Pioneer Global Group Limited

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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

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

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

(Incorporated in Bermuda with limited liability)

(Stock Code : 00224)

MAJOR TRANSACTION FORMATION OF A JOINT VENTURE

15 June 2004

	Page
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
LETTER FROM THE BOARD
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
The Agreement dated 13 May 2004 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
Reason for investment in MSR Co. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
Major transaction and approval by shareholders . . . . . . . . . . . . . . . . . . . . . . . .	7
General information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8
APPENDIX I – VALUATION REPORT . . . . . . . . . . . . . . . . . . . . . . . . . . .	9
APPENDIX II – FINANCIAL INFORMATION . . . . . . . . . . . . . . . . . . . . . .	15
APPENDIX III – GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . .	47

−i −

DEFINITIONS

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

“Agreement”

the shareholders’ agreement amongst Pioneer-SPV, Morgan Stanley-SPV and Pamfleet-SPV entered into on 13 May 2004 relating to the affairs of the MSR Co.;

“associates”
has the meaning as defined in the Listing Rules;
“closely allied group of shareholders”
(1) Forward Investments Inc., wholly owned by The YCK Trust of which Madam Y. C. Koo, the mother of Rossana Wang Gaw, is a beneficiary, owns 174,277,635 shares (23.27%) of the Company;
(2) Asset Plus Investments Ltd., wholly owned by Winfred Ho and Elsa Wang Ho, the brother-in-law and sister of Rossana Wang Gaw, owns 68,076,076 shares (9.09%) of the Company;
(3) Intercontinental Enterprises Corporation, wholly owned by The KYC 1991 Trust, of which Rossana Wang Gaw is a beneficiary, owns 123,148,701 shares (16.44%) of the Company;
(4) Vitality Holdings Limited, wholly owned by Rossana Wang Gaw, owns 15,309,732 shares (2.04%) of the Company;
(5) Rising Crescent Enterprises Limited, wholly owned by The RGK Trust, of which Kenneth Gaw (the son of Rossana Wang Gaw) is a beneficiary, owns 26,457,774 shares (3.53%) of the Company;
(6) Fortune South China Limited, wholly owned by Kenneth Gaw, owns 8,122,000 shares (1.08%) of the Company;
(7) Kenneth Gaw owns 1,734,750 shares (0.23%) of the Company;

“Company”

Pioneer Global Group Limited, a company incorporated in Bermuda with limited liability the shares of which are listed on the Stock Exchange;

−1 −

DEFINITIONS

“Directors”	the directors of the Company;
“Group”	the Company and its subsidiaries;
“HK$”	Hong Kong dollars, the lawful currency of Hong Kong;
“Kowloon City Plaza”	the land and property known as Kowloon City Plaza, 128
	Carpenter Road, Kowloon City, Kowloon, Hong Kong
	and erected on New Kowloon Inland Lot No.6056;
“Latest Practicable Date”	10 June 2004, being the latest practicable date prior to the
	printing of this circular for ascertaining certain
	information contained in this circular;
“Listing Rules”	The Rules Governing the Listing of Securities on the
	Stock Exchange;
“Morgan Stanley”	Morgan Stanley, a global financial services firm with its
	shares listed on the New York Stock Exchange;
“Morgan Stanley-SPV”	MSR Grand Slam Project Holdings Ltd., a company
	incorporated in the Cayman Islands, which is an
	independent third party not connected with any directors,
	chief executive or substantial shareholders of the
	Company or its subsidiaries or their respective
	associates;
“MSR Co.”	MSR Grand Slam Project Ltd., a company incorporated
	with limited liability on 6 May 2004 in the Cayman
	Islands;
“Paliburg Plaza”	the land and property known as Paliburg Plaza, 68 Yee
	Wo Street, Causeway Bay, Hong Kong and erected on
	Section K of Inland Lot No.1408;
“Pamfleet-SPV”	Pamfleet Investments Limited, a company incorporated
	in the British Virgin Islands, which is an independent
	third party not connected with any directors, chief
	executive or substantial shareholders of the Company or
	its subsidiaries or their respective associates;
“Pioneer-SPV”	Wealth Instrument Inc., a company incorporated in the
	British Virgin Islands with limited liability which is a
	wholly owned subsidiary of the Company;

−2 −

DEFINITIONS

“Properties”	Paliburg Plaza and Kowloon City Plaza;
“SFO”	Securities and Futures Ordinance (Chapter 571 of the
	Laws of Hong Kong);
“Shareholders”	holders of shares;
“shares(s)”	ordinary share(s) of HK$0.10 each in the issued share
	capital of the Company;
“Stock Exchange”	The Stock Exchange of Hong Kong Limited;
“substantial shareholders”	has the meaning as defined in the Listing Rules.

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LETTER FROM THE BOARD

PIONEER GLOBAL GROUP LIMITED

(Incorporated in Bermuda with limited liability)

(Stock Code : 00224)

Executive Directors: Rossana Wang Gaw (Chairman) Goodwin Gaw (Vice Chairman) Kenneth Gaw (Managing Director) Jane Kwai Ying Tsui

Registered office: Canon’s Court 22 Victoria Street Hamilton HM 12 Bermuda

Independent non-executive Directors: Dr. Charles Wai Bun Cheung, J.P. The Hon. Bernard Charnwut Chan Arnold Tin Chee Ip

Principal place of business and head office: Suites 01-03, 30/F, Office Tower Convention Plaza 1 Harbour Road Wanchai, Hong Kong

15 June 2004

To Shareholders

Dear Sir/Madam

MAJOR TRANSACTION FORMATION OF A JOINT VENTURE

INTRODUCTION

By an announcement dated 25 May 2004, the Company announced that, on 13 May 2004, Pioneer-SPV, a wholly owned subsidiary of the Company, entered into an agreement with Morgan Stanley-SPV and Pamfleet-SPV to participate in a joint venture by becoming shareholders of MSR Co. by subscribing new shares.

As the consideration for the formation of joint venture represents more than 25% of the market capitalization of the Group for the last five trading days prior to the date of the Agreement, the Agreement constitutes a major transaction of the Company under Rule 14.06(3) of the Listing Rules.

The Listing Rules also provide that a major transaction must be made conditional on approval by the Shareholders and that such approval may be obtained either by convening a

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LETTER FROM THE BOARD

general meeting or by a written shareholders’ approval obtained from a closely allied group of shareholders who together hold more than 50% in nominal value of the securities giving the right to attend and vote at such general meeting.

A written shareholders’ approval has been obtained from a closely allied group of shareholders who together hold more than 50% in nominal value of the securities giving the right to attend and vote at general meeting to approve the transaction and such shareholders and their respective associates have no interest in the Agreement and the transaction. To the best of the Directors’ information, knowledge and belief, having made all reasonable enquiries, no shareholder shall be required to abstain from voting if the Company were to convene a general meeting for the approval of the transaction. A shareholders’ meeting will therefore not be convened for the purpose of obtaining shareholders’ approval.

The purpose of this circular is to provide shareholders with details of the Agreement, general information on the nature of transaction in relation to the Agreement and certain information of the Group in compliance with the requirements of Chapter 14 of the Listing Rules.

THE AGREEMENT DATED 13 MAY 2004

Parties

a. Pioneer-SPV, a wholly owned subsidiary of the Company.
b. Morgan Stanley-SPV, a company incorporated in the Cayman Islands. It is wholly owned by Morgan Stanley Real Estate Funds which are Morgan Stanley sponsored equity funds.
c. Pamfleet-SPV, a company incorporated in the British Virgin Islands, is an investment holding company.

On 13 May 2004, Pioneer-SPV, Morgan Stanley-SPV and Pamfleet-SPV entered into an agreement to own interests of 5%, 90% and 5% respectively of MSR Co. by way of subscription of new shares.

Morgan Stanley-SPV and Pamfleet-SPV and their respective ultimate beneficial owners are independent third parties not connected with any directors, chief executive or substantial shareholders of the Company or its subsidiaries or their respective associates.

The Agreement was conditional upon the completion of the transaction by MSR Co. to acquire Paliburg Plaza and Kowloon City Plaza on or before 31 May 2004.

Completion

On 13 May 2004, the Parties became shareholders of MSR Co. by subscription of new shares. The shareholding of MSR Co. held by Pioneer-SPV is 5% upon completion.

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LETTER FROM THE BOARD

Joint Venture and its business

MSR Co. is a company incorporated by Morgan Stanley Real Estate Funds with limited liability on 6 May 2004 in the Cayman Islands. On 14 May 2004, MSR Co. completed a transaction to purchase Paliburg Plaza and Kowloon City Plaza in Hong Kong. The vendor of the Properties is independent and not connected with any directors, chief executive or substantial shareholders of the Company or its subsidiaries or their respective associates.

The objective of MSR Co. is to act as a holding company for the Properties, which are intended to be held as long-term investments. Professional asset and property management companies, which are independent and not connected with any directors, chief executive or substantial shareholders of the Company or its subsidiaries or their respective associates, have been engaged on 14 May 2004 by MSR Co. to supervise and operate the rental business of the Properties.

Paliburg Plaza is a 24-floor, 217,625 square feet office tower with a retail podium located at 68 Yee Wo Street, Causeway Bay, Hong Kong. It is adjacent to the Regal Hotel. Occupancy rate is over 90%.

Kowloon City Plaza is a 640,000 square feet shopping center, located at 128 Carpenter Road, Kowloon City, Kowloon, Hong Kong. It comprises three basement floors, six upper floors and two floors of car-parking. Occupancy rate is over 75%.

Paliburg Plaza and Kowloon City Plaza have been valued to be HK$950 million and HK$1,300 million respectively as of 7 June 2004. Details of valuation are provided in Appendix I of this circular.

MSR Co. has neither intention nor commitment of future purchases of properties.

Board representation

The board of MSR Co. will consist of 5 directors. Pioneer-SPV is entitled to appoint one director to the board of MSR Co.. Pamfleet-SPV and Morgan Stanley-SPV are entitled to appoint one and three directors respectively.

Consideration and commitment by Pioneer-SPV

Pursuant to the terms of the Agreement, the capital of MSR Co. is principally funded by shareholder loans in accordance with their respective shareholding. The considerations paid in cash by the Group comprised share capital of nominal values of US$10 and shareholder loan of HK$39 million at book value on 13 May 2004. Pro-rata capital contribution and shareholder loans were also made by Morgan Stanley-SPV and Pamfleet-SPV respectively. All shareholder loans are unsecured bearing no interest and shall be repaid on or before May 2011. The Group also committed an additional HK$6 million shareholder loan (unsecured bearing no interest and shall be repaid on or before May 2011) to MSR Co. on a needed basis.

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LETTER FROM THE BOARD

Pioneer-SPV’s shares in MSR Co. are not permitted to be transferred within the first 24 months from the date of the Agreement. Thereafter, transfer is allowed subject to certain right of first refusal, tag along and drag along provisions. The Agreement provides that if Morgan Stanley-SPV disposes of its shares in MSR Co. to an independent third party, Pioneer-SPV has the right to dispose of its shares in MSR Co. on the same terms of the disposal. At the same time, Morgan Stanley-SPV also has the right to require Pioneer-SPV to dispose of its shares in MSR Co. on the same terms of the disposal.

REASON FOR INVESTMENT IN MSR CO.

The principal business activities of the Group consist of property investment and management, investment in securities and information services provision. Paliburg Plaza is a prime office building located in the heart of Causeway Bay on Yee Wo Street, adjacent to the Regal Hotel. Kowloon City Plaza has the potential to become an exciting retail, food & beverages and entertainment destination in the region of Kowloon City. The Directors consider that the investment, the terms of which had been negotiated on an arm’s length basis, is fair and reasonable and is in the best interest of the Company and the Shareholders as a whole. The Group’s investment in MSR Co. shall be accounted for as a long term investment security in the books.

MAJOR TRANSACTION AND APPROVAL BY SHAREHOLDERS

The Agreement constitutes a major transaction of the Company under Rule 14.06(3) of the Listing Rules and must be made conditional on shareholders’ approval. Pursuant to Rule 14.44(2), a written shareholders’ approval has been obtained from a closely allied group of shareholders who together hold more than 50% in nominal value of the securities giving the right to attend and vote at general meeting to approve the transaction such shareholders and their respective associates have no interest in the Agreement and the transaction. The Company confirms that the closely allied group of shareholders or their ultimate beneficial owners and their respective associates are aware that they must not deal in the Company’s securities before information relating to this transaction is made available to the public. No shareholder or his respective associates have any interest in the transaction. No shareholder shall be required to abstain from voting if the Company were to convene a general meeting for the approval of the transaction. A shareholders’ meeting will therefore not be convened for the purpose of obtaining shareholders’ approval.

Pursuant to Rule 14.67(4), a circular issued in relation to an acquisition constituting a major transaction must contain an accountant’s report on the company being acquired provided that, where any company in question will not become a subsidiary of the Company, the Stock Exchange may be prepared to relax this requirement. Since MSR Co. is not a subsidiary of the Group and its investment in MSR Co. shall be accounted for as a long term investment security, no additional information will be provided by an accountant’s report. The Group therefore requested the Stock Exchange to relax the requirement of an accountant’s report.

−7 −

LETTER FROM THE BOARD

GENERAL INFORMATION

To the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, Morgan Stanley-SPV and Pamfleet-SPV and their respective ultimate beneficial owners are third parties independent of the Company and connected persons of the Company and do not hold any shares in the Company.

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

Yours faithfully For and on behalf of Pioneer Global Group Limited Kenneth Gaw Managing Director

−8 −

VALUATION REPORT

APPENDIX I

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7th June, 2004

The Directors

Pioneer Global Group Limited 30/F, Office Tower Convention Plaza 1 Harbour Road Wanchai Hong Kong

Dear Sirs,

In accordance with your instructions to value the property interests as per the attached valuation certificate which are going to be acquired by the Company, we confirm that we have carried out inspections, made relevant enquiries and obtained such information as we consider necessary for the purpose of providing you with our opinion of the open market values of these property interests as at today’s date.

Our valuations represent our opinion of the open market values. We define open market value as “the best price at which the sale of an interest in a property might reasonably be expected to have been completed unconditionally for cash consideration on the date of valuation assuming:

(a) a willing seller;
(b) that, prior to the date of valuation, there had been a reasonable period (having regard to the nature of the property and the state of the market) for the proper marketing of the interest, for the agreement of price and terms and for the completion of the sale;
(c) that the state of the market, level of values and other circumstances were, on any earlier assumed date of exchange of contracts, the same as on the date of valuation;

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VALUATION REPORT

APPENDIX I

(d) that no account is taken of any additional bid by a prospective purchaser with a special interest; and
(e) that both parties to the transaction had acted knowledgeably, prudently and without compulsion.”

Our valuations have been made on the assumption that the owners sell the properties on the open market in their existing state without the benefit of deferred terms contract, leaseback, joint venture, management agreement or any similar arrangement which could serve to increase or decrease the value of such property interests.

In valuing the property interests, we have adopted the investment approach which capitalises the current rent receivable from the existing tenancy and the potential reversionary market rent of the property interest taking into account the latest market rental comparable in the open market.

We have relied to a very considerable extent information provided by the Company and have accepted advice given to us on such matters as planning approvals, statutory notices, easements, tenure, particulars of occupancy, lettings, rental income and revenue, joint venture agreements, site and floor areas etc.

We have caused searches to be made at the Land Registry and in some instances we have been provided with extracts from title documents relating to those properties. We have not, however, searched the original documents to verify ownership or to verify the existence of any lease amendments that do not appear on the copies handed to us. All documents and leases have been used for reference only. All dimensions, measurements and areas included in the valuation certificate are only approximation.

We have inspected the exterior and, where possible, the interior of all properties. However, we have not carried out any structural survey nor have we inspected woodwork or other parts of the structures that are covered, unexposed or inaccessible. We are therefore unable to confirm whether the properties are or are not free of rot, infestation or any other defects. No tests were carried out on any of the services.

We have had no reason to doubt the truth and accuracy of the information provided to us by the Company. We were also advised by the Company that no material factors have been omitted from the information supplied. We consider that we have been provided with sufficient information to reach an informed view, and have no reason to suspect that any material information has been withheld.

−10 −

VALUATION REPORT

APPENDIX I

No allowance has been made in our report for any charges, mortgages or amounts owing on the properties nor 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 outgoing of any onerous nature which could affect their values.

We enclose herewith our summary of valuation and valuation certificate.

Yours faithfully, For and on behalf of KNIGHT FRANK Catherine Cheung MHKIS MRICS RPS(GP) Assistant Director

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VALUATION REPORT

APPENDIX I

SUMMARY OF VALUATION

Property 1. Paliburg Plaza No. 68 Yee Wo Street Causeway Bay Hong Kong 2. Kowloon City Plaza No. 128 Carpenter Road Kowloon City Kowloon Total:	Capital value in existing state as at 7th June, 2004 HK$950,000,000 HK$1,300,000,000
	HK$2,250,000,000

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VALUATION REPORT

APPENDIX I

VALUATION CERTIFICATE

Property

Description and tenure

Particulars of occupancy

Capital value in existing state as at 7th June, 2004

Paliburg Plaza No. 68 Yee Wo Street Causeway Bay Hong Kong
Section K of Inland Lot No. 1408.

The property comprises a 16-storey grade A office building (including 2 mechanical floors) and a 7-level shopping and car parking podium (plus 1 level of basement) erected on a site having a total registered site area of about 18,591 sq.ft., with frontages to Yee Wo Street, Pennington Street and Irving Street.

The property is let to various tenants with 63,323 sq.ft. remain vacant and yields a total monthly rental of about HK$2,700,000, exclusive of rates, management fee, airconditioning charges, licence fees and income from car parking spaces. Monthly licence fees for antennae receivable was about HK$46,300.

HK$950,000,000

The shopping and car parking podium of the property (also known as Phase I) was completed in about 1984 and has a gross area of approximately 77,657 sq.ft. retail/restaurant floor spaces on the ground to third levels whilst the remaining levels accommodate approximately 107 car parking spaces.

Car parking spaces were let on hourly and monthly basis yielding a total revenue of HK$2,200,000 for the period from June 2003 to May 2004.

The office portion of the property (also known as Phase II) was completed in about 1989 and comprises a gross area of about 139,968 sq.ft..

The property is held under a Government lease for a term of 999 years from 25th December, 1884.

The Government rent for the property is HK$4.34 per annum.

Notes:

(1) The registered owner of the property is Treasure Spot Investments Limited.
(2) The property is subject to a Modification Letter dated 27th May, 1986 and a Deed of Restrictive Covenant dated 13th May, 1992.
(3) The property is subject to a Debenture and Share Charge dated 29th September, 2000 in favour of Commercial Plaza Securitisation Limited.
(4) The property is subject to a Deed of Charge and Assignment dated 29th September, 2000 in favour of DB Trustees (Hong Kong) Limited.

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VALUATION REPORT

APPENDIX I

Property

Description and tenure

Particulars of occupancy

Capital value in existing state as at 7th June, 2004

Kowloon City The property comprises a Plaza 7-storey (plus 3 levels of No. 128 Carpenter basement) shopping/ Road entertainment complex Kowloon City completed in 1993 on a Kowloon site with site area of about 63,734 sq.ft.. New Kowloon Inland Lot The property No. 6056. accommodates retail/ shopping spaces of various sizes from portion of 2nd basement to portion of 5th floor, two mini-cinemas, 500 car parking spaces and 36 loading/unloading spaces on the roof portion of 5th floor, portion of 2nd basement and the whole of 3rd basement. The property has a total lettable floor area of about 283,796 sq.ft..

The property is let to various tenants at various terms with 121,420 sq.ft. remain vacant and yields a total monthly rent of HK$4,480,000, exclusive of rates, management fees, airconditioning charges, turnover rent, licence fees and income from exhibition but inclusive of carparking spaces. Monthly licence fees for antennae receivable amount to HK$170,000. Exhibition, Movable Sales Booth, Lightbox & Signage income receivable is about HK$71,000.

HK$1,300,000,000

The property is held under the Conditions of Sale No. 12078 for a term expiring on 30th June, 2047.

The annual Government rent is HK$1,000 up to 30th June, 1997 and thereafter at an amount equal to 3 percent. of the then rateable value of the lot.

Notes:

(1) The registered owner of the property is Good Focus Holdings Limited.
(2) The property is subject to an Occupation Permit dated 27th May, 1993 and a Letter of Compliance dated 25th August, 1993.
(3) The property is subject to a Debenture and Share Charge dated 29th September, 2000 in favour of Commercial Plaza Securitisation Limited.
(4) The property is subject to a Deed of Charge and Assignment dated 29th September, 2000 in favour of DB Trustees (Hong Kong) Limited.

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FINANCIAL INFORMATION

APPENDIX II

1. INDEBTEDNESS

At the close of business on 30 April 2004, being the latest practicable date for the purpose of this indebtedness statement, the Group had outstanding borrowings from banks of approximately HK$51.7 million consisting of short term secured loans. The Group also had contingent liabilities of approximately HK$0.4 million comprising guarantee for payment of drawn banking facilities to an associate of the Group amounting to approximately HK$0.2 million and guarantee given to a banker in lieu of utility deposits amounting to approximately HK$0.2 million.

Save as aforesaid and apart from intra-group liabilities, actual and contingent, none of the companies of the Group had outstanding at the close of business on 30 April 2004 indebtedness in respect of any mortgages, charges or debentures, loan capital, long-term loans, bank overdrafts, other loans, debt securities or other similar indebtedness, or hire purchase commitments, finance lease commitments, guarantees or other material contingent liabilities.

Foreign currency amounts have been translated into Hong Kong dollars at the approximate rates of exchange prevailing at the close of business on 30 April 2004.

2. WORKING CAPITAL

The Directors are of the opinion that taking into account the Group’s available facilities from financial institutions and internal resources, the Group has sufficient working capital for its immediate requirements.

3. MATERIAL ADVERSE CHANGE

The Directors are not aware of any material adverse change in the financial or trading position of the Group since 31 March 2003, being the date up to which the latest published audited consolidated financial statements of the Group were made.

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FINANCIAL INFORMATION

APPENDIX II

4. EXTRACT OF THE FINANCIAL STATEMENTS

The following audited consolidated financial statements of the Group are extracted from the annual reports of the Group for the years ended 31 March 2003 and 2002.

CONSOLIDATED PROFIT & LOSS ACCOUNT

For the year ended 31 March

2003 HK$’000 42,264	2002 HK$’000 49,256	2001 HK$’000 63,913 (8,428) (1,823) (25,595) (1,121) (6,976) (43,943) 19,970 – (13,557) 6,413 (9,220) 2,883 76 (1,210) (1,134) 1,329 195 0.03
(5,462) (1,966) (18,151) (1,021) (6,191) (32,791) 9,473 7,891 (12,144) 5,220 (2,692) 1,860 4,388 (2,254) 2,134 897	(3,970) (4,200) (25,063) (1,113) (6,875) (41,221) 8,035 7,032 (26,444) (11,377) (586) (41,293) (53,256) (2,126) (55,382) 1,844	(8,428 (1,823 (25,595 (1,121 (6,976
		(43,943
		19,970 – (13,557
		6,413 (9,220 2,883
		76 (1,210
		(1,134 1,329
3,031 0.40	(53,538) (7.11)

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FINANCIAL INFORMATION

APPENDIX II

CONSOLIDATED BALANCE SHEET

At 31 March

2003 HK$’000 242,197 47,119 153,783 108,456 5,061 –	2002 HK$’000 252,802 41,613 114,970 108,456 4,242 –	2001 HK$’000 221,636 – 121,788 147,211 23,967 6,630 521,232 7,278 – 75,520 82,798 12,370 1,123 817 (14,310) 68,488 589,720 – (5,358) 584,362 75,267 509,095 584,362
556,616 6,810 20,396 53,919 81,125 15,207 64,400 1,144 (80,751) 374 556,990 (21,600) (1,241)	522,083 7,529 16,456 62,088 86,073 12,378 33,623 992 (46,993) 39,080 561,163 (22,800) (2,517)	521,232
		7,278 – 75,520
		82,798
		12,370 1,123 817
		(14,310
		68,488
		589,720 – (5,358
534,149	535,846
74,898 459,251	74,948 460,898	75,267 509,095
534,149	535,846

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FINANCIAL INFORMATION

APPENDIX II

BALANCE SHEET

At 31 March

2003 HK$’000 488,031 –	2002 HK$’000 487,661 –	2001 HK$’000 499,276 6,630 505,906 1,111 – 61,236 62,347 665 – – (665) 61,682 567,588 75,267 492,321 567,588
488,031 617 15,834 51,035 67,486 630 31,200 17 (31,847)	487,661 327 11,447 58,474 70,248 645 31,200 – (31,845)	505,906
		1,111 – 61,236
		62,347
		665 – –
		(665
35,639 523,670	38,403 526,064
74,898 448,772	74,948 451,116	75,267 492,321
523,670	526,064

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FINANCIAL INFORMATION

APPENDIX II

CONSOLIDATED CASH FLOW STATEMENT

For the year ended 31 March

Cash flows from operating activities Profit/(loss) before taxation Exchange adjustment Share of net losses of associates Net (profit)/loss on disposal of assets less impairment provisions Claims paid in respect of investments Unclaimed dividend declared by subsidiary reversed Depreciation and amortisation Provision for long service payments Interest income Interest expenses Investment income – listed – unlisted Decrease in debtors, advances and prepayments Increase in creditors and accruals Cash generated from operations Hong Kong profits tax (paid)/refunded Overseas profits tax paid Net cash inflow from operating activities	2003 HK$’000 4,388 (29) 4,253 (1,860) – – 1,021 700 (3,704) 2,692 (1,571) (429) 1,235 905 7,601	2002 HK$’000 (53,256) 316 19,412 41,293 – – 1,113 140 (1,878) 586 (3,384) (429) 316 239 4,468	2001 HK$’000 76 (173) 13,557 (2,883) (793) (239) 1,121 618 (5,382) 9,220 (5,313) (313) 14,234 13,656 37,386 (839) (12,288) 24,259
	(316) (288)	435 (955)	(839 (12,288
	6,997	3,948

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FINANCIAL INFORMATION

APPENDIX II

2003 HK$’000 6,997	2002 HK$’000 3,948	2001 HK$’000 24,259 5,382 5,129 497 – (916) 43 (64,300) 1,131 (7,668) 6,140 (14,125) – (68,687) 163,079 (812) (9,220) – (120) – (21,298) 131,629 87,201 (12,567) – (237) 74,397 75,520 (1,123) 74,397
3,458 949 1,051 2,459 (161) 3 (18,768) 945 (33,528) 12,595 (17,613) 5,850	1,868 3,151 662 – (43,725) 301 (20,415) 210 (1,080) 50,925 (63,300) 390	5,382 5,129 497 – (916 43 (64,300 1,131 (7,668 6,140 (14,125 –
(42,760)	(71,013)
– – (2,692) (157) (379) (1,200) –	– – (586) (976) (144) 22,800 1,200	163,079 (812 (9,220 – (120 – (21,298
(4,428)	22,294
(40,191) 29,665 1,219 26	(44,771) 74,397 – 39	87,201 (12,567 – (237
(9,281)	29,665
53,919 (63,200)	62,088 (32,423)	75,520 (1,123
(9,281)	29,665

−20 −

FINANCIAL INFORMATION

APPENDIX II

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the year ended 31 March

Notes Total equity at 1 April Exchange adjustment of: – associates 17 – subsidiaries 17 Deficit on revaluation of investment properties Net losses not recognised in the profit and loss account Profit/(loss) for the year Goodwill included in reserves written off Shares repurchased Total equity at 31 March	2003 HK$’000 535,846 1,946 153 (9,700) (7,601) 3,031 3,030 (157) 534,149	2002 HK$’000 584,362 (59) 691 (11,292) (10,660) (53,538) 16,658 (976) 535,846

−21 −

FINANCIAL INFORMATION

APPENDIX II

NOTES TO FINANCIAL STATEMENTS

For the year ended 31 March 2003

1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Basis of Preparation of Financial Statements

These financial statements are prepared under historical cost convention as modified by the revaluation of investment properties and the valuation to fair value of other investments, and in accordance with accounting principles generally accepted in Hong Kong including Statements of Standard Accounting Practice (“SSAP”) and Interpretations issued by the Hong Kong Society of Accountants, and with the disclosure requirements of the rules governing the listing of securities on The Stock Exchange of Hong Kong Limited and of the Hong Kong Companies Ordinance.

In the current year, the Group has adopted the following new or revised SSAPs effective for accounting periods commencing on or after 1 April 2002:

SSAP 1 (Revised) – Presentation of financial statements SSAP 11 (Revised) – Foreign currency translation SSAP 15 (Revised) – Cash flow statements SSAP 34 – Employee benefits

These SSAPs prescribe new accounting measurement and disclosure practices. The major effects on the Group’s accounting policies and on the amounts disclosed in these financial statements of those SSAPs which have had a significant effect on the financial statements, are summarized as follows, and certain comparative figures have been restated to conform with the current year’s presentation.

SSAP 1 prescribes the basis for the presentation of financial statements and sets out guidelines for the structure and minimum requirements for the content thereof. The principal impact of the revision of this SSAP is that a consolidated statement of changes in equity is now presented in place of the consolidated statement of recognized gains and losses that was previously required.

SSAP 11 prescribes the basis for the translation of foreign currency transactions and financial statements. The principal impact of the revision of this SSAP on the consolidated financial statements is that the profit and loss accounts of overseas subsidiaries and associates are now translated to Hong Kong dollars at the weighted average exchange rates for the year, whereas previously they were translated at the exchange rates at the balance sheet date. The adoption of the revised SSAP 11 has had no material effect on the financial statements.

SSAP 15 prescribes the revised format for the cash flow statement. The principal impact of the revision of this SSAP is that the consolidated cash flow statement now presents cash flows under three headings, cash flows from operating, investing and financing activities, rather than the five headings previously required. In addition, cash flows from overseas subsidiaries arising during the year are now translated to Hong Kong dollars at the exchange rates at the dates of the transactions, or at an approximation thereto, whereas previously they were translated at the exchange rates at the balance sheet date.

SSAP 34 prescribes the recognition and measurement criteria to apply to employee benefits, together with the required disclosures in respect thereto. This SSAP has had no material effect on amounts previously reported in the prior year’s financial statements.

(b) Consolidation

The consolidated financial statements incorporate the financial statements of the Company and its subsidiaries made up to 31 March each year together with the Group’s share of the net assets and post-acquisition results of the associated companies using the equity method of accounting.

(c) Goodwill

Goodwill arising on the acquisition of subsidiaries and associates represents the excess of the cost of the acquisition over the Group’s share of the fair values ascribed to the identifiable assets and liabilities as at the date of acquisition.

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FINANCIAL INFORMATION

APPENDIX II

In accordance with SSAP 30, goodwill arising on acquisition occuring on or after 1 April 2001 is recognised in the consolidated balance sheet as an asset and amortised on the straight-line basis over its estimated useful life.

Goodwill arising on acquisitions previously written off to reserves in the year prior to 1 April 2001 remains eliminated against reserves with subsequent review of impairment.

(d) Subsidiaries

A subsidiary is an entity over which the Company has direct or indirect control. In the case of limited companies, control means the continuing ability to exercise more than half of the voting rights or to appoint a majority of the directors. In the case of partnerships, control means the continuing ability to exercise more than half of the voting rights or to appoint the general partner.

The Company’s interests in subsidiaries are stated at cost less provision for impairment losses.

(e) Associates

An associate is an entity, other than a subsidiary, over which the Group has the ability to exercise significant influence, including participation in financial and operating policy decisions.

Investments in associates are stated in the consolidated balance sheet at the Group’s share of the net assets less provision for impairment losses and in the balance sheet of the Company at cost less provision for impairment losses.

(f) Fixed Assets and Depreciation

(1) Investment properties

Properties which are intended to be held for long-term rental income purposes are classified as investment properties. Investment properties are revalued annually by independent professional valuers on an open market value basis. Changes in the value of investment properties are dealt with in the investment properties valuation reserve. If the total of this reserve is insufficient to cover a deficit on a portfolio basis, the excess of the deficit is charged to the profit and loss account. On disposal of a revalued investment property, the relevant revaluation surplus or deficit is transferred to the profit and loss account.

(2) Other fixed assets

Other fixed assets are stated at cost less depreciation less provision for impairment losses.

(3) Depreciation

Depreciation is calculated to write off the cost or valuation of assets over their estimated useful lives on the following bases:

Investment properties Nil

Other assets 10-30% p.a. reducing balance method

(g) Investment Securities

Investment securities are securities which are intended to be held on a continuous basis, for example for strategic reasons or to cement commercial relationships.

Investment securities are stated at cost less provision for impairment losses.

(h) Other Investments

Other investments are securities, other than investments in subsidiaries, associates and investment securities, the accounting policies for which are disclosed above. Other investments intended by the directors to be held for more than one year are classified as non-current assets and other investments intended by the

−23 −

FINANCIAL INFORMATION

APPENDIX II

directors to be held for less than one year are classified as current assets. Other investments are stated at fair value as at the balance sheet date, those listed on a stock exchange being based on the quoted market price of each investment at the balance sheet date, and those unlisted being stated at fair value as estimated by the directors. Changes in fair value are recognised in the profit and loss account as they arise.

(i) Impairment of Assets

At each balance sheet date, the Group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. An impairment loss is recognised as an expense immediately, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.

Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in prior years. A reversal of an impairment loss is recognised as income immediately, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.

(j) Operating Leases

Leases whereby substantially all the rewards and risks of ownership of assets remain with the leasing company are considered as operating leases. Rental payable and receivable under operating leases are accounted for on a straight line basis over the respective periods of the leases.

(k) Foreign Currencies

Transactions in foreign currencies during the period are translated at exchange rates ruling at transaction dates. Monetary assets and liabilities in foreign currencies and the financial statements of overseas subsidiaries and associates are translated into Hong Kong Dollars at exchange rates ruling at the balance sheet date.

Differences on foreign currency translation are dealt with in the profit and loss account except that differences arising from the translation of overseas subsidiaries and associates are taken directly to the exchange reserve.

On consolidation, the profit and loss accounts of overseas subsidiaries and associates are translated to Hong Kong dollars at the weighted average exchange rates for the year, and their balance sheets are translated to Hong Kong dollars at the exchange rates at the balance sheet date. The resulting translation differences are included in the exchange reserve.

For the purpose of the consolidated cash flow statement, the cash flows of overseas subsidiaries are translated to 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.

The main exchange rates used at the balance sheet date are:

US$1.00 = HK$7.80 (2002: HK$7.80) Baht 100 = HK$18.19 (2002: HK$17.89)

(l) Deferred Taxation

Provision is made for deferred tax using the liability method in respect of timing differences which are expected with reasonable probability to crystallise in the foreseeable future.

(m) Revenue Recognition

(1) Rental income

Rental income is recognised on a straight line basis over the periods of the leases.

−24 −

FINANCIAL INFORMATION

APPENDIX II

(2) Rendering of services

Services income is recognised when the services are rendered.

(3) Dividend income

Dividend income from listed investments is recognised when the share price of the investment goes ex-dividend. Dividend income from unlisted investments is recognised when the Group’s right to received payment is established.

(4) Interest income

Interest income is recognised on a time proportion basis.

(5) Sales of investments

Profits and losses on sales of investments are recognised when the transaction is completed and represent the difference between the estimated net proceeds and the carrying amount of the investments.

(n) Employee Benefits

(1) Retirement scheme

The Group participates in a defined contribution mandatory provident fund retirement benefits scheme in compliance with the Mandatory Provident Fund Schemes Ordinance. The assets of this scheme are held separately from those of the Group and administered independently. The Group’s contributions are recognised in the profit and loss account when incurred.

(2) Long service payments

Certain of the Group’s employees have completed the required number of years of service in order to be eligible for long service payments under the Employment Ordinance in the event of termination of their employment, including retirement. The Group is liable to make such payments in the event that such a termination of employment meets the circumstances specified in the Employment Ordinance.

The Group has had and continues to maintain a provision in respect of probable future long service payments expected to be made. The provision is based on an estimate of future payments which have been earned by the employees, including executive directors, from their service to the Group, net of the Group’s employer contributions to the mandatory provident fund scheme.

(3) Share option scheme

The Group operated a share option scheme, details of which are provided in note 22. Upon the exercise of share options, no charge is recorded in the profit and loss account. The resulting shares issued are recorded by the Company as additional share capital at the nominal value of the shares, and the excess of the exercise price per share over the nominal value of the shares is recorded by the Company in the share premium account. Options which are cancelled prior to their exercise date, or which lapse, are deleted from the register of outstanding options.

2) SEGMENT INFORMATION

Segment information is presented on a primary reporting basis by business segment.

Segment revenue, expenses, results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis to that segment. Unallocated items mainly comprise corporate, financing expenses and non-operating items shown below.

−25 −

FINANCIAL INFORMATION

APPENDIX II

Segment capital expenditure is the total cost incurred during the period to acquire segment assets (both tangible and intangible) that are expected to be used for more than one period.

Turnover from external customers is after elimination of inter-segment turnover. The amount eliminated attributable to Investments is HK$11,795,000 (2002: HK$16,163,000).

No geographical analysis is provided this year as less than 10% of the Group’s turnover, less than 10% of the consolidated profit of the Group and less than 10% of the Group’s net assets are outside Hong Kong.

Business Segments

Segment turnover Segment result Unallocated corporate expenses Operating profit Share of profits and (losses) of associates – Listed – Unlisted Finance costs Net profit/(loss) on disposal of assets less impairment provisions Taxation Minority interests Net profit/(loss) Segment assets and liabilities Segment assets Investment in associates: – Listed – Unlisted Consolidated total assets Segment liabilities Unallocated corporate liabilities Consolidated total liabilities Other information Capital expenditure Depreciation	Property Investments Information Technology 2003 2002 2003 2002 2003 2002 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 27,200 26,541 5,704 5,690 9,360 17,025 8,981 7,995 5,496 5,455 (3,866) (4,088) – – 7,891 7,032 – – (12,144) (25,936) – – – (508) 258,454 267,607 175,500 177,988 2,885 5,978 – – 47,119 41,613 – – 153,783 114,970 – – – – (64,786) (33,250) (31,311) (31,291) (4,463) (3,602) 116 43,450 17 90 28 185 621 749 123 163 277 201	Consolidated 2003 2002 HK$’000 HK$’000 42,264 49,256 10,611 9,362 (1,138) (1,327) 9,473 8,035 7,891 7,032 (12,144) (26,444) (2,692) (586) 1,860 (41,293) (2,254) (2,126) 897 1,844 3,031 (53,538) 436,839 451,573 47,119 41,613 153,783 114,970 637,741 608,156 (100,560) (68,143) (1,791) (1,650)* (102,351) (69,793) 161 43,725 1,021 1,113	Consolidated 2003 2002 HK$’000 HK$’000 42,264 49,256 10,611 9,362 (1,138) (1,327) 9,473 8,035 7,891 7,032 (12,144) (26,444) (2,692) (586) 1,860 (41,293) (2,254) (2,126) 897 1,844 3,031 (53,538) 436,839 451,573 47,119 41,613 153,783 114,970 637,741 608,156 (100,560) (68,143) (1,791) (1,650)* (102,351) (69,793) 161 43,725 1,021 1,113
		* 10,611 (1,138) 9,473 7,891 (12,144) (2,692) 1,860 (2,254) 897	9,362 (1,327
			8,035 7,032 (26,444 (586 (41,293 (2,126 1,844
		3,031
		436,839 47,119 153,783 637,741 (100,560) (1,791) (102,351)	451,573 41,613 114,970 608,156 (68,143 (1,650 (69,793
		161 1,021

Segment results and liabilities and unallocated corporate expenses and liabilities for the year ended 31 March 2002 have been reclassified to conform with the current year’s presentation following an internal review of allocation of overheads and liabilities.

−26 −

FINANCIAL INFORMATION

APPENDIX II

3) PROFIT/(LOSS) BEFORE TAXATION

(a) Charging Borrowing costs for interest expenses on bank loans & overdrafts Auditors’ remuneration Depreciation and amortisation Exchange losses Provision for long service payments to employees Contributions to mandatory provident fund Rental payments under non-cancellable leases (b) Crediting Share of results of listed associate Share of results of unlisted associates Rental income from investment properties less direct outgoings Listed investment income Unlisted investment income Interest income	2003 HK$’000 2,692 246 1,021 49 700 378 3,192 7,891 (12,144) (4,253) 19,149 1,571 429 3,704	2002 HK$’000 586 275 1,113 298 140 138 2,071 7,032 (26,444) (19,412) 19,366 3,384 429 1,878

(c) Net profit/(loss) on disposal of assets less impairment provisions

Net profit on disposal of other investments Loss on disposal of fixed assets Gain on disposal of investments in unlisted associates Gain on forfeiture of deposit relating to an unlisted associate (note 21(c)) Unclaimed liabilities written back Unrealised (decrease)/increase in fair value of other investments – listed – unlisted Impairment losses – Goodwill in respect of a subsidiary – Goodwill in respect of an unlisted associate – Provision for unlisted associates – Recovery of (provision for) receivables, debtors and advances	2003 HK$’000 124 (131) 452 2,161 – (162) (292) – (3,030) (3,112) 5,850 1,860	2002 HK$’000 820 (77) – – 1,505 24 (16,884) (14,500) (2,158) (1,600) (8,423) (41,293)

−27 −

FINANCIAL INFORMATION

APPENDIX II

4) TAXATION

Group Current provision Hong Kong Overseas Over provision in prior year Hong Kong Listed associate, overseas taxation	2003 HK$’000 450 306 –	2002 HK$’000 522 246 (73
	756 1,498	695 1,431
	2,254	2,126

Hong Kong profits tax has been provided at the rate of 16% (2002: 16%) on the estimated Hong Kong source assessable profits for the year. Overseas tax in respect of the Group and the listed associate has been provided at the applicable rates in the countries in which the tax is levied.

In respect of deferred taxation, the Group has not made provision for potential liabilities representing taxation in the event of future disposal of certain properties amounting to HK$1,630,000 (2002: HK$1,500,000). This liability has not been provided for because it is not the present intention of the directors that the Group disposes of these properties.

5) PROFIT/(LOSS) ATTRIBUTABLE TO SHAREHOLDERS

The loss of the Company is HK$2,237,000 (2002: Loss of HK$40,548,000) and is included in determining the net profit attributable to shareholders in the consolidated profit and loss account.

6) EARNINGS/(LOSS) PER SHARE

Earnings per share is calculated on profit attributable to shareholders amounting to HK$3,031,000 (2002: Loss of HK$53,538,000) and on the weighted average number of 749,036,972 shares in issue during the year (2002: on the weighted average number of 752,468,545 shares in issue during the year). No diluted earnings or loss per share have been presented for the years ended 31 March 2003 and 31 March 2002 as the exercise prices of the share options granted by the Company were higher than the fair value per share at the balance sheet date.

7) DIRECTORS’ AND SENIOR MANAGEMENT’S EMOLUMENTS

(a) Directors’ Emoluments

(1) Details of Directors’ remuneration charged to the Group’s profit and loss account are set out below:

Fees Basic salaries, housing and other allowances and benefits in kind Contributions to mandatory provident fund	2003 HK$’000 210 6,916 34 7,160	2002 HK$’000 150 7,630 36
		7,816

−28 −

FINANCIAL INFORMATION

APPENDIX II

The number of directors fell within emoluments bands as follows:

HK$ Nil–1,000,000 1,000,001–1,500,000 2,500,001–3,000,000 3,000,001–3,500,000	2003 5 – 2 – 7	2002 5 – 1 1
		7

(2) Share Options to Executive Directors

The Company granted share options to executive directors, details of which are provided in note 22.

(b) Other Senior Management’s Emoluments

(1) During the year, the five highest paid individuals included four directors (2002: four directors), details of whose emoluments are included above. The details of the remuneration of the remaining one (2002: one) highest paid individual are set out below:

Salaries, allowances and benefits in kind Contributions to mandatory provident fund	2003 HK$’000 1,236 12 1,248	2002 HK$’000 1,441 12
		1,453

The remuneration of the individual fell within the band of HK$1,000,001–HK$1,500,000.

(2) Share Options to employees

The Company granted share options to employees, details of which are provided in note 22.

−29 −

FINANCIAL INFORMATION

APPENDIX II

8) FIXED ASSETS

Investment Properties HK$’000 241,044 9,540	Other Assets HK$’000 – 12,078	Total HK$’000 241,044 21,618 262,662 161 (328) 97 (11,600) 250,992 9,860 1,021 (194) 8 (1,900) 8,795 242,197 252,802 2002 HK$’000 71,400 159,300 8,444 239,144 7,950 1,590 9,540 248,684
250,584 – – 89 (11,600)	12,078 161 (328) 8 –	262,662 161 (328 97 (11,600
239,073	11,919
1,900 – – – (1,900)	7,960 1,021 (194) 8 –	9,860 1,021 (194 8 (1,900
– 239,073 248,684	8,795 3,124 4,118 2003 HK$’000 69,000 152,000 8,533 229,533
	7,950 1,590 9,540	7,950 1,590
		9,540
	239,073

−30 −

FINANCIAL INFORMATION

APPENDIX II

Investment properties have been valued as follows:

a) Properties in Hong Kong as at 31 March 2003 by AA Property Services Limited, professional valuers, on an open market value basis.
b) Properties in Thailand as at 31 March 2002 by Nexus Property Consultants Company Limited, professional valuers, on an open market value basis. An updated valuation has not been obtained as the directors consider that any revaluation difference would not be significant to these financial statements.
c) The other properties which are stated at cost, have not been valued as the directors consider that any revaluation difference would not be significant to these financial statements.

Certain properties outside Hong Kong are registered in the names of nominees.

Other assets comprised of furniture and fixtures and motor vehicles.

9) LISTED ASSOCIATE

At cost Attributable post acquisition reserves Exchange reserve Increase in fair value Share of net assets Market value	2003 HK$’000 38,471 5,812 1,841 995 47,119 40,570	2002 HK$’000 38,471 2,645 – 497
		41,613

		37,632

Particulars of the listed associate are as follows:

							Country of	Class of
						Main activity	incorporation	shares held
Siam	Food	Products	Public	Company	Limited	Canned fruits	Thailand	Ordinary
						for exports

The Group holds 14.31% (2002: 14.31%) of the ordinary share capital of Siam Food Products Public Company Limited (“Siam Food”) which is listed on the Stock Exchange of Thailand, and it accounts for this investment as an associate on the ground that the Group exercises significant influence.

In the opinion of the directors the Group exercises significant influence over Siam Food following the appointment of Mr. Kenneth Gaw, the Group’s managing director, as a director of Siam Food and his continuing activity in that appointment. Furthermore the Group is the largest single shareholder in Siam Food. Significant influence is considered to have commenced for financial statements purposes on 1 April 2001.

−31 −

FINANCIAL INFORMATION

APPENDIX II

Siam Food draws up its audited financial statements to 31 December of each year and it publishes unaudited financial information quarterly. The currency of its financial statements is the Thai Baht. Financial information summarized from published sources is as follows:

Result for the year ended 31 March 2003: Turnover Profit before the following items Prior period adjustments Share of result of associated company and a joint venture Profit before taxation Taxation Net profit for the year Balance sheet as at 31 March 2003: Property, plant and equipment and plantation Associated company and joint venture Other non-current assets Inventories Other current assets Current liabilities Represented by: Issued share capital, share premium and legal reserve Retained earnings Shareholders’ funds at 31 March 2003	2003 Baht ’000 2,140,110	2002 Baht ’000 1,717,046 195,988 – 59,268 255,256 (55,910) 199,346 706,879 530,217 73,922 1,311,018 618,153 274,249 (360,659) 1,842,761 601,352 1,241,409 1,842,761
	236,281 (12,434) 59,412 283,259 (57,401)	195,988 – 59,268
		255,256 (55,910
	225,858
	960,901 540,757 25,595 1,527,253 572,748 395,147 (532,113)	706,879 530,217 73,922
		1,311,018 618,153 274,249 (360,659
	1,963,035
	600,769 1,362,266	601,352 1,241,409
	1,963,035

Equity accounting requires, inter alia, that as at the date of acquisition the cost of the investment is compared with the fair values of the underlying net assets; in this case it was determined that the excess of the Group’s share of the book value of Siam Food’s net assets over the cost of the investment was represented by a fair value difference ascribed collectively to Siam Food’s property, plant, equipment and capitalized plantation cost.

The fair value difference at the date Siam Food became an associate was HK$4,974,000.

The directors consider it reasonable to amortise the fair value difference of HK$4,974,000 over a 10 year period effective 1 April 2001 so that each year HK$497,400 is included in the Group’s share of Siam Food’s net profit. However, the Group’s accounting policy on impairment of assets will be applied to this amount in accordance with SSAPs issued by the Hong Kong Society of Accountants.

−32 −

FINANCIAL INFORMATION

APPENDIX II

A reconciliation from Siam Food’s profit to the Group’s attributable share of profit for year ended 31 March 2003 follows:

Siam Food’s profit before taxation as above Group’s share before adjustment, translated into HK$ at 2003: 0.1824 (2002: 0.1789) Add: Fair value increment for the year Group’s share of profit	2003 Baht ’000 283,259 2003 HK$’000 7,393 498 7,891	2002 Baht ’000 255,256

		2002 HK$’000 6,535 497
		7,032

10) UNLISTED ASSOCIATES

At cost Goodwill written off Impairment loss Exchange reserves Attributable post acquisition losses Share of net assets Amount due from associates	2003 HK$’000 135,661 (5,188) (4,712) 46 (60,051)	2002 HK$’000 112,243 (5,188 (1,600 (59 (44,007
	65,756 88,027	61,389 53,581
	153,783	114,970

Particulars of unlisted associates are as follows:

(a) Associates held by Group

			Percentage	Effective
		Country of	of ordinary	Group
Name of company	Main activity	incorporation	shares held	percentage
Easy Group (BVI) Holdings	Investment	British Virgin	28	28
Ltd.*		Islands
Global Gateway, L.P.	Telecom	United States	20	20
	Infrastructure
Grand Prospect Enterprise	Inactive	Hong Kong	50	50
Limited
Grandsworth Pte. Ltd.*	Investment	Singapore	50	50
iShipExchange Corporation*	e-procurement	Cayman Islands	21	12
	solutions
	providers

−33 −

FINANCIAL INFORMATION

APPENDIX II

				Percentage	Effective
			Country of	of ordinary	Group
	Name of company	Main activity	incorporation	shares held	percentage
	iShipExchange Limited	e-procurement	Hong Kong	21	12
		platform
		services
		agent
	Strand Hotels International	Hotels	British Virgin	28	28
	Limited (the hotels operate		Islands
	in Myanmar)
	Winman Investment Limited	Real Estate	Hong Kong	35	35
(b)	Associate held by the Company
				Percentage	Effective
			Country of	of ordinary	Group
	Name of company	Main activity	incorporation	shares held	percentage
	Tidefull Investment Limited*	Investment	Liberia	50	50

Except as indicated, the principal countries of operation of the associates are the same as that of their incorporation.

operates in Hong Kong

(c) Additional information in respect of three major associates held by the Group as at 31 March 2003 is provided as follows.

(i) Global Gateway, L.P. (“Global Gateway”)

The Group holds 20% equity interest of Global Gateway, L.P.. The principal activities of Global Gateway, L.P. are telecom infrastructure and related service.

(ii) Tidefull Investment Limited (“Tidefull”)

The Group holds 50% equity interest of Tidefull Investment Limited. The principal activity of Tidefull Investment Limited is its investment holding of 28% in Chely Well Limited, a company incorporated in Hong Kong with its principal activity of property investment in Mainland China.

(iii) Grandsworth Pte. Ltd. (“Grandsworth”)

The Group holds 50% equity interest of Grandsworth Pte. Ltd. The principal activity of Grandsworth Pte. Ltd. is its investment holding of approximately 10% in Dusit Thani Public Company Limited, a listed company in Thailand.

−34 −

FINANCIAL INFORMATION

APPENDIX II

The extracts of the financial information of the above three associates based on their unaudited consolidated financial statements as at 31 March 2003 are set out below:

Global Gateway 2003 2002 HK$’000 HK$’000 3,823 1,623 (8,002) (16,964)	Global Gateway 2003 2002 HK$’000 HK$’000 3,823 1,623 (8,002) (16,964)	Tidefull Grandsworth 2003 2002 2003* HK$’000 HK$’000 S$’000 – – 460 (4) (4) 214	Tidefull Grandsworth 2003 2002 2003* HK$’000 HK$’000 S$’000 – – 460 (4) (4) 214	Tidefull Grandsworth 2003 2002 2003* HK$’000 HK$’000 S$’000 – – 460 (4) (4) 214
71,613 (37,433) 34,180 63,933 (29,753)	70,659 (40,712) 29,947 51,802 (21,855)	86,709 (84,998) 1,711 – 1,711	85,644 (83,929) 1,715 – 1,715	14,734 (14,520
				214
				– 214
34,180	29,947	1,711	1,715	214

Grandsworth is a new investment during the year and comparative information is therefore not provided.

11) INVESTMENTS

(a) Investment Securities

Listed shares in Hong Kong Market value	2003 HK$’000 108,456 43,363	2002 HK$’000 108,456
		46,832

Details of the listed investment securities are as follows:

	Country of
Name	incorporation	Listed in	Cost
			HK$’000
Asia Financial Holdings Limited	Bermuda	Hong Kong	108,456
			(2002: HK$108,456)

As at 31 March 2003, the investment in Asia Financial Holdings Limited (“AFH”) represented 4.1% (2002: 4.1%) interest in the ordinary share capital of AFH.

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FINANCIAL INFORMATION

APPENDIX II

(b) Other Investments

Non-current Unlisted shares and debentures Loans and other assets Current Listed shares and bonds In Hong Kong Outside Hong Kong Market value	2003 HK$’000 3,607 1,454 5,061 145 20,251 20,396 20,396	2002 HK$’000 2,788 1,454
		4,242

		1,223 15,233
		16,456

		16,456

The market value of other investments was the same as fair value.

12) SUBSIDIARIES

Unlisted shares, at cost Amount due by subsidiaries Provision for subsidiaries	2003 HK$’000 424,433 358,598 (295,000) 488,031	2002 HK$’000 424,433 348,228 (285,000)
		487,661

−36 −

FINANCIAL INFORMATION

APPENDIX II

Particulars of subsidiary companies are as follows:

(a) Subsidiaries held by the Company

					Percentage
	Main	Country of	No. of issued		of equity
Name of company	activity	incorporation	shares	Par value	held
Asian Champion Limited	Investment	Liberia	2	US$1,000	100
(operates in Hong Kong)
Brilliant Valley Investment	Investment	Liberia	1	Nil	100
Limited (operates in Hong
Kong)
Fortune Far East Limited	Investment	Liberia	1	US$1,000	100
(operates in U.S.A.)
Future Star Company Limited*	Investment	British Virgin	1	US$1	100
		Islands
Glory East Limited (operates in	Real Estate	Liberia	1	Nil	100
Mainland China and in
Myanmar)
Golden Mile Limited (operates in	Real Estate	Liberia	1	Nil	100
Mainland China)
Green Harmony Global Co., Ltd	Investment	British Virgin	1	US$1	100
(operates in Thailand)		Islands
Pearl River Investment Limited*	Investment	Liberia	1	Nil	100
Pine International Limited*	Investment	British Virgin	1	HK$1	100
		Islands
Pioneer Global Communications	Investment	British Virgin	1	US$1	100
Limited*		Islands
Pioneer (USA) Holdings, Inc.	Investment	United States	1	Nil	100
Shining Galaxy Limited*	Investment	Liberia	1	Nil	100
Wise Champion Limited*	Investment	Liberia	1	Nil	100

−37 −

FINANCIAL INFORMATION

APPENDIX II

(b) Subsidiaries held by the Group

					Percentage
	Main	Country of	No. of issued		of equity
Name of company	activity	incorporation	shares	Par value	held
Anpona Investments Limited	Real Estate	Hong Kong	1,000	HK$10	100
Bright Orient Holdings Limited	Investment	Hong Kong	2	HK$1	100
Dearwood Estates Limited	Investment	Hong Kong	2	HK$10	100
Dragon Phoenix Land Investment	Real Estate	Hong Kong	1,000	HK$10	100
Limited
Fomax Limited	Computer	Hong Kong	10,000	HK$1	55
	Consultancy
	Services
Forerunner Investments Limited	Investment	Hong Kong	3,000,000	HK$1	60
Gamolon Investments Limited	Real Estate	Hong Kong	100	HK$10	100
Golden Joy Technology Limited	Computer	Hong Kong	5,000	HK$1	55
	Consultancy
	Services
Internet Group Technology	Investment	British Virgin	1	US$1	55
Company Limited (operates in		Islands
Hong Kong)
PGG Development Company	Real Estate	Hong Kong	70,000	HK$10	100
Limited
Pioneer Estates Limited	Real Estate	Hong Kong	100	HK$10	100
Pioneer Global Gateway Asia	Investment	British Virgin	1	US$1	100
Limited*		Islands
Pioneer Global Gateway LLC*	Investment	United States	1	Nil	100
Pioneer Global Gateway USA	Investment	British Virgin	1	US$1	100
Limited*		Islands
Pioneer iConcepts Limited	Computer	Hong Kong	36,363,636	HK$1	55
	Consultancy
	Services
Pioneer iNetwork Limited	Inactive	Hong Kong	2	HK$1	100
Pioneer Industries (Holdings)	Investment	Hong Kong	150,794,424	HK$0.50	100
Limited	and Group
	Administration
Sino Asset Developments Ltd.*	Inactive	British Virgin	1	US$1	100
		Islands
Wuhan Huazhong Science Union	Software	Mainland	Nil	Nil	55**
Software Development Co., Ltd.	Development	China
(“WHS”)**

−38 −

FINANCIAL INFORMATION

APPENDIX II

Except as indicated, the companies’ principal countries of operation are the same as that of their incorporation.

No definite country of operation
** WHS is an equity joint venture registered in Mainland China and the Group’s effective interest in WHS is 30.25%.

13) DEBTORS, ADVANCES & PREPAYMENTS

Trade and rental debtors Advances & prepayments Debtors, advances & prepayments	2003 HK$’000 1,432 5,378 6,810	2002 HK$’000 2,428 5,101
		7,529

The Group does not allow credit to its tenants and allows an average credit period of 30 days to its trade customers.

Aged analysis 0-30 days 31-60 days 61-90 days > 90 days	2003 HK$’000 693 360 318 61 1,432	2002 HK$’000 1,610 452 14 352
		2,428

14) CREDITORS & ACCRUALS

Trade creditors Provision for long service payments Accruals & other creditors Creditors and accruals Aged analysis 0-30 days 31-60 days 61-90 days > 90 days	2003 HK$’000 674 2,121 12,412 15,207 2003 HK$’000 41 – – 633 674	2002 HK$’000 985 1,421 9,972
		12,378

		2002 HK$’000 227 – 16 742
		985

−39 −

FINANCIAL INFORMATION

APPENDIX II

15) SECURED BANK LOANS AND OVERDRAFTS

Current Secured bank overdraft Secured bank loans – within one year Non-current Secured bank loan More than one year but not exceeding two years More than two years but not exceeding five years More than five years SHARE CAPITAL Authorised At 31 March 2002 Increased during the year At 31 March 2003 Issued and Fully Paid At 31 March 2002 Shares repurchased At 31 March 2003	2003 HK$’000 – 64,400 64,400 1,200 3,600 16,800 21,600 No. of share of HK$0.10 each 1,000,000,000 1,000,000,000 2,000,000,000	2003 HK$’000 – 64,400 64,400 1,200 3,600 16,800 21,600 No. of share of HK$0.10 each 1,000,000,000 1,000,000,000 2,000,000,000	2002 HK$’000 1,222 32,401 33,623 1,200 3,600 18,000 22,800 HK$’000 100,000 100,000 200,000 74,948 (50) 74,898


	749,484,917 (500,000)		74,948 (50
	748,984,917

16) SHARE CAPITAL

Pursuant to the annual general meeting of the Company held on 29th August 2002, the Company’s authorised share capital was increased from HK$100,000,000 to HK$200,000,000 by the creation of 1,000,000,000 additional shares of HK$0.1 each.

−40 −

FINANCIAL INFORMATION

APPENDIX II

17) RESERVES

At 31 March 2003

Group

At 31 March 2002 Shares repurchased Impairment losses – goodwill written off Exchange on translation of – subsidiaries – associates Revaluation on investment properties Profit for the year At 31 March 2003 Dealt with by: Company and subsidiaries Listed associate Unlisted associates	Share Premium HK$’000 304,836 (107) – – – – – 304,729	Capital Reserve & Contributed Surplus HK$’000 64,120 – – – – – – 64,120	Exchange Reserve HK$’000 (2,088) – – 153 1,946 – – 11	Investment Properties Revaluation Reserve HK$’000 157,020 – – – – (9,700) – 147,320	Goodwill HK$’000 (3,030) – 3,030 – – – – –	Retained Earnings HK$’000 (59,960) – – – – – 3,031 (56,929)	Total HK$’000 460,898 (107) 3,030 153 1,946 (9,700) 3,031 459,251 511,603 7,653 (60,005) 459,251
	304,729 – –	64,120 – –	(1,876) 1,841 46	147,320 – –	– – –	(2,690) 5,812 (60,051)	511,603 7,653 (60,005
	304,729	64,120	11	147,320	–	(56,929)

−41 −

FINANCIAL INFORMATION

APPENDIX II

At 31 March 2002

Group

At 31 March 2001 Shares repurchased Impairment loss – goodwill written off Exchange on translation of – subsidiaries – associate Revaluation on investment properties Loss for the year At 31 March 2002 Dealt with by: Company and subsidiaries Listed associate Unlisted associates	Share Premium HK$’000 305,493 (657) – – – – – 304,836	Capital Reserve & Contributed Surplus HK$’000 64,120 – – – – – – 64,120	Exchange Reserve HK$’000 (2,720) – – 691 (59) – – (2,088)	Investment Properties Revaluation Reserve HK$’000 168,312 – – – – (11,292) – 157,020	Goodwill HK$’000 (19,688) – 16,658 – – – – (3,030)	Retained Earnings HK$’000 (6,422) – – – – – (53,538) (59,960)	Total HK$’000 509,095 (657) 16,658 691 (59) (11,292) (53,538) 460,898 501,822 3,142 (44,066) 460,898
	304,836 – –	64,120 – –	(2,029) – (59)	157,020 – –	(3,030) – –	(19,095) 3,142 (44,007)	501,822 3,142 (44,066
	304,836	64,120	(2,088)	157,020	(3,030)	(59,960)

At 31 March 2003

Company

At 31 March 2002 Shares repurchased Loss for the year At 31 March 2003	Share Premium HK$’000 304,836 (107) – 304,729	Contributed Surplus HK$’000 403,929 – – 403,929	Retained Earnings HK$’000 (257,649) – (2,237) (259,886)	Total HK$’000 451,116 (107) (2,237) 448,772

The contributed surplus arose in 1989 as a result of the Group reorganisation and represented the difference between the nominal value of the Company’s shares allotted under the reorganisation scheme and the consolidated shareholders’ funds of the acquired subsidiary company. The contributed surplus is distributable as dividend under Bermudian Law and the Bye-Laws of the Company.

The reserves of the Company available for distribution to shareholders as at the balance sheet date, calculated in accordance with the Bermuda Companies Act, amount to HK$144,043,000 (2002: HK$146,280,000).

−42 −

FINANCIAL INFORMATION

APPENDIX II

At 31 March 2002

Company

At 31 March 2001 Shares repurchased Loss for the year At 31 March 2002	Share Premium HK$’000 305,493 (657) – 304,836	Contributed Surplus HK$’000 403,929 – – 403,929	Retained Earnings HK$’000 (217,101) – (40,548) (257,649)	Total HK$’000 492,321 (657) (40,548)
				451,116

18) CONTINGENT LIABILITIES AND COMMITMENTS

	Group		Company
	2003	2002	2003	2002
	HK$’000	HK$’000	HK$’000	HK$’000
Guarantees
– for banking facilities granted to
subsidiaries	–	–	121,060	132,224
– to bankers in lieu of utility deposits	260	370	–	–
– for payment of banking facilities to an
associate	651	1,191	–	–
Commitments
– to purchase foreign currency
(USD10,000,000)	78,488	–	78,488	–
– to sell Hong Kong Dollars	78,488	–	78,488	–
– for further investment in other
investments	819	1,638	–	–
– for credit facilities made to an associate	1,573	1,673	1,573	1,673
– for total future minimum lease payments
– not later than one year	963	3,192	–	–
– later than one year and not later than
five years	–	963	–	–

19) OPERATING LEASE RECEIVABLE

At the balance sheet date, the Group’s total future minimum lease payments to be received under non-cancellable rental leases in respect of investment properties are as follows:

Not later than one year Later than one year but not later than five years	2003 HK$’000 20,904 16,920 37,824	2002 HK$’000 16,926 16,108
		33,034

20) PLEDGE OF ASSETS

At the balance sheet date, properties, investments and bank balances of the Group with an aggregate book value of approximately HK$300 million (2002: HK$326 million) were pledged to secure banking and other loan facilities to the extent of HK$215 million (2002: HK$226 million) of which HK$86 million (2002: HK$56 million) was utilised at that date.

−43 −

FINANCIAL INFORMATION

APPENDIX II

21) NOTES TO THE CONSOLIDATED CASH FLOW STATEMENT

(a) Reconciliation of Bank Loans and Overdraft

Bank loans and overdraft up to three months, included in cash and cash equivalents Three months and beyond As shown in the consolidated balance sheet	2003 HK$’000 63,200 1,200 64,400	2002 HK$’000 32,423 1,200
		33,623

(b) Analysis of Changes in Financing during the Year

As at 31 March 2003

Share Capital and Share Premium HK$’000 379,784 – – (157) – – 379,627	Bank Loan included in Non-current Liabilities *(note 15)* HK$’000 22,800 – – – (1,200) – 21,600	Bank Loan repayable beyond three months and included in Current Liabilities *(note 21(a))* HK$’000 1,200 – – – 1,200 (1,200) 1,200	Minority Interests HK$’000 2,517 (897 (379 – – –
			1,241

380,760 – – (976) – – –	– – – – – – 22,800	– – – – – – 1,200	5,358 (1,134 (1,844 – 281 (144 –
379,784	22,800	1,200	2,517

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FINANCIAL INFORMATION

APPENDIX II

(c) Material Non-cash Transaction

In August 2001, an unrelated shareholder (“Acquirer”) in an unlisted associate, Strand Hotels International Limited (“SHIL”), entered into a contract to purchase all shares of SHIL from other shareholders, including the Group. The Acquirer failed to complete the purchase and as a result, the deposit, which was in a form of loan receivable was forfeited to the other shareholders. The loan receivable transferred to the Group amounted to HK$2,161,000.

(d) Reclassification to Creditors and Accruals

The reclassification to creditors and accruals of HK$1,219,000 represents a bank loan and overdraft facility of a former non-wholly owned subsidiary, which was acquired in January 2000. This loan and overdraft facility was guaranteed by and secured over assets owned by a former owner of the company. Since the company commenced its winding-up, the Group has not received any claim from the bank.

22) SHARE OPTION SCHEME

On 3 September 1996, a Share Option Scheme (the “Scheme”) was approved by the shareholders, under which the directors of the Company may, at its discretion, offer any employee (including any executive director) options to subscribe for shares in the Company subject to the terms and conditions stipulated in the Scheme.

Summary of the Scheme

(a) Purpose of the Scheme

To provide the participants to subscribe for ordinary shares in the Company with the opportunity to acquire proprietary interests in the Company and to encourage them to work towards enhancing the value of the Company and its Shares for the benefit of the Company and its shareholders as a whole.

(b) Participants of the Scheme

The Board may at its discretion, grant to any employee (including any executive director) options to subscribe for the Company’s shares.

(c) Maximum number of shares available for issue under the Scheme

The maximum number of the shares in respect of which options may be granted under the Scheme will be such number of shares, when aggregated with shares already subject to any share option schemes of the Company, shall not exceed 10% of the issued share capital of the Company.

(d) Maximum entitlement to any one participant

Under the Scheme, no options may be granted to any one employee which if exercised in full would result in the total number of the Company’s shares already issued and issuable to him under all the options granted to him exceeding 25% of the aggregate number of shares of the Company for the time being issued and issuable under the Scheme.

(e) Period and payment on acceptance of options

Under the Scheme, the offer of an option to acquire shares must be accepted in writing in such manner as the Board of Directors may prescribe within 2 days from the date of grant and upon payment of a nominal consideration of HK$1 in total by the participant to the Company.

(f) Period within which the shares must be taken up under an option

Within ten years from the date of grant or such shorter period as the Board of Directors will specify at the time of grant.

(g) The basis of determining the exercise price

The exercise price of the options is determined by the Board of Directors and will not be less than the greater of (i) an amount equal to 80% of the average closing price of the Company’s share as stated in the daily

−45 −

FINANCIAL INFORMATION

APPENDIX II

quotations sheets issued by the Stock Exchange for the five trading days immediately preceding the date of grant and (ii) the nominal amount of the Company’s share.

(h) Life of the Scheme

The Scheme expired on 2 September 2001 but without prejudice to the rights attached to outstanding options granted prior to expiry.

As at 31 March 2003, the Company had outstanding options to subscribe for an aggregate of 48,893,641 (2002: 48,926,280) shares in the Company. Summary of the outstanding options is as follows:

Number of options	At 31 March 2003 Exercise price Date of grant Exercise period* 21,612,137 HK$1.941 24 October 1996 24 October 1996 to 23 October 2006 25,456,823 HK$1.582 6 March 1997 6 March 1997 to 5 March 2007 47,068,960 1,658,499 HK$0.653 30 August 2001 30 August 2001 to 29 August 2006 166,182 HK$0.653 30 August 2001 30 August 2001 to 29 August 2004 1,824,681 48,893,641
At 1 April 2002 Adjustment To executive directors 21,626,564 (14,427) 25,473,817 (16,994) To employees* 1,659,607 (1,108) 166,292 (110)	At 31 March 2003 21,612,137 25,456,823
	47,068,960
	1,658,499 166,182
	1,824,681
Total

Adjustments were made during the year in accordance with the Share Option Scheme to both the exercise prices and the number of options consequent on shares repurchased during the year. No options were exercised and no options lapsed during the year. The names of the executive directors and their individual entitlements to share options are set out in the Directors’ Report.

23) SUBSEQUENT EVENT

In July 2003, Grand Prospect Enterprise Limited, incorporated in Hong Kong was converted from an associated company into a subsidiary of the Group with 51% directly owned by the Group and 49% owned by the Gaw Family, a related party. On 11 July 2003, Grand Prospect Enterprise Limited entered into contract arrangements to acquire 100% of the Orchid Fund Four (the “Fund”) at the total consideration of Baht 870 million (approximately HK$163 million). The Fund is a Thai property fund which currently owns a 382-room hotel, Garden Beach Resort (the “Hotel”), in Pattaya, Thailand. The consideration was determined after arm’s length negotiations with reference to an independent valuation of the Hotel. The Group’s share of investment is 51% representing an amount of Baht 443.7 million (approximately HK$83 million). As the acquisition constitutes a notifiable transaction of the Company under the Listing Rules, a public announcement was made on 15 July 2003.

24) APPROVAL OF FINANCIAL STATEMENTS

The financial statements set out on pages 15 to 57 have been approved by the Board of Directors on 15 July 2003.

−46 −

GENERAL INFORMATION

APPENDIX III

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 full reasonable enquires, that to the best of their knowledge and belief there are no other facts the omission of which would make any statement herein misleading.

2. DISCLOSURE OF INTERESTS

As at the Latest Practicable Date, the following Directors of the Company were interested, or were deemed to be interested in the following long and short positions in the shares, underlying shares and debentures of the Company or any associated corporation (within the meaning of the SFO) which (a) were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO; or (b) were required, pursuant to section 352 of the SFO, to be entered in the register referred to therein; or (c) were required, pursuant to the Model Code for Securities Transactions by Directors adopted by the Company to be notified to the Company and the Stock Exchange.

Long position in shares of the Company

		Interests	Interest
		held by	held by
	Personal	controlled	family
	interests	corporation	trust	Total	%
Rossana Wang Gaw	–	15,309,7321	123,148,7013	138,458,433	18.49
Kenneth Gaw	1,734,750	8,122,0002	26,457,7744	36,314,524	4.85
Jane Kwai Ying Tsui	600,750	–	–	600,750	0.08

1 Mrs. Rossana Wang Gaw owns the entire issued share capital of Vitality Holdings Limited, which was beneficially interested in 15,309,732 shares.

2 Mr. Kenneth Gaw owns the entire issued share capital of Fortune South China Limited, which was beneficially interested in 8,122,000 shares.

3 Family trust of which members of the family of Mrs. Rossana Wang Gaw are amongst the beneficiaries held an aggregate of 123,148,701 shares.
4 Family trust of which Mr. Kenneth Gaw is a beneficiary held an aggregate of 26,457,774 shares.

−47 −

GENERAL INFORMATION

APPENDIX III

Long position in underlying shares of the Company

Number

	Number
	of share	Exercise	Date of
	options	price	grant	Exercise period
		(HK$)
Rossana Wang Gaw	8,167,113	1.582	06/03/97	06/03/97 to 05/03/97
Goodwin Gaw	9,668,588	1.941	24/10/96	24/10/96 to 23/10/06
	7,507,374	1.582	06/03/97	06/03/97 to 05/03/07
Kenneth Gaw	9,668,588	1.941	24/10/96	24/10/96 to 23/10/06
	7,507,374	1.582	06/03/97	06/03/97 to 05/03/07
Jane Kwai Ying Tsui	2,274,961	1.941	24/10/96	24/10/96 to 23/10/06
	2,274,962	1.582	06/03/97	06/03/97 to 05/03/07

Long position in shares of associated companies

		No. of
		shares held
		by controlled
Name of Company	Name of Director	corporation	%
Grandsworth Pte. Ltd.	Rossana Wang Gaw	1*	50
Grandsworth Pte. Ltd.	Kenneth Gaw	1*	50

1 share in Grandsworth Pte. Ltd. is deemed to be interested by Mrs. Rossana Wang Gaw and Mr. Kenneth Gaw. It represents the same interest and is therefore duplicated.

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

−48 −

GENERAL INFORMATION

APPENDIX III

3. SUBSTANTIAL SHAREHOLDERS

As at the Latest Practicable date, according to the register of interests in long positions and short positions kept by the Company under the provisions of Divisions 2 and 3 of Part XV of section 336 of the SFO and so far as the Directors were aware, the following persons had a long position or short position in the shares, underlying shares or debentures of the Company which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO:

	Number of
	shares	%
Asset-Plus Investments Ltd.	68,076,076	9.09
Forward Investments Inc.	174,277,635	23.27
Intercontinental Enterprises Corporation	72,650,000	9.70
Prosperous Island Limited	63,354,452	8.46

Save as disclosed below, the Directors are not aware of any other persons (other than a Director of the Company) who, as at the Latest Practicable Date, was directly or indirectly interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any other members of the Group:

Name of company	Name of shareholder	%
Forerunner Investments Limited	Farnham Group Limited	30
Pioneer iConcepts Limited	Ng Poon Wing Man Agnes	40

4. SERVICES CONTRACT

None of the Directors have any existing or proposed service contract with the Company or any member of the Group (excluding contracts expiring or determinable by the Company within one year without payment of compensation other than statutory compensation).

5. DIRECTORS’ INTERESTS IN ASSETS/CONTRACTS/ARRANGEMENTS

None of the Directors has any direct or indirect interest in any assets which have been acquired or disposed of by or leased to any member of the Group, or are proposed to be acquired or disposed of by or leased to any member of the Group, since 31 March 2003, the date up to which the latest published audited consolidated financial statements of the Group were made.

None of the Directors is materially interested in any contract or arrangement subsisting at the date of this circular which is significant in relation to the business of the Group.

6. LITIGATION

No litigation or claim of material importance is known to the Directors to be pending or threatened against the Group.

−49 −

GENERAL INFORMATION

APPENDIX III

7. MATERIAL CONTRACTS

There have been no material contracts (not being contracts entered into in the ordinary course of business of any member of the Group) within the two years preceding the date of this circular.

8. GENERAL

(i) The Qualified Accountant of the Company is Mr. Lee Kam Hung Alan, a fellow member of Hong Kong Society of Accountant.
(ii) The Secretary of the Company is Ms. Tsui Kwai Ying Jane, an associate of The Institute of Bankers of London.
(iii) The registered office of the Company is Canon’s Court, 22 Victoria Street, Hamilton HM 12, Bermuda.
(iv) The share registrar of the Company in Hong Kong is Computershare Hong Kong Investor Services Limited at 17th Floor, Hopewell Centre, 183 Queen’s Road East, Hong Kong.
(v) This circular has been prepared in both English and Chinese. In the case of any discrepancy, the English text shall prevail.

9. DOCUMENTS FOR INSPECTION

Copies of the following documents will be available for inspection during normal business hours at the principal office of the Company at Suites 01-03, 30/F, Office Tower, Convention Plaza, 1 Harbour Road, Wanchai, Hong Kong up to and including 30 June 2004.

(i) the Memorandum of Association and Bye-Laws of the Company;
(ii) the audited consolidated financial statements of the Group for the financial years ended 31 March 2002 and 31 March 2003;
(iii) a circular of the Company dated 26 August 2003 in relation to the acquisition of 100% of PGG Siam Property Fund by an associated company of the Group;
(iv) a circular of the Company dated 28 November 2003 in relation to a major transaction;
(v) the Agreement as referred to in this circular.

−50 −

AI assistant

Pioneer Global Group Limited — Proxy Solicitation & Information Statement 2004

49048_rns_2004-06-15_f24847d7-8645-49eb-95e3-ded8368665a1.pdf

PIONEER GLOBAL GROUP LIMITED

MAJOR TRANSACTION FORMATION OF A JOINT VENTURE

CONTENTS

DEFINITIONS

DEFINITIONS

PIONEER GLOBAL GROUP LIMITED

MAJOR TRANSACTION FORMATION OF A JOINT VENTURE

INTRODUCTION

THE AGREEMENT DATED 13 MAY 2004

Parties

Completion

Joint Venture and its business

Board representation

Consideration and commitment by Pioneer-SPV

LETTER FROM THE BOARD

REASON FOR INVESTMENT IN MSR CO.

MAJOR TRANSACTION AND APPROVAL BY SHAREHOLDERS

GENERAL INFORMATION

7th June, 2004

The Directors

SUMMARY OF VALUATION

VALUATION CERTIFICATE

Property

Description and tenure

Particulars of occupancy

Property

Description and tenure

Particulars of occupancy

1. INDEBTEDNESS

2. WORKING CAPITAL

3. MATERIAL ADVERSE CHANGE

4. EXTRACT OF THE FINANCIAL STATEMENTS

CONSOLIDATED PROFIT & LOSS ACCOUNT

CONSOLIDATED BALANCE SHEET

BALANCE SHEET

CONSOLIDATED CASH FLOW STATEMENT

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

NOTES TO FINANCIAL STATEMENTS

1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Basis of Preparation of Financial Statements

(b) Consolidation

(c) Goodwill

(d) Subsidiaries

(e) Associates

(f) Fixed Assets and Depreciation

(3) Depreciation

(g) Investment Securities

(h) Other Investments

(i) Impairment of Assets

(j) Operating Leases

(k) Foreign Currencies

(l) Deferred Taxation

(m) Revenue Recognition

(3) Dividend income

(4) Interest income

(n) Employee Benefits

(1) Retirement scheme

(2) Long service payments

(3) Share option scheme

2) SEGMENT INFORMATION

Business Segments

3) PROFIT/(LOSS) BEFORE TAXATION

(c) Net profit/(loss) on disposal of assets less impairment provisions

4) TAXATION

5) PROFIT/(LOSS) ATTRIBUTABLE TO SHAREHOLDERS

6) EARNINGS/(LOSS) PER SHARE

7) DIRECTORS’ AND SENIOR MANAGEMENT’S EMOLUMENTS

(a) Directors’ Emoluments

(b) Other Senior Management’s Emoluments

8) FIXED ASSETS

9) LISTED ASSOCIATE

APPENDIX II

APPENDIX II

10) UNLISTED ASSOCIATES

(a) Associates held by Group

(c) Additional information in respect of three major associates held by the Group as at 31 March 2003 is provided as follows.

(ii) Tidefull Investment Limited (“Tidefull”)

Pioneer Global Group Limited Proxy Solicitation & Information Statement 2004