that the purpose of our valuation is to express an independent opinion on the market value of the Asset as at 31 October 2007 for your acquisition reference purposes only.

BASIS OF VALUATION

Our valuation was carried out on the basis of market value. Market value is defined as “t he estimated amount for which an asset should exchange on the date of valuation between a willing buyer and a willing seller in an arm’s length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion ”.

We have adopted “HKIS Valuation Standards on Trade-related Business Assets and Business Enterprises” in preparing this valuation report.

– 129 –

APPENDIX VI

VALUATION OF THE RIGHTS

BACKGROUND OF THE ASSET

The Asset owned by 陝西久權礦業有限公司 (Shanxi Jiuquan Mining Company Limited) (referred to as “Jiuquan Mining”) is located in Xunyangba County, Ningshan Town, Shanxi Province in the People’s Republic of China (referred to as the “PRC”). The mining license was issued to Jiuquan Mining on 13 August 2005 with a 3-year validation period from August 2005 to August 2008. The mining project was proved by 寧陝縣發展計劃局 (The Development and Planning Bureau, Ningshan Town) on 15 December 2004.

The vanadium reserves of the Asset are 300,761 tonnes with an average grade of 1.13%. Detailed vanadium reserves of the Asset are as follows:

Quantity of Ore Metallic Quantity of V2O5 (Tonnes) (Tonnes) 26,671,518 300,761

BRIEF INDUSTRY OVERVIEW

Vanadium is indeed a 20th century miracle metal. As mankind strives to make products stronger, lighter, and safer and more fuel efficient there will be ever increasing demand for the metal and the need for significant increases in sustainable, cost effective vanadium production. Vanadium’s primary use is as a steel hardening agent. When used in the steelmaking process, vanadium increases the strength and corrosion resistance of steel. The demand for vanadium, therefore, is strongly dependent on steel production rates.

There are three major groups of vanadium producers.

1. Primary Producers:

Extract vanadium directly from vanadiferous titanomagnetite, mined only for this purpose.

Magnetite ore containing vanadium is crushed and ground, beneficiated by magnetic separation, roasted in a rotary kiln with a sodium flux until the vanadium is leached out.

“Backyard” producers in the PRC numbering more than 150 have sprung up in the last three years of high prices, extracting over 6,000 tonnes of vanadium from magnetite and stone coal in 2005. There is a growing pressure from the Chinese central government to close down these backyard operators as part of a programme to rationalise much of the country’s mineral and metal production and to reduce rampant pollution and energy consumption. Some closures have already been reported. The PRC imposed a new resource tax on primary vanadium mines in September 2006, in what the government said was an attempt to prevent “irrational” mining. The tax of US$1.50 per tonne of ore has added over US$1 per pound to the cost of vanadium pentoxide. A 10% export duty has also been applied to vanadium products.

– 130 –

APPENDIX VI

VALUATION OF THE RIGHTS

2. Co-Producers:

Process vanadiferous titanomagnetite primarily to make steel and produce a vanadium-containing slag as a co-product of steelmaking.

There is a popular myth that the co-producers get their vanadium as a free byproduct from the process of making steel. They are in fact, relatively high cost steel and high cost vanadium producers.

There are only five relatively small steel plants worldwide producing steel from these ores, because they are a very low grade source of iron (15% – 30% Fe) (Fe is the chemical symbol of iron), compared to the more common 60 – 68% Fe hematite. Plus the titanium content is harmful to steel-making plant, and the huge volume of slags generated compared to using high grade haematite, blows out energy costs.

Steel Production of Vanadium Co-Producers – 2006

				Annual
Steel and				Grude	In situ
Vanadium			In situ	Steel	Vanadium
Co-Producer	Region	Ore Type	Iron Grade	Production	Grade
					(%V2O5)
Chengde Xinxin	Hebei Province,	Vanadiferous	31% Fe	2.7 Mt	0.3%
	the PRC	Titanomagnetite
Panzhihua Iron and	Sichuan Province,	Vanadiferous	31% Fe	4.7 Mt	0.3%
Steel Group	the PRC	Titanomagnetite
Chusovoy	Perm region,	Vanadiferous	15% Fe	0.8 Mt	0.13%
(ex NTMK)	Russia	Titanomagnetite
Vanady Tula	Kachkanar, Russia	Vanadiferous	16% Fe	5.6 Mt	0.14%
(ex Nizhni Tagil)		Titanomagnetite
Highveld Steel &	Witbank, South	Vanadiferous	38% Fe	0.87 Mt	1.7%
Vanadium Corp	Australia	Titanomagnetite
New Zealand Steel	Waikato North	Vanadiferous	57% Fe	0.59 Mt	0.5%
(to Chengde)	Head,	Titanomagnetite
	New Zealand	sands
Total Vanadium Co-Producers steel output				15.26 Mt
Total World Steel output				1,240 Mt

Source : Vanadium Supply and Demand Trends, Michael Tamlin and Roderick J H Smith, PMA, MB Mar 2007

– 131 –

APPENDIX VI

VALUATION OF THE RIGHTS

3. Recovery:

Extract vanadium from wastes such as fly ash, oil residues or spent catalysts.

Vanadium catalysts used in petrochemical and chemical industries can be processed to remove the vanadium and other deposited metals once they have reached the end of their useful life. The burning of vanadium-containing fuel oil such as the Venezuelan product Orimulsion[®] produces a fly ash containing vanadium which can be treated. Coal stone in the PRC provides another source of vanadium raw materials. Processing many of these materials is usually complex and costly.

Following modest average annual growth of around 1% through the 1990s, world vanadium consumption has risen significantly since 2002, reflecting both higher world steel production and higher unit vanadium consumption as the share of high-strength steels in total steel output rises. Despite the set-back resulting from high prices in 2005, world demand for vanadium rose by 7.5% from 79,800 tonnes V2O5 equivalent in 2003 to a peak level of 98,900 tonnes in 2006.

The outlook for vanadium consumption through 2010 appears optimistic. World consumption may show short-term fluctuations in line with steel production, but is forecast to show underlying growth of 5–6% to reach 118,600 tonnes V2O5 equivalent in 2010. High-strength steels will continue to provide the main area of growth as increasing emphasis is placed on life-cycle costs in the construction industry, on reducing weight and improving fuel efficiency in the transport industry, and on the use of higherperformance materials to withstand aggressive environments in the oil and gas industry.

SOURCE OF INFORMATION

For the purpose of our valuation, we were furnished with the financial and operational data related to the Asset, which was provided by the senior management of the Company.

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

The business nature of the Asset;
The financial and operational information related to the Asset;
The specific economic environment and competition for the market in which the Asset is exposed to;

– 132 –

APPENDIX VI

VALUATION OF THE RIGHTS

Market-derived investment returns of similar assets; and
The financial and business risks related to the Asset, including the continuity of income and the projected future results.

SCOPE OF WORKS

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

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

VALUATION ASSUMPTIONS

Given the changing environment in which the Asset is exposed to, a number of assumptions had to be established in order to sufficiently support our concluded opinion of value of the Asset. The major assumptions adopted in our valuation were:

There will be no major changes in the existing political, legal, and economic conditions in the jurisdiction where the Asset is currently or will be exposed to, which will materially affect the revenues attributable to the Asset;
There will be no major changes in the current taxation law in the jurisdiction related to the Company, that the rates of tax payable remain unchanged and that all applicable laws and regulations will be complied with;
Exchange rates and interest rates will not differ materially from those presently prevailing;

– 133 –

APPENDIX VI

VALUATION OF THE RIGHTS

The financial projections in respect of the Asset were prepared on a reasonable basis, reflecting estimates that have been arrived at after due and careful consideration by the senior management of the Company; and
Economic conditions will not deviate significantly from economic forecasts.

VALUATION METHODOLOGY

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

The market approach provides indications of value by comparing the subject to similar assets that have been sold in the market.

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

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

We have considered that the income approach is not appropriate to value the Asset, as there are insufficient historical and forecasted financial data of the Asset. Moreover, the income approach involves adoption of much more assumptions than the other two approaches, not all of which can be easily quantified or ascertained. In the event of any such assumptions are found to be incorrect or unfounded, the valuation would be significantly affected. Besides, the cost approach is regarded inadequate in this valuation, as this approach does not take future growth potential of the Asset into consideration. Thus, we have determined that the market approach is the most appropriate valuation approach for this valuation.

REMARKS

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

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

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

– 134 –

APPENDIX VI

VALUATION OF THE RIGHTS

CONCLUSION OF VALUE

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

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

Based on our investigation and analysis outlined in this report, It is our opinion that the market value of the Asset as at 31 October 2007 was RMB1,580,000,000 (RENMINBI ONE THOUSAND FIVE HUNDRED AND EIGHTY MILLION ONLY) .

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

Yours faithfully, For and on behalf of BMI APPRAISALS LIMITED

Dr. Tony Cheng

BSc, MUD, MBA(Finance), MSc(Eng), PhD(Econ), MHKIS, MCIArb, AFA, SCIFM, FCIM, MASCE, MIET, MIEEE, MASME, MIIE, MAIC Director

Notes:

Dr. Tony Cheng is a member of the Hong Kong Institute of Surveyors (General Practice), a member of the American Society of Civil Engineers, a member of the American Society of Mechanical Engineers and a member of Institute of Industrial Engineers (U.K.). He has about 5 years’ experience in valuing similar assets or companies engaged in similar business activities as that of the Asset worldwide.

– 135 –

APPENDIX VII

GENERAL INFORMATION

1. RESPONSIBILITY STATEMENT

This circular includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Company. The Directors collectively and individually accept full responsibility for the accuracy of the information contained in this circular and confirm, having made all reasonable enquiries, that to the best of their knowledge and belief, there are no other facts the omission of which would make any statement herein misleading. This circular is for information purposes only and does not constitute an offer to acquire, purchase, or subscribe for or the solicitation of an offer to acquire, purchase or subscribe for any securities or an invitation to enter into an agreement to do any such things, nor is it calculated to invite any offer to acquire, purchase or subscribe for any securities.

2. SHARE CAPITAL OF THE COMPANY

As at the Latest Practicable Date, the authorised and issued share capital of the Company were as follows:

Shares Authorised 15,000,000,000 Shares Issued and fully paid or credited as fully paid: 3,636,340,000 Shares	HK$ 300,000,000

	72,726,800

All Shares currently in issue rank pari passu in all respects with each others, including, in particular, as to dividends, voting rights and return of capital. Other than 120,000,000 new shares issued by the Company (before subdivision) pursuant to the topup placing arrangement as disclosed on the Company’s announcement dated 11 December 2007 and since 31 March 2007 (being the date to which the latest published audited accounts of the Group were prepared) and up to the Latest Practicable Date, no new Shares have been issued by the Company.

There were no outstanding warrants, options or securities convertible into Shares as at the Latest Practicable Date.

The issued Shares are listed and traded on the main board of the Stock Exchange. No part of the issued share capital of the Company is listed on any other stock exchanges.

– 136 –

APPENDIX VII

GENERAL INFORMATION

3. DISCLOSURE OF INTERESTS

(a) Directors’ interests and share positions in the securities of the Company and its associated corporations

As at the Latest Practicable Date, the following Director had an interest or short position 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 required (i) to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests or short positions which they were taken or deemed to have under such provisions of the SFO); or (ii) pursuant to section 352 of the SFO, to be entered in the register referred to therein; or (iii) pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers contained in the Listing Rules to be notified to the Company and the Stock Exchange.

(I) Interests and short positions in the Shares, underlying Shares and debentures of the Company

		Number of ordinary	Number of ordinary
		shares held
				Percentage of
Name of		Personal	Corporate	the issued
Director	Capacity	interests	interests	share capital
Mr. Lai Leong	Beneficial owner	Nil	383,013,000	52.66%
	(Note 1)		(Note 2)

Notes:

383,013,000 Shares are owned by Oriental Day International Limited, a company incorporated in the British Virgin Islands.
Mr. Lai Leong is interested in 1,915,065,000 Shares upon the share subdivision of the Company becoming effective on 20 December 2007 while Mr. Lai Leong’s Shareholding percentage remained unchanged.
(II) Interests and short positions in the Shares, underlying Shares and debentures of associated corporations of the Company

				Percentage of
				the issued
				share capital
	Name of	Capacity and	Number of	of the
Name of	associated	nature of	issued ordinary	associated
Director	corporation	interest	shares held	corporation
Mr. Lai Leong	Oriental Day	Personal	1	100%
	International	beneficial
	Limited_(Note 1)_	owner

Note:

Oriental Day International Limited is a company incorporated in the British Virgin Islands.

– 137 –

APPENDIX VII

GENERAL INFORMATION

Save as disclosed above, none of the directors and chief executive of the Company or their associates had any interest or short position in the shares, underlying shares or debentures of the Company or any of its associated corporations that was required to be recorded pursuant to Section 352 of the SFO, or as otherwise notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Companies.

(b) Persons who have interests or short positions which are discloseable under Divisions 2 and 3 of Part XV of the SFO

As at the Latest Practicable Date, so far as was known to the Directors or chief executive of the Company, the following persons (other than the Directors or chief executive of the Company) had an interest or short position in the Shares or/and underlying Shares which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO or, who were, 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 member of the Group were as follows:

Interests in the Shares and underlying Shares

		Approximate percentage of
		issued capital as at
Name	Total	the Latest Practicable Date
Oriental Day	383,013,000	52.66%
International Limited	(Note 2)
(Note 1)
Mr. Wang Hong	298,928,570	8.22%
Mr. Zou QuanBo	1,494,642,850	41.10%
Mr. Chen JianJun	1,195,714,280	32.88%

Notes: 1. The entire issued share capital of Oriental Day International Limited is held and beneficially owned by Mr. Lai Leong, an Executive Director and chairman of the Company.
Oriental Day International Limited is interested in 1,915,065,000 Shares upon the Share subdivision of the Company becoming effective on 20 December 2007 while its shareholding percentage remained unchanged.

As at the Latest Practicable Date, save as disclosed above, so far as was known to the Directors, no other person (other than the Directors or chief executive of the Company) had, or was deemed or taken to have an interest or short position in the Shares or/and underlying Shares which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO or, who were, 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.

– 138 –

APPENDIX VII

GENERAL INFORMATION

(c) Since 31 March 2007 (being the date to which the latest published audited consolidated accounts of the Company were made up), none of the Directors or any proposed Director has had any interest, direct or indirect, in any assets which have been acquired or disposed of by or leased to any member of the Group, or which are proposed to be acquired or disposed of by or leased to any member of the Group.
(d) There was no contract or arrangement subsisting at the Latest Practicable Date in which any of the Directors is materially interested and which is significant in relation to the business of the Group.

4. SERVICE CONTRACTS

As at the Latest Practicable Date, there were no service contracts with the Company or any of its subsidiaries or associated companies in force for the Directors which:

were continuous contracts with a notice period of 12 months or more; or
were fixed term contracts with more than 12 months to run irrespective of the notice period.

5. LITIGATION

As at the Latest Practicable Date, none of the members of the Group was engaged in any litigation, claim or arbitration of material importance and there was no litigation, claim or arbitration of material importance known to the Directors to be pending or threatened by or against any member of the Group.

6. MATERIAL CONTRACTS

The following contracts (being contracts not entered into in the ordinary course of business of the Group) have been entered into by the members of the Group after the date of two years immediately preceding the date of this circular, and up to the Latest Practicable Date, and are or may be material:

a sale and purchase agreement dated 13 February 2006 and an assignment dated 27 March 2006 entered into by Chan Yuk Ying as the vendor and Cepa Distribution Limited (a wholly owned subsidiary of the Company) as the purchaser in relation to the acquisition of Flat C, 4th Floor, Block 26, Laguna City, No. 12 East Laguna Street, Kowloon at the consideration of HK$2,050,000.00.
a sale and purchase agreement dated 3 April 2007 entered into by Yue Da Enterprise Group (H.K.) Company Limited as the vendor and Cepa Distribution Limited (a wholly owned subsidiary of the Company) as the purchaser in relation to the acquisition of Office on Floor No. 12 (previously known as 11th Floor), Times Tower, Nos. 391 to 407, Jaffe Road, Hong Kong at the consideration of HK$9,800,000.00.

– 139 –

APPENDIX VII

GENERAL INFORMATION

a sale and purchase agreement dated 14 July 2007 entered into by Rising Development Limited (a wholly owned subsidiary of the Company) as the vendor and Kinyi Limited as the purchaser in relation to the sale of Workshop No. 2 on the 13th Floor, Hung Tai Industrial Building, Nos. 37-39, Hung To Road, Kowloon at the consideration of HK$1,900,000.00.
a provisional sale and purchase agreement dated 20 July 2007 entered into by Rising Development Limited (a wholly owned subsidiary of the Company) as the vendor and Ng Pui Cheung as the purchaser in relation to the sale of Flat B on the 9th Floor of Nos 12 & 12A, Austin Avenue & Nos. 86, 88, 90, 92, 94 & 96, Kimberley Road, Kowloon at the consideration of HK$2,250,000.00.
a sale and purchase agreement dated 22 October 2007 entered into by Cepa Distribution Limited (a wholly owned subsidiary of the Company) as the vendor and Jade Century Development Limited, as the purchaser in relation to the sale of 12th Floor, Times Tower, 391-407 Jaffe Road, Hong Kong at the consideration of HK$10,900,000.00.
a sale and purchase agreement dated 24 October 2007 entered into by Cepa Distribution Limited (a wholly owned subsidiary of the Company) as the vendor and Tang Hin Tak and Lai Mun Lan, as the purchaser in relation to the sale of Flat E on 12th Floor, Block 7, Sea Crest Villa, Phase 3, 18 Castle Peak Road, Tsing Lung Tau, New Territories at the consideration of HK$2,500,000.00.
a sale and purchase agreement dated 30 November 2007 entered into by Cepa Distribution Limited (a wholly owned subsidiary of the Company) as the vendor and Au Chung Ming and Kwan Suk Mee, as the purchaser in relation to the sale of Flat E on 9th Floor, On Ping Mansion, Site D, Lei King Wan, 62 Lei King Road, Sai Wan Ho, Hong Kong at the consideration of HK$3,400,000.00.
a placing agreement dated 10 December 2007 entered into by the Company, Oriental Day International Limited (a substantial Shareholder), Taifook Securities Company Limited and Cheong Lee Securities Company Limited in relation to the placing of 120,000,000 shares of the Company (before subdivision) owned by Oriental Day International Limited.
a top-up subscription agreement dated 10 December 2007 entered into by the Company and Oriental Day International Limited (a substantial Shareholder) in relation to the top-up subscription of 120,000,000 shares of the Company (before subdivision) by Oriental Day International Limited.
a sale and purchase agreement dated 27 December 2007 entered into by Cepa Distribution Limited (a wholly owned subsidiary of the Company) as the vendor and Kam Hung Industrial (H.K.) Company Limited, as the purchaser in relation to the sale of Flat C on 4th Floor, Block 26, Laguna City, 12 East Laguna Street, Cha Kwo Ling, Kwun Tong, Kowloon at the consideration of HK$2,300,000.00.
the Agreement.

– 140 –

APPENDIX VII

GENERAL INFORMATION

7. CONSENTS AND QUALIFICATIONS

The followings are the names and the qualifications of the professional advisers who have given opinions or advice which are contained or referred to in this document:

Name

Qualification

BMI Appraisals Limited

Valuer

Li, Tang, Chen & Co.

Certified Public Accountants

As at the Latest Practicable Date, none of BMI Appraisals Limited and Li, Tang, Chen & Co. had any beneficial interest in the share capital of any member of the Enlarged Group nor did any of them have any right, whether legally enforceable or not, to subscribe for or to nominate persons to subscribe for securities in any member of the Enlarged Group or have any interest, either directly or indirectly, in any assets which have been, since 31 March 2007, being the date to which the latest published audited consolidated accounts of the Group were made up, acquired or disposed of by or leased to or are proposed to be acquired or disposed of by or leased to any member of the Enlarged Group.

Each of BMI Appraisals Limited and Li, Tang, Chen & Co. has given and has not withdrawn its respective written letters of consent to the issue of this circular with the inclusion herein of references to its name in the form and context in which they respectively appear.

8. COMPETING INTERESTS

As at the Latest Practicable Date, to the best knowledge of the Directors, none of the Directors and their respective associates were considered to have any interests in businesses which compete or were likely to compete, either directly or indirectly, with the business of the Group, other than those business where the Directors were appointed as directors to represent the interests of the Company and/or the Group.

9. MISCELLANEOUS

The company secretary of the Company is Mr. Chiang Chi Kin, Stephen, who is qualified as a solicitor of the High Court of Hong Kong in 1998 and has over 10 years of experience in corporate and commercial law.
The qualified accountant of the Company is Mr. Lam Wing Chau who is an associate member of The Hong Kong Institute of Certified Public Accountants and a fellow member of the Association of Chartered Certified Accountants in the U.K.

– 141 –

APPENDIX VII

GENERAL INFORMATION

10. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be available for inspection during normal business hours (i.e. from 9:30 a.m. to 6:00 p.m. on Monday to Friday, and from 9:30 a.m. to 1:00 p.m. on Saturday) at the principal place of business of the Company in Hong Kong at Rooms 2004-2005, 20/F., World Trade Centre, 280 Gloucester Road, Causeway Bay, Hong Kong from 26 February 2008, the date of this circular up to and including 14 March 2008:

the memorandum and articles of association of the Company;
the annual report of the Company for the year ended 31 March 2007;
the interim report of the Company for the six months ended 30 September 2007;
the pro forma financial information of the Enlarged Group, the text of which is set out in Appendix IV to this circular;
the valuation reports in relation to the Rights and the property of the Enlarged Group prepared by BMI Appraisals Limited, the text of which are set out in Appendix V and VI respectively;
the letters of consent referred to under the paragraph headed “Consents and Qualifications” in this appendix;
a copy of the material contracts referred to in the paragraph headed “Material contracts” in this appendix; and
the circular dated 7 May 2007 issued by the Company in relation to the sales of shares in China BlueChemical Limited.

– 142 –

NOTICE OF THE SGM

==> picture [216 x 125] intentionally omitted <==

NOTICE OF SPECIAL GENERAL MEETING

NOTICE IS HEREBY GIVEN that a special general meeting of Rising Development Holdings Limited (the “ Company ”) will be held at Rooms 2004-2005, 20/F., World Trade Centre, 280 Gloucester Road, Causeway Bay, Hong Kong at 11:30 a.m. on 14 March 2008 for the purpose of considering and, if thought fit, passing, with or without modification, the following resolution as an ordinary resolution of the Company:

ORDINARY RESOLUTIONS

To consider and if thought fit, pass the following resolution as Ordinary Resolution No. 1:

“ THAT
1.1 the Agreement (as defined in the circular dated 26 February 2008 despatched to the shareholders of the Company (the “ Circular ”), a copy of which has been produced to the meeting and marked “A”, and initialled by the chairman of the meeting for the purpose of identification) a copy of which has been produced to the meeting and marked “B”, and initialled by the chairman of the meeting for the purpose of identification and the terms thereof be and are hereby approved, confirmed and ratified;
1.2 the acquisition of the Sale Shares (as defined in the Circular) by the Company on the terms set out in the Agreement be and is hereby approved;
1.3 the issue of the Convertible Notes (as defined in the Circular) in favour of each of the Vendors and/or their respective nominees, in each case on the terms set out in the Agreement, be and are hereby approved;
1.4 the issue and allotment by the Company of the Conversion Shares from time to time upon exercise of the conversion rights under the Convertible Notes be and are hereby approved;
1.5 all other transactions contemplated under the Agreement be and are hereby approved; and
for identification purpose only

– 143 –

NOTICE OF THE SGM

1.6 any one director of the Company be and is hereby authorised to do all such acts and things as he in his sole and absolute discretion deems necessary, desirable or expedient to implement, give effect to and/or complete the Agreement and the transactions contemplated thereunder, including without limitation the issue of the Convertible Notes, the issue and allotment of the Conversion Shares from time to time upon exercise of the conversion rights under the Convertible Notes, and, where required, any amendment of the terms of the Agreement and/or the Convertible Notes as required by, or for the purposes of obtaining the approval of, relevant authorities or to comply with all applicable laws, rules and regulations.”

By Order of the Board of Rising Development Holdings Limited Lai Leong Chairman

Hong Kong, 26 February 2008

Registered office:

Clarendon House 2 Church Street Hamilton HM11 Bermuda

Head office and principal place of

business in Hong Kong:

Rooms 2004-2005, 20/F. World Trade Centre 280 Gloucester Road Causeway Bay Hong Kong

Notes:

A member of the Company entitled to attend and vote at the above meeting is entitled to appoint one or more proxies to attend and, including on a poll, to vote in his/her stead. A proxy need not be a member of the Company.
In order to be valid, the form of proxy, together with the power of attorney or other authority (if any) under which it is signed or a notarially certified copy of that power of attorney or authority, must be deposited with the Company’s branch share registrar in Hong Kong, Tricor Tengis Limited, at 26/F, Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong, not less than 48 hours before the time fixed for holding the meeting or any adjournment thereof.

As at the date of this notice, the executive directors of the Company are Mr. Lai Leong, Mr. Lee Yuk Lung and Mr. Kong Shan, David and the independent non-executive directors of the Company are Mr. Fok Ho Yin, Thomas, Mr. Tso Hon Sai, Bosco and Mr. Tsui Ching Hung.

– 144 –

AI assistant

Pacific Basin Shipping Limited — Proxy Solicitation & Information Statement 2008

50538_rns_2008-02-25_a9763f3e-c413-4546-8384-9245f2901519.pdf

VERY SUBSTANTIAL ACQUISITION

CONTENTS

DEFINITIONS

DEFINITIONS

VERY SUBSTANTIAL ACQUISITION

INTRODUCTION

THE AGREEMENT

1. The Parties and the Date

2. Asset to be Acquired

3. The Consideration and its Basis

Consideration

Adjustment to Consideration

PROVIDED THAT:

Basis of Consideration

4. Conditions Precedent of the Sale and Purchase Agreement

THE INFORMATION ABOUT THE COMPANY, THE VENDORS AND THE TARGET GROUP

1. Principal Activities of The Company

2. Principal Activities of the Target Group

Information on the Target Company

REASONS FOR THE ACQUISITION

FINANCIAL IMPACT OF THE ACQUISITION

FINANCIAL AND TRADING PROSPECT OF THE ENLARGED GROUP

Investment Business

Fur Skin Business

Manufacture and Sales of Fur Garments

Business Diversification

CHANGES IN SHAREHOLDING STRUCTURE

Dilution effect on Shareholders

RISKS ASSOCIATED WITH THE ACQUISITION

IMPLICATIONS OF THE LISTING RULES

SGM

PROCEDURE TO DEMAND A POLL AT GENERAL MEETING

RECOMMENDATION

GENERAL

1. SUMMARY OF AUDITED FINANCIAL INFORMATION OF THE GROUP

CONSOLIDATED INCOME STATEMENT

CONSOLIDATED BALANCE SHEET

2. AUDITED FINANCIAL STATEMENTS OF THE GROUP

CONSOLIDATED INCOME STATEMENT

CONSOLIDATED BALANCE SHEET

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

CONSOLIDATED CASH FLOW STATEMENT

BALANCE SHEET

NOTES TO FINANCIAL STATEMENTS

1. CORPORATE INFORMATION

2. BASIS OF PREPARATION AND CONSOLIDATION

3. IMPACT OF NEW AND REVISED HONG KONG FINANCIAL REPORTING STANDARDS

4. IMPACT OF ISSUED BUT NOT YET EFFECTIVE HONG KONG FINANCIAL REPORTING STANDARDS

5. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Revenue recognition:

Subsidiaries:

Associate:

Impairment of assets:

Related parties:

Property, plant and equipment:

Investment properties:

Leases:

Investments and other financial assets:

Financial assets at fair value through profit or loss:

Loans and receivables:

Available-for-sale financial assets:

Impairment of financial assets:

Assets carried at amortised cost:

Assets carried at cost:

Available-for-sale financial assets:

Derecognition of financial assets:

Interest-bearing loans and borrowings:

Derecognition of financial liabilities:

Derivative financial instruments:

Financial guarantee contracts:

Income tax:

Employee benefits:

Inventories:

Foreign currencies:

Equity share-based payment transactions:

Cash and cash equivalents:

Provisions:

Pacific Basin Shipping Limited Proxy Solicitation & Information Statement 2008