Rykadan Capital Limited - Proxy Solicitation & Information Statement 2009

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

Web Proof Information Pack of

SUNDART INTERNATIONAL HOLDINGS LIMITED

(a company incorporated in the Cayman Islands with limited liability) (the “ Company ”)

WARNING

This Web Proof Information Pack (“WPIP”) is being published as required by The Stock Exchange of Hong Kong Limited (“HKEx”)/the Securities and Futures Commission solely for the purpose of providing information to the public in Hong Kong.

This WPIP is in draft form. The information contained in it is incomplete and is subject to change which can be material. By viewing this document, you acknowledge, accept and agree with the Company, any of its sponsor, advisers or members of the underwriting syndicate that:

(a) this WPIP is only for the purpose of facilitating equal dissemination of information to investors in Hong Kong and not for any other purposes. No investment decision should be based on the information contained in this WPIP;
(b) the posting of the WPIP or supplemental, revised or replacement pages on the HKEx Website does not give rise to any obligation of the Company, any of its sponsor, advisers and/or members of the underwriting syndicate to proceed with an offering in Hong Kong or any other jurisdiction. There is no assurance that the Company will proceed with the offering;
(c) the contents of the WPIP or supplemental, revised or replacement pages may or may not be replicated in full or in part in the actual prospectus;
(d) the WPIP may be updated or revised by the Company from time to time but each of the Company, its affiliates, sponsor, advisers and members of the underwriting syndicate is under no obligation, legal or otherwise, to update any information contained in this WPIP;
(e) this WPIP does not constitute a prospectus, notice, circular, brochure or advertisement offering to sell any securities to the public in any jurisdiction, nor is it an invitation to the public to make offers to subscribe for or purchase any securities, nor is it calculated to invite offers by the public to subscribe for or purchase any securities;
(f) this WPIP must not be regarded as an inducement to subscribe for or purchase any securities, and no such inducement is intended;
(g) neither the Company nor any of its affiliates, advisers, sponsor or members of the underwriting syndicate is offering, or is soliciting offers to buy, any securities in any jurisdiction through the publication of this WPIP;
(h) neither the Company nor any of its affiliates, advisers, sponsor or members of the underwriting syndicate makes any express or implied representation or warranty as to the accuracy or completeness of the information contained in this WPIP;
(i) each of the Company and its affiliates, advisers, sponsor and members of the underwriting syndicate expressly disclaims any and all liabilities on the basis of any information contained in, or omitted from, or any inaccuracies or errors in, this WPIP;
(j) the Company has not and will not register the securities referred to in this WPIP under the United States Securities Act of 1933, as amended (“the Securities Act”), or any state securities laws of the United States of America (“the U.S.”); and
(k) as there may be legal restrictions on the distribution of this WPIP or dissemination of any information contained in this WPIP, you agree to inform yourself about and observe any such restrictions applicable to you.

THIS WPIP IS NOT FOR PUBLICATION OR DISTRIBUTION TO PERSONS IN THE U.S. ANY SECURITIES REFERRED TO HEREIN HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES ACT, AND MAY NOT BE OFFERED OR SOLD WITHOUT REGISTRATION THEREUNDER OR PURSUANT TO AN AVAILABLE EXEMPTION THEREFROM.

NEITHER THIS WPIP NOR THE INFORMATION CONTAINED HEREIN CONSTITUTES AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY SECURITIES IN THE U.S. THIS WPIP IS NOT BEING MADE AND MAY NOT BE DISTRIBUTED OR SENT INTO CANADA OR JAPAN.

Any offer or invitation to make an offer for any securities will only be made to the public in Hong Kong after the Company has registered its prospectus in accordance with the Companies Ordinance (Chapter 32 of the laws of Hong Kong). If an offer or an invitation is made by the Company to the public in Hong Kong in due course, prospective investors are reminded to make their investment decisions solely based on a prospectus of the Company registered with the Registrar of Companies in Hong Kong, copies of which will be distributed to the public during the offer period.

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THIS WEB PROOF INFORMATION PACK IS IN DRAFT FORM. The information contained in it is incomplete and is subject to change. This Web Proof information Pack must be read in conjunction with the section headed “Warning” on the cover of this Web Proof Information pack.

This Web Proof Information Pack contains the following information in relation to Sundart International Holdings Limited extracted from an amended version of the Listing Committee Post-Hearing Proof of the draft document:

Summary
Definitions
Glossary of Technical Terms
Risk Factors
Forward-Looking Statements
Directors and Parties Involved
Corporate Information
Waiver from Strict Compliance with the Requirements under the Listing Rules
Industry Overview
Regulations
History, Reorganisation and Group Structure
Business
Relationship with Controlling Shareholders
Connected Transactions
Directors, Senior Management and Employees
Substantial Shareholders
Share Capital
Financial Information
Future Plans
Appendix I – Accountants’ Reports
Appendix III – Profit Forecast
Appendix IV – Property Valuation
Appendix V – Summary of the Constitution of the Company and Cayman Islands Company Law
Appendix VI – Statutory and General Information

YOU SHOULD READ THE SECTION HEADED “WARNING” ON THE COVER OF THIS WEB PROOF INFORMATION PACK.

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THIS WEB PROOF INFORMATION PACK IS IN DRAFT FORM. The information contained in it is incomplete and is subject to change. This Web Proof Information Pack must be read in conjunction with the section headed “Warning” on the cover of this Web Proof Information Pack.

SUMMARY

OVERVIEW

We are an integrated fitting-out contractor in Hong Kong specialising in providing professional, up-market and cost-saving fitting-out contracting services for sizeable residential and hotel projects.

We believe that our proven track record, long working relationships with major property developers in Hong Kong and hotel owners in Hong Kong and Macau and our good reputation in the fitting-out industry position us well to increase our market shares in the fitting-out industries in Hong Kong, Macau and China as well as to further develop our business outside these areas to other countries.

We have participated in a number of sizeable fitting-out projects in Hong Kong. As a professional fitting-out contractor, we are responsible for the overall project implementation by providing or arranging for the necessary materials, labour, engineering expertise and technical know-how required for the fitting-out works and carrying out corresponding project management so as to ensure that the fitting-out works conform to the contractual requirements, meet customers’ expectation and are completed on time and within budget.

As a fitting-out contractor, we are responsible for overall project implementation and do not directly employ any worker so that all labour intensive works such as carpentry, installation of doors, floorsets and marble and plumbing works are outsourced to subcontractors. In doing so, we engage or outsource to subcontractors to carry out such works by entering into separate contracts with our subcontractors. Depending on the terms of such contracts, we may also be responsible for purchasing all interior decorative and building materials for the fitting-out projects while in other cases, our subcontractors will be responsible for provision of such materials for purposes of the fitting-out works. As at the Latest Practicable Date, we had over 200 subcontractors, of which 33 have five years or above working relationship with us. Details of the subcontracting arrangements are set out in the section headed “Business – Fitting-out works – Project administration – Subcontracting” in this document.

Our fitting-out projects normally commenced with the tendering process. After tenders are awarded, we usually set up the detailed working plans, delegate part of the fitting-out works to subcontractors and coordinate among customers, subcontractors and suppliers in completing the projects. Progress payments are received from the customers periodically according to the stages of completion of the works done, and the corresponding subcontracting fees and costs for materials payable to suppliers/subcontractors are settled accordingly.

Our fitting-out business started in 1988 when Sundart Engineering, our past subsidiary, was involved as a subcontractor in works relating to structural spray fire-protection ( ) and fitting-out works in respect of Jing Guang Centre in the PRC. Since then, we, through Sundart Engineering, continued to participate in several projects in the PRC on a project-by-project basis until Sundart (Beijing) was established in 2003. Then we have operated our fitting-out business in Hong Kong since 1996. We further expanded our

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SUMMARY

fitting-out business to Macau in 2005 through Sundart (Macau). Over the years, we have participated in a number of sizeable fitting-out projects including the following projects completed by us during the Track Record Period:

		Our				Contract sum
Project name	Type of customer	capacity(1)	Project type	Scope of works	District	attributable to us	Completion date
Celestial Heights	Property owner	Contractor	Residence	Typical flats and	Homantin,	HK$269.6 million	27 March 2009
(Phase 1)				lift lobbies	Hong Kong
				fitting-out
The Capitol, Lohas	Property owner	Contractor	Residence	Typical kitchens,	Tseung Kwan	HK$160.2 million	June 2009(2)
Park				bathrooms and	O, Hong
				lift lobbies	Kong
				fitting-out
Metro Town Phase	Property owner	Contractor	Residence	Residential units,	Tseung Kwan	HK$167.4 million	16 October 2006
1 (Tiu Keng				typical lift	O, Hong
Leng Station				lobbies, main	Kong
Development)				entrance lobbies
				and lift interior
Le Point, Phase 2	Main contractor	Nominated	Residence	Residential units,	Tseung Kwan	HK$138.7 million	5 February 2008
(Tiu Keng Leng		subcontractor		lift lobbies, life	O, Hong
Station)				cars	Kong
The Legend	Main contractor	Nominated	Residence	Typical flats,	Tai Hang,	HK$102.9 million	4 August 2007
		subcontractor		bathrooms and	Hong Kong
				lift lobbies
				fitting-out
Phase RIII and	Main contractor	Subcontractor	Residence	Typical bathrooms	Pokfulam,	Bathroom:	28 February 2006
RIVa of the				and lift lobbies	Hong Kong	HK$75.6
Residential				fitting-out		million
Development of						Typical Lobby:
Pokfulam						HK$35.6
						million
Residential	Main contractor	Subcontractor	Residence	Typical bathrooms	Pokfulam,	Bathroom:	11 November
Development at				and main	Hong Kong	HK$75.2	2008
Pokfulam Phase				entrance lobbies		million
RV – Bathroom Entrance Lobbies & Lift Cars				fitting-out		Main Entrance: HK$15.2 million
The Palazzo (Ho	Main contractor	Nominated	Residence	Typical lift	Shatin, Hong	HK$60.0 million	31 March 2009
Tung Lau		subcontractor		lobbies	Kong
Development,				fitting-out
Shatin) –
Typical Tower
Lift Lobby
Garden East	Main contractor	Subcontractor	Serviced	Typical guest	Hong Kong	HK$56.2 million	14 November
Serviced			apartments	rooms and			2008
Apartment				corridor
(Hotel				fitting-out
Development at
Queen’s Road
214-224)

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SUMMARY

		Our				Contract sum
Project name	Type of customer	capacity(1)	Project type	Scope of works	District	attributable to us	Completion date
Parcel 2 of the	Property owner	Trade	Hotel	Guest suites	Cotai, Macau	MOP147.7	4 August 2008
Cotai Casino,		contractor		(excluding the		million
Exhibition and				two presidential
the Hotel				suites on L18
Complex				and L19),
				common
				corridors at
				front-of-house
				areas, lift
				lobbies and lift
				cars from
				L6-L19
				fitting-out
MGM Grand	Management	Subcontractor	Hotel	Villa rooms, lift	Nam Van,	MOP162.3	10 January 2008
Macau	contractor			lobby and	Macau	million
				corridor
				fitting-out
MGM Grand	Management	Subcontractor	Hotel	Suite rooms, lift	Nam Van,	MOP172.8	10 January 2008
Macau	contractor			lobby and	Macau	million
				corridor
				fitting-out
Grand Lisboa	Main contractor	Subcontractor	Casino and	Casino gaming	Macau	MOP152.4	21 January 2008
Hotel and			hotel	areas at 1/F,		million
Casino				2/F, 3/F, casino
				VIP rooms at
				2/F, U2/F, and
				3/F and VIP lift
				lobbies and
				passageways at
				LG3, LG1, G/F
				and 3/F and
				hotel banquet
				hall at UG/F
				interior
				fitting-out
Grand Lisboa	Main contractor	Subcontractor	Hotel	Hotel guestrooms	Macau	MOP112.8 million	14 February 2008
Hotel				11/F to 22/F
				(except 13/F,
				15/F & 16/F
				interior
				fitting-out
Parcel 1 of the	Major trade	Subcontractor	Hotel	VIP Suites at L38	Cotai, Macau	MOP250.6	14 August 2007
Cotai Casino,	contractor			& L39 and VIP,		million	(L38 & L39)
Exhibition and				hospitality and
the Hotel				club lounge at
Complex				L6 and L7,			20 July2007
				hotel suites and			(L6 & L7)
				corridors at
				central wing,
				guest lift			31 May 2007
				lobbies and			hotel suites and
				guest elevators			corridors at
				of typical floors			central wing,
				fitting-out			guest lift
							lobbies and
							guest elevators
							of typical floors
							fitting-out
Wynn Resort	Contractor	Subcontractor	Casino and	Fitout and	Macau	HK$16.0	December 2007
Macau			hotel	Drywall to		million(3)
				Ground Floor
				Promenade and
				Ground Floor
				Noodle
				(Expansion
				Phase)

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SUMMARY

		Our				Contract sum
Project name	Type of customer	capacity(1)	Project type	Scope of works	District	attributable to us	Completion date
Waldo Hotel	Property owner	Contractor	Casino and	G/F and M/F	Macau	HK$27.0 million(4)	October 2008
			hotel	Casino and
				Lobby
				renovation and
				fitting-out
The Long Beach,	Main contractor	Subcontractor	Residence	Typical lift lobby,	Hoi Fan Road,	HK$75.5 million	10 October 2003
KIL No. 11152,				bathroom,	Hong Kong		25 November
Hoi Fan Road,				kitchen living			2004
Kowloon				room and maid
				lavatory for
				residential
				towers
Parc Palais,	Main contractor	Nominated	Residence	Typical	King’s Park,	HK$78.9 million	10 July 2003
Kowloon Inland		subcontractor		bathrooms,	Hong Kong		3 May 2004
Lot No. 11118,				shuttle lift
King’s Park				lobbies,
				entrance lobbies
				and lift lobbies
				fitting-out
Central Park	Property owner	Contractor	Residence	Typical flats and	Tin Shui Wai,	HK$123.0 million	4 October 2004
Towers, Tin				lift lobbies	Hong Kong		2 January 2008
Shui Wai Town				fitting-out
Lot No. 24,
Area 33
Harbourview	Property owner	Contractor	Hotel	Loose Furniture	Hung Hom,	HK$56.3 million	21 June 2005
Horizon KIL				and lighting to	Hong Kong		1 May 2006
11103 Hung				the typical suite
Hom Bay				units fitting-out
Wynn Resorts	Contractor	Subcontractor	Hotel	Fit-out to SPA,	Macau	HK$36.4 million(5)	June 2005
Macau				Restaurants,			April 2007
				Hotel Lobbies,
				G/F Promenade
				and Lobby
				Lounge, Italian
				Restaurant and
				Public
				Restrooms in
				Area 2
One Island East,	Main contractor	Subcontractor	Office	Passenger,	Quarry Bay,	HK$59.1 million	12 June 2007
Quarry Bay				Carpark and	Hong Kong		24 May 2008
				Service lift
				lobbies, toilets
				smoke lobbies
				outside toilets
				and lift car
				interiors
				fitting-out
Butterfly On Prat	Main contractor	Subcontractor	Hotel	Provision of	Tsim Sha Tsui,	HK$55.3 million	8 December 2007
(Hotel				alteration	Hong Kong		14 November
Conversion at				works,			2008
21-23A Prat				fitting-out
Avenue,				works and
Kowloon)				building
				services
				installation
				works

Notes:

For those projects which our capacity was classified as contractor/trade contractor, we were directly employed by the property owners to executive the fitting-out works.

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SUMMARY

For those projects which our capacity was classified as nominated subcontractor, we were nominated by the property owners and entered into sub-contracts with the main contractors to execute the fitting-out works.

Fitting-out works have been completed pending written confirmation from our customer.
The actual value of the works exceeded HK$66.5 million due to subsequent variation of orders received from our customer.
The actual value of the works exceeded HK$100.0 million due to subsequent variation of orders received from our customer.
The actual value of the works exceeded HK$56.8 million due to subsequent variation of orders received from our customer.

Our revenue by business segments during the Track Record Period was as follows:

Fitting-out works – Hotel and serviced apartment – Residential apartment – Others Sub-total: Sourcing and distribution of interior decorative materials Total:	2007 (HK$’ million) 528.2 338.8 31.4	Year ended 31 March 2008 2009 % (HK$’ million) % (HK$’ million) 57.3 1,025.6 71.0 843.5 36.8 343.8 23.8 598.2 3.4 74.3 5.2 23.5	Year ended 31 March 2008 2009 % (HK$’ million) % (HK$’ million) 57.3 1,025.6 71.0 843.5 36.8 343.8 23.8 598.2 3.4 74.3 5.2 23.5	Year ended 31 March 2008 2009 % (HK$’ million) % (HK$’ million) 57.3 1,025.6 71.0 843.5 36.8 343.8 23.8 598.2 3.4 74.3 5.2 23.5	Year ended 31 March 2008 2009 % (HK$’ million) % (HK$’ million) 57.3 1,025.6 71.0 843.5 36.8 343.8 23.8 598.2 3.4 74.3 5.2 23.5	% 57.6 40.8 1.6
	898.4 22.9	97.5 2.5	1,443.7 –	100 –	1,465.2 –	100 –
	921.3	100	1,443.7	100	1,465.2	100

Our revenue by geographic locations during the Track Record Period was as follows:

Hong Kong Macau China Total:	2007 (HK$’ million) 310.7 500.5 110.1 921.3	Year ended 31 March 2008 2009 % (HK$’ million) % (HK$’ million) 33.7 445.7 30.8 867.9 54.3 939.1 65.1 547.8 12.0 58.9 4.1 49.5 100 1,443.7 100 1,465.2	% 59.2 37.4 3.4
			100

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SUMMARY

COMPETITIVE STRENGTHS

Our Directors believe that we have the following major strengths to compete in the fitting-out industry:

Established reputation and a proven track record
Long working relationships with major property developers and hotel owners in Hong Kong, Macau and the PRC
Competitive edge on material costs and arrangements with reliable suppliers and subcontractors
Possession of qualifications, capabilities and excellent job reference to undertake sizeable fitting-out projects
Experienced and efficient management team
Commitment to safety, quality and environment through well-established management system

BUSINESS STRATEGIES

To create long-term shareholder value, our principal business strategies are to:

Solidify our position in the fitting-out markets in Hong Kong and Macau which we currently operate
Further expand our fitting-out business in the PRC
Strategically expand our fitting-out business to other markets such as Qatar and Abu Dhabi in the Middle East
Extend to new business segment of building renovation and usage conversion
Develop our business of sourcing and distribution of interior decorative materials
Set-up our own procurement and pre-fabrication facility
Strengthen our research and development capabilities
Continue to further enhance our brand name recognition
Continue to emphasize and maintain high standards of project planning, management and implementation
Adhere to prudent financial management to ensure sustainable growth and capital sufficiency

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SUMMARY

SUMMARY OF FINANCIAL INFORMATION

The following is a summary of our Group’s combined results for the three years ended 31 March 2009 extracted from the accountants’ report set out in Appendix I to this document. You should read the accountants’ report, included in Appendix I to this document, for further details.

I. Combined income statements

For the year ended 31 March 2007 2008 2009 HK$’000 HK$’000 HK$’000 921,334 1,443,742 1,465,230 (790,203) (1,306,520) (1,260,105) 131,131 137,222 205,125 1,838 3,274 2,627 2,554 379 – (40,366) (36,050) (35,659) (4,920) (1,266) (1,656) (7,413) (10,984) (2,920) 82,824 92,575 167,517 (12,382) (12,071) (23,810) 70,442 80,504 143,707 36,800 25,000 113,000 9.98 0.3 0.4	For the year ended 31 March 2007 2008 2009 HK$’000 HK$’000 HK$’000 921,334 1,443,742 1,465,230 (790,203) (1,306,520) (1,260,105) 131,131 137,222 205,125 1,838 3,274 2,627 2,554 379 – (40,366) (36,050) (35,659) (4,920) (1,266) (1,656) (7,413) (10,984) (2,920) 82,824 92,575 167,517 (12,382) (12,071) (23,810) 70,442 80,504 143,707 36,800 25,000 113,000 9.98 0.3 0.4	For the year ended 31 March 2007 2008 2009 HK$’000 HK$’000 HK$’000 921,334 1,443,742 1,465,230 (790,203) (1,306,520) (1,260,105) 131,131 137,222 205,125 1,838 3,274 2,627 2,554 379 – (40,366) (36,050) (35,659) (4,920) (1,266) (1,656) (7,413) (10,984) (2,920) 82,824 92,575 167,517 (12,382) (12,071) (23,810) 70,442 80,504 143,707 36,800 25,000 113,000 9.98 0.3 0.4
131,131 1,838 2,554 (40,366) (4,920) (7,413) 82,824 (12,382)	137,222 3,274 379 (36,050) (1,266) (10,984) 92,575 (12,071)	205,125 2,627 – (35,659 (1,656 (2,920
		167,517 (23,810
70,442 36,800 9.98	80,504 25,000 0.3

Note:

Hong Kong Accounting Standard 33 “Earnings Per Share” requires the number of ordinary shares outstanding before a capitalization issue to be adjusted proportionately as if the capitalisation issue had occurred at the beginning of the earliest period presented (i.e. 1 April 2006) for the purpose of computing earnings per share (“EPS”). The EPS calculation has also taken into account the effect of the shares swap under which 69,990,000 shares were issued in exchange for the 5,100 shares of Sundart Holdings effected on 3 August 2009 by reference to the guidance set out in Accounting Guideline 5 “Merger Accounting for Common Control Combinations”. Before the Capitalization Issue of 290 million shares and the shares swap, the number of outstanding ordinary shares of Sundart Holdings is 5,100, of which only 100 shares were outstanding throughout the year ended 31 March 2007. Therefore, the number of ordinary shares for the purpose of calculating EPS during the year ended 31 March 2007 is adjusted for both the effect of the Capitalization Issue and the share swap (using a factor of 100/5100), resulting in a lower number of ordinary shares outstanding for that year and a considerably higher amount of EPS.

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SUMMARY

II. Combined balance sheets

As at 31 March 2007 2008 2009 HK$’000 HK$’000 HK$’000 4,010 – – 1,192 5,135 6,000 746 746 746	As at 31 March 2007 2008 2009 HK$’000 HK$’000 HK$’000 4,010 – – 1,192 5,135 6,000 746 746 746	As at 31 March 2007 2008 2009 HK$’000 HK$’000 HK$’000 4,010 – – 1,192 5,135 6,000 746 746 746
5,948 163,205 171,496 83,755 3,083 5,000 5,506 25,144 457,189 130,347 996 – 6,474 12,365 122,326 272,508 184,681	5,881 285,540 141,287 111,673 1,293 – 70,790 81,064 691,647 271,766 370 – 10,302 22,653 148,362 453,453 238,194	6,746
		320,047 70,056 114,914 43 – 809 191,074
		696,943
		353,520 2,291 5,181 15,512 35,017 26,667
		438,188
		258,755
190,629	244,075	265,501

1 173,845 173,846 16,500 283 16,783	40 231,924 231,964 11,666 445 12,111	40 263,437
		263,477
		1,667 357
		2,024
190,629	244,075	265,501

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SUMMARY

USE OF PROCEEDS

The net proceeds from the [�] to our Company (after deduction of [�] and estimated expenses payable by us in relation to the [�], and assuming an [�] of HK$[�] per Share, being the mid-point of the indicative [�] range of HK$[�] to HK$[�] and the [�] is not exercised) are estimated to be approximately HK$[�] million. We currently plan to use the proceeds from the [�] in the following manner:

approximately HK$[�] million (equivalent to approximately [�]% of the total estimated net proceeds) to finance our future fitting-out projects in the PRC, which will include procurement of equipments, hiring of additional staff, and payments of start-up costs for new projects such as prepayment of subcontracting fees and material purchase costs. As at the Latest Practicable Date, our Group is in the stage of bidding for the tenders and tenders for [12] fitting-out projects in the PRC had been submitted;
approximately HK$[�] million (equivalent to approximately [�]% of the total estimated net proceeds) to set up our own procurement and pre-fabrication facility and for our R&D developments as more particularised in the section headed “Business – Business strategies” in this document;
approximately HK$[�] million (equivalent to approximately [�]% of the total estimated net proceeds) to finance our future fitting-out projects in the Middle East, which will include procurement of equipments, hiring of additional staff, and payments of start-up costs for new projects such as prepayment of subcontracting fees and material purchase costs. As at the Latest Practicable Date, our Group is in the stage of bidding for the tenders and tenders for [12] fitting-out projects in the Middle East had been submitted;
approximately HK$[�] million (equivalent to approximately [�]% of the total estimated net proceeds) as reserve for potential future acquisitions. As at the Latest Practicable Date, the Directors confirm that our Company has not entered into any agreement or negotiation nor do we have any definite plans at present in relation to any potential acquisition;
approximately HK$[�] million (equivalent to approximately [�]% of the total estimated net proceeds) to finance our fitting-out projects in Hong Kong and Macau;
approximately HK$[�] million (equivalent to approximately [�]% of the total estimated net proceeds) for our marketing activities; and
approximately HK$[�] million (equivalent to approximately [�]% of the total estimated net proceeds) for working capital requirements and other general corporate purposes.

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SUMMARY

DIRECTORS

The Board consists of five executive Directors among whom Mr. Ng is one of the founders of our Group’s business and Mr. Wong joined us in 2002. While Mr. Leung is also one of the founders of our Group’s business, he left our Group in July 2006 and re-joined us in April 2009. Mr. Chan and Mr. Yip joined the Group in March 2008 and April 2008 respectively.

Pursuant to the terms of the service contracts entered into between the executive Directors and us, the initial term of appointment for each of them runs until three years from the Listing Date. The executive Directors are expected to have long term association with the Group and anticipated that the Group will continuously focus on fitting-out business and sourcing and distribution business in the foreseeable future with respect to business strategies as set out in the section headed “Business – Business strategies” in this document.

UNAUDITED PROFIT FORECAST FOR THE SIX MONTHS ENDING 30 SEPTEMBER 2009[(1)]

Forecast combined profit attributable to equity holders of our Company[(2)] . . . . . . . . . . . . . . . . . Not less than HK$[�] million

Notes:

Pursuant to Rule 11.18 of the Listing Rules, our Company has given an undertaking to the Stock Exchange that the interim financial statements of our Company for the six months ending 30 September 2009 will be audited.
The forecast combined profit attributable to equity holders of our Company for the six months ending 30 September 2009 is extracted from the section headed “Financial information – Profit forecast for the six months ending 30 September 2009” in this document. The bases and assumptions on which the above profit forecast has been prepared are summarised in Appendix III to this document. The forecast combined profit attributable to equity holders of our Company for the six months ending 30 September 2009 is based on the unaudited combined results of our Group for the three months ended 30 June 2009 and a forecast of the combined results of our Group for the remaining three months ending 30 September 2009.

DIVIDEND POLICY

Subsidiaries of our Company have declared dividends to our then equity holders of HK$36.8 million, HK$25.0 million and HK$113.0 million, respectively during the Track Record Period. In addition, Sundart Holdings had declared a dividend in the sum of HK$120 million on 30 July 2009 in the form of cash to its then equity holders, which was paid on 5 August 2009.

For the avoidance of doubt, the holders of [�] will not be entitled to any of the aforesaid pre-IPO dividends.

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SUMMARY

number of factors, including our results of operations, financial conditions, capital requirements, prevailing economic climate and other factors that our Directors may deem relevant at such time. At present, our Directors intend, subject to certain limitations, and in the absence of any circumstances which might reduce the amount available for distribution whether by losses or otherwise, to distribute to the Shareholders approximately 40% of our profits available for distribution for financial years subsequent to the Listing. Such declarations of dividends, however, will only be recommended by our Directors after taking into account, among other things, our results of operations, cashflows and financial condition, operating and capital requirements, the amount of distributable profits based on HKFRS, the Memorandum and Articles of Association, the Companies Law, applicable laws and regulations and such other factors which our Directors may deem relevant. There is, however, no assurance that dividends of such amount or any amount will be declared or distributed in any year.

RISK FACTORS

We believe that there are certain risks involved in our operations, some of which are beyond our control. These risks are set out in the section headed “Risk factors” in this document and are summarised as follows:

Risks relating to our business

Our customers pay us by way of progress payment and require retention money, and there is no guarantee that progress payment is paid to us on time and in full, or that retention money is fully released to us after the expiry of the defect liability period
We estimate time and costs in order to determine the tender price. However, the actual implementation of a project may not be in accordance with such estimation due to cost overruns and other construction risks related to the project
Our failure to meet schedule requirements of our contracts could require us to pay liquidated damages
We depend on key management personnel
We are exposed to dispute or litigation
We are subject to other construction risks such as fire, suspension of water and electricity supplies
We rely on a limited number of major customers
We may not be able to operate successfully in markets such as Qatar and Abu Dhabi in the Middle East
Our cash flows may fluctuate

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SUMMARY

Our profit may be substantially reduced if there are changes in our subcontracting and materials costs after tendering
Fitting-out works are highly labour intensive and we rely on a stable supply of labour to carry out our projects
We engage directly or indirectly labour of different trade who may launch industrial action or strikes to have higher wages and shorter working hours
Our revenue is mainly derived from short-term projects which are not recurrent in nature and there is no guarantee that our customers will provide us with new business
The trend of our historical financial information may not necessarily reflect our financial performance in the future
Our interests may conflict with those of the Controlling Shareholders, who may take actions that are not in, or may conflict with, the best interests of our public Shareholders
Dividends declared in the past may not be indicative of the dividend policy in the future
We may be adversely affected by the recent global economic developments and credit crunch
The global economy may be adversely affected by a recurrence of severe acute respiratory syndrome, or an outbreak of other epidemics such as swine flu and avian flu, thereby affecting our prospects

Risks relating to our industry

Our performance is dependent on market conditions and trends in the fitting-out industry and in the overall economy which may change adversely
The entrance barrier to fitting-out industry is low and we may face more keen competition if there are new comers
We depend on our subcontractors to complete our projects and to implement safety measures or procedures during our courses of execution of works

Risks relating to Hong Kong

The state of economy in Hong Kong may adversely affect our performance and financial condition
The state of political environment in Hong Kong may adversely affect our performance and financial condition

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SUMMARY

Devaluation of the Hong Kong dollars could affect our financial conditions and results of operations

Risks relating to Macau

The gaming industry in Macau has slowed down which may adversely affect our performance and financial condition
Our business could be affected by the limitations of the Pataca exchange markets

Risks relating to the PRC

Our future operations in the PRC are subject to the uncertainties of the PRC legal system
The economic, political and social conditions of the PRC, as well as the policies of the PRC Government, could adversely affect the financial markets in the PRC and our business

Risks relating to the State of Qatar

The oil price may adversely affect our performance and financial condition
Any changes in the political, social, economic conditions in Qatar could have a material adverse effect on our investments
The Qatar legal system continues to develop and this may create an uncertain environment for our investment and business activity
Foreign investment risks in Qatar
We may encounter difficulties or disputes with joint venture partners

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DEFINITIONS

In this document, unless the context otherwise requires, the following terms shall have the meanings set out below.

“Articles” or “Articles of Association”
the articles of association of our Company, adopted on [�] 2009, and as amended from time to time
“associate(s)” has the meaning ascribed thereto under the Listing Rules
“Board” or “Board of Directors” the board of Directors
“business day” any day (other than a Saturday or Sunday) on which licensed banks in Hong Kong are generally open for business
“BVI” British Virgin Islands
“Capitalisation Issue”
the issue of Shares to be made upon capitalisation of certain sums standing to the credit of the share premium account of our Company as referred to in the section headed “Further information about our Company – Written resolutions of all the Shareholders passed on [�]” in Appendix VI to this document
“Companies Law” the Companies Law, Cap. 22 (Law 3 of 1961, as consolidated and revised) of the Cayman Islands
“Companies Ordinance”
the Companies Ordinance (Chapter 32 of the Laws of Hong Kong), as amended, supplemented or otherwise modified from time to time
“Company” or “our Company”
Sundart International Holdings Limited, an exempted company incorporated in the Cayman Islands with limited liability on 27 April 2009
“connected person(s)” has the meaning ascribed thereto under the Listing Rules
“Controlling Shareholder(s)” has the meaning ascribed thereto under the Listing Rules, and in the context of our Company, means Tiger Crown, Mr. Chan, Scenemay Holdings, Mr. Li and Ms. Li

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DEFINITIONS

“Deed of Indemnity” the deed of indemnity dated [�] 2009 and executed by the Controlling Shareholders, Mr. Ng, Mr. Leung and Mr. Wong in favour of our Company, particulars of which are set out in the section headed “Other information – Estate duty, tax and other indemnity” in Appendix VI to this document
“Deed of Non-competition” the deed of non-competition dated [�] 2009 and executed by the Controlling Shareholders, Mr. Ng, Mr. Leung and Mr. Wong in favour of our Company, particulars of which are set out in the section headed “Relationships with the Controlling Shareholders – Deed of Non-competition” in this document
“Director(s)” or “our Director(s)” the director(s) of our Company
“DSTP” (Dongguan Sundart Timber Products Co., Ltd.), a wholly foreign-owned enterprise established in the PRC on 23 September 1992 and a wholly-owned subsidiary of Sundart Living, which in turn is a wholly-owned subsidiary of SPG. It is principally engaged in manufacturing of timber products, which principally include timber doors, wall panels and furniture
“DSTP Agreement” the manufacturing and supply agreement dated 14 March 2009 and entered into between Sundart Holdings, DSTP and SPG in relation to the supply of timber products, which principally include timber doors, wall panels and furniture by DSTP to our Group
“DYBM” (Dongguan Yoho Building Materials Limited), a wholly foreign-owned enterprise established in the PRC on 29 September 2004 and a past member of the Sundart Living Group before its deregistration in May 2008. It was principally engaged in the manufacturing of timber products at the time of its deregistration

“Golden Tiger” Golden Tiger Group Limited, an investment holding company incorporated in the BVI with limited liability on 21 January 2008, whose entire issued share capital is owned by Tiger Crown and Scenemay Holdings in equal shares

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DEFINITIONS

“Group” or “our Group” or “we” our Company and its subsidiaries and jointly-controlled or “our” or “us” entity, or where the context refers to any time prior to our Company becoming the holding company of its present subsidiaries and jointly-controlled entity, the present subsidiaries and jointly-controlled entity of our Company and their past subsidiaries (if any) and the businesses operated by them
“HKFRS” Hong Kong Financial Reporting Standards
“Hong Kong” or “HK” the Hong Kong Special Administrative Region of the PRC
“Hong Kong Government” the Government of Hong Kong
“Independent Third Parties” persons or companies which are independent of and not connected with any of the directors, chief executive and substantial shareholders of our Company or any of its subsidiaries and their respective associates, and an “Independent Third Party” means any of them
“JV Partners” Messrs. Jubin Kodinjyil Thomas, Anastasia Chistyakova and Abdullatteef Mohammed A Al-Kuwari, who are, to the best of the knowledge of the Directors, save for their relationship as being business partners, independent from each other, and save for their interest in Sundart Interior, independent from our Group
“Latest Practicable Date” [�] 2009, being the latest practicable date for the inclusion of information in this document prior to the printing of this document
“Listing”
listing of the Shares on the Main Board of the Stock Exchange
“Listing Committee”
the listing sub-committee of the board of directors of the Stock Exchange
“Listing Rules”
The Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited, as amended from time to time

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DEFINITIONS

“LPI”	L P I (HK) Limited, a company incorporated in Hong
	Kong with limited liability on 15 April 2004 which was
	then owned as to 51% by Win Venture and a past
	member of our Group before we disposed of our
	interest in it in 2006. It was principally engaged in the
	business of sourcing and distribution of building
	materials at the time when we disposed of our interest
	in it in 2006
“Macau”	the Macau Special Administrative Region of the PRC
“Memorandum” or “Memorandum	the memorandum of association of our Company,
of Association”	adopted on 27 April 2009 and as amended from time to
	time
“Mr. Chan”	Mr. Chan William, an executive Director and one of
	the Controlling Shareholders
“Mr. Leung”	Mr. Leung Kai Ming, an executive Director and our
	Chief Operating Officer
“Mr. Li”	Mr. Li Chu Kwan, one of the Controlling Shareholders
	and Ms. Li’s brother
“Mr. Ng”	Mr. Ng Tak Kwan, an executive Director, our Chief
	Executive Officer and a substantial shareholder of our
	Company
“Mr. Wong”	Mr. Wong Kim Hung, Patrick, an executive Director
“Mr. Yip”	Mr. Yip Chun Kwok, an executive Director
“Ms. Li”	Ms. Li Wing Yin, one of the Controlling Shareholders
	and Mr. Li’s sister
“PRC” or “China”	the People’s Republic of China which for the purpose
	of this document does not include Hong Kong, Macau
	and Taiwan
“PRC Government”	the central government of the PRC including all
	political subdivisions (including provincial, municipal
	and other regional or local government entities) and
	instrumentalities thereof
“Qatar”	the State of Qatar

– 17 –

DEFINITIONS

“Reorganisation”

the reorganisation arrangements undergone by our Group in preparation for the Listing, which is more particularly described in the section headed “History, Reorganisation and Group structure” in this document

“Scenemay Holdings”

Scenemay Holdings Limited, an investment holding company incorporated in the BVI with limited liability on 18 December 2007, whose entire issued share capital is owned by Mr. Li and Ms. Li in equal shares

“SFC” the Securities and Futures Commission of Hong Kong
“SFO”

the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong), as amended, supplemented or otherwise modified from time to time

“Share Option Scheme”

the share option scheme conditionally approved and adopted by our Company on [�] 2009, a summary of its principal terms is set out under the section headed “Other information – Share Option Scheme” in Appendix VI to this document

“Share Repurchase Mandate”

the general unconditional mandate to repurchase Shares granted to our Directors pursuant to the written resolutions of all the Shareholders passed on [�] 2009 as described in the section headed “Share capital – General mandate to repurchase Shares” in this document

“Share(s)” ordinary share(s) of our Company with a nominal value of HK$0.01 each

“Shareholder(s)” holder(s) of Share(s)
“SI-JV Agreement”

the joint venture agreement dated 14 May 2009 and entered into between Sundart (Middle East) and the JV Partners relating to the establishment and operation of Sundart Interior and as amended by an amendment agreement dated 15 July 2009 entered into between the same parties

– 18 –

DEFINITIONS
“SIL” Sundart International Limited, a company incorporated in Hong Kong with limited liability on 3 September 2003, a wholly-owned subsidiary of SPG and a past member of our Group before we disposed of our interest in it in 2006. It was principally engaged in the business of sourcing and distribution of timber products at the time when we disposed of our interest in it in 2006
“SI (Macau)” Sundart International (Macau) Limited, a company incorporated in Macau with limited liability on 16 January 2008 and an indirect wholly-owned subsidiary of SPG. It is principally engaged in the business of sourcing and distribution of timber products
“SPG” Sundart Products Group Limited (formerly known as Wenwick Group Limited), an investment holding company incorporated in the BVI with limited liability on 8 May 2006, whose entire issued share capital is owned by Mr. Leung
“Stock Exchange” The Stock Exchange of Hong Kong Limited “substantial shareholder(s)” has the meaning ascribed to it under the Listing Rules “Sundart (Beijing)” (Sundart Engineering & Contracting (Beijing) Limited), a wholly foreign-owned enterprise established in the PRC on 19 September 2003 and a wholly-owned subsidiary of Sundart Timber. It is principally engaged in interior fitting-out works
“Sundart (Macau)” Sundart Engineering Services (Macau) Limited, a company incorporated in Macau with limited liability on 18 March 2005, which is owned as to 90% by Sundart Timber and 10% by Sundart Holdings. It is principally engaged in interior fitting-out works
“Sundart (Middle East)” Sundart Investments (Middle East) Limited, an investment holding company incorporated in Hong Kong with limited liability on 4 November 2002 and a wholly-owned subsidiary of Sundart Development

– 19 –

DEFINITIONS
“Sundart Build Idea” Sundart Build Idea Limited, an inactive company incorporated in Hong Kong with limited liability on 15 August 2007, which was owned as to 65% by Sundart Investments and 35% by an Independent Third Party and a past member of our Group before its deregistration in 2008
“Sundart Creation” Sundart Creation Limited, a company incorporated in Hong Kong with limited liability on 20 May 2005 and a past member of our Group before we disposed of our interest in it to an Independent Third Party in 2007. It was principally engaged in property investment at the time when we disposed of our interest in it in 2007
“Sundart Development” Sundart Development Limited, an investment holding company incorporated in the BVI with limited liability on 21 May 2008 and a wholly-owned subsidiary of Sundart Holdings
“Sundart Engineering” Sundart Engineering Limited, a company incorporated in Hong Kong with limited liability on 12 September 1986, which was a wholly-owned subsidiary of Sundart Holdings prior to its disposal to Mr. Leung Chung Lim, who is the son of Mr. Leung on 28 March 2008. It was principally engaged in supply and installation of timber doors and floorsets and interior fitting-out works at the time when we disposed of our interest in it in 2008
“Sundart Holdings”

Sundart Holdings Limited, an investment holding company incorporated in the BVI with limited liability on 21 May 2001 and a wholly-owned subsidiary of our Company

“Sundart Interior”
Sundart Interior Contracting (Middle East) L.L.C., a company incorporated in Qatar with limited liability on 17 May 2009, which Sundart (Middle East) holds 47% of its share capital and is entitled to share 51% of its profit pursuant to the SI-JV Agreement and its articles of association and which is a jointly-controlled entity of our Company. It is principally engaged in interior fitting-out works
“Sundart International”

Sundart International Supply Limited, a company incorporated in Hong Kong with limited liability on 4 November 2002 and a wholly-owned subsidiary of Sundart Products. It is principally engaged in the business of sourcing and distribution of interior decorative materials

– 20 –

DEFINITIONS

“Sundart Investments” Sundart Investments Limited, an investment holding company incorporated in Hong Kong with limited liability on 7 April 2005 and a wholly-owned subsidiary of Sundart Holdings
“Sundart Living” Sundart Living Limited, a company incorporated in Hong Kong with limited liability on 11 August 1994, a wholly-owned subsidiary of SPG and a past member of our Group before we desposed of our interest in it in 2005
“Sundart Living Group” SPG and its subsidiaries including DSTP, Win Venture and SI (Macau) and, where the context refers to any time when DYBM was a subsidiary of SPG, also includes DYBM
“Sundart Products” Sundart Products Limited, an investment holding company incorporated in the BVI with limited liability on 11 November 2008 and a wholly-owned subsidiary of Sundart Holdings
“Sundart Timber” Sundart Timber Products Company Limited, a company incorporated in Hong Kong with limited liability on 10 January 1995 and a wholly-owned subsidiary of Sundart Investments. It is principally engaged in investment holding and interior fitting-out works
“Synovate Report” a report on the fitting-out industry in Hong Kong issued by the business consulting unit of Synovate Limited in 31 July 2009 and commissioned by us
“Taishan Sundart” (Taishan Sundart Building Materials Co., Ltd.), a wholly foreign-owned enterprise established in the PRC on 13 June 2003, a wholly-owned subsidiary of Sundart Creation at the time when we disposed of our interest in it to an Independent Third Party in 2007 and a past member of our Group before we disposed of our interest in it in 2007. It was principally engaged in property investment at the time when we disposed of our interest in it in 2007
“Takeovers Code” the Code on Takeovers and Mergers of Hong Kong
“Tiger Crown”
Tiger Crown Limited, an investment holding company incorporated in the BVI with limited liability on 2 March 2004, the entire issued share capital of which is owned by Mr. Chan

– 21 –

DEFINITIONS

“Track Record Period” the three financial years ended 31 March 2009 “United States” or “U.S.” the United States of America “U.S. Securities Act” the United States Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder
“Win Venture” Win Venture Trading Limited, a company incorporated in Hong Kong with limited liability on 20 March 2002, a wholly-owned subsidiary of SPG and a past member of our Group before we disposed of our interest in it in 2006. It was principally engaged in the business of sourcing and distribution of timber products at the time when we disposed of our interest in it in 2006
“HK$” or “HK dollars” or Hong Kong dollars and cents, the lawful currency of “cents” Hong Kong
“MOP” or “Pataca” Macau Pataca, the lawful currency of Macau “QAR” or “Qatar Riyals” Qatar Riyals, the lawful currency of Qatar
“RMB” or “Renminbi” Renminbi, the lawful currency of the PRC
“sq.m.” or “m[2] ” square metres
“US$” or “U.S. dollars” United States dollars, the lawful currency of the United States
“£” pound sterling, the lawful currency of the United Kingdom
“%” per cent.

The English names of the PRC entities mentioned in this document are translations of their Chinese names. If there is any inconsistency, the Chinese names shall prevail.

Unless otherwise expressly stated or the context otherwise requires, all data in this document is as at the date of this document.

For the purpose of illustration only and unless otherwise specified in this document, amounts denominated in MOP, QAR, RMB and US$ have been translated into HK$ at the rate of MOP1.03 = HK$1, QAR0.47 = HK$1, RMB0.88 = HK$1 and US$1 = HK$7.76. No representation is made that the MOP, QAR, RMB and US$ amounts could have been, or could be, converted into HK$ at such rates or at any other rate on such date or on any other date. Unless otherwise specified, all references to any shareholdings in our Company assume no exercise of the [ � ].

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GLOSSARY OF TECHNICAL TERMS

This glossary contains explanations of certain terms used in this document in connection with us and our business. These terminologies and their given meanings may not correspond to those standard meanings and usage adopted in the industry.

“Air Pollution Control Ordinance”

Air Pollution Control Ordinance (Chapter 311 of the Laws of Hong Kong), as amended, supplemented or otherwise modified from time to time

“Cotai Casino, Exhibition and the casino, exhibition centre and hotel complex at Cotai, Hotel Complex” Macau, which our Group has participated or is still participating in the fitting-out works of certain parts thereof
“Dumping at Sea Ordinance”
Dumping at Sea Ordinance (Chapter 466 of the Laws of Hong Kong), as amended, supplemented or otherwise modified from time to time
“Employees’ Compensation Employees’ Compensation Ordinance (Chapter 282 of Ordinance” the Laws of Hong Kong), as amended, supplemented or otherwise modified from time to time
“Environment Impact Assessment Environment Impact Assessment Ordinance (Chapter Ordinance” 499 of the Laws of Hong Kong), as amended, supplemented or otherwise modified from time to time
“Environmental Protection Environmental Protection Department of the Hong Department” Kong Government
“Factories and Industrial Factories and Industrial Undertakings Ordinance Undertakings Ordinance” (Chapter 59 of the Laws of Hong Kong), as amended, supplemented or otherwise modified from time to time
“GDP” gross domestic product

“ISO” the International Organisation for Standardisation, a non-government organisation based in Geneva, Switzerland, for assessing the quality systems of business organisations

“ISO 14000” a family of environmental management standards set by ISO for assisting a company to continually improve its ability to efficiently identify, minimise, prevent and manage environmental impacts. ISO 14001 is a member of that family and ISO 14001:2004 is the current version of ISO 14001

– 23 –

GLOSSARY OF TECHNICAL TERMS

“ISO 9000” a family of standards set by ISO for quality management system where an organisation needs to demonstrate its ability to provide products that fulfill customers and applicable regulatory requirements and aim to enhance customer satisfaction. ISO 9001 is a member of that family and ISO 9001:2008 is the current version of ISO 9001
“Jing Guang Centre” (Jing Guang Centre), a commercial complex in Beijing whose construction was completed in 1990
“Noise Control Ordinance” Noise Control Ordinance (Chapter 400 of the Laws of Hong Kong), as amended, supplemented or otherwise modified from time to time
“QS” quantity surveying
“R&D” research and development
“UL” or “Underwriters Underwriters Laboratories Inc., an independent product Laboratories” safety certification organisation whose product certification programs are accredited by the U.S. Occupational Safety and Health Administration, the American National Standards Institute and the Standards Council of Canada

“UL Mark” the label bearing the words “UL” and being stuck on the product for the purpose of identifying the product as being certified by UL. UL maintains a database of authorised label suppliers and only the suppliers shown in the database are authorised to print labels with the UL Mark

“Waste Disposal Ordinance” Waste Disposal Ordinance (Chapter 354 of the Laws of Hong Kong), as amended, supplemented or otherwise modified from time to time

“Water Pollution Control Water Pollution Control Ordinance (Chapter 358 of the Ordinance” Laws of Hong Kong), as amended, supplemented or otherwise modified from time to time

– 24 –

RISK FACTORS

You should carefully consider all of the information in this document including the risks and uncertainties described below. The business, financial condition or results of operations of our Group could be materially adversely affected by any of these risks.

RISKS RELATING TO OUR BUSINESS

Our customers pay us by way of progress payment and require retention money, and there is no guarantee that progress payment is paid to us on time and in full, or that retention money is fully released to us after the expiry of the defect liability period.

We normally receive progress payment from our customers on a monthly basis, with reference to the value of work done. Generally, the authorised persons, usually architects or consulting quantity surveyors employed by our customers, would issue a progress certificate certifying the work progress in the preceding month.

A portion of contract value, normally 5%, is usually withheld by our customers as retention money and will generally be released after the defect liability period. As at 31 March 2007, 31 March 2008 and 31 March 2009, retention money of approximately HK$83,755,000, HK$111,673,000 and HK$114,914,000, respectively was retained by our customers.

There can be no assurance that progress payment is paid to us on time and in full, or the retention money or any future retention money will be remitted by our customers to us on a timely basis and in full or that the level of bad debt arising from such payment practice can be maintained at the same level as in the Track Record Period. Any failure by our customers to make remittance on time and in full may have an adverse effect on our future liquidity position.

We estimate time and costs in order to determine the tender price. However, the actual implementation of a project may not be in accordance with such estimation due to cost overruns and other construction risks related to the project.

Most of our fitting-out contracts are normally awarded through competitive tendering process. We need to estimate the time and costs in order to determine the tender price. There is no assurance that the actual time and costs would not exceed our estimation during the actual implementation of the project, which often takes several months to complete.

The time taken and the costs actually involved in completing fitting-out projects undertaken by us may be adversely affected by many factors, including typhoon and other acts of god, shortage and cost escalation of materials and labour, additional variations to the fitting-out plans requested by our customers or because of technical needs, disputes with subcontractors, accidents and other unforeseen problems and circumstances. Any of these can give rise to delays in completion of works or costs overruns or even unilateral termination of projects by our customers.

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RISK FACTORS

Failures to complete a project according to specification and quality standard on a timely basis may result in disputes, contract termination, liabilities and/or lower returns than anticipated on the project concerned. Such delays or failures to complete and/or unilateral termination of projects by our customers may cause our revenue or profitability to be lower than what we have expected.

Our failure to meet schedule requirements of our contracts could require us to pay liquidated damages.

Substantially all of our contracts are subject to specific completion schedule requirements with liquidated damages charged to us if we do not meet the schedules. Liquidated damages are typically levied at an agreed rate for each day of delay that is deemed to be our responsibility. Any failure to meet the schedule requirements of our contracts could cause us to pay significant liquidated damages, which would reduce or eliminate our profit on the relevant contracts, could adversely affect our liquidity and cash flows and have a material adverse effect on our business, financial condition, results of operations, reputation and prospects.

We depend on key management personnel.

Our success and growth depends on our ability to identify, hire, train and retain suitable, skilled and qualified employees, including management personnel with the requisite industry expertise. Our Directors and members of senior management, in particular, our executive Directors are important to us. The loss of a significant number of our executive Directors and/or senior management may have a material adverse effect on our business if we are unable to find suitable replacements in a timely manner. Competition for such personnel is intense, and any failure to recruit and retain the necessary management personnel at any time could harm our business and prospects.

We are exposed to dispute or litigation.

As a fitting-out contractor, we are principally responsible for the fitting-out projects and we may receive claims in respect of various matters from our customers, subcontractors, workers and other parties concerned with the projects from time to time. Such claims include claims for compensation for late completion of works and delivery of substandard works, and claims in respect of personal injuries and labour compensation in relation to works. Please refer to the section headed “Business – Litigation” in this document for details.

Although we have effected insurance policies and retained moneys from our subcontractors to cover these claims, the outcome of any claim is subject to the relevant parties’ negotiation or the decision of the court or the relevant arbitrating authorities, and the result of any of the outstanding claims may be unfavourable to us. Should such claims fall outside the scope and/or limit of our insurance coverage or moneys retained from subcontractors, our financial position may be adversely affected.

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RISK FACTORS

We are subject to other construction risks such as fire, suspension of water and electricity supplies.

We usually commence our fitting-out works after the main contractor has substantially completed the construction of the relevant building. Therefore, we will carry out our fitting-out works when other subcontractors are still carrying out their works in the same construction site. Although fitting-out works are relatively safe when comparing with other trades, we nevertheless are subject to other construction risks such as fire, suspension of water and electricity supplies primarily caused by others which may not only affect our work progress but also even pose risks on our properties kept at the construction site.

We rely on a limited number of major customers.

We principally derive our revenue from providing fitting-out services to major property developers in Hong Kong and/or the property development projects undertaken by them and hotel owners in Hong Kong and Macau. During the Track Record Period, revenue derived from our five largest customers, which are either major property developers in Hong Kong or hotel owners in Hong Kong and Macau, amounted to approximately HK$598.4 million, HK$1,157.9 million and HK$1,153.7 million, respectively, and accounted for approximately 64.9%, 80.2% and 78.7%, respectively, of our total revenue. We expect that we will continue to rely on revenue derived from providing fitting-out services to such kinds of customers, therefore, any decrease or delay in property or hotel development projects of them could have an adverse effect on our operations and profits. In addition, there is no assurance that we can diversify the composition of our customer base.

We may not be able to operate successfully in markets such as Qatar and Abu Dhabi in the Middle East.

We are exploring business opportunities in selected markets outside Hong Kong, Macau and the PRC such as Qatar and Abu Dhabi in the Middle East. These markets are new to us and we face risks in conducting our business outside Hong Kong, Macau and the PRC. The risks include differences in general business environment, legal and regulatory requirements, the licensing regime, the tendering regime, payment practices, potentially adverse tax consequences, competition within the local market, fluctuations in currency exchange rates, differences in legal burdens in complying with local laws and regulations and changes in political and economic conditions, particularly for the Middle East region, given its current political instability. There is no assurance that we will be able to operate successfully in such selected overseas markets, and the deployment of human and financial resources in pursuit of such plans outside Hong Kong, Macau and the PRC may have a material and adverse impact on us.

Our cash flows may fluctuate.

As far as a single project is concerned, net cash outflows are normally recorded at the early stage of carrying out our works when we are required to pay the setting up expenditures. Progress payments will be paid after our works commence and accordingly the cash flows for a particular project will turn into accumulative net inflows gradually as the works progress. Please see the section headed “Business” in this document.

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RISK FACTORS

If we take up too many significant projects at a particular period of time, which require substantial initial setting up costs without cash inflow from other projects during such period of time, our cash flow position may be adversely affected.

Our profit may be substantially reduced if there are changes in our subcontracting and materials costs after tendering.

Our subcontracting costs and material costs represent a significant portion of our cost of sales. During the Track Record Period, our subcontracting costs and material costs amounted to approximately HK$728.3 million, HK$1,205.5 million and HK$1,152.2 million, respectively and accounted for approximately 92.2%, 92.3% and 91.4% of our cost of sales, respectively. We prepare our tender and quotation based on our estimated project costs (which mainly include subcontracting costs and material costs) plus a mark-up margin at the time when we submit our tender for projects or our initial proposals to our potential customers but the actual subcontracting costs and material costs will not be determined until after we have entered into agreements with our customers. Any fluctuations in the subcontracting and material costs during this period will affect our profitability.

Fitting-out works are highly labour intensive and we rely on a stable supply of labour to carry out our projects.

Fitting-out works are basically labour intensive works. For any given project, a large number of workers from different trade with different skills may be required. In Hong Kong, given that it has a total population of about seven million, the shortage of labour has never been severe in recent years. However, in Macau, given that it only has a total population of less than one million and there have been a large number of construction projects in recent years, the labour market in Macau has been tight and average labour costs in Macau have increased significantly.

During the Track Record Period, we or our subcontractors have not encountered any difficulties in recruiting labour to work for our projects in Hong Kong and Macau. However, there is no guarantee that the supply of labour and average labour costs will be stable. In the event that we or our subcontractors fail to retain our existing labour and/or recruit sufficient labour in a timely manner to cope with the demand of our existing or future projects and/or there is a significant increase in the costs of labour, we may not be able to complete our projects on schedule and within budget and our operations and profitability may be adversely affected.

We engage directly or indirectly labour of different trade who may launch industrial action or strikes to have higher wages and shorter working hours.

Construction works usually split into various different trade. Each trade requires highly skillful labour of its own and may not be substituted from labour of other trade. During the Track Record Period, the construction industry in Hong Kong encountered a strike action by steel benders and fixers. However, the strike did not have much impact on our operations because our projects did not directly involve steel bending and fixing.

– 28 –

RISK FACTORS

Nevertheless, we are exposed to the risk that some trade unions may launch industrial actions or even strikes to ask for higher wages and shorter working hours. If we meet their demand, we will incur additional labour costs, or if not, we may expose risk to damages claimed by employers/developers for the delays in completion of our contracts. In either case, these industrial actions or strikes may have adverse impact on our profitability and results of operations.

Our revenue is mainly derived from short-term projects which are not recurrent in nature and there is no guarantee that our customers will provide us with new business.

During the Track Record Period, most of our revenue was derived from short-term projects with private developers in Hong Kong, Macau and the PRC. Certain of our projects currently carrying out by us will, sooner or later after Listing, be completed. However, there is no guarantee that we will be able to secure new contracts with customers. In the event that we are unable to do so, our future revenue and hence our future profit will be adversely affected.

The trend of our historical financial information may not necessarily reflect our financial performance in the future.

For each of the three years ended 31 March 2009, our revenue amounted to approximately HK$921.3 million, HK$1,443.7 million and HK$1,465.2 million, respectively, representing a year-on-year growth rate of approximately 56.7% and 1.5%, respectively. For each of the three years ended 31 March 2009, our net profit amounted to approximately HK$70.4 million, HK$80.5 million and HK$143.7 million, respectively, representing a year-on-year growth rate of approximately 14.3% and 78.5%, respectively.

However, such trend of historical financial information of our Group is a mere analysis of our past performance only and does not have any positive implication or may not necessarily reflect our financial performance in the future which will solely depend on our capability to secure new contracts and keep our costs at a minimum.

Our interests may conflict with those of the Controlling Shareholders, who may take actions that are not in, or may conflict with, the best interests of our public Shareholders.

Our interests may conflict with those of the Controlling Shareholders, who may take actions that are not in, or may conflict with, our public Shareholders’ best interests. Upon completion of the [�], the Controlling Shareholders will own, in aggregate, 40.46% of our enlarged issued share capital assuming that the [�] is not exercised. As such, the Controlling Shareholders have and will continue to have the ability to exercise a controlling influence over our business, including matters relating to our management and policies and certain matters requiring the approval of our Shareholders, including election of Directors, approval of significant corporate transactions and the timing and distribution of dividends.

They will also have veto power with respect to any Shareholder action or approval requiring a majority vote. They may take actions that you may not agree with or that are not in the best interest of our public Shareholders. This concentration of ownership may have

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RISK FACTORS

the effect of delaying, deferring or preventing a change in control, discouraging bids for our Shares at a premium over the market price, or adversely affecting the market price of our Shares.

Dividends declared in the past may not be indicative of the dividend policy in the future.

Subsidiaries of our Company have declared dividends to the then equity holders of our Company, of HK$36.8 million, HK$25.0 million and HK$113.0 million, respectively, during the Track Record Period, which have been paid by us and financed by our internal resources. In addition, Sundart Holdings had declared a dividend in the sum of HK$120 million on 30 July 2009 in the form of cash to its then equity holders, which was paid on 5 August 2009. Any declaration of dividends proposed by our Directors and the amount of any such dividends will depend on various factors, including, without limitation, our results of operations, financial condition, future prospects and other factors which our Directors may determine are important. For further details of the dividend policy of our Company, please see the section headed “Financial information – Dividend policy” in this document. Because of the above reasons, we cannot guarantee if and when dividends will be paid in the future.

We may be adversely affected by the recent global economic developments and credit crunch.

The recent global economic developments and credit crunch has adversely affected the global economy. Under such deteriorating global economy and with the continual weak economic sentiment, the investment in residential, commercial and industrial property sectors may decrease and there has been delay or suspension with respect to our existing projects, which may affect our profitability and revenue growth. Moreover, banks have been tightening credit, which may aggravate the interest expenses on our bank borrowings, or banks may even reduce the amount of or discontinue the banking facilities currently available to us. If the economic downturn and the weak economic sentiment continue, our business, financial condition and results of operations may be adversely affected.

The global economy may be adversely affected by a recurrence of severe acute respiratory syndrome, or an outbreak of other epidemics such as swine flu and avian flu, thereby affecting our prospects.

Some countries including Mexico, United States and Japan are susceptible to epidemics such as severe acute respiratory syndrome (SARS), swine flu (H1N1) and avian flu, which may cause severe damage to their respective local economies and the global economy as a whole. If such epidemics break out in the PRC, or in the cities where we have or will have operations, it may result in material disruptions to our business operations, which will in turn adversely affect our financial condition.

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RISK FACTORS

RISKS RELATING TO OUR INDUSTRY

Our performance is dependent on market conditions and trends in the fitting-out industry and in the overall economy which may change adversely.

During the Track Record Period, approximately 33.7%, 30.9% and 59.2% of our revenue was derived in Hong Kong. The future growth and level of profitability of the fitting-out industry in Hong Kong are likely to depend primarily upon the continued availability of major construction projects. The nature, extent and timing of such projects will, however, be determined by the interplay of a variety of factors, in particular, the spending patterns of the Hong Kong Government on the construction industry in Hong Kong, the investment of property developers and hotel owners and the general conditions and prospects of Hong Kong’s economy. These factors may affect the availability of fitting-out projects from the public sector, private sector or institutional bodies.

Although our Directors believe that the Hong Kong Government is committed to maintaining a robust investment in new infrastructure and improving existing facilities, and a number of large scale infrastructure projects will be implemented in Hong Kong, these projects are susceptible to delays and availability of funds of the Hong Kong Government. There are also many other factors affecting the fitting-out industry, including cyclical trends in the economy as a whole, fluctuations in interest rates and the availability of new projects in the private sector, and the implementation of new infrastructure projects by the Hong Kong Government may not be able to help in the recovery of the fitting-out industry. Should there be a recurrence of recession in Hong Kong, deflation or any changes in Hong Kong’s currency policy, or should the fitting-out industry in Hong Kong start to decline again, and we fail to open up new markets outside Hong Kong, our operations and profits could be adversely affected.

The entrance barrier to fitting-out industry is low and we may face more keen competition if there are new comers.

The fitting-out industry, either in Hong Kong, Macau or the PRC, is highly competitive. In order to survive, market participants have to, not only come up with new creative ideas and skills, but also cut their prices and sacrifice their profit in order to successfully obtain tenders.

In addition, given that no industry specific licences or qualifications are required to carry out fitting-out business in Hong Kong or Macau, we may face even more keen competition in the future if there are new comers who are able to offer services of higher quality at lower prices. If we fail to compete effectively or maintain our competitiveness in the market, our business, financial condition and results of operations will be materially and adversely affected.

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RISK FACTORS

We depend on our subcontractors to complete our projects and to implement safety measures or procedures during our courses of execution of works.

In the course of our operations, we engage subcontractors to provide certain services or manpower. We have established a system with respect to the selection and control of subcontractors, including maintaining a regularly updated list of qualified subcontractors, and entering into agreements with them to set forth each party’s rights and obligations. Nevertheless, we may not be able to monitor the performance of these subcontractors as directly and efficiently as with our own staff. In addition, qualified subcontractors may not always be readily available when our needs for outsourcing arise. If we are unable to hire qualified subcontractors, our ability to complete projects could be impaired. If the amounts we are required to pay for subcontractors exceed what we have estimated, especially in fixed-price contracts with our customers, we may suffer losses on these contracts. If a subcontractor fails to provide services as required under a contract for any reason, we may be required to source these services on a delayed basis or at a higher price than anticipated, which could impact contract profitability. If a subcontractor’s performance does not meet our standards, the quality of the project may be affected, which could harm our reputation and potentially expose us to litigation and damage claims.

We require our subcontractors to follow and adopt all the safety measures and procedures as stipulated in our safety management plans. Nonetheless, if our subcontractors violate any laws, rules or regulations in relation to health and safety matters, we may not only expose ourselves as primary obligor to prosecutions by relevant authorities, but also be liable to claims for losses and damages if such violations cause any personal injuries/death or damage to properties. Although we have closely supervised and monitored our subcontractors in implementation of all required safety measures and procedures during execution of works, we cannot assure that there will not be any violations, whether substantial or minor in nature, of any laws, rules or regulations. In the event there is any such violation occurred in the sites for which we are responsible, our operations and hence our financial position will be adversely affected.

RISKS RELATING TO HONG KONG

The state of economy in Hong Kong may adversely affect our performance and financial condition.

After experiencing substantial growth in economy since 2006, Hong Kong has entered into a recessionary period of economic down-turn and it is uncertain for how long the economy in Hong Kong will take to return to normal again. Hong Kong is our major market which accounted for approximately 33.7%, 30.9% and 59.2% of our revenue during the Track Record Period, in case the economy of Hong Kong continues to be bad or even deteriorates, our results of operations and financial positions may be severely affected.

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RISK FACTORS

The state of political environment in Hong Kong may adversely affect our performance and financial condition.

Hong Kong is a special administrative region of the PRC and enjoys a high level of autonomy under the principle of “one country, two systems” according to the Basic Law of Hong Kong. However, we are not in any position to guarantee the implementation of the “one country, two systems” principle and the level of autonomy as currently in place at the moment. Since our primary operations are substantially located in Hong Kong, any change of such political arrangements may post immediate threat on the stability of the economy in Hong Kong, thereby directly and negatively affecting our results of operations and financial positions.

Devaluation of the Hong Kong dollars could affect our financial conditions and results of operations.

Since 17 October 1983, Hong Kong dollars have been pegged to the U.S. dollars at a rate of HK$7.80 to US$1.00. There is no indication that the Hong Kong Government intends to cancel or change the pegged exchange rate arrangements. However, in the event that such arrangements shall change or the valuation of U.S. dollars shall become volatile in the international currency markets, valuation of Hong Kong dollars may be significantly affected or may even experience devaluation. At present, substantial part of our revenue is generated in the currency of Hong Kong dollars and part of our expenses and/or certain fitting-out materials imported from other countries is incurred in a currency other than Hong Kong dollars. In case of devaluation of Hong Kong dollars by whatever reason, our financial performance and liquidity positions may be adversely affected and our expenses incurred may drastically increase as a result.

RISKS RELATING TO MACAU

The gaming industry in Macau has slowed down which may adversely affect our performance and financial condition.

Macau has undergone growth in the construction industry, particularly for constructions of casinos, gaming and entertainment related establishments before the financial tsunami broke out in 2008, which has caused many construction projects to abandon or delay. During the Track Record Period, approximately 54.3%, 65.0% and 37.4% of our revenue was generated from our projects in Macau. In case the construction sector of Macau continues to be bad or deteriorates as a result of financial tsunami, our results of operations may be adversely affected.

Our business could be affected by the limitations of the Pataca exchange markets.

Part of our revenue from Macau is denominated in Patacas, the lawful currency of Macau. Although currently permitted, we cannot assure you that the Patacas will continue to be freely exchangeable into Hong Kong dollars. Also, because the currency market for Patacas is relatively small and undeveloped, our ability to convert large amounts of Patacas into Hong Kong dollars over a relatively short period may be limited. As a result, we may experience difficulty in converting Patacas into Hong Kong dollars.

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RISK FACTORS

RISKS RELATING TO THE PRC

We are prepared to expand our business in the PRC. Accordingly, our business and financial condition and prospects are subject to risks of economic, political and legal developments in the PRC.

Our future operations in the PRC are subject to the uncertainties of the PRC legal system.

The PRC legal system is a civil law system based on written statutes. Unlike common law system, it is a system in which decided legal cases have little value as precedents. In 1979, the PRC Government began to promulgate a comprehensive system of laws and regulations governing economic matters in general, and such legislation over the past 30 years has significantly enhanced the protections afforded to various forms of foreign investment in China in general and laws and regulations applicable to wholly foreign-owned enterprises in particular. These laws, regulations and legal requirements are relatively new and are often changing and their interpretation and enforcement involve uncertainties. These uncertainties limit the reliability of legal protections available to us. We cannot predict the effect of future developments in the PRC legal system. We may be required in the future to procure additional permits, authorisations and approvals for our future projects, which may not be obtainable in a timely fashion or at all.

The economic, political and social conditions of the PRC, as well as the policies of the PRC Government, could adversely affect the financial markets in the PRC and our business.

The PRC economy differs from the economies of most developed countries in many respects, including the amount of PRC Government’s involvement, level of capital reinvestment, growth rate, control of foreign exchange, allocation of resources and balance of payments position. While the PRC economy has experienced significant growth in the past 20 years, growth has been uneven, both geographically and among various sectors of the economy. The PRC Government has implemented various measures to encourage economic growth and guide the allocation of resources.

Some of these measures may have a negative effect on us. For example, our business and financial condition may be adversely affected by the PRC Government’s control over property investments or use of mortgage financing and by changes in tax regulations that are applicable to us. Any slowdown in growth of the PRC economy could have a negative effect on our business. The PRC economy has been transitioning from a planned economy to a more market-oriented economy. The PRC Government has implemented measures since the late 1970s emphasising the use of market forces for economic reform, the reduction of state ownership of productive assets and the establishment of improved corporate governance in business enterprises. Yet currently a substantial portion of productive assets in the PRC is still owned by the PRC Government. In addition, the PRC Government continues to play a significant role in regulating industry development by imposing industrial policies. It also exercises significant control over China’s economic growth through the allocation of resources, controlling payment of foreign currency denominated obligations, setting monetary policy and providing preferential treatment to particular industries or companies.

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RISK FACTORS

Since late 2003, the PRC Government has implemented a number of measures designed to prevent the economy from overheating. On 17 May 2006, the PRC Government announced further measures with respect to the PRC real estate industry. These include a focus on property development for low-income households and various tax, bank credit and land allocation policies designed to regulate demand and to discourage developers or local authorities from hoarding land and driving up land prices. On 24 May 2006, the State Council approved further detailed measures to implement the same policies. On 11 July 2006, the PRC Government issued further opinions on regulating the access of foreign investment to the real estate market and strengthening the management of real estate purchases by foreign invested enterprises. These actions, as well as future actions and policies of the PRC Government, could cause a decrease in the overall level of economic activity, and consequently have an adverse impact on our business and financial condition.

RISKS RELATING TO THE STATE OF QATAR

General

Investors should be aware that the State of Qatar (“ Qatar ”) market may be subject to greater risks than more developed markets, including in some cases significant legal, economic and political risks. Accordingly, investors should exercise particular care in evaluating the risks involved and must decide for themselves whether, in light of those risks, their investment is appropriate.

The oil price may adversely affect our performance and financial condition.

Sundart Interior operates in Qatar. Qatar is a peninsular state in the Persian Gulf, heavily dependent upon imports. Its major natural resources, and sources of income are oil and gas, the majority of which is exported. Qatar economy is largely dependent on its oil production and global prices of oil. If oil prices continue to drop or if Qatar’s oil production levels decline, there will be an adverse impact on the revenue earned in Qatar. A decline in oil prices or a reduction in Qatar’s oil production could have a material adverse effect on the Qatari economy and on Sundart Interior’s performance.

Any changes in the political, social, economic conditions in Qatar could have a material adverse effect on our investments.

Political affairs in Qatar are very much subject to the personality and views of the current Emir from the Al Thani family. No assurance can be given that the current Emir will not implement regulations or fiscal or monetary policies, including policies, regulations, or new legal interpretations of existing regulations, relating to or affecting taxation, interest rates or exchange controls, or otherwise take actions which could have a material adverse effect on the business, financial condition, results of operations or prospects of Sundart Interior.

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RISK FACTORS

Changes in investment policies or shifts in the prevailing political climate in Qatar could result in the introduction of increased government regulations with respect to, among other things:

price controls;
export and import controls;
income and other taxes;
environmental legislation;
customs and immigration;
foreign ownership restrictions;
foreign exchange and currency controls; and
labour and welfare benefit policies.

As the political, economic and social environments in Qatar in which we have made investments remain subject to continuing development, investments in Qatar are characterised by a significant degree of uncertainty. Any unexpected changes in the political, social, economic or other conditions in Qatar, or in countries that neighbour Qatar, could have a material adverse affect on the investments that we have made or may make in the future, which in turn could have a material adverse affect on our financial condition and results of operations.

The Qatar legal system continues to develop and this may create an uncertain environment for our investment and business activity.

Qatar and many of the Gulf Cooperation Council (“ GCC ”) countries are in various stages of developing their legal and regulatory institutions that are characteristic of more developed markets. As a result, procedural safeguards as well as formal regulations and laws may not be applied consistently. In some circumstances it may not be possible to obtain the legal remedies provided under the relevant laws and regulations in a timely manner. As the legal environment remains subject to continuous development, investors in Qatar and the GCC countries may face uncertainty as to the security of their investments. Any unexpected changes in the legal systems in Qatar and the GCC may have a material adverse effect on the investments that we have made or may make in the future, which may in turn have a material adverse effect on our business, operating results, cash flows and financial condition.

Foreign investment risks in Qatar.

While the Qatari economy has developed rapidly over the last decade, there remain important restrictions in the economy, particularly as regards the rights of foreign investors, which include the prohibition on the purchase of land in Qatar by foreigners (except for certain areas) and the limit of 49% foreign ownership of a Qatari business.

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RISK FACTORS

We may encounter difficulties or disputes with joint venture partners.

As part of the Group’s strategies to expand to our fitting-out business to other markets, the Group has entered into joint venture arrangement with third parties, and may enter into joint venture arrangements with other parties as and when appropriate commercial opportunities arise in the future. As at the Latest Practicable Date, the Group had one jointly controlled entity, namely Sundart Interior, which is a joint venture and owned by our Group as to 47% and pursuant to the SI-JV Agreement and the articles of association of Sundart Interior, our Group is entitled to share 51% of the profit of Sundart Interior. However, there is a theoretical and remote risk that our Group’s disproportional profit sharing entitlement may be subject to challenge and in the unlikely event that such challenge is successful, there is a risk that Sundart (Middle East)’s share of the profit in Sundart Interior will be brought down from 51% to 47% to be in line with the percentage of its shareholding in Sundart Interior and in such event, our Group’s financial condition and results of operations may be materially and adversely affected.

There is no assurance that the Group’s relationship with its joint venture partners can at all times be amicably maintained. Our Group’s existing and future joint venture arrangements involve a number of risks, including:

disputes with joint venture partners in connection with the performance of each party’s obligations under the relevant joint venture agreements;
financial difficulties encountered by a joint venture partner affecting its ability to perform its obligations under the joint venture agreements or other contracts with our Group;
conflicts between the policies or objectives adopted by the joint venture partners and those by our Group; and
joint venture partners having economic or business interests inconsistent with those of our Group.

The occurrence of any of these events and other factors may lead to disputes between joint venture partners and our Group and affect the operations of our Group and, as a result, our Group’s financial condition and results of operations may be materially and adversely affected.

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FORWARD-LOOKING STATEMENTS

We have included in this document forward-looking statements that state our intentions, beliefs, expectations or predictions for the future, in particular, under the sections headed “Business”, “Future plans and use of proceeds” and “Financial information” in this document.

In some cases, we use words such as “anticipate”, “believe”, “consider”, “expect”, “may”, “plans”, “prospects”, “will” and similar expressions to identify forward-looking statements. All statements other than statements of historical facts included in this document, including statements regarding our strategy, projected costs and plans and objects of management for future operations, are forward-looking statements. Although we believe that the expectations reflected in those forward-looking statements are reasonable, we give no assurance that those expectations will prove to be correct, and you are cautioned not to place undue reliance on such statements. Important factors that could cause actual results to differ materially from our expectations are disclosed in this section and elsewhere in this document. All forward-looking statements contained in this document are qualified by this cautionary statement.

– 38 –

DIRECTORS AND PARTIES INVOLVED

DIRECTORS
Name	Address	Nationality
Executive Directors
CHAN William (Chairman)	6201 Mount Davis Road	Chinese
	Cape Mansion
	Pokfulam Road
	Hong Kong
NG Tak Kwan	Room 605	Chinese
(Chief Executive Officer)	Block C
	Kornhill
	Quarry Bay
	Hong Kong
LEUNG Kai Ming	61-63 Third Street	Chinese
(Chief Operating Officer)	Section K
	Fairview Park
	Yuen Long
	New Territories
	Hong Kong
WONG Kim Hung, Patrick	Flat C, 4/F	Chinese
	Block 16
	Provident Centre
	51 Wharf Road
	North Point
	Hong Kong
YIP Chun Kwok	Flat H, 28/F	Chinese
	Tien Shan Mansion
	Kao Shan Terrace
	Taikoo Shing
	Hong Kong

– 39 –

DIRECTORS AND PARTIES INVOLVED

Name	Address	Nationality
_Independent Non-Executive _	Directors
TO King Yan, Adam	Flat D, 15/F	Australian
	Estoril Court
	55 Garden Road
	Hong Kong
WONG Hoi Ki	13C Seahorse Lane	Chinese
	Discovery Bay
	Hong Kong
WONG Kwok Wai, Albert	42D, Tower 5	British
	Sky Tower
	38 Sung Wong Toi Road
	Kowloon
	Hong Kong

– 40 –

DIRECTORS AND PARTIES INVOLVED

PARTIES INVOLVED

Legal advisers to our Company as to Hong Kong law: Woo Kwan Lee & Lo 26th Floor, Jardine House 1 Connaught Place Central Hong Kong as to Cayman Islands law: Conyers Dill & Pearman Cricket Square Hutchins Drive Grand Cayman KY1-1111 Cayman Islands as to PRC law: Jingtian & Gongcheng 15th Floor The Union Plaza 20 Chaoyangmenwai Dajie Beijing PRC as to Macau law: Rui Afonso Lawyers’ Office Suites B, C&D, 4th Floor Dynasty Plaza Building Nos. 411 and 417, Alameda Dr. Carlos D’Assumpcao Macau as to Qatar law: Simmons & Simmons Level 5 Al Mirqab Tower Al Corniche Street P.O. Box 23540 Doha State of Qatar Auditor and reporting Deloitte Touche Tohmatsu accountants Certified Public Accountants 35/F, One Pacific Place 88 Queensway Hong Kong

– 41 –

DIRECTORS AND PARTIES INVOLVED

Property valuer

Jones Lang LaSalle Sallmanns Limited 17/F Dorset House Taikoo Place 979 King’s Road Quarry Bay Hong Kong

– 42 –

CORPORATE INFORMATION

Registered office Cricket Square Hutchins Drive P.O.Box 2681 Grand Cayman, KY1-1111 Cayman Islands Headquarters and principal 7/F, Millennium City 3 place of business in Hong 370 Kwun Tong Road Kong Kowloon Hong Kong Company’s website address www.sundart.com (information on this website does not form part of this document) Company secretary YIP Chun Kwok HKICPA, FCCA, ACS, ACIS, CFA Authorised representatives WONG Kim Hung, Patrick Flat C, 4/F Block 16 Provident Centre 51 Wharf Road North Point Hong Kong YIP Chun Kwok Flat H, 28/F Tien Shan Mansion Kao Shan Terrace Taikoo Shing Hong Kong Compliance adviser ICBC International Capital Limited Level 18 Three Pacific Place 1 Queen’s Road East Hong Kong Audit committee WONG Kwok Wai, Albert (Chairman) TO King Yan, Adam WONG Hoi Ki Remuneration committee CHAN William (Chairman) WONG Kwok Wai, Albert WONG Hoi Ki

– 43 –

CORPORATE INFORMATION

Nomination committee CHAN William (Chairman) WONG Kwok Wai, Albert WONG Hoi Ki Principal share registrar and Butterfield Fulcrum Group (Cayman) Limited transfer office Butterfield House 68 Fort Street P.O. Box 609 Grand Cayman, KY1-1111 Cayman Islands Hong Kong branch share Tricor Investor Services Limited registrar and transfer office 26/F Tesbury Centre 28 Queen’s Road East Hong Kong Principal bankers DBS Bank (Hong Kong) Limited 11th Floor The Center 99 Queen’s Road Central Hong Kong Guangdong Development Bank Co., Ltd. ALAMEDA DR. CARLOS D’ ASSUMPC¸ ÃO, N[o] S 181 A 187, CENTRO COMERCIAL DO GRUPO BRILHANTISMO, 18[o] ANDAR, EM MACAU Industrial and Commercial Bank of China (Asia) Limited 33/F ICBC Tower 3 Garden Road Central Hong Kong Oversea-Chinese Banking Corporation Limited 9/F Nine Queen’s Road Central Hong Kong The Bank of Tokyo-Mitsubishi UFJ, Limited 8/F, AIG Tower 1 Connaught Road Central Hong Kong

– 44 –

WAIVERS FROM STRICT COMPLIANCE WITH THE REQUIREMENTS UNDER THE LISTING RULES

CONTINUING CONNECTED TRANSACTIONS

We have entered into and are expected to continue with certain transactions which would constitute non-exempt continuing connected transactions of our Company under the Listing Rules after the Listing. We have applied to the Stock Exchange for, and the Stock Exchange has granted, a waiver from strict compliance with the announcement and independent shareholders’ approval requirements under Chapter 14A of the Listing Rules for such non-exempt continuing connected transactions. Further information on such non-exempt continuing connected transactions and the waiver are set forth in the section headed “Connected transactions” in this document.

– 45 –

INDUSTRY OVERVIEW

HONG KONG MARKET

Overview of the Construction Industry in Hong Kong

As the Hong Kong Government announced ten mega infrastructure projects in 2007, there has been positive impact on the construction industry of Hong Kong. According to the statistics published by the Census and Statistics Department of the Hong Kong Government, the gross value of construction works performed by main contractors for public sites, which includes projects commissioned by the Hong Kong Government, MTR Corporation Limited, Airport Authority and the Housing Authority, amounts to approximately HK$14,503 million in 2007 and increases to approximately HK$15,339 million in 2008, representing a growth rate of approximately 5.8%. As regards the private sector sites which mainly include projects commissioned by private developers, the gross value of construction works performed by main contractors amounts to approximately HK$28,973 million in 2007 and increased to approximately HK$33,495 million in 2008, representing a growth rate of approximately 15.6%. The table below sets out the total gross output value of construction by sector from 2004 to 2008 as extracted from the Synovate Report.

Gross Output Value of Construction

==> picture [366 x 126] intentionally omitted <==

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

HK$ in million
99,599 Private Sector Sites
100,000 93,171 90,851 90,230 92,866 Public Sector Sites
80,000 Locations other than sites
60,000 36,618 42,160 48,240 49,390 50,765 Total
40,000 28,533 15,339
22,334 17,135 14,503
20,000
28,021 26,356 24,855 28,973 33,495
0
Year 2004 2005 2006 2007 2008
----- End of picture text -----

Sources: Buildings Department of the Hong Kong Government, Synovate interviews and analysis

The Synovate Report provides that the increase in total gross output value of construction from 2006 to 2008 is mainly attributable to (i) the increase of new hotel constructions; (ii) the adoption of higher quality materials for better prices and for marketing purposes upon building completion; and (iii) the increase in new construction of more premium private residential housing and offices. According to the Synovate Report, a few sizable infrastructure projects are under planning or construction and these are expected to cause the increase of gross output value of construction. Such projects include Hong Kong-Guangdong bridge, Kai Tak redevelopment project and West Kowloon cultural district. A construction cycle generally involves the construction of infrastructure and real estates, and the stage of real estate development usually follows the stage of infrastructure development, leading to positive future outlook.

– 46 –

INDUSTRY OVERVIEW

Residential Property Market in Hong Kong

Under weak market conditions, developers generally planned to slow down the construction progress of existing projects. The number of units completed for residential housing dropped from approximately 11,343 rooms in 2007 to approximately 8,776 rooms in 2008, which represents a decrease of approximately 22.6%. Nonetheless, the financial crisis in 2008 had resulted in delayed completion of residential units to 2009, thereby leading to a very positive outlook for 2009. As at the end of 2008, the gross floor area under construction in Hong Kong for the residential sector is estimated in the Synovate Report to be approximately 4,517,000 sq.m., and that for non-residential sector is approximately 2,029,000 sq.m. Set forth below is the number of units completed for residential housing from 2004 to 2008, as extracted from the Synovate Report.

Number of units completed for residential housing

==> picture [259 x 130] intentionally omitted <==

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

No. of units
25,000
20,000
23,899
15,000
17,321
16,579
10,000
11,343
5,000 8,776
0
Year 2004 2005 2006 2007 2008
----- End of picture text -----

Sources: Buildings Department of the Hong Kong Government, Rating and Valuation Department of the Hong Kong Government

According to the Synovate Report, the investment in the fitting-out work for the residential market in Hong Kong had been increasing across 2006 to 2008, with the CAGR of approximately 11%. Fitting-out work for new residential housing has been increasingly sophisticated and complicated, with clubhouse and pre-fixed home appliances to be inevitable features for the sale of new buildings. Currently, the fitting-out cost shares about 15% to 25% of the total construction cost including home appliances procurement and installation. Moreover, the luxurious residential renovation and fitting-out cost can be as high as 40% of the total construction cost including home appliances procurement and installation. During the prosperous period of the economy in the past 3 years, developers tended to increase fitting-out investment to boost the sales of residential housing. In particular, complicated interior design of clubhouses and showrooms are of significant effect to fitting-out costs.

Hotel Industry in Hong Kong

The supply of hotel services in Hong Kong increased over the past 5 years in response to the increase in the tourists from Mainland China and the preparation of 2009 East Asian Games. Set forth below is the existing hotel units and corresponding room number from 2004 to 2008 as extracted from the Synovate Report.

– 47 –

INDUSTRY OVERVIEW

Existing Hotel Units and Corresponding Room Number

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

Number of units Number of units
70,000 651 695 800
612 Number of hotel rooms
60,000 585 700
541
50,000 600 Number of hotel
500
40,000
52,512 56,649 60,273 400
30,000 44,362 48,891
300
20,000
200
10,000 100
0 0
2004 2005 2006 2007 2008
Year
----- End of picture text -----

==> picture [233 x 9] intentionally omitted <==

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

Note: The figures include all levels of hotels and guesthouses
----- End of picture text -----

Source: Hong Kong Tourism Board

Investment in the fitting-out work for Hong Kong hotels had been increasing for the past 5 years, with the annual rate of increase of approximately 8.0%. Currently, the fitting-out cost of hotels are usually higher than that of residential housing. The fitting-out cost of 3 to 4-star hotel shares about 18% to 25% of the total construction cost, with all furniture and appliances well-equipped; whereas the fitting-out cost of 5 to 6-star hotel can be over 30% of the total construction cost.

Commercial Property Market in Hong Kong

As stated in the Synovate Report, commercial completion increased at a CAGR of approximately 39% from 2005 to 2008, which is mostly attributable to offices which shared approximately 87% of new commercial buildings. Set forth below is the gross floor area completed for commercial buildings from 2005 to 2008, as extracted from the Synovate Report.

Gross Floor Area Completed for Commercial Buildings

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sq.m. in thousand
400 368 390
350
291
300
250
200
145
150
100
50
0
Year 2005 2006 2007 2008
----- End of picture text -----

Note: Gross floor area completed for commercial buildings include offices, shopping malls, etc., but not include industrial offices and public usage

Sources: Buildings Department of the Hong Kong Government, Rating and Valuation Department of the Hong Kong Government

– 48 –

INDUSTRY OVERVIEW

Renovation/Decoration Value of Hong Kong Property Markets

Hotels in Hong Kong usually have the highest percentage of renovation/decoration value to total project value compared with residential and commercial buildings. According to the Synovate Report, the percentage of renovation/decoration value to total project value for residential buildings ranges from about 15% to 25%; while that for hotels ranges from about 18% to 30% and that for commercial buildings ranges from about 10% to 20%.

In conclusion, continuously rising living standard of Hong Kong residents maintains the strong demand for high-quality and luxurious residential housing. Expected recovery of the Hong Kong economy at a later stage will activate the demand for more sophisticated and luxurious fitting-out and decoration of residential housing. Moreover, the recovery of global economy will be favorable to the growth of inbound tourists and businessmen to Hong Kong, which is expected to propel the development and renovation of hotels and serviced apartments.

CHINA MARKET

Overview of the China Construction Industry

Before 2008, the real estate industry in China enjoyed a significant growth with the completed and under-construction gross floor area kept increasing. In 2008, although the under-construction gross floor area increased by 9.5%, the real estate market was shrinking due to global financial tsunami and the national policy to restrain the over-heated market. Set forth below is the gross floor area completed and under construction in the PRC from 2004 to 2008 as extracted from the Synovate Report.

Gross Floor Area Completed and Under Construction

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sq.m. in billion
6
5.28 Completed
5 4.82
Under construction
4.1
4 3.53
3.11
3
2.04 2.03
2 1.47 1.59 1.8
1
0
Year 2004 2005 2006 2007 2008
Source: National Bureau of Statistics of China
----- End of picture text -----

China’s fast developing economy has resulted in a rapid growth of China’s household income, thereby driving up expenditure on housing and utilities steadily. In 2008, the total expenditure of urban and rural areas is RMB1.2 trillion and RMB515 billion respectively. Set forth below is China’s annual household income and expenditure in urban and rural areas from 2004 to 2008 as extracted from the Synovate Report.

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INDUSTRY OVERVIEW

China’s Income and Expenditure

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Household
income
(Urban)
RMB in billion Household
income
12,000
(Rural)
9,574
9,000 8,186 Expenditure
6,786 on housing
5,898 and utilities
6,000 5,114
(Urban)
3,434
3,012
3,000 2,223 2,426 2,645 Expenditure
675 777 910 1,043 1,211 on housing
437 515 and utilities
0 284 336 383 (Rural)
Year 2004 2005 2006 2007 2008
----- End of picture text -----

Note:

1. Household income (Urban) represents the total annual disposable income of urban households. Household income (Rural) represents the total annual net income of rural households.

Source: National Bureau of Statistics of China

China Residential Market

Residential buildings experienced a dramatic increase in 2005 and kept growing rapidly until 2007. In 2008, the growth rate slowed down due to the financial tsunami and the national policy to cool down the overheated estate market. Set forth below is the gross floor area of competed residential buildings in the PRC from 2004 to 2008 as extracted from the Synovate Report.

Gross Floor Area of Residential Buildings Completed

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sq.m. in thousand
600,000
498,313 505,000
500,000 436,828 467,570
401,182
400,000
300,000
200,000
100,000
0
Year 2004 2005 2006 2007 2008
----- End of picture text -----

Source: China real estate statistics yearbook

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INDUSTRY OVERVIEW

In late 2008, the PRC Government announced a series of new housing policies which, in general, lower the home purchase cost, monthly repayment burden and the barrier on getting home mortgage from banks. These policies have triggered a warm sales volume recovery in early 2009. The nationwide commodity residential sales grew by approximately 8.7% to approximately 103 million sq.m. in the first quarter of 2009 as compared to the first quarter of 2008. Some major cities even recorded significant rebound in sales volume. For instance, residential property sales in Beijing for the first quarter of 2009 reached approximately 3.1 million sq.m., representing an increase of approximately 80.0% compared with the first quarter of 2008.

Hotel and Serviced Apartments in China

Despite the continuous decline in the number of newly established star hotels from 2004 to 2007, the number picked up sharply in 2008 with 1,417 units completed due to Beijing Olympic Games. In 2009 and 2010, key events (such as Shanghai Expo and Guangzhou Asia Games) to be held in China are expected to be the main drivers of the hotel industry. Serviced apartments in China are maintaining steady growth, with increasing popularity in big cities while remaining a low profile in second and third-tier cities. Set forth below is the number of completed hotels and serviced apartments in the PRC from 2004 to 2008 as extracted from the Synovate Report.

Number of Completed Hotels and Serviced Apartments

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No. of Buildings
1,500 1,417
1,137 Serviced Apartments
940 923 832
1,000 Star Hotels
500
10 15 50 100 120
0
Year 2004 2005 2006 2007 2008
----- End of picture text -----

Source: China real estate statistics yearbook, Synovate analysis

Commercial Property Market in China

Commercial buildings hold an overall growth trend in terms of completion during the past few years. Set forth below is the gross floor area of completed commercial buildings in the PRC from 2004 to 2008 as extracted from the Synovate Report.

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INDUSTRY OVERVIEW

Gross Floor Area of Completed Commercial Buildings

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sq.m. in thousand
20,000 19,313 18,540
15,000 14,167 13,937
10,346
10,000
5,000
0
Year 2004 2005 2006 2007 2008
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Source: China real estate statistics yearbook

Renovation/Decoration Value of PRC Property Markets

With the issuance of “Notice on further strengthening the management of residential decoration”, all the newly built residential buildings are encouraged to be fully-renovated before selling to customers. Sizable decoration on residential buildings will have big market opportunity. Despite global financial crisis, the decoration market is forecast to grow at the annual rate of 20%. According to the Secretary of State Assets Administration Committee, the total decoration output will hit RMB 2.1 trillion in 2010. Set forth below is the gross output value of decoration/renovation in the PRC from 2004 to 2008 as extracted from the Synovate Report.

Gross Output Value of Decoration/Renovation

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RMB in billion
2000
1,475 1,500
1500 1,300
1000
680
500
500
0
2004 2005 2006 2007 2008
Year
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Source: Committee of Economic Development Strategy of the PRC

– 52 –

INDUSTRY OVERVIEW

MACAU MARKET

Overview of Macau Construction Industry

The liberalisation of gambling industry and loosening of China tourists visits indirectly drove the fast growth of construction industry in Macau. Macau’s completed gross floor area grew dramatically in 2006 at the rate of 226% and showed the increasing trend from 2004 to 2007, with the CAGR of 107%. Such increase was attributable to the continuous opening of large casinos with hotels in 2006 and 2007 including Wynn Macau and Macau MGM Grand. New casinos and hotels help to drive the growth of economy and income of Macau residents and, in turn, propel the demand for residential and commercial buildings. In 2008 during which the financial tsunami took place, many construction sites had prolonged the progress or even put the works on hold, leading to a sharp decrease in the gross floor area completed and under construction. Set forth below is the completed gross floor area and that for new construction completion in Macau from 2004 to 2008, as extracted from the Synovate Report.

Gross Floor Area in Completion and New Construction

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sq.m. in thousand
2,500 2,133 2,200 Completed
2,000 1,926
New construction
1,500 1,276
986
1,000
715
584 533
500 391
215
0
Year 2004 2005 2006 2007 2008
----- End of picture text -----

Source: Statistics and Census of Macau SAR

Residential and commercial property markets in Macau

As regards the residential property market in Macau, the number of units completed increased from 2004 to 2006 due to completion of major residential projects, and showed a decreasing trend afterwards. Set forth below is the number of units completed for residential housing in Macau from 2004 to 2008, as extracted from the Synovate Report.

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INDUSTRY OVERVIEW

Number of Units Completed for Residential Housing

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No. of units
3,000 2,783
2,500
2,000 1,856
1,500
962 1,098 1,099
1,000
500
0
Year 2004 2005 2006 2007 2008
----- End of picture text -----

Sources: Statistics and Census of Macau SAR, Midland Macau

Similar to the trend as in residential housing, commercial buildings completion showed an increasing trend from 2004 to 2006 and dropped in 2007. Nonetheless, completion of offices and shopping malls drove up the trend in 2008, as demonstrated in the chart below.

Gross Floor Area Completed for Commercial Buildings

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sq.m.
60,000
51,117
50,000
42,540
40,000
30,000 23,395
21,060
18,860
20,000
10,000
0
Year 2004 2005 2006 2007 2008
----- End of picture text -----

Sources: Statistics and Census of Macau SAR, Synovate analysis

Hospitality Industry in Macau

The number of existing hotel rooms increased significantly in 2007 due to the opening of two major hotels, namely, Venetian Resort Hotel and MGM Grand Hotel. However, since certain large-scale resort projects at Cotai Strip had come to a halt, the growth in hotel supply is expected to slow down. Set forth below is the existing hotel units and corresponding room number in Macau from 2004 to 2008.

– 54 –

INDUSTRY OVERVIEW

Existing Hotel Units and Corresponding Number of Rooms

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Number of units Number of buildings
20,000 100 Number of hotel rooms
84
80 82
15,000 70 75 80 Number of hotels
17,490
16,148
60
10,000 12,978
10,832 40
9,168
5,000
20
0 0
2004 2005 2006 2007 2008
----- End of picture text -----

Sources: Statistics and Census of Macau SAR, Macau Government Tourist Office

Renovation/Decoration Value of Macau Property Markets

Hotels and casinos in Macau usually have the highest percentage of renovation/ decoration works to total project value, comparing to residential and commercial buildings. According to the Synovate Report, the percentage of renovation/decoration value to total project value for residential buildings ranges from about 12% to 20%; while that for hotels and casinos ranges from about 18% to 50% and that for commercial buildings ranges from about 8% to 15%. The comparatively larger range for hotels and casinos is mainly attributable to luxurious casino resorts invested by foreign funds.

QATAR MARKET

Overview of the Qatar Market

Qatari economy is highly dependent on oil and natural gas, which accounted for approximately 53% of its GDP in 2008. Being heavily dependent on the oil sector, Qatar is facing liquidity problem because of the recent crude oil price fluctuations. The Qatari government is trying to diversify its economy to non-oil sectors in order to build a more sustainable economy. In addition to manufacturing, finance and real estate sectors, the Qatari government is also focusing on the development of the construction industry. The chart below sets forth the contribution by various sectors to Qatar’s GDP in 2008.

– 55 –

INDUSTRY OVERVIEW

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

GDP Contribution Non-Oil sector GDP Contribution
21% 18%
4%
47%
14%
53%
24%
11%
8%
Oil Sector Non Oil sector
Manufacturing Electricity and water
Building And Construction Restaurants and Hotels
Transport and Communication Business & real estate services
Others
----- End of picture text -----

Source: Globe Investment House

Relaxed property ownership laws and encouragement for the tourism industry of Qatar has increased activity in construction sector which has nonetheless seen a slight contraction in 2008 due to global economic crisis. Set forth below is the gross output value of construction in Qatar from 2004 to 2008 as extracted from the Synovate Report.

Gross Output Value of Construction

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

6,000
5,419
5,000
4,020
4,000
3,303
3,000
2,402
2,000 1,771
1,000
Year 2004 2005 2006 2007 2008
----- End of picture text -----

Source: Planning council of Qatar, IMF

A fast developing and increasingly wealthy economy in Qatar has resulted in an influx of expatriates, thereby driving population growth which has in turn created acute shortage of housing and residential units in the country. This gives an opportunity for real estate developers to tap this potential. Moreover, population growth due to expatriates and working class segment has resulted in higher household income, thereby driving up housing expenditure. Set forth below is the average household consumption and expenditure in housing from 2004 to 2008 as extracted from the Synovate Report.

– 56 –

INDUSTRY OVERVIEW

Qatar’s Average Household Consumption and Expenditure on Housing

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

Source: Qatar Statistics Authority
----- End of picture text -----

During the past few years, Qatar has been moving towards liberalised property ownership laws. In 2004, expatriates are allowed to own properties on a long-term leasehold basis in 18 designated areas in Qatar; and permitted to own land, buildings and residential units in Pearl Qatar, West Bay Lagoon and Al Khor Resort Project, thereby encouraging foreign investment in real estates in Qatar.

Residential Market of Qatar

Qatar’s high population growth due to influx of expatriates has resulted in shortage of residential units which in turn catalyses the growth of upcoming residential projects in Qatar. Set out below is the cumulative number of units for residential units from 2005 to 2008 as extracted from the Synovate Report.

Cumulative Number of Residential Units

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No. of rooms
125,000
97,561 98,527 100,000 100,500
100,000
75,000
50,000
25,000
0
Year 2005 2006 2007 2008
----- End of picture text -----

Source: Planning Council, Qatar Tourism Authority, Synovate analysis

– 57 –

INDUSTRY OVERVIEW

Hotel Industry in Qatar

Qatar has been promoted as one of the prime tourist locations for business, sports and leisure tourism. In 2006, Qatar hosted the 2006 Asian Games. The hosting of Asian Games resulted in an increase in demand for hotels. Set forth below is the cumulative number of hotels and serviced apartments from 2005 to 2008 as extracted from the Synovate Report.

Cumulative Number of Hotel Units (including Serviced Apartments)

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No. of units
10,000 9,530
8,000 7,398
6,472
6,000 5,662
4,000
2,000
0
Year 2005 2006 2007 2008
----- End of picture text -----

Source: Planning Council, Qatar Tourism Authority, Synovate analysis

Commercial Property Market in Qatar

The Qatari government’s ambitious projects including the Qatar financial centre, Qatar Science and Technology Park and the Energy City have fuelled the growth in commercial construction. As stated in the Synovate Report, the gross floor area of commercial completion increased at a CAGR of approximately 34.6% from 2005 to 2008. Set forth below is the gross floor area completed for commercial buildings from 2005 to 2008 as extracted from the Synovate Report.

Gross Floor Area of Commercial Completion

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sq.m. in thousand
1,500
1,240
950
1,000
700
508
500
0
2005 2006 2007 2008
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Source: Planning Council, Qatar Tourism Authority, Synovate analysis

– 58 –

INDUSTRY OVERVIEW

Renovation/Decoration Value of Qatar Property Markets

Interior decoration and renovation market stands at USD929 million in 2008. Commercial segment (including office space and retail space) has been the anchor for interior decoration market, comprising of nearly 58% of the market size in 2008. With the development of large residential projects in Qatar, interior decoration for residential units is expected to emerge strongly. Set out below is the size and the relative proportion of the interior contracting market in Qatar for 2008 as extracted from the Synovate Report.

Size of the Interior Contracting Market in Qatar in 2008

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

Residential
US$33 million
(3.6%)
Hotels
Commercial
US$357 million
US$539 million
(38.4%)
(58.0%)
----- End of picture text -----

Source: Synovate analysis

ABU DHABI MARKET

Overview of the Abu Dhabi Market

Similar to the case of Qatar, approximately 56% of Abu Dhabi’s GDP in 2008 is attributable to the oil sector. This makes the GDP and liquidity in the market highly dependent on oil prices. The Abu Dhabi government has taken steps to diversify its economy to non-oil sectors by promoting investments in real estate segment by allowing foreign investments in phases. As indicated by the drastic CPI growth rate of approximately 20.0% in 2008, which is mainly attributable to the high growth rate in house rent and related items, the real estate market of Abu Dhabi was in shortage. Moreover, growing income level in Abu Dhabi is expected to create ample opportunities for future development.

With an effort to diversify GDP to non-oil sectors, the Abu Dhabi government has increased spending on infrastructure projects. Strong official support for real estate investments has also encouraged the private sector to step in, thereby increasing the construction activity in the region. Set forth below is the gross output value of construction from 2005 to 2008 as extracted from the Synovate Report.

– 59 –

INDUSTRY OVERVIEW

Gross Output Value of Construction (at Constant Prices)

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

US$ million
5,000
4,354 4,370
3,893
4,000 3,527
3,000
2,000
1,000
0
Year 2005 2006 2007 2008
----- End of picture text -----

Source: Abu Dhabi Chambers of Commerce and Industry

The main growth driver for real estate has been the influx of expatriates. In 2004, Abu Dhabi government passed the property law, which allows GCC citizens to own land in designated areas in Abu Dhabi, and other expatriates to acquire long-term rights to use properties and construct buildings. Relaxation in laws governing property ownership has also increased interest of foreign investors in Abu Dhabi. This is one of the key reasons for the growth of construction sector. Moreover, growing income levels and current shortage of quality houses provide ample opportunity for future developments. Set forth below is the average Abu Dhabi’s annual household consumption and expenditure on housing from 2005 to 2008 as extracted from the Synovate Report.

Annual Household Consumption and Expenditure on Housing

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

US$
80,000
67,054 Annual consumption
70,000 60,665
per household
54,967 56,475
60,000
Annual spending on
50,000 housing per household
40,000 33,760
27,615 29,814
30,000 22,912
20,000
10,000
0
2005 2006 2007 2008
----- End of picture text -----

Source: International civil service commission

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INDUSTRY OVERVIEW

Abu Dhabi Residential Market

Shortage of residential space and increasing population (both of internal and expatriates) is expected to drive demand for residential dwellings. Set out below is the number of units completed for residential housing from 2005 to 2008 as extracted from the Synovate Report.

Number of Residential Units Completed

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No. of units
200,000 173,787 180,000 186,200
167,789
150,000
100,000
50,000
0
Year 2005 2006 2007 2008
----- End of picture text -----

Source: Synovate Report

Hotel Industry in Abu Dhabi

The hosting of F1 race and establishment of world class museums are marking Abu Dhabi a preferred location for tourism. Increasing number of tourists and Emirate’s growing trend to promote Abu Dhabi as a tourist attraction are expected to provide impetus for the growth of the hospitality segment. Set forth below is the units of hotels and serviced apartments completed from 2005 to 2008 as extracted from the Synovate Report.

Units of Hotels and Serviced Apartments Completed

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

No. of units
15,000
10,500
9,500
10,000
7,690
6,224
5,000
0
Year 2005 2006 2007 2008
----- End of picture text -----

Source: Synovate Report

– 61 –

INDUSTRY OVERVIEW

Commercial Property Market in Abu Dhabi

Oil & gas companies and government departments drive the majority of demand for office space segment, along with occupiers in banking, finance and insurance sectors. Rising population, increasing disposable income and a diversification of retail offers are driving the growth of retail space segment in Abu Dhabi. Set forth below is the gross floor area completed for commercial buildings from 2005 to 2008 as extracted from the Synovate Report.

Gross Floor Area of Commercial Buildings (without Hotels) Completed

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

sq.m. in thousand
3,000
2,478
2,220
1,845
2,000 1,684
1,000
0
Year 2005 2006 2007 2008
----- End of picture text -----

Source: Synovate Report

Renovation/Decoration Value of Abu Dhabi Property Markets

Interior decoration and renovation market of Abu Dhabi stands at USD 969 million in 2008. Set out below is the size and relative proportion of the interior contracting market in Abu Dhabi for 2008 as extracted from the Synovate Report.

Size of the Interior Contracting Market in Abu Dhabi in 2008

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

Hotels
US$241 million
(24.9%)
Commercial632
US$464 million
(47.9%)
Residential
US$264 million
(27.2%)
----- End of picture text -----

Source: Synovate analysis

– 62 –

INDUSTRY OVERVIEW

As stated in the Synovate Report, growth in the hospitality segment is expected to meet the demand for hotel rooms during F1 race. Besides, commercial segment will continue to be the main driver of interior decoration market because of its attractiveness in terms of project value per office unit.

BACKGROUND OF SYNOVATE REPORT

On 6 May 2009, we engaged the business consulting unit of Synovate Limited to undertake a study on the fitting-out market in Hong Kong, Macau, the PRC and the Middle East at a fee of approximately HK$300,000. The study is set out in the Synovate Report. Our Directors confirm that Synovate Limited, including all of its subsidiaries, divisions and units, is independent of and not connected with us in any way.

Synovate Limited, on behalf of itself, its subsidiaries and units, confirms that the Synovate Report was prepared in its ordinary course of business, and has given its consent for us to quote from the Synovate Report and to use information contained in the Synovate Report in this document.

The information contained in the Synovate Report is derived by means of data and intelligence gathering methodology which includes (i) desk research conducted by the business consulting unit of Synovate Limited including specialised industry literature, government/regulatory sources, online data sources, third-party reports and surveys, industry reports and analyst reports, industry associations and the database maintained by Synovate Limited; and (ii) primary research by having interviews with key stakeholders and industry experts, including real estate investors/developers, building managers, architects/interior designers, contractors and end-customers in Hong Kong, Macau, China, Qatar and Abu Dhabi.

According to the business consulting unit of Synovate Limited, Synovate Limited was formed in 2003 and is a research institute with close to 6,000 employees worldwide and coverage in over 100 cities spanning over 62 countries. It is a market research unit of Aegis Group plc, a company listed on the London Stock Exchange. Services of the business consulting unit of Synovate Limited include market profiling, market sizing, share and segmentation analysis, distribution and value analysis, competitor tracking and corporate intelligence.

This document contains some information extracted from the Synovate Report, and they are in sections headed “Summary”, “Industry overview”, “Business” and “Financial information”.

– 63 –

REGULATIONS

LAWS AND REGULATIONS IN RELATION TO SAFETY AND INSURANCE IN HONG KONG

Factories and Industrial Undertakings Ordinance

The Factories and Industrial Undertakings Ordinance provides for the safety and health protection to workers in the industrial sector. Under the Factories and Industrial Undertakings Ordinance, every proprietor shall take care of the safety and health at work of all persons employed by it at an industrial undertaking by:

providing and maintaining plant and work systems that do not endanger safety or health;
making arrangement for ensuring safety and health in connection with the use, handling, storage or transport of plant or substances;
providing all necessary information, instruction, training, and supervision for ensuring safety and health;
providing and maintaining safe access to and egress from the workplaces; and
providing and maintaining a safe and healthy work environment.

A proprietor who contravenes these duties commits an offence and is liable to a fine of HK$500,000.

Employees’ Compensation Ordinance

The Employees’ Compensation Ordinance establishes a no-fault and non-contributing employee compensation system for work injuries and lays down the rights and obligations of employers and employees in respect of injuries or death caused by accidents arising out of and in the course of employment, or by prescribed occupational diseases.

Under the Employees’ Compensation Ordinance, if an employee sustains an injury or dies as a result of an accident arising out of and in the course of his employment, his employer is in general liable to pay compensation even if the employee might have committed acts of faults or negligence when the accident occurred. Similarly, an employee who suffers incapacity arising from an occupational disease is entitled to receive the same compensation as that payable to employees injured in occupational accidents.

According to Section 40 of the Employees’ Compensation Ordinance, all employers (including contractors and subcontractors) are required to take out insurance policies to cover their liabilities both under the Employees’ Compensation Ordinance and at common law for injuries at work in respect of all their employees (including full-time and part-time employees). Where a principal contractor has undertaken to perform any construction work, it may take out an insurance policy for an amount not less than HK$200 million per event to cover his liability and that of his subcontractor(s) under the Employees’ Compensation Ordinance and at common law.

– 64 –

REGULATIONS

An employer who fails to comply with the Ordinance to secure an insurance cover is liable on conviction to a fine of HK$100,000 and imprisonment for two years.

LAWS AND REGULATIONS IN RELATION TO ENVIRONMENTAL PROTECTION IN HONG KONG

Air Pollution Control Ordinance

The Air Pollution Control Ordinance is the principal legislation in Hong Kong for controlling emission of air pollutants and noxious odour from construction, industrial and commercial activities and other polluting sources. Subsidiary regulations of the Air Pollution Control Ordinance impose control on air pollutant emissions from certain operations through the issue of licences and permits.

A contractor shall observe and comply with the Air Pollution Control Ordinance and its subsidiary regulations, particularly the Air Pollution Control (Open Burning) Regulation, the Air Pollution Control (Construction Dust) Regulation and the Air Pollution Control (Smoke) Regulation. The contractor responsible for a construction site shall devise, arrange methods of working and carrying out the works in such a manner so as to minimise dust impacts on the surrounding environment, and shall provide experienced personnel with suitable training to ensure that these methods are implemented. Asbestos control provisions in the Air Pollution Control Ordinance require that building works involving asbestos must be conducted only by registered qualified personnel and under the supervision of a registered consultant.

Noise Control Ordinance

The Noise Control Ordinance controls the noise from construction, industrial and commercial activities. A contractor shall comply with the Noise Control Ordinance and its subsidiary regulations in carrying out general construction works. For construction activities that are to be carried out during the restricted hours and for percussive piling at all times, construction noise permits are required from the Environmental Protection Department in advance.

Under the Noise Control Ordinance, noisy construction work and the use of powered mechanical equipment in populated areas is not allowed between 7 p.m. and 7 a.m. or at any time on general holidays, unless prior approval has been granted by the Environmental Protection Department through the construction noise permit system. Certain equipment is also subject to restrictions when its use is allowed. Hand-held percussive breakers and air compressors must comply with noise emissions standards and be issued with a noise emission label from the Environmental Protection Department. Percussive pile-driving is allowed on weekdays only with prior approval, in the form of a construction noise permit from the Environmental Protection Department.

– 65 –

REGULATIONS

Water Pollution Control Ordinance

The Water Pollution Control Ordinance controls the effluent discharged from all types of industrial, commercial, institutional and construction activities into public swears, rainwater drains, river courses or water bodies. For any industry/trade generating wastewater discharge (except domestic sewage that is discharged into communal foul sewers or unpolluted water to storm drains), they are subject to licensing control by the Environmental Protection Department.

All discharges, other than domestic sewage to a foul sewer or unpolluted water to a storm drain, must be covered by an effluent discharge licence. The licence specifies the permitted physical, chemical and microbial quality of the effluent and the general guidelines are that the effluent does not damage sewers or pollute inland or inshore marine waters.

According to the Water Pollution Control Ordinance, unless being licensed under the Water Pollution Control Ordinance, a person commits an offence who discharges any waste or polluting matter into the waters or discharges any matter into a communal sewer or communal drain in a water control zone and is liable to imprisonment for 6 months and (a) for a first offence, a fine of HK$200,000; (b) for a second or subsequent offence, a fine of HK$400,000, and in addition, if the offence is a continuing offence, to a fine of HK$10,000 for each day during which it is proved to the satisfaction of the court that the offence has continued.

Waste Disposal Ordinance

The Waste Disposal Ordinance controls the production, storage, collection, treatment, recycling and disposal of wastes. At present, livestock waste and chemical waste are subject to specific controls whilst unlawful deposition of waste is prohibited. Import and export of waste is generally controlled through a permit system.

A contractor shall observe and comply with the Waste Disposal Ordinance and its subsidiary regulations, particularly the Waste Disposal (Charges for Disposal of Construction Waste) Regulation and the Waste Disposal (Chemical Waste) (General) Regulation.

Under the Waste Disposal (Charges for Disposal of Construction Waste) Regulation, a main contractor who undertakes construction work with a value of HK$1 million or above will be required to establish a billing account with the Environmental Protection Department to pay any disposal charges payable in respect of the construction waste generated from construction work undertaken under that contract.

Under the Waste Disposal (Chemical Waste) (General) Regulation, anyone who produces chemical waste or causes it to be produced has to register as a chemical waste producer. The waste must be packaged, labeled and stored properly before disposal. Only a licensed collector can transport the waste to a licensed chemical waste disposal site for disposal. Chemical waste producers also need to keep records of their chemical waste disposal for inspection by the staff of the Environmental Protection Department.

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Under the Waste Disposal Ordinance, a person shall not use, or permit to be used, any land or premises for the disposal of waste unless he has a licence from the Environmental Protection Department. A person who except under and in accordance with a permit or authorisation, does, causes or allows another person to do anything for which such a permit or authorisation is required commits an offence and is liable to a fine of HK$200,000 and to imprisonment for 6 months for the first offence, HK$500,000 and to imprisonment for 2 years for a second or subsequent offence.

Dumping at Sea Ordinance

Under the Dumping at Sea Ordinance, any waste producers involved in marine dumping and related loading operations are required to obtain permits from the Environmental Protection Department. Materials to be controlled by the permit under Dumping at Sea Ordinance are mostly large quantities of sediment arising from dredging works.

Under the Dumping at Sea Ordinance, a person who except under and in accordance with a permit, does anything or causes or allows another person to do anything for which a permit is needed commits an offence and is liable on conviction to a fine of HK$200,000 and to imprisonment for 6 months on a first conviction; and HK$500,000 and to imprisonment for 2 years on a second or subsequent conviction; and in addition, to a further fine of HK$10,000 for each day if the court is satisfied that the operation has continued.

Environmental Impact Assessment Ordinance

The Environmental Impact Assessment Ordinance is to avoid, minimise and control the adverse environmental impacts from designated projects as specified in Schedule 2 of the Environmental Impact Assessment Ordinance (for example, public utility facilities, certain large-scale industrial activities, community facilities, etc.) through the application of the environmental impact assessment process and the environmental permit system prior to their construction and operation (and decommissioning, if applicable), unless exempted.

According to the Environmental Impact Assessment Ordinance, a person commits an offence if he constructs or operates a designated project listed in Part I of Schedule 2 of the Environmental Impact Assessment Ordinance (which includes roads, railways and depots, residential and other developments, etc.) without an environmental permit for the project; or contrary to the conditions, if any, set out in the permit. The offender is liable (a) on a first conviction on indictment to a fine of HK$2,000,000 and to imprisonment for six months; (b) on a second or subsequent conviction on indictment to a fine of HK$5,000,000 and to imprisonment for two years; (c) on a first summary conviction to a fine at level 6 and to imprisonment for six months; (d) on a second or subsequent summary conviction to a fine of HK$1,000,000 and to imprisonment for one year, and in any case where the offence is of a continuing nature, the court or magistrate may impose a fine of HK$10,000 for each day on which he is satisfied the offence continued.

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MACAU LICENSING AND REGISTRATION REGIME OF INTERIOR FITTING-OUT WORKS

In Macau, for the purpose of the applicability of licensing and registration system, interior fitting-out works are mainly divided into 4 categories: simple work for residential unit ( ), non-simple work for residential unit ( ), simple work for non residential unit ( ) and non-simple work for non residential unit ( ). To classify the work is simple or not, generally speaking, it depends on whether alteration of interior division or usage of the unit involved.

To conduct fitting-out works business in Macau, it is not required to obtain license or register with the Land, Public Works and Transport Bureau of Macau ( ). However, to commence any fitting-out work project in Macau, it is required to give prior notice (for simple work) or obtain work license (for non-simple work) with respect to each project. As for fitting-out work taken place in non residential unit or fitting-out work which is not a simple one, such notification or application of work license has to be submitted together with a declaration of responsibility signed by an individual or company registered in the mentioned authority as a registered urban constructor to be responsible to all liability arising from such fitting-out work and purchase the required insurance of industry accident and occupational disease.

LAWS AND REGULATIONS IN RELATION TO LABOUR RELATED MATTERS IN MACAU

The legal regime in relation to labour matters in Macau is established mainly based on the following legislations:

18th of October – Decree Law No. 58/93/M (approval of social security regime);
14th of August – Decree Law No. 40/95/M (approval of legal regime of reparation of damages caused by industrial accidents and occupational diseases);
22nd of May – Decree Law No. 37/89/M (approval of general regulation of working safety and hygiene of office, service and commercial establishment);
18th of February – Decree Law No. 13/91/M (determination of sanctions for the incompliance of general regulation of working safety and hygiene of office, service and commercial establishments);
27th of July – Law No. 4/98/M (Framework Law on Employment Policy and Worker’s Rights);
2nd of August −Law No. 6/2004 (Law of Illegal Immigration and Expulsion);
14th of June – Administrative Regulation No. 17/2004 (Regulation on Prohibition of Illegal Work);
18th of August – Law No. 7/2008 (Labour Relation Law).

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The legal regime of labour matters in Macau is developed based on 27th of July – Law No. 4/98/M (Framework Law on Employment Policy and Worker’s Rights) which prescribed general principles and directions of labour legislations in different aspects.

Besides of the mentioned legislation, 18th of August – Law No. 7/2008 (Labour Relation Law) plays a important role in labour legal regime which was entered into force since 1 January 2009 replacing the “old labour law” – 3rd of April – Decree-Law No. 24/89/ M (Labour Relations, Juridical System). It stipulates the basic requirements and conditions for all labour relations, excepted for those which have been excluded explicitly therein. In general, such requirements and conditions stipulated cannot be prevailed by mutual agreement.

As an employer, the Company shall have to comply with the conditions required under 22nd of May – Decree Law No. 37/89/M (approval of general regulation of working safety and hygiene of office, service and commercial establishment) for its working places in order to provide a safe and clean working condition for its employees. Otherwise, fine and cautious measures will be imposed on the Group according to 18th of February – Decree Law No. 13/91/M (determination of sanctions for the incompliance of general regulation of working safety and hygiene of office, service and commercial establishments).

As statutory requirements stipulated under 18th of October – Decree Law No. 58/93/M (approval of social security regime) and 4th of August – Decree Law No. 40/95/M (approval of legal regime of reparation of damages caused by industrial accidents and occupational diseases), the Company has to participate and contribute to the mandatory social security funds and has purchased compulsory industrial accident insurance for its Macau employees in accordance with the relevant applicable legislation, otherwise, fine will be charged as legal sanction.

All employees of the Company have to be Macau residents, non-permanent or permanent, holders of working permits in case of foreign workers. Except for situations stated under 14th of June – Administrative Regulation No. 17/2004 (Regulation on Prohibition of Illegal Work) with a very limit scope, workers other than those abovementioned will consider as illegal workers in Macau and the employers will be criminally liable under 2nd of August −Law No. 6/2004 (Law of Illegal Immigration and Expulsion) and subject to administrative fine according to the above-mentioned administrative regulation.

In relation to the issue of illegal workers in Macau, if it is only the subcontractors of our Company who are engaged in the employment of illegal workers in Macau, it will not lead to any criminal or administrative liability on the part of our Company from the legal perspectives.

The regulatory authority in charge of labour safety and insurance matters are the Labour Department of Macau ( ) and Monetary Authority of Macau ( ) respectively.

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LAWS AND REGULATIONS IN RELATION TO ENVIRONMENTAL PROTECTIONS IN MACAU

The fundamentals of the legal Regime of safety and environmental law of Macau, which is applicable to every individual and corporate entity, are the Basic Law of Macau, the Law No 2/91/M of 11th of March which is known as the organic environmental law of Macau (the “ Macau Environment Law ”), 14 of November– Decree Law 54/94/M regarding prevention and control of ambient noise (“ Law of Prevention and Control of Ambient Noise ”) and series of international conventions in related fields applicable in Macau.

Article 119 of the Basic Law of Macau states that “The Macau Special Administrative Region shall carry out the protection of environment in accordance with law”. To implement this article together with the Macau Environmental law, Law of Prevention and Control of Ambient Noise and other applicable international conventions, numbers of environmental legislations in form of law, decree law and administrative regulations have been enacted in various fields such as natural heritage protection, air, sea and sound pollutions, hygiene of environment, chemical goods, etc.

As a general rule prescribed in the Macau Environmental Law, any violation of the environmental legislations will subject to civil liability, administrative fine or criminal punishment depending on different violations and also administrative injunction is possible to be granted to cease environmental infringement.

Besides, according to the Law of Prevention and Control of Ambient Noise, any work which may produce annoying noise is forbidden to be conducted during whole day of Sunday and public day and between 20:00 ~ 08:00 (next day) of weekday.

The regulatory authority in charge of environmental protection matters is the Environmental Protection Bureau of Macau ( ).

LAWS AND REGULATIONS IN RELATION TO THE CONSTRUCTION INDUSTRY IN THE PRC

The Company develops most of its business in the PRC, covering various interior construction, outdoor decoration and decoration construction works, wholesales of construction materials, wooden doors, wooden flooring and furniture, provisions of after-sale services and technical advisory and technical services in accordance with the industrial policies, related laws and regulations of the PRC under the supervision of the PRC Government. The scope of activities under supervision of the regulations (including interior construction, outdoor decoration and etc.) in the construction industry in which the Company is engaged includes qualification, tendering and quality etc. In addition, all of our operations in the PRC should comply with laws and regulations in taxation, safety and environmental protection.

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The Company is mainly supervised and regulated by the following authorities of the PRC Government:

State Council ( ), the highest administrative authority, which is responsible for the examination and approval of certain material investment projects recognised in the 2007 Catalogue for the Guidance of Foreign Investment Industries issued by the PRC Government;
Ministry of Commerce ( ), the ministry overseeing all foreign investment works in the PRC, which is responsible for macro-guidance of foreign investment works throughout the PRC, examination and approval of the establishment of foreign-funded enterprises and changes in corporate status, monitoring the execution of related laws and regulations, rules and contracts and articles by the foreign-funded enterprises; guiding and managing commerce and financing throughout the PRC, facilitating investment and examining and approving the foreign-funded enterprises and their imports and exports business;
State Administration for Industry and Commerce ( ), which is responsible for the registration and supervision of participants in the market and maintaining operational order of the market;
Ministry of Housing and Urban-Rural Development ( ), which is responsible for the supervision and administration of construction quality and administration of qualification of enterprises in the foreign-funded construction industry.

I. Legal governance of enterprises in the construction industry

Enterprises engaged in various interior construction, outdoor decoration and decoration construction works are construction enterprises stipulated in the Provisions on the Administration of Qualifications of Construction Enterprises ( ), which refer to enterprises engaged in activities such as civil engineering, construction, installation of lines, pipes and equipment and new, extended decoration and conversion works.

(1) Establishment of the construction enterprise

On 16 December 1994, the Ministry of Construction ( ) (renamed as “Ministry of Housing and Urban-Rural Development ( )” after the re-organisation by the State Council on 15 March 2008) and the State Commission for Economic Restructuring ( ) issued the “Opinions on fully deepening the restructure of the construction market ( )”, which suggested that management of each construction segment should be well established. The owners of the construction projects will have the right to select contractors according to the laws and the market management regulations are strictly observed and the obligations agreed in the contracts are completely fulfilled.

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On 1 November 1997, the Construction Law of the People’s Republic of China ( ) was issued and became effective from 1 March 1998. According to that law, construction quality and safety of construction activities should be ensured and comply with construction safety standard of the PRC; construction enterprises, surveying units, design units and construction supervision units engaged in construction activities should meet the following criteria: (1) with registered capital in accordance with regulations in the PRC; (2) with professional technical staff who possess respective statutory licenses of the construction activities they are engaged; (3) with the technology and equipment required by the related construction activities; and (4) other conditions required by laws and administrative regulations. Construction enterprises, surveying units, design units and construction supervision units engaged in construction activities are classified into different qualification levels according to qualification conditions such as their registered capital, professional technical staff, technology and equipment and performance records of their completed construction works, etc. and they shall engage in construction activities within the scope permitted by their qualification levels after passing the qualification examination and obtaining qualification certificates for their respective levels.

On 31 October 2001, the General Office of the State Council ( ) issued the Notice on Further Rectification and Regulation of Order in the Construction Market ( ) and requested for further rectification and regulation of order in the construction market.

(2) Foreign-funded Construction Enterprises

On 18 September 1995, the Ministry of Construction and the Ministry of Foreign Trade and Economic Co-operation ( ) (revoked by the Meeting of the Tenth National People’s Congress in March 2003 and the Ministry of Commerce was established) issued Certain Regulations on Establishment of Foreign-funded Construction Enterprises ( ) and the establishment of wholly foreign-owned construction enterprises were not allowed for the time being.

On 11 February 2002, the State Council issued the Provisions Guiding the Direction of Foreign Investment ( ), which was effective from 1 April 2002. According to the provisions, foreign investment projects were classified into four categories, namely encouraged, permitted, restricted and prohibited. Foreign investment projects in the encouraged, restricted and prohibited categories were listed in the Catalogue for the Guidance of Foreign Investment Industries ( ). Foreign investment projects not belonging to encouraged, restricted and prohibited categories were in the permitted category. Foreign investment projects in the permitted category were not listed in the Catalogue for the Guidance of Foreign Investment Industries.

The construction industry is a foreign investment industry in the permitted category according to the Category for the Guidance of Foreign Investment Industries approved by the State Council on 4 March 2002 and effective from 1 April 2002.

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On 27 September 2002, the Ministry of Construction and the Ministry of Foreign Trade and Economic Co-operation issued the Provisions on Management of Foreign-funded Construction Enterprises ( ), stipulating that the Administrative Department of the Foreign Trade and Economic Co-operation of the State Council should be responsible for administration of the establishment of foreign-funded construction enterprises; the Construction Administrative Department of the State Council is responsible for administration of corporate qualification of foreign-funded construction enterprises. According to the provisions, foreign investors were allowed to establish wholly foreign-owned construction enterprises in Mainland China from 1 December 2002. The provisions also stipulated that foreign-funded construction enterprises were only allowed to contract the following works within the scope permitted by their qualification level: (1) all foreign-invested, foreign-donated, foreign-invested and donated construction works; (2) construction projects granted by international tender which was funded by international financial institutions and under terms of borrowings; (3) Sino-foreign joint construction projects with foreign funding equal to or over 50%; and Sino-foreign joint construction projects approved by construction administrative department of the people’s government of provinces, autonomous regions and municipalities with less than 50% foreign funding but could not be carried out independently by the PRC construction enterprises due to technical difficulties; (4) construction projects invested by the PRC but could not be carried out independently by the PRC construction enterprises due to technical difficulties, and which were approved by construction administrative department of the people’s government of provinces, autonomous regions and municipalities to be jointly undertaken by the PRC and foreign construction enterprises.

On 31 October 2007, National Development and Reform Commission ( ) and Ministry of Commerce amended the Catalogue for the Guidance of Foreign Investment Industries, which was effective from 1 December 2007. According to the amended Catalogue for the Guidance of Foreign Investment Industries, foreign-funded enterprises were still permitted to undertake construction projects. Foreign-funded construction enterprises should obtain approval from the relevant department of commerce prior to applying for registration with the relevant administration of industrial and commerce and collect the Certificate of Approval for Establishment of Enterprises with Foreign Investment ( ) or Certificate of Approval for Establishment of Enterprises with Investment of Taiwan, Hong Kong, Macao and Overseas Chinese ( ).

(3) Qualification of Construction Enterprises

On 15 April 1997, the Home Decoration Management Pilot Scheme ( ) was issued and implemented by the Ministry of Construction. According to the Scheme, all units which have undertaken home decoration works should possess the Construction Enterprise Qualification Certificate ( ) with sub-contracting scope of the construction and decoration works issued by the relevant construction administrative department. Except for decoration work to be performed by their own, the residents should select and appoint

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construction units possessing the Construction Enterprise Qualification Certificate or persons with Induction Certificate for Individual Decoration Practitioners ( ) for home decoration works.

On 5 March 2002, the Ministry of Construction issued the Administrative Measures for Residential Interior Decoration ( ) (“ Decoration Measures ”) which was effective from 1 May 2002. According to the Decoration Measures, decoration enterprises undertaking residential interior decoration should have their qualification examined by the relevant construction administrative department, obtain relevant qualification certificate for construction enterprises and undertake works within the scope permitted by their qualification levels.

On 26 June 2007, the Ministry of Construction issued the Provisions on Administration of Qualifications of Construction Enterprises (“ Provisions ”) which was effective from 1 September 2007. According to the Provisions, the PRC would implement qualification management for domestic construction enterprises, which means that enterprises engaged in activities such as civil engineering, construction, installation of lines, pipes and equipment and new, extended decoration and conversion works could engage in construction activities within the scope permitted by their qualification after obtaining the qualification certificate for construction enterprises. The term of the qualification certificate for construction enterprises is five years. The qualification of construction enterprises was divided into three sequences, namely full contracting of construction, professional contracting and labour sub-contracting: enterprises with qualification of full contracting of construction (“ Enterprises with Full Contracting of Construction ”) could undertake works with full contracting of construction. Enterprises with Full Contracting of Construction can perform all professional works on their own within the works with full contracting of construction undertaken by them, and can also sub-contract the professional works or labour operations to professional sub-contracting enterprises or labour sub-contracting enterprises with respective qualification in accordance with the laws. Enterprises with professional sub-contracting qualification (“ Professional Sub-contracting Enterprises ”) can undertake professional works sub-contracted by Enterprises with Full Contracting of Construction and professional works sub-contracted by construction units in accordance with the laws. Professional Sub-contracting Enterprises can perform all professional works undertaken on their own and can sub-contract labour operations to labour sub-contracting enterprises with respective qualification in accordance with the laws. Enterprises with labour sub-contracting qualification (“ Labour Sub-contracting Enterprises ”) can undertake labour operations sub-contracted by Enterprises with Full Contracting of Construction or Professional Sub-contracting Enterprises. The sequence of qualification for full contracting of construction, qualification for professional sub-contracting and qualification for labour sub-contracting is divided into certain categories of qualification according to the nature of works and technological characteristics. Each category of qualification is further divided into certain qualification levels in accordance with the required conditions.

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The Ministry of Construction formulated the Implementation Opinions Concerning Provisions on Administration of Qualification of Construction Enterprises ( ) on 18 October 2007, setting out requirements for the transition period in respect of the qualification of construction enterprises. According to such requirements, for construction enterprises which have obtained qualification of construction enterprises prior to the Provisions, their qualification certificates will not be replaced generally upon implementation of the Provisions for the time being. The Ministry of Construction together with relevant authorities will promptly revise the class standards for qualification of construction enterprises other than those for special classes, while original qualification certificates will remain valid until the promulgation of new standards.

(4) Operations of Construction Enterprises

(i) Quality

On 30 January 2000, the State Council issued the Construction Quality Management Regulations ( ) (“ Regulations ”) which stipulated that those engaged in related activities such as new, extended construction and conversion works in the PRC and implemented quality supervision and management for construction works should comply with the Regulations. It also stipulated that construction units which jerry-build, use unqualified building materials, building accessories and equipment or involve in other misconducts such as not following the construction design blueprint or construction technical standards should make correction and be penalised from 2% to 4% of the construction contract price. Those with construction quality not complying with required quality standard should be responsible for rework, repair and compensation for loss resulted. Those with serious infringement should have their business rectified with lowered qualification level or revocation of qualification certificates. Construction units infringing the Regulations, not inspecting the building materials, building accessories, equipment and mixed concrete or not sampling the test block, specimen and related materials should rectify themselves and be penalised from RMB100,000 to RMB200,000. Those with serious infringement would have their business rectified with lowered qualification level or revocation of qualification certificates. Those causing loss should be liable for compensation in accordance with the laws.

Pursuant to the Decoration Measures, decoration enterprises should perform their works in accordance with the mandatory standards of construction and other technical standards without jerry-building and ensure the quality of decoration works.

(ii) Safety production

Pursuant to the Decoration Measures, the following conducts are prohibited for residential interior decoration activities: (1) changes of main bodies of buildings or load-bearing structures without design solutions from original designing units or designing units with relevant qualification levels; (2) turning

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rooms without waterproof requirements or balconies into toilets and kitchens; (3) extending original size of doors and windows on load-bearing walls and removing bricks and concrete walls connecting the balconies; (4) damaging the original energy reduction facilities in the house and lowering the effect of energy reduction; (5) Other conducts affecting the structure of the building and safety. Decoration staff engaged in residential interior decoration activities should not have the following conducts without approval: (1) construction of buildings and structures; (2) changing the exterior of the residential and adding doors and windows on non-load-bearing walls; (3) removing or altering heat pipes and facilities; (4) removing or altering gas pipes and facilities. Decoration enterprises should perform their works in accordance with the mandatory standards of construction and other technical standards without jerry-building and ensure the quality of decoration works. Decoration enterprises engaged in residential interior decoration activities should comply with the operation safety rules, adopt necessary safety protection and fire measures in accordance with the rules and should not use open flame and perform welding without authorisation, so as to ensure the safety of operating staff and the surrounding housing and property. Decoration staff and decoration enterprises engaged in residential interior decoration activities should not occupy public space or damage public areas or facilities. Decoration enterprises infringing related safety production requirements and technical rules of safety production of the PRC, not adopting necessary safety protection and fire measures in accordance with the rules, using open flame and perform welding without authorisation or not adopting measures in resolving hidden problems causing construction safety incidents should be rectified by the relevant construction administrative department and penalised from RMB1,000 to RMB10,000. Those with serious infringement should have their business rectified and should be penalised from RMB10,000 to RMB30,000. Those causing major safety incidents should have their qualification level lowered or qualification certificates revoked.

The State Council issued the Safety Production Permit Regulations ( ) on 13 January 2004, which stipulated that the PRC should implement the safety production permission system on construction enterprises. Enterprises without safety production permit should not engage in production activities. On 5 July 2004, the Ministry of Construction issued the Provisions for Safety Production Permit Management on Construction Enterprises ( ) and applied the safety production permit for construction enterprises on construction enterprises engaged in related activities such as civil engineering, construction, installation of lines, pipes and equipment and new, extended decoration and conversion works in the PRC. Construction enterprises should apply for safety production permit with provincial people’s governments at the place of corporate registration according to the principles of graded and territory management before engaging in construction activities. The term of the safety production permit for construction enterprises is

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three years. For extension of the safety production permit after expiry, enterprises should apply for extension with original safety production permit issuing authorities three months before expiry.

On 19 March 2008, the Beijing Municipal Construction Committee ( ) issued the Standardised Safety Manual for Construction Sites ( ) (“ Manual ”) in Beijing which was effective from the same day. The Manual provides detail requirements for practical safety regulations for construction sites. (iii) Tendering Major construction projects in the PRC have to comply with the requirements of the Tender Law of the People’s Republic of China ( ) (“ Tender Law ”). Pursuant to the said Tender Law, the following construction projects in the PRC which include surveying, design, construction, supervision and purchase of important equipment and materials related to construction of the projects should proceed with tendering: (1) projects in relation to the social and public interest and public safety such as large basic infrastructures and utilities; (2) projects invested with state-owned funding or financed by the PRC in full or in part; (3) projects utilising loans and assistance from international organisations or foreign governments. The scope and standards of projects listed above are formulated by the development planning department of the State Council and related departments of the State Council and approved by the State Council. The scope of other projects required for tendering by the laws or the State Council should be followed.

Pursuant to the Management Measures for Tendering of Construction Designs ( ) issued by the Ministry of Construction on 8 October 2000, the tendering of construction designs could be open or by invitation in accordance with the laws. Construction administrative department of the local people’s government of counties and above is responsible for supervision and management of tendering of construction designs within the administrative regions.

(iv) Environment

On 29 October 1996, Law of the People’s Republic of China on Prevention and Control of Pollution From Environmental Noise ( ) was issued and was effective from 1 March 1997. It stipulated that those who produce noise from construction to the surrounding living environment within the cities should comply with the noise production standards of construction sites stipulated in the PRC. Construction works which produce pollution from environmental noise at night time were prohibited in urban areas with concentrated noise sensitive buildings except for emergency repair, rescue operations and necessary continuing operations required technically or specifically.

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To prevent and control the interior environmental pollution of new, expanded and conversed civil construction works, the Ministry of Construction formulated the Control Measures for Interior Environmental Pollution of Civil Construction Works ( )(the “ Measures ”) on 26 November 2001 and regulated the controlling standards of the amount of interior radon, formaldehyde, benzene, ammonia and total volatile organic compounds (TVOC). This is the first mandatory standard for construction which controls the interior environmental pollution in the PRC and becomes effective from 1 January 2002. On 20 April 2006, the Ministry of Construction partly revised the Measures and the revised Measures took effect on 1 August 2006. Upon completion of the construction works, the construction units should examine the interior environmental quality according to the requirement of the Measures and appoint recognised examination authorities to perform tests on the amount of interior radon, formaldehyde, benzene, ammonia and TVOC of the construction works. Buildings with standard of amount of interior harmful materials not complying with the requirement in the Measures would not be allowed for use.

The Decoration Measures have provided further requirements on construction, residential decoration and interior environmental pollution. Decoration enterprises engaged in residential interior decoration activities should comply with required schedule for decoration works strictly, lower noise from construction works and reduce environmental pollution. Owners or users of houses appointing enterprises to perform residential interior decoration works should ensure the air quality to be within related standard of the PRC after completion of the decoration works. The owners or users of houses could appoint qualified examination units to perform tests on air quality. The decoration enterprises should rework if the tests could not meet the standard and the respective loss should be borne by the responsible person.

(v) Fire Prevention

The revised Fire Control Law of the People’s Republic of China ( ) is effective from 1 May 2009. According to its provisions, fire control design and construction of construction works must comply with the state technical standards on fire control for construction projects. The fire resistance of building and decoration materials must also comply with state standards, or industry standards if there is no state standard.

The revised Supervision and Administration Provisions on Fire Control for Construction Projects ( ) is effective from 1 May 2009. It specifically sets out provisions applicable for the supervision and administration of fire control for construction works such as new and extension construction and reconstruction (including internal decoration and changing usages). It requires that units such as constructing, designing, building and construction supervising units to comply with fire control laws and regulations, and state technical standards on fire control and be responsible for the design, construction quality and safety for fire control of construction works.

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II. Supervision on wholesale and general service industry

Pursuant to the Catalogue for the Guidance of Foreign Investment Industries amended in 2007, the delivery of general products in the wholesale and retail industry belongs to industries encouraging foreign investment while general service industry belongs to industries permitting foreign investment. For legal supervision of the above industries, general company laws should be complied with, which include but not limited to, the Company Law of the People’s Republic of China ( ) amended on 27 October 2005 and effective from 1 January 2006, Wholly Foreign-owned Enterprise Law of the People’s Republic of China ( ) amended and implemented on 31 October 2000 and the Implementation Rules for Wholly Foreign-owned Enterprise Law of the People’s Republic of China ( ) amended and implemented on 12 April 2001.

Pursuant to the Provisions for Management of Foreign-invested Business Domains ( ) issued by the Ministry of Commerce on 16 April 2004, wholesale means the sales of products and related services to retailers and industrial, commercial and institutional customers or other wholesalers; retail means the sales of goods for individual or group consumption or related services at fixed location or through television, telephone, post, the internet and auto vending machines. Pursuant to the above provisions, foreign investors who wish to engage in wholesale and retail operating activities in the PRC could establish foreign-invested commercial enterprises. Pursuant to the Notice of the Ministry of Commerce on Matters Relating to Additions to Distribution Business Scope of Foreign Invested Non-commercial Enterprises ( ) issued by the Ministry of Commerce on 2 April 2005, foreign-invested non-commercial enterprises who wish to engage in wholesale and retail operating activities should apply for the additions to distribution business scope, report to the authority according to the related legal procedures of the extended business scope of the enterprise and apply for approval certificate for foreign-invested enterprises. The foreign-invested non-commercial enterprises should clearly detail their distribution methods (wholesale, retail and commission agent) for the additions to distribution business scope and submit their list of products upon application.

LAWS AND REGULATIONS IN RELATION TO FOREIGN INVESTMENT IN THE STATE OF QATAR

The creation of, or investing in, a company in the State of Qatar by a foreign investor is primarily governed by the Foreign Investment Law No.(13) of 2000 (the “ Foreign Investment Law ”).

The general rule under Article (2)1 of the Foreign Investment Law is that non-Qataris, whether natural or legal persons, may invest in all sectors of the national economy BUT only through the medium of a company incorporated in Qatar in which one or more Qatari individuals and/or 100% Qatari entities hold not less than fifty one per cent. (51%) of the share capital. Other than in very special cases, the form of company must be a Limited Liability Company.

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Notwithstanding the above, Article (2)2 of the Foreign Investment Law does indeed provide that non-Qataris may, subject to an exemption from the Minister of Business and Trade own up to 100% of the share capital of projects in the fields of agriculture, industry, health, education, tourism, development and utilisation of natural resources, energy and mining. Preference is to be given to projects, which would achieve optimum utilisation of locally-available raw materials, and industries intended for the export of products, for introducing new products or employing modern technologies, as well as projects which are aimed at localising world-famous industries and projects which train and improve the qualifications of Qatari nationals.

A new draft foreign investment law is currently in circulation. Under its current form the draft law provides for the opening of all economic activities to foreign investments, with the possibility for foreign investors to acquire up to 100 per cent of any project or business in Qatar. This remains, however, subject to the prior formal approval of the Minister of Business and Trade. An application process is established for this purpose.

LAWS AND REGULATIONS IN RELATION TO LABOUR RELATED MATTERS IN THE STATE OF QATAR

Labour matters in the State of Qatar are governed by the labour law No. (14) of 2004 (the “ Labour Law ”).

Article (4) of the Labour Law provides that the entitlements prescribed by the Labour Law represent the minimum entitlements of the employees and any stipulation contradicting the provisions of the Labour Law shall be void even if it was made prior to the date of application of the Labour Law unless the said stipulation is more advantageous to the employees and any release, compromise or waiver of the entitlements prescribed for the employees by the Labour Law shall be deemed void.

All employees of the company have to be Qatari or Qatari residents. Employees other than those mentioned above will be considered as illegal workers in the State of Qatar and the employers will be criminally liable.

Priority in employment shall be given to Qatari nationals. Non-Qataris may be employed if necessary. Foreign investors must note that Article (26) of the Labour Law provides that the percentage of non-Qatari to Qatari workers in every sector of work shall be defined by a Ministerial decision.

The Qatari Council of Ministers Resolution No. (11) of 1997 dealt with “Qatarisation” and provided that across all sectors of the economy, including the private sector, a minimum of 20 per cent. of the work force must be Qatari nationals. To date, only a few companies have complied with the target set by the Qatari Council of Ministers Resolution.

Article (73) of the Labour Law provides that the maximum working hours are 48 hours per week or, eight hours per day during all months of the year, except during the Holy Month of Ramadan, during which it will be reduced to 36 hours per week or six hours daily.

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In addition to any amounts due to the employee, the employer shall pay an end of service benefits, in cases where the employee has worked for a period of one year or more. Such end of service benefits have to be agreed upon by the employee and the employer and should not be lower than three weeks salary for every one year worked and shall be paid according to the period of work. The end of service benefit will also include any number of months for which the employee has worked, after completing one year.

LAWS AND REGULATIONS IN RELATION TO ENVIRONMENTAL PROTECTIONS IN THE STATE OF QATAR

Qatar’s Environment Department was created within the Ministry of Municipal Affairs in 1994, with the objective of integrating environmental considerations in decision making at all levels.

Qatar is a signatory to international environmental conventions including the UN convention on the law of the sea, the Kuwait regional agreement of co-operation for protecting the marine environment from pollution and the Brussels conventions of 1969 and 1971.

A Supreme Council for the Environment and Natural Reserves (“ SCENR ”) replaced the previous Environmental Protection Committee in 2000.

The Environment Protection Law (Decree Law No. 30 of the Year 2002) contains an administrative framework and sets out licensing and operational requirements including restrictions on hazardous waste, air, noise and marine pollution.

Of particular note is the requirement for both Governmental and private bodies to include a clause dealing with environmental protection issues and undertakings to pay clean-up costs in all contracts which could have a harmful effect on the environment.

Project licences will not be issued until the plans have been submitted to the SCENR for approval and an environmental impact assessment has been carried out. Once a project is up and running the operator must comply with all relevant environmental measures, take all necessary precautions to prevent environmental damage and maintain ongoing environmental impact records. If environmental damage does occur all necessary steps must be taken to minimise the impact.

The most significant changes introduced by the Environmental Protection Law are the SCENR’s powers of enforcement and sanctions.

The SCENR may enter sites to assess compliance with the environmental protection regulations and may suspend or impose conditions on any activities which may damage the environment. Environmental damage is a criminal offence.

Breaches of the various articles of the Environmental Protection Law will result in fines on a sliding scale between QAR1,000 and QAR200,000 and imprisonment for a period of up to 10 years for more serious offences. Sanctions are doubled for repeat offences.

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REGULATIONS

In addition, the court may close the project, seize tools and equipment and deport foreign nationals. There are also provisions to cover crimes committed on behalf of another or in the name of another legal body, with defences where the crime was committed, among others, without knowledge, where responsibility had been delegated to another person, or that reasonable steps had been taken to prevent unintentional damage.

Environmental regulations are also featured in other laws. In particular, the Foreign Investment Law obliges foreign companies to protect the environment from pollution under the Foreign Investment Law.

LAWS AND REGULATIONS IN RELATION TO SAFETY AND INSURANCE IN THE STATE OF QATAR

While there are no specific insurances (such as workers’ compensation or equivalent) required to be maintained by the employer, the Labour Law does provide disability and death compensation.

Article (109) of the Labour Law provides that the employee who sustains a work injury shall be entitled to receive medical treatment appropriate to his condition at the cost of the employer in accordance with the decision of the competent medical authority.

Article (110) of the Labour Law provides that the heirs of the employee who dies because of work and the employee who sustains a work injury resulting in a partial or total permanent disability shall be entitled to receive compensation. The amount of compensation in case of death of the employee shall be calculated in accordance with the provisions of the Islamic Sharia.

The employer shall pay the compensation for the disability within a period not exceeding fifteen days from the date of proof of the disability of the worker or from the date of announcement of the result of the inquiries supporting the occurrence of the disability because of work.

In addition to the matters mentioned above, the Labour Law contains limited provisions relating to health and safety at work. Its Part Ten entitled “Safety, Vocational Health and Welfare” contains provisions which are generally applicable to health and safety of employees.

According to the Labour Law, every employer shall take care of the safety and health at work of all persons employed by it by notifying every employee about the work related risks involved and acquainting him with the safety measures.

Furthermore, the employer shall take the necessary precautionary measures to protect employees while at work from any injury or disease that could occur from the work done in his company.

The employer shall not hold his employees responsible of deduct from their wages any amounts for the provision of these safety measures.

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REGULATIONS

If the employer refuses to take the prescribed safety measures or in case of any possible hazard that threatens the employees’ health and safety, the Ministry of Labour can issue a decision on the partial or complete closure of the workplace. In this case the employer shall be committed to pay the employees’ full wages during the period of closure or termination of operations.

A employer who contravenes these duties commits an offence and is liable to a fine of not less than QAR2,000 and not more than QAR6,000, and shall be penalised with imprisonment for a period not exceeding one month.

Responsibility for issuing decisions for the organisation of agencies concerned with health and safety, defining and organising services and precautionary measures to protect employees lies with the Ministry of Labour.

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HISTORY, REORGANISATION AND GROUP STRUCTURE

HISTORY AND DEVELOPMENT

We commenced our business in 1986 in Hong Kong, at which time we operated our business as a contractor of fire-proofing materials and dry walls through Sundart Engineering, of which Mr. Leung and Mr. Ng were two of the founders. Our fitting-out business started in 1988 when Sundart Engineering, our past subsidiary, was involved as a subcontractor in Jing Guang Centre in the PRC in works relating to structural spray fire-protection ( ) and fitting-out works in respect of Jing Guang Centre in the PRC. Then we have operated our fitting-out business in Hong Kong since 1996. In 1992, we further expanded our business to manufacturing of timber products by establishing DSTP as a wholly-owned subsidiary of Sundart Engineering.

In 1995, Sundart Timber was incorporated to acquire the entire interest in DSTP from Sundart Engineering. Since then, certain corporate reorganisation took place within each of Sundart Timber and Sundart Engineering and investors were invited to join us to provide financial resources to sustain our development. In 1999, Sundart Timber started to engage in fitting-out works in Hong Kong. In 2002, DSTP was reorganised to become wholly-owned by Sundart Living, which in turn was then a wholly-owned subsidiary of Sundart Timber.

In 2001, Octopus Network Limited (“ Octopus ”), a company incorporated in the BVI with limited liability and an Independent Third Party, through Sundart Holdings (which was then wholly-owned by Octopus), acquired 60% shareholding interest in Sundart Timber then held by an Independent Third Party (which at that time held 65% interest in Sundart Timber), at a cash consideration of HK$34,800,000. Such consideration was determined after arm’s length negotiation between the relevant parties with reference to the net asset value of Sundart Timber and its then subsidiaries as shown in its then latest available unaudited consolidated accounts. As a result, Octopus joined our Group and Mr. Anthony Ng was appointed to the board of directors of Sundart Timber as a representative of Octopus until Octopus left our Group by disposing of its 68% interest in Sundart Holdings to Golden Tiger in March 2008 as described below. During his term, Mr. Anthony Ng mainly acted as a passive investor and he was not actively involved in the day-to-day management. The share capital of Octopus was held by Mr. Anthony Ng and his sister, Ms. Cindy Ng, in equal shares when Octopus joined our Group in 2001 until 2004 when they transferred their entire interests in Octopus to Kwong Tai Holdings Limited, a company incorporated in the BVI and, based on our Directors’ understanding, with ultimate shareholders being Mr. Anthony Ng and/or his family members. Octopus is independent of and not connected with Mr. Leung. Mr. Anthony Ng is an ex-executive director of Kowloon Development Company Limited and a non-executive director of RoadShow Holdings Limited, the shares of both companies are listed on the Main Board of the Stock Exchange.

Shortly after the acquisition of interest in Sundart Timber by Octopus as described in the preceding paragraph, Mr. Leung acquired from the same vendor its remaining 5% shareholding interest in Sundart Timber at a cash consideration of HK$3,190,000, determined after arm’s length negotiation between the relevant parties on similar basis as the acquisition of 60% shareholding interest in Sundart Timber by Sundart Holdings as described in the preceding paragraph.

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HISTORY, REORGANISATION AND GROUP STRUCTURE

Following the acquisitions of shares in Sundart Timber described above, Sundart Timber became owned by Sundart Holdings as to 60%, Mr. Leung as to 38% and Mr. Ng as to 2%.

In 2002 and 2003, further allotments of shares were made by Sundart Holdings to each of Mr. Wong and Octopus, resulting in Mr. Wong holding 8.3% and Octopus holding 91.7% interest in Sundart Holdings respectively. Mr. Wong paid a total consideration of US$371,799 and Octopus paid a total consideration of US$4,089,739 for their respective interest of 8.3% and 91.7% in Sundart Holdings and the aggregate consideration paid by Mr. Wong and Octopus is equivalent to the consideration for the aforesaid acquisition of 60% shareholding interest in Sundart Timber by Sundart Holdings in 2001.

For the purpose of rationalising our Group’s structure, in August 2003, (i) Mr. Leung and Mr. Ng transferred their entire shareholding interests (being 38% and 2% respectively) in Sundart Timber to Sundart Holdings in exchange for 38% and 2% interest in Sundart Holdings, such that the effective control of each of Mr. Leung and Mr. Ng in Sundart Timber (represented by their respective shareholding) remained unchanged; and (ii) Mr. Leung transferred 18% interest in Sundart Holdings to Mr. Ng at a consideration of US$1,676,977, which was determined after arm’s length negotiation between Mr. Leung and Mr. Ng with reference to the net asset value of Sundart Holdings and its then subsidiaries as shown in its then latest available unaudited consolidated accounts. As a result of such share exchanges and share transfer, Sundart Holdings became the holding company of Sundart Timber holding 100% of its issued share capital and Sundart Holdings became owned as to 55% by Octopus, 20% by Mr. Leung, 20% by Mr. Ng and 5% by Mr. Wong. Further in October 2003, Sundart Living (which was then wholly-owned by Sundart Timber) was reorganised to become wholly-owned by Sundart Holdings.

In order to enhance the management efficiency of our Group and simplify our corporate structure, DSTP was segregated from our Group in 2005 when Sundart Holdings disposed of its entire interest in Sundart Living (the holding company of DSTP) to Mr. Anthony Ng, Mr. Leung, Mr. Ng and Mr. Wong at an aggregate consideration of HK$100,000 which was determined after arm’s length negotiation among the relevant parties having considered that Sundart Living and its then subsidiaries, including among others, DSTP, were then in a net liability position. As a result, Sundart Living became owned (and thus DSTP became indirectly owned) by Mr. Anthony Ng as to 55%, Mr. Leung as to 20%, Mr. Ng as to 20% and Mr. Wong as to 5%. In 2006, Mr. Anthony Ng disposed of his 55% interest in Sundart Living to Octopus at a consideration of HK$55, being the total nominal value of the shares purchased and sold.

Sundart Timber remained indirectly owned by Mr. Leung, Mr. Wong, Mr. Ng and Octopus until July 2006 when Mr. Leung departed from Sundart Holdings as a result of a share exchange whereby Mr. Leung disposed of his entire interest in Sundart Holdings to Octopus, Mr. Ng and Mr. Wong in exchange for (i) the transfer of 55% and 20% interest in Sundart Living (which in turn held, among others, the entire equity interest in DSTP) by Octopus and Mr. Ng respectively to his wholly-owned subsidiary, SPG; and (ii) the transfer of 5% interest in Sundart Living by Mr. Wong to him. As a result, DSTP became a company wholly-owned by Mr. Leung directly and indirectly while Sundart Holdings was owned as to 68% by Octopus, 25% by Mr. Ng and 7% by Mr. Wong. The aforesaid disposal of Mr.

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HISTORY, REORGANISATION AND GROUP STRUCTURE

Leung’s interests in Sundart Holdings in exchange for the interests in Sundart Living was due to the fact that the then other shareholders of Sundart Holdings intended to focus on the fitting-out business of our Group and not to continue to be involved in the timber products manufacturing business and as such, it ended up in the agreement between the then shareholders of Sundart Holdings and Mr. Leung that the timber products manufacturing business be taken up and run by Mr. Leung.

In order to streamline our business and simplify our corporate structure, during the Track Record Period, several past subsidiaries within our Group, namely, SIL, Sundart Engineering, Taishan Sundart, Win Venture, Sundart Creation and LPI were disposed of by us whereas Sundart Build Idea was deregistered during the Track Record Period.

In July 2006, (i) the entire issued share capital of Win Venture, which then held a 51% interest in LPI, was disposed of by Sundart Creation (a wholly-owned subsidiary of Sundart Holdings at that time) to SPG at a consideration of HK$2.00 which was determined after arm’s length negotiation between the relevant parties based on the nominal value of the shares being sold and purchased having considered that Win Venture and LPI were then in a net liability position; and (ii) the entire issued share capital of SIL was disposed of by Sundart Investments to SPG at a consideration of HK$2.00 which was determined after arm’s length negotiation between the relevant parties based on the nominal value of the shares being sold and purchased due to the fact that SIL was then in a net liability position.

In January 2007, the entire issued share capital of Sundart Creation, which then held all the issued shares in Taishan Sundart, was disposed of by Sundart Holdings to an Independent Third Party at a consideration of HK$1,000 which was determined after arm’s length negotiation between the relevant parties based on the nominal value of the shares being sold and purchased having considered that Sundant Creation was then in a net liability position.

Further in March 2008, the entire issued share capital of Sundart Engineering was disposed of by Sundart Timber to Mr. Leung Chung Lim, who is the son of Mr. Leung at a consideration of HK$2.00 which was determined after arm’s length negotiation between the relevant parties having considered that Sundart Engineering was in a net liability position at the relevant time.

Please refer to the section headed “Financial information” and the accountants’ report in Appendix I to this document for further details about the disposals and/or deregistration of the above past subsidiaries. Our Directors are of the view that the terms of the above disposals are fair and reasonable and in the best interest of our Company and its Shareholders as a whole.

As a result of our Group being engaged as a fitting-out contractor for the renovation of Waldo Hotel (in which Mr. Chan’s father has interest) in September 2007, Mr. Chan came to know our Group and was impressed by our Group’s quality of work, management competency and business prospects such that Mr. Chan through Mr. Wong and Mr. Ng commenced negotiation with Mr. Anthony Ng (the representative of Octopus, which is independent of and not connected with Golden Tiger) for the acquisition of Octopus’ 68% shareholding in Sundart Holdings together with Mr. Li and Ms. Li through Golden Tiger on

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HISTORY, REORGANISATION AND GROUP STRUCTURE

an arm’s length basis. As a result, in March 2008, Golden Tiger acquired 68% interest in Sundart Holdings from Octopus at a consideration of HK$197,200,000. Such consideration was determined after arm’s length negotiation between the parties based on the then expected net asset value of Sundart Holdings and its then subsidiaries as at 31 March 2009 of HK$290,000,000. As a result, Golden Tiger became the single largest shareholder of Sundart Holdings and Mr. Chan was appointed as the chairman of our Group.

In April 2009, Mr. Leung acquired 520 shares of US$1.00 each in the share capital of Sundart Holdings, representing approximately 10.2% interest in Sundart Holdings, from Golden Tiger at a consideration of HK$26,874,710, which was determined based on and represented 10.2% of the net asset value of Sundart Holdings as at 31 March 2009 as shown in its audited balance sheet. In July 2009, Mr. Leung further agreed with Golden Tiger that if he ceases to hold any directorship in the Group under certain circumstances such as his resignation or breach of his obligations at any time before 1 April 2010, or between 1 April 2010 to 31 March 2011, or between 1 April 2011 to 31 March 2012, he will compensate Golden Tiger for HK$33 million, HK$22 million and HK$11 million respectively. As a result of such acquisition, Mr. Leung re-joined us as a director and a shareholder of Sundart Holdings and took the lead to develop our business of sourcing and distribution of interior decorative materials as well as to expand our interior fitting-out business to the Middle East.

Following Golden Tiger’s acquisition of interest in Sundart Holdings in March 2008 and its transfer of interest in Sundart Holdings to Mr. Leung in April 2009, Sundart Holdings became owned by Golden Tiger, Mr. Ng, Mr. Leung and Mr. Wong as to approximately 57.8%, 25%, 10.2% and 7% respectively.

Expanding Business to Macau

With the rapid developments in the tourism and the casino and hotel industries in Macau in recent years, we stepped in the Macau market in 2005 when Sundart (Macau) was established to carry out our interior fitting-out business in Macau. Please refer to the section headed “Business – Fitting-out works – Projects taken and undertaking” in this document for details of major fitting-out works undertaken by us in Macau during the Track Record Period and projects currently undertaking by us in Macau.

Expanding Business to the PRC

Our fitting-out business in the PRC was started in 1988. With a view to further expanding our fitting-out business in the PRC, we established Sundart (Beijing) in 2003 which is a fitting-out contractor having been granted the Construction Enterprise Qualification Certificate (Grade I in the specialised contract for architectural decoration projects) ( ) ( ). Please refer to the section headed “Business – Fitting-out works – Projects taken and undertaking” in this document for details of major fitting-out works undertaken by us in the PRC during the Track Record Period and projects currently undertaking by us in the PRC. In addition, branch companies of Sundart (Beijing) was set up in Shanghai in 2005 and in Dongcheng, Beijing in 2009, respectively, for the purpose of capturing local business opportunities.

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HISTORY, REORGANISATION AND GROUP STRUCTURE

Expanding Business to the Middle East

In order to further develop our business in other countries outside Hong Kong, Macau and China, Sundart Interior was established by us in May 2009 as a jointly-controlled entity for the purpose of developing fitting-out business in the Middle East. The JV Partners, all of whom are long-term business partners of Mr. Leung, were invited as we believe that they are capable of providing labour sources, market knowledge and business opportunities to Sundart Interior.

REORGANISATION

In preparation for the Listing, we have carried out the Reorganisation which involved the following steps:

(a) On 11 November 2008, Sundart Products was incorporated in the BVI and 1 share of US$1.00 in its share capital was issued and allotted to Sundart Holdings for cash at par.
(b) On 1 December 2008, Sundart Investments transferred the entire issue share capital of Sundart International to Sundart Products at a consideration of HK$10,000.
(c) On 1 December 2008, Sundart Investments transferred the entire issued share capital of Sundart (Middle East) to Sundart Development at a consideration of HK$1.00. On 2 January 2009, Sundart (Middle East) issued and allotted, for cash at par, 1,400 shares of HK$1.00 each to each of Messrs. Jubin Kodinjyil Thomas and Anastasia Chistyakova and 4,200 shares of HK$1.00 each to Sundart Development. On 16 March 2009, each of Messrs. Jubin Kodinjyil Thomas and Anastasia Chistyakova transferred 1,400 shares of HK$1.00 each in Sundart (Middle East) to Sundart Development at a cash consideration of HK$1,400, such consideration was determined after arm’s length negotiation between the relevant parties based on the nominal value of the shares being sold and purchased having considered that Sundart (Middle East) has not commenced operation yet.
(d) On 1 April 2009, Golden Tiger transferred 520 shares of US$1.00 each in the share capital of Sundart Holdings, representing approximately 10.2% interest in Sundart Holdings to Mr. Leung at a consideration of HK$26,874,710, which was determined based on and represented approximately 10.2% of the net asset value per share of Sundart Holdings as at 31 March 2009 as shown in its audited balance sheet, such consideration was determined after arm’s length negotiation between the relevant parties with reference to the net asset value of Sundart Holdings as at 31 March 2009.
(e) Our Company was incorporated in the Cayman Islands on 27 April 2009. On the same day, 10,000 Shares were issued and allotted for cash at par as to 5,780 to Golden Tiger, 2,500 Shares to Mr. Ng, 1,020 Shares to Mr. Leung and 700 Shares to Mr. Wong (including 1 Share transferred from the subscriber).

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HISTORY, REORGANISATION AND GROUP STRUCTURE

(f) On 17 May 2009, Sundart Interior was incorporated in Qatar. 4,700, 5,100, 100 and 100 shares of QAR1,000 each of Sundart Interior were subscribed by and allotted to Sundart (Middle East), Messrs. Abdullatteef Mohammed A Al-Kuwari, Jubin Kodinjyil Thomas and Anastasia Chistyakova respectively on 17 May 2009.
(g) On 31 July 2009, Golden Tiger transferred all its 2,948 shares of US$1.00 each in the share capital of Sundart Holdings to each of Tiger Crown and Scenemay Holdings in equal shares at a total cash consideration of HK$152,290,026, which was determined after arm’s length negotiation between the relevant parties with reference to the audited net asset value of Sundart Holdings as at 31 March 2009.
(h) On 31 July 2009, Golden Tiger transferred all its 5,780 Shares to each of Tiger Crown and Scenemay Holdings in equal shares at a total cash consideration of HK$[57.80], being the total nominal value of the Shares purchased and sold.
(i) On 3 August 2009, our Company issued and allotted 20,227,110 Shares, 20,227,110 Shares, 17,497,500 Shares, 7,138,980 Shares and 4,899,300 Shares, all credited as fully paid, to Tiger Crown, Scenemay Holdings, Mr. Ng, Mr. Leung and Mr. Wong respectively in consideration of Tiger Crown, Scenemay Holdings, Mr. Ng, Mr. Leung and Mr. Wong transferring 1,474 shares, 1,474 shares, 1,275 shares, 520 shares and 357 shares of US$1.00 each in the share capital of Sundart Holdings to our Company pursuant to a deed for sale and purchase dated 3 August 2009 entered into between Tiger Crown, Scenemay Holdings, Mr. Ng, Mr. Leung and Mr. Wong as vendors and warrantors, Mr. Chan as warrantor and our Company as purchaser.

Particulars of the Reorganisation are set out in the section headed “Further information about our Company – Corporate reorganisation” in Appendix VI to this document.

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HISTORY, REORGANISATION AND GROUP STRUCTURE

GROUP STRUCTURE

The following chart sets out our structure immediately before the commencement of the Reorganisation:

==> picture [384 x 548] intentionally omitted <==

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

Mr. Chan Mr. Li Ms. Li
50% 50%
100%
Tiger Crown Scenemay Holdings
(BVI) (BVI)
(Investment holding) (Investment holding)
50% 50%
Golden Tiger
(BVI) Mr. Ng Mr. Wong
(Investment holding)
68% 25% 7%
Sundart Holdings
(BVI)
(Investment holding)
100% 100%
Sundart Investments Sundart Development
(Hong Kong) (BVI)
(Investment holding) (Investment holding)
100% 100% 100%
Sundart International Sundart Timber
(Hong Kong) Sundart (Middle East) (Hong Kong)
(Sourcing and distribution (Hong Kong) (Investment holding
of interior decorative (Investment holding) and interior fitting-out
materials) works)
100% 90%
Sundart (Beijing) Sundart (Macau) 10%
(PRC) (Macau)
(Interior fitting-out (Interior fitting-out
works) works)
----- End of picture text -----

– 90 –

HISTORY, REORGANISATION AND GROUP STRUCTURE

The following chart sets out our structure as at 31 March 2009, being the last day of the Track Record Period:

==> picture [374 x 467] intentionally omitted <==

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

Mr. Chan Mr. Li Ms. Li
50% 50%
100%
Tiger Crown Scenemay Holdings
(BVI) (BVI)
(Investment holding) (Investment holding)
50% 50%
Golden Tiger
(BVI) Mr. Ng Mr. Wong
(Investment holding)
68% 25% 7%
Sundart Holdings
(BVI)
(Investment holding)
100% 100% 100%
Sundart Products [(1)] Sundart Development Sundart Investments
(BVI) (BVI) (Hong Kong)
(Investment holding) (Investment holding) (Investment holding)
100% 100% 100%
Sundart International [(2)] Sundart Timber
(Hong Kong) Sundart (Middle East) [(3)] (Hong Kong)
(Sourcing and distribution (Hong Kong) (Investment holding
of interior decorative (Investment holding) and interior fitting-out
materials) works)
100% 90%
Sundart (Beijing) Sundart (Macau) 10%
(PRC) (Macau)
(Interior fitting-out (Interior fitting-out
works) works)
----- End of picture text -----

Notes:

(1) On 11 November 2008, Sundart Products was incorporated in the BVI and 1 share in its share capital was issued and allotted to Sundart Holdings.
(2) On 1 December 2008, Sundart Investments transferred the entire issue share capital of Sundart International to Sundart Products.
(3) On 1 December 2008, Sundart Investments transferred the entire issued share capital of Sundart (Middle East) to Sundart Development. On 2 January 2009, Sundart (Middle East) issued and allotted, for cash at par, 1,400 shares to each of Messrs. Jubin Kodinjyil Thomas and Anastasia Chistyakova and 4,200 shares to Sundart Development. On 25 March 2009, each of Messrs. Jubin Kodinjyil Thomas and Anastasia Chistyakova transferred 1,400 shares in Sundart (Middle East) to Sundart Development so that Sundart Development became the sole owner of Sundart (Middle East).

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HISTORY, REORGANISATION AND GROUP STRUCTURE

The following chart sets out our structure after completion of the transfer of approximately 10.2% interest in Sundart Holdings to Mr. Leung and the incorporation of Sundart Interior:

==> picture [335 x 448] intentionally omitted <==

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

Mr. Chan Mr. Li Ms. Li
50% 50%
100%
Tiger Crown Scenemay Holdings
(BVI) (BVI)
(Investment holding) (Investment holding)
50% 50%
Golden Tiger
(BVI) Mr. Leung [(1)] Mr. Ng Mr. Wong
(Investment holding)
57.8% 10.2% 25% 7%
Sundart Holdings
(BVI)
(Investment holding)
100% 100% 100%
Sundart Products Sundart Development Sundart Investments
(BVI) (BVI) (Hong Kong)
(Investment holding) (Investment holding) (Investment holding)
100% 100% 100%
Sundart International Sundart Timber
(Hong Kong) Sundart (Middle East) (Hong Kong)
(Sourcing and distribution (Hong Kong) (Investment holding
of interior decorative (Investment holding) and interior fitting-out
materials) works)
47%
100% 90%
Sundart Interior [(2)] Sundart (Beijing) Sundart (Macau)
(Qatar) (PRC) (Macau) 10%
(Interior fitting-out (Interior fitting-out (Interior fitting-out
works) works) works)
----- End of picture text -----

Notes:

Pursuant to a sale and purchase agreement dated 14 March 2009, Mr. Leung acquired from Golden Tiger approximately 10.2% interest in Sundart Holdings on 1 April 2009.
Sundart Interior was incorporated in Qatar on 17 May 2009. The registered owners of Sundart Interior are Sundart (Middle East) (47%) and the JV Partners (together 53%). Pursuant to the SI-JV Agreement and the articles of association of Sundart Interior, Sundart (Middle East) is entitled to share 51% of the net profits of Sundart Interior.

– 92 –

HISTORY, REORGANISATION AND GROUP STRUCTURE

The following chart sets out our structure immediately prior to completion of the final step of the Reorganisation:

==> picture [417 x 404] intentionally omitted <==

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

Mr. Chan Mr. Li Ms. Li
100% 50% 50%
Tiger Crown [(1)] Scenemay Holdings [(1)]
(BVI) (BVI) Mr. Leung Mr. Ng Mr. Wong
(Investment holding) (Investment holding)
28.9% 28.9% 10.2% 25% 7%
Sundart Holdings
(BVI)
(Investment holding)
100% 100% 100%
Sundart Products Sundart Development Sundart Investments
(BVI) (BVI) (Hong Kong)
(Investment holding) (Investment holding) (Investment holding)
100% 100% 100%
Sundart International Sundart Timber
(Hong Kong) Sundart (Middle East) (Hong Kong)
(Sourcing and distribution (Hong Kong) (Investment holding
of interior decorative (Investment holding) and interior fitting-out
materials) works)
47%
100% 90%
Sundart Interior [(2)] Sundart (Beijing) Sundart (Macau)
(Qatar) (PRC) (Macau) 10%
(Interior fitting-out (Interior fitting-out (Interior fitting-out
works) works) works)
----- End of picture text -----

Notes:

Golden Tiger transferred its entire interest in Sundart Holdings to each of Tiger Crown and Scenemay Holdings in equal shares on 31 July 2009.
Sundart Interior was incorporated in Qatar on 17 May 2009. The registered owners of Sundart Interior are Sundart (Middle East) (47%) and the JV Partners (together 53%). Pursuant to the SI-JV Agreement and the articles of association of Sundart Interior, Sundart (Middle East) is entitled to share 51% of the net profits of Sundart Interior.

– 93 –

HISTORY, REORGANISATION AND GROUP STRUCTURE

The following chart sets out our structure after the Reorganisation but immediately before [�]:

==> picture [406 x 440] intentionally omitted <==

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

Mr. Chan Mr. Li Ms. Li
100% 50% 50%
Tiger Crown [(1)] Scenemay Holdings [(1)]
(BVI) (BVI) Mr. Leung Mr. Ng Mr. Wong
(Investment holding) (Investment holding)
28.9% 28.9% 10.2% 25% 7%
Company [(1)]
(Cayman Islands)
(Investment holding)
100%
Sundart Holdings
(BVI)
(Investment holding)
100% 100% 100%
Sundart Products Sundart Development Sundart Investments
(BVI) (BVI) (Hong Kong)
(Investment holding) (Investment holding) (Investment holding)
100% 100% 100%
Sundart International Sundart Timber
(Hong Kong) Sundart (Middle East) (Hong Kong)
(Sourcing and distribution (Hong Kong) (Investment holding
of interior decorative (Investment holding) and interior fitting-out
materials) works)
47% 100% 90%
Sundart Interior [(2)] Sundart (Beijing) Sundart (Macau)
(Qatar) (PRC) (Macau) 10%
(Interior fitting-out (Interior fitting-out (Interior fitting-out
works) works) works)
----- End of picture text -----

Notes:

Pursuant to a deed for sale and purchase dated 3 August 2009, our Company acquired the entire interest in Sundart Holdings.
Sundart Interior was incorporated in Qatar on 17 May 2009. The registered owners of Sundart Interior are Sundart (Middle East) (47%) and the JV Partners (together 53%). Pursuant to the SI-JV Agreement and the articles of association of Sundart Interior, Sundart (Middle East) is entitled to share 51% of the net profits of Sundart Interior.

– 94 –

HISTORY, REORGANISATION AND GROUP STRUCTURE

The following chart sets out our structure upon the Capitalisation Issue and the [�] (assuming that the [�] is not exercised):

==> picture [423 x 403] intentionally omitted <==

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

Mr. Chan Mr. Li Ms. Li
100% 50% 50%
Tiger Crown [(1)] Scenemay Holdings [(1)]
(BVI) (BVI) Mr. Leung Mr. Ng Mr. Wong Public
(Investment holding) (Investment holding)
[•]% [•]% [•]% [•]% [•]% [•]%
Company
(Cayman Islands)
(Investment holding)
100%
Sundart Holdings
(BVI)
(Investment holding)
100% 100% 100%
Sundart Products Sundart Development Sundart Investments
(BVI) (BVI) (Hong Kong)
(Investment holding) (Investment holding) (Investment holding)
100% 100% 100%
Sundart International Sundart Timber
(Hong Kong) Sundart (Middle East) (Hong Kong)
(Sourcing and distribution (Hong Kong) (Investment holding
of interior decorative (Investment holding) and interior fitting-out
materials) works)
47% 100% 90%
Sundart Interior [(1)] Sundart (Beijing) Sundart (Macau)
(Qatar) (PRC) (Macau) 10%
(Interior fitting-out (Interior fitting-out (Interior fitting-out
works) works) works)
----- End of picture text -----

Note 1: Sundart Interior was incorporated in Qatar on 17 May 2009. The registered owners of Sundart Interior are Sundart (Middle East) (47%) and the JV Partners (together 53%). Pursuant to the SI-JV Agreement and the articles of association of Sundart Interior, Sundart (Middle East) is entitled to share 51% of the net profits of Sundart Interior.

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OVERVIEW

Our revenue by business segments during the Track Record Period was as follows:

2007 (HK$’ million) 528.2 338.8 31.4	% 57.3 36.8 3.4	Year ended 31 March 2008 (HK$’ million) % 1,025.6 71.0 343.8 23.8 74.3 5.2	Year ended 31 March 2008 (HK$’ million) % 1,025.6 71.0 343.8 23.8 74.3 5.2	2009 (HK$’ million) 843.5 598.2 23.5	% 57.6 40.8 1.6
898.4 22.9	97.5 2.5	1,443.7 –	100 –	1,465.2 –	100 –
					100

					100

We have participated in a number of sizeable fitting-out projects in Hong Kong. As a fitting-out contractor, we are responsible for the overall project implementation by providing or arranging for the necessary materials, labour, engineering expertise and technical

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know-how required for the fitting-out works and carrying out corresponding project management so as to ensure that the fitting-out works conform to the contractual requirements, meet customers’ expectation and are completed on time and within budget.

Although we do not directly employ workers for the fitting-out projects, we specialise in project management and all labour intensive works are outsourced to our subcontractors. Depending on the terms of the contracts with the subcontractors, the subcontractors may also be responsible for the provision of interior decorative materials for purposes of the fitting-out works, while in other cases we may be responsible for purchasing all such materials for the fitting-out projects. As at the Latest Practicable Date, we had over 200 subcontractors, of which 33 have five years or above working relationship with us. Our fitting-out projects normally commenced with the tendering process. After tenders are awarded, we usually set up the detailed working plans, delegate part of the fitting-out works to subcontractors and coordinate among customers, subcontractors and suppliers in completing the projects. Progress payments are received from the customers periodically according to the stages of completion of the works done, and the corresponding subcontracting fees and costs for materials payable to suppliers/subcontractors are settled accordingly.

Our fitting-out business is and has been focusing on the private sector in Hong Kong. In recent years, we have expanded our fitting-out business to Macau and in China. During the Track Record Period, our revenue attributable to fitting-out works amounted to approximately HK$898.4 million, HK$1,443.7 million and HK$1,465.2 million, respectively and accounted for approximately 97.5%, 100% and 100% of our total revenue, respectively.

Our growth in revenue and gross profit is principally attributable to our success in achieving effective economies of scale in the overall business model, cost control system, quality of services and the experienced and dedicated management team. Leveraging on the diverse nature and number of fitting-out projects undertaken by us, our management and staff have accumulated years of experience in a wide variety of fitting-out works.

COMPETITIVE STRENGTHS

Our competitive strengths as set out below have driven our growth in revenue and gross profits and distinguish us from our competitors:

� Established reputation and a proven track record

We commenced operations in Hong Kong in 1986 as a contractor of fire-proofing materials and dry walls. Our fitting-out business was started in 1988 and we have significant experience in the fitting-out industry in Hong Kong.

Our Directors believe that we have a good reputation in the fitting-out industry in Hong Kong, Macau and the PRC with a proven track record and have the capability of delivering our jobs on time and to the satisfaction of our customers. Our professional and quality services have been well recognised in the fitting-out industry and a number of awards, Shanghai Construction Engineering Magnolia Award 2006 (Municipal high-quality engineering) ( ),

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Cross-century Dongguan and Hong Kong Manufacturing Outstanding Business Award ( ), Best Subcontractor Award and Macau Prime Awards For Brand Excellence 2008 have been granted by certain associations, government authorities and major property developers in Hong Kong (please refer to the section headed “Business – Major qualifications, certifications and awards” in this document) and we have provided our fitting-out services for most of the landmark hotel and casino projects in Macau and to most of the major property developers in Hong Kong and/or the property development projects undertaken by them during the Track Record Period.

Long working relationships with major property developers and hotel owners in Hong Kong, Macau and the PRC

We have been providing fitting-out services to most of the major property developers in Hong Kong and/or the property development projects undertaken by them since 1996 and certain hotel owners in Hong Kong, Macau and the PRC since 1988. Recommendations on our professional services have been given by some of them, thereby allowing us to secure further contracts from them. Such recommendations have not only solidified our market shares in the fitting-out industries in Hong Kong, Macau and the PRC in past years but also positioned us well to obtain fitting-out projects in the coming years.

� Competitive edge on material costs and arrangements with reliable suppliers and subcontractors

We have entered into agreements with DSTP and one other supplier and four other subcontractors. They are either suppliers or subcontractors of timber products, marble products or steel, metal and glazing products, all of which are principal materials and raw materials used in fitting-out projects. DSTP is a company indirectly wholly-owned by Mr. Leung, one of our executive Directors, while others are owned by Independent Third Parties.

DSTP used to be a member of our Group before we disposed of our interest in it in 2005. Since then, we continued to purchase timber products manufactured by DSTP through different members of the Sundart Living Group for our fitting-out projects in view of the history of DSTP, our relationships with DSTP and hence its owner and the quality and pricing of timber products manufactured by DSTP. Please refer to the section headed “Business – Relationship with DSTP” in this document for further information about DSTP and the section headed “Connected transactions – Purchase of timber products from DSTP” in this document for details about our transactions with DSTP.

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Sundart Holdings (for itself and on behalf of its subsidiaries, its holding company and the subsidiaries of its holding company from time to time) entered into the manufacturing and supply agreement, and manufacturing, supply & installation agreements with the following parties (the “ Suppliers ”), major terms of which are set out below:

Suppliers	Timber	Two Marble	Steel and	Glazing, steel
	products	products	metal	and metal
	supplier	subcontractors	products	products
			subcontractor	subcontractor
Name of	manufacturing	manufacturing,	manufacturing,	manufacturing,
agreement	& supply	supply &	supply &	supply &
	agreement	installation	installation	installation
		agreement	agreement	agreement
Relationship with	Independent	Independent	Independent	Independent
our Group	Third Party	Third Party	Third Party	Third Party
Major	manufacture	manufacture,	manufacture,	manufacture,
responsibilities	and supply	supply to	supply to	supply to
of the Suppliers	timber	and/or, if	and/or, if	and/or, if
	products to	required,	required,	required,
	our Group	install marble	install steel	install
	whenever	products for	and metal	glazing, steel
	requested by	our Group	products for	and metal
	our Group	whenever	our Group	products for
		requested by	whenever	our Group
		our Group	requested by	whenever
			our Group	requested by
				our Group

Each of the above agreements commenced on 1 June 2009 and shall continue up to 31 March 2012 and can be terminated by either the relevant Suppliers or Sundart Holdings without penalty by giving not less than three months’ written notice to the other.

Under each of the above agreements, the terms of the manufacture and supply or manufacture, supply and/or installation (as the case may be) of the requested products shall be arrived at after arm’s length negotiations and shall be fair and reasonable and be on normal commercial terms or, if there are no or not sufficient comparable transactions to judge whether they are on normal commercial terms, on terms no less favourable to our Group than terms available from Independent Third Parties and, without limitation to the generality of the foregoing, for those products where there are available market rates for those product comparable to the requested product (taking into account factors such as the design, type, standard, amount and quality of the product required and the time frame for the manufacturing and supply of such products), the payment terms to be offered to our Group by the Suppliers shall be no

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less favourable to our Group than the payment terms that may be offered to our Group by other Independent Third Party manufacturers or suppliers for such/ similar product. Each of the Suppliers also undertakes that the price it charges our Group shall be the lowest among the prices it charges its other customers and that it shall give priority to orders placed by our Group over its other customers’ orders.

If the relevant Suppliers and the relevant members of our Group are unable to reach an agreement on the terms governing the manufacture and supply of any product requested, neither of them shall be obliged to manufacture and supply or accept (as the case may be) such product.

Although such arrangements with the Suppliers are not formed exclusively for our Group, our Directors are not aware that they have formed any similar arrangement with any third party. Notwithstanding these arrangements with the Suppliers, our Company will follow the usual tendering process as more particularly described in the section headed “Business – Fitting-out works – Operating procedures – Tendering” in this document in determining whether the orders are to be awarded to the Suppliers.

The arrangements with DSTP and the Suppliers allow us to have cost advantages as well as stable and reliable supplies of principal materials and raw materials used in fitting-out projects and hence let us have a competitive position when bidding for tenders. In addition, the arrangement with DSTP also allows us to have considerable advantage when bidding for tenders made by U.S.-based customers as DSTP is one of the very few manufacturers of timber products in China licensed by UL to produce UL certified products.

� Possession of qualifications, capabilities and excellent job reference to undertake sizeable fitting-out projects

In China, Sundart (Beijing) has been granted the Construction Enterprise Qualification Certificate (Grade I in the specialised contract for architectural decoration projects) ( ) ( ) which is the highest level of qualification for fitting-out contractor and attesting our capability to undertake sizeable fitting-out projects in the PRC.

In Hong Kong and Macau, although no industry specific qualification, license or permit is required to carry out fitting-out works, our Directors consider that it is difficult for new or small-sized fitting-out companies to take part in sizeable projects as pre-qualification on job reference, technicality and financial resources is usually required. Therefore, having participated in a number of sizeable fitting-out projects in Hong Kong, Macau and the PRC, we possess the necessary capabilities and job reference to undertake sizeable fitting-out projects and are able to withstand stiff competition by small-sized fitting-out companies. In addition, by concurrently participating in a number of sizeable projects, we have the advantage of economic of scale to keep our operating costs to a minimum and increase our bargaining power on procurement of materials which further secure our competitive position when bidding for tenders.

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� Experienced and efficient management team

Our senior management team and key technical personnel have extensive industry knowledge, project management experience and industry expertise in fitting-out works as well as in the other peripheral operations.

As at the Latest Practicable Date, 63 members of our staff have either received tertiary education or above or professional qualifications such as professional engineer, builder, surveyor, accountant and company secretary. Their qualifications and experience facilitate the formulation of competitive yet accurate tenders, which are essential to us in securing new business, and the efficient and timely implementation and management of fitting-out works.

We believe that the combination of our management and technical teams’ collective expertise and knowledge of the industry, together with our highly qualified employees, have been and will continue to be our valuable assets.

� Commitment to safety, quality and environment through well-established management system

Our Directors believe that our business primarily depends on our ability to meet our customers’ requirements, particularly in respect of safety, quality and environmental aspects, and in order to ensure that we meet our customers’ requirements on safety, quality and environmental aspects, we have established safety management and formal quality and environmental management systems. Through the systematic and effective control of our operations, compliance with safety, quality and environmental requirements can be further assured.

We have been continuously accredited and re-accredited with ISO 9001 and ISO 14001 certifications. Our Directors believe that certifications to ISO 9001 and ISO 14001 will enhance our public image and credibility and also helps us to improve confidence in our stakeholders.

In addition, we are authorised to apply labels with the UL Mark on certain of our products, which provide us with further competitive advantages over others when tenders are made by us to U.S.-based customers which normally require such certifications.

BUSINESS STRATEGIES

We aim to become a global integrated fitting-out contractor by increasing our market share in the fitting-out industries in Hong Kong, Macau and China and extending our geographic presence to other countries such as Qatar and Abu Dhabi in the Middle East.

In view of the different market conditions, we have different business objectives in these markets. We intend to maintain growth in our core fitting-out businesses in Hong Kong, Macau and China and step in other markets such as Qatar and Abu Dhabi in the Middle East. To achieve the aforesaid objectives, we will implement the following strategies:

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Solidify our position in the fitting-out markets in Hong Kong and Macau which we currently operate

Hong Kong

We are an integrated fitting-out contractor in Hong Kong. Given our proven track record, local knowledge and good reputation, we plan to increase our market share in the fitting-out industry in Hong Kong by focusing on new and key projects in Hong Kong in order to generate strong recurring cash flows for us.

Newly developed projects have been put into market and received good response while projects under development have not been halted. In addition, various upcoming mega-sized infrastructure projects will be commenced in the coming few years, we believe this initiative will create stimulus and another golden decade for the construction industry in Hong Kong as, according to the Synovate Report, a construction cycle generally involves the construction of infrastructure and real estates, and the stage of real estate development usually follows the stage of infrastructure development. According to the Synovate Report, certain residential housing and hotel projects are under construction currently and will be completed during the years from 2009 to 2013.

We believe that our proven track record and long working relationships with major property developers and hotel owners position us well for bidding key projects in Hong Kong for the coming years.

Macau

With the openings of new casinos in Macau, the tourism industry and economy in Macau had grown robustly until the financial tsunami broke out in 2008, as a result of which several casino and hotel projects were abandoned before completion. We expect that these casino and hotel projects will be re-launched in Macau as the global economy returns to normal. In addition, according to the Synovate Report, there are about four major housing projects under construction or waiting for the approval of the government of Macau. These projects, with estimated fitting-out values ranging from approximately MOP3 million to MOP1 billion, are expected to be completed during the years from 2009 to 2012. In view of these, our Directors are still optimistic about the fitting-out industry in Macau.

Our Directors intend to bring in additional effort and resources to make further business development in Macau.

Further expand our fitting-out business in the PRC

Despite the financial tsunami, China is still able to maintain growth in its GDP when comparing with other developed countries including the United States, Japan and other European countries. Such driving force came primarily from one of the national policies to invest in public construction and infrastructure projects. In view of this policy and the statistics about the China construction industry for the last few years,

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our Directors are optimistic about the construction industry and hence the fitting-out industry in China. We intend to pursue more business opportunities in selected cities in China with good growing potential and to enhance the scale of our operations in China. This will principally be done by way of providing our services to major Hong Kong or International property developers in their PRC property development projects, through which we believe will enable us to further develop in the fitting-out industry in China and hence increase our profitability.

In order to meet our business expansion plan in China, we have already taken several steps including increasing the registered capital of Sundart (Beijing) from HK$18 million to HK$28 million in May 2009 and obtaining additional banking facilities for Sundart (Beijing). In addition, we have targetted certain proposed sizeable projects announced by major property developers in Hong Kong, and have closely monitored their progress so that sales and marketing efforts will be available as and when necessary. Our Directors believe that, given our proven track record and good reputation in the fitting-out industry, we will be able to participate in the mega-sized hotel and/or luxurious residential projects to be carried out in China in the coming years.

Strategically expand our fitting-out business to other markets such as Qatar and Abu Dhabi in the Middle East

With the re-joining of Mr. Leung, we have started our fitting-out business in overseas market such as Qatar. Mr. Leung stepped in the Middle East market in about 2005 by trading timber products to local distributors and supplying timber products to local fitting-out contractors. As such, Mr. Leung possessed strong experience in dealing with market participants in the Middle East. New corporate entity, Sundart Interior, was set up by us for this purpose on 17 May 2009.

Sundart Interior’s initial share capital is QAR10,000,000 divided into 10,000 equal shares of QAR1,000 each and is held as to 51%, 47%, 1% and 1% by Mr. Abdullatteef Mohammed A Al-Kuwari, Sundart (Middle East), Mr. Jubin Kodinjyil Thomas and Ms. Anastasia Chistyakova respectively who are entitled to exercise voting rights in accordance with their respective shareholding interests. Sundart Interior was set up to be engaged principally in fitting-out works for residential, commercial, hotel and resort development and any other projects in Qatar.

Under the SI-JV Agreement, the board of Sundart Interior comprises four directors of which two are nominated and appointed by Sundart (Middle East) and the other two directors are nominated by Mr. Al-Kuwari and Ms. Chistyakova respectively. The quorum of board meetings is three directors of which two shall be directors nominated and appointed by Sundart (Middle East). Any decision of the board of Sundart Interior shall be made by a simple majority of votes of the directors present at a duly constituted meeting and every director present shall have one vote.

Each of the JV Partners is entitled to appoint one representative to vote and Sundart (Middle East) is entitled to appoint three representatives to vote at shareholders’ meetings of Sundart Interior. The quorum of shareholders’ meetings of

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Sundart Interior shall be a minimum of one representative appointed by each of the JV Partners and any two representatives appointed by Sundart (Middle East) and passing of all resolutions at shareholders’ meetings require votes of those shareholders representing more than 75% of the total number of shares of Sundart Interior except for those matters which require the approval of votes representing 100% of the total number of shares of Sundart Interior, such matters include, among others, any change in the capital and debt structure of Sundart Interior, any change in the dividend policy of Sundart Interior, the approval, declaration or payment of dividends or other distributions of Sundart Interior’s profits and earnings, any proposal for Sundart Interior’s reconstruction, consolidation, amalgamation or merger with, or acquisition by, another corporation.

The day to day administration of Sundart Interior is delegated to a general manager (who is appointed by Sundart (Middle East)) and to Mr. Thomas as manager. Mr. Leung has been appointed as the senior director who has the powers of a company general manager in accordance with Qatar law and to supervise the general manager of Sundart Interior. Each of the JV Partners shall provide Sundart Interior with such general assistance as it reasonably requires upon the request of Sundart (Middle East) or Sundart Interior.

Each of the JV Partners has also undertaken that he/she will not enter into any activities which do not form part of his/her existing businesses and would be in competition with, directly or indirectly, the business of Sundart Interior and any other business as Sundart Interior may from time to time carry out without the prior written consent of Sundart (Middle East).

Pursuant to the SI-JV Agreement, subject to circumstances prevailing at the relevant time, Sundart (Middle East), Mr. Al-Kuwari, Mr. Thomas and Ms. Chistyakova shall be entitled to dividend in the proportions as to 51%, 25%, 12% and 12% respectively of the net profits of Sundart Interior. They shall also be responsible for the net losses of Sundart Interior in the same proportions as aforesaid.

We have been advised by our legal advisers as to Qatar law that under Law No (13) of 2000 for the Regulation of Foreign Capital Investment in Economic Activity of Qatar (the “ Foreign Investment Law ”), a foreign investor may not own more than 49% of a Qatari company unless it has received an exemption in accordance with the Foreign Investment Law. Foreigners practising any economic activity in violation of the Foreign Investment Law are subject to a fine not less than QAR50,000 and not more than QAR100,000, and any Qatari national who collaborates with a foreigner in operating such activity shall be liable to the same penalty. However, the Foreign Investment Law does not explicitly prohibit a foreign investor from receiving more than 49% of a Qatari company’s net profit.

The profit distribution arrangement as provided in the SI-JV Agreement as mentioned above means that the non-Qatari shareholders of Sundart Interior (i.e. Sundart (Middle East), Mr. Thomas and Ms. Chistyakova) will be entitled to receive 75% of the net profits of Sundart Interior which is more than their combined 49% equity shareholding in Sundart Interior. Such profit distribution arrangement is also

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contained in the articles of association which have been studied, approved and registered by and with the Ministry of Business and Trade of Qatar. Although it is possible that such profit distribution arrangement could theoretically be challenged in the Qatar courts on the basis that the profit distribution is of a different proportion to the equity shareholding and therefore possibly not in compliance with the Foreign Investment Law, the legal advisers as to Qatar law have advised that profit sharing ratios being different from the actual shareholding is a long established practice in Qatar, they have seen many other Qatari companies with similar profit distribution arrangements and they have been involved in a considerable number of Qatari company incorporations over the last five years the joint venture contracts/articles of association of which contained similar provisions as those of Sundart Interior and that they are not themselves aware of any such challenge having been made or any decision handed down by the Qatar courts on this issue. Furthermore, under Qatar law there is a general principle by which the contract is the law of the contracting parties, and therefore in the absence of a specific prohibition in the law, shareholders should be able to determine and agree among themselves the basis on which they hold the economic benefit of their shareholdings in a company.

In the absence of fraud, misrepresentation or other extenuating circumstances, our legal advisers as to Qatar law believe that such a challenge would be very remote and has very little chances of being successful in a court action in Qatar in these circumstances, particularly given the level of profit distribution, the clear agreement of the parties and the fact that such arrangements are enshrined not only in the SI-JV Agreement, but also in the articles of association of Sundart Interior which have been approved by and registered at the Qatar Ministry of Business and Trade. In any event, any challenge of the arrangement would most likely be on the ground of the Qatari shareholder wanting a bigger share of the profit and not by a third party (including the authorities).

Our legal advisers as to Qatar law are also of the view that in the unlikely event that in this case, such challenge was made and was successful and the profit distribution arrangement was held to be void, the risk is that the court would bring back the profit sharing ratios to be in line with the actual shareholding and it would not otherwise affect the legal status, the operations or other activities of Sundart Interior. Thus the risk is that the share of profits of Sundart (Middle East) will be brought down from 51% to 47% to be in line with its percentage shareholding. The profit sharing entitlement of the other two non-Qatari shareholders (Mr. Thomas and Ms. Chistyakova) would also be brought down to 1% each and the profit sharing entitlement of the Qatari shareholder (Mr. Al-Kuwari) would be increased to 51% reflecting their respective levels of shareholding in Sundart Interior.

We will pay particular efforts to develop our business in Qatar market as we believe that new mega-sized fitting-out projects are emerging in this country which, if we are able to participate in them, will enhance our goodwill and make up our dropping business in Macau.

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We also look for opportunities to expand our fitting-out business to other country such as Abu Dhabi in the Middle East. As a stepping stone, we will first involve in sourcing and distribution of interior decorative materials, followed by installation of timber doors and floors and thereafter try to participate in fitting-out projects in such country as and when appropriate.

Up to the Latest Practicable Date, we had not secured any fitting-out contract in Qatar and Abu Dhabi but tenders for 12 fitting-out projects have been submitted.

Extend to new business segment of building renovation and usage conversion

In addition to new property developments, fitting-out business opportunities also arise when a building undertakes complete renovation or changes its usage, say from residential to hotel or from industrial to residential or hotel. Such kind of projects do not require construction of superstructure and usually require the fitting-out contractor to adopt “design-and-build” approach and take the leading role in place of building main contractor, hence, render the fitting-out contractor to have greater flexibility in deploying resources.

During the Track Record Period, we have participated as main contractor in 3 projects of building renovation and usage conversion involving Waldo Hotel, the Hotel Development at Morrison Hill Road and Butterfly on Prat (Hotel Conversion at 21-23A Prat Avenue, Kowloon). Such participations have not only provided us with business opportunities and revenue but also enhanced our image in the eyes of the customers, designers, suppliers and subcontractors.

In view of shortage of land and high labour costs in Hong Kong and our receipt of different tender invitations during the Track Record Period and thereafter, our Directors believe that further building renovations and usage conversion projects will emerge in the coming years in Hong Kong. As such, we will place further efforts to capture such opportunities.

Develop our business of sourcing and distribution of interior decorative materials

Our proven track record positions us well to participate in future projects and we will pursue opportunities which we believe will generate a satisfactory return in investment. Leveraging on the established platforms of our main business, we intend to expand our operation scale by further developing our business of sourcing and distribution of interior decorative materials in other countries outside Hong Kong, Macau and China.

With the relationship with DSTP and the arrangements under the DSTP Agreement and the arrangements with other suppliers and subcontractors, we will actively be involving in the business of sourcing and distribution of interior decorative materials. Given that purchase orders aggregating over HK$67 million have been secured by us since April 2009 and up to 25 July 2009 and the fact that gross output value of construction in Qatar had been increasing throughout 2005 to 2008, we are confident that this business will not only generate additional and stable revenue to us but also

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give us additional opportunities to step into other markets, first by supplying interior decorative materials, followed by installation of timber doors and floors and then by participating in interior fitting-out projects in other countries in the Middle East as and when appropriate.

Set up our own procurement and pre-fabrication facility

We believe that there is a common trend in the fitting-out industry for pre-fabrication of fitting-out materials, particularly for sizeable projects, where heavy and complex fitting-out materials such as marbles, timber doors and furniture are pre-fabricated and then delivered on-site for assembling as pre-fabrication method will not only save costs and enhance quality but also generate less wastages and hence environmental friendly.

In view of this, we intend to set up our own procurement and pre-fabrication facility in the PRC, which we believe will enhance our competitiveness when bidding for tenders in terms of price, quality and environmental friendliness.

As an initial planning, our procurement and pre-fabrication facility will be located in the Southern part of China having an aggregate gross floor area of about 10,000 sq.m. which comprises a warehouse, a laboratory, an office and a staff dormitory and hiring not less than 100 employees. As at the Latest Practicable Date, the Group did not have any capital commitment in relation to the setting up of the pre-fabrication facility. Such proposal, which will be solely financed by our proceeds from the [�], will be commenced immediately after Listing and is targeted to be completed by 2012.

Strengthen our research and development capabilities

Property developers and hotel owners have been increasingly demanding when it came to new projects, but they might not be willing to pay commensurate pricing. In order to maintain our competitive edge, we have to strengthen our R&D capabilities. At present, we do not have a separate R&D department but have recruited a technical manager in April 2009, with primary responsibility to provide technical support to our project team as well as research and development of timber products and pre-fabrication and installation technique. No R&D expenses arose by reason of employment of any employee before the recruitment date of the said technical manager. The R&D expenses for the two years ended 31 March 2009 had been accounted for under cost of sales or staff costs and no separate allocation of such expenses was made. After Listing, we will devote significant research efforts and resources in the R&D of pre-fabrication and installation technique, fire-proofing and/or noise-reduction fitting-out materials and combination of different materials for fitting-out usages. In doing so, we will set up a separate R&D department and recruit not less than two engineers/technicians with sufficient engineering experience whom will be led by our technical manager recruited by us in April 2009. A laboratory with advanced instruments and equipments will also be set up in the same premises at which our own procurement and pre-fabrication facility is to be located.

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Continue to further enhance our brand name recognition

We believe that our “ Sundart ” brand name has been paramount to our past records and will underpin our development in the future. We will continue to focus on increasing the appeal of our services and distinguishing ourselves from our competitors by further enhancing our operational efficiency and productivity. We will also continue to proactively manage our customer relations, expand our customer base and increase customer loyalty.

We believe that our “ Sundart ” brand name will be enhanced as we expand our business.

Continue to emphasize and maintain high standards of project planning, management and implementation

We will continue to collaborate with highly selective main contractors in our pursuit of overall project quality. Our goal is to benchmark our services against world-class standards. More importantly, we will continue to apply our systematic approach to project management to further standardise and streamline different areas of our operations. We will also continue to implement strict quality control measures to monitor our product quality and workmanship throughout the development process.

As we expand, it will become increasingly important that we are able to maintain our levels of standards in order to ensure customer comfort and satisfaction.

Adhere to prudent financial management to ensure sustainable growth and capital sufficiency

We will continue to closely monitor our capital and cash positions and carefully manage key measures such as labour costs, cash flows and fixed charge coverage. In the process of identifying and capturing emerging opportunities, we will continue to focus on projects on a selective and prudent basis which are profitable and of high-profile in nature.

We will continue to focus on our internal control system to ensure adequate cash flow for our ongoing capital requirements, improve our operating facilities and technologies and streamline our operational processes to achieve savings in our costs. We will remain disciplined in our capital commitments and seek long-term financing opportunities.

FITTING-OUT WORKS

We have been conducting our fitting-out business within Hong Kong, Macau and China. Our fitting-out business started in 1988 when Sundart Engineering, our past subsidiary, was involved as a subcontractor in works relating to structural spray fire protection ( ) and fitting-out works in respect of Jing Guang Centre in the PRC. Since then, we, through Sundart Engineering, continued to participate in several

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projects in the PRC on a project-by-project basis until Sundart (Beijing) was established in 2003. Then we have operated our fitting-out business in Hong Kong since 1996. We further expanded our fitting-out business to Macau in 2005 through Sundart (Macau).

As a professional fitting-out contractor, we are involved in the day-to-day management and implementation of projects awarded to us. Normally, we delegate part of our fitting-out works to our subcontractors, and coordinate with our customers or their consultants, the main contractors, subcontractors and suppliers when carrying out our projects.

Projects taken and undertaking

We normally secure projects through competitive tender process. Over the years, we have completed a significant numbers of sizeable fitting-out projects for major property developers in Hong Kong and Macau. The diversity and extensiveness in our portfolio in the past is illustrated in the following examples of projects undertaken by us:

						Contract	Contractual/
						sum	estimated
	Type of	Our				attributable	commencement	Completion
Project name	customer	capacity(1)	Project type	Scope of works	District	to us	date	date
Celestial Heights	Property	Contractor	Residence	Typical flats and	Homantin,	HK$269.6	28 August 2007	27 March
(Phase 1)	owner			lift lobbies	Hong Kong	million		2009
				fitting-out
The Capitol, Lohas	Property	Contractor	Residence	Typical kitchens,	Tseung Kwan	HK$160.2	7 June 2007	June 2009(2)
Park	owner			bathrooms and	O, Hong	million
				lift lobbies	Kong
				fitting-out
Metro Town Phase 1	Property	Contractor	Residence	Residential units,	Tseung Kwan	HK$167.4	7 September	16 October
(Tiu Keng Leng	owner			typical lift	O, Hong	million	2004	2006
Station				lobbies, main	Kong
Development)				entrance lobbies
				and lift interior
Le Point, Phase 2 (Tiu	Main	Nominated	Residence	Residential units	Tseung Kwan	HK$138.7	24 May 2006	5 February
Keng Leng Station )	contractor	subcontractor		lift lobbies, lift	O, Hong	million		2008
				cars	Kong
The Legend	Main	Nominated	Residence	Typical flats,	Tai Hang,	HK$102.9	10 August 2005	4 August
	contractor	subcontractor		bathrooms and	Hong Kong	million		2007
				lift lobbies
				fitting-out
Phase RIII and RIVa	Main	Subcontractor	Residence	Typical bathrooms	Pokfulam,	Bathroom:	22 December,	28 February
of the Residential	contractor			and lift lobbies	Hong Kong	HK$75.6	2004	2006
Development of				fitting-out		million
Pokfulam
						Typical
						Lobby:
						HK$35.6
						million
Residential	Main	Subcontractor	Residence	Typical bathrooms	Pokfulam,	Bathroom:	27 September	11 November
Development at	contractor			and main	Hong Kong	HK$75.2	2007	2008
Pokfulam Phase RV				entrance lobbies		million
– Bathroom				fitting-out
Entrance Lobbies &						Main
Lift Cars						Entrance:
						HK$15.2
						million

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BUSINESS

						Contract	Contractual/
						sum	estimated
	Type of	Our				attributable	commencement	Completion
Project name	customer	capacity(1)	Project type	Scope of works	District	to us	date		date
The Palazzo (Ho Tung	Main	Nominated	Residence	Typical lift	Shatin,	HK$60.0	2 July 2007		31 March
Lau Development,	contractor	subcontractor		lobbies	Hong Kong	million			2009
Shatin) −Typical				fitting-out
Tower Lift Lobby
Garden East Serviced	Main	Subcontractor	Serviced	Typical guest	Hong Kong	HK$56.2	31 January 2008	14	November
Apartment (Hotel	contractor		apartments	rooms and		million			2008
Development at				corridor
Queen’s Road				fitting-out
214-224)
Parcel 2 of the Cotai	Property	Trade	Hotel	Guest suites	Cotai, Macau	MOP147.7	15 August 2007		4 August
Casino, Exhibition	owner	contractor		(excluding the		million			2008
and the Hotel				two presidential
Complex				suites on L18
				and 19),
				common
				corridors at
				front-of-house
				areas, lift
				lobbies and lift
				cars from
				L6-L19
				fitting-out
MGM Grand Macau	Management	Subcontractor	Hotel	Villa rooms, lift	Nam Van,	MOP162.3	14 February	10 January
	contractor			lobby and	Macau	million	2007		2008
				corridor
				fitting-out
MGM Grand Macau	Management	Subcontractor	Hotel	Suite rooms, lift	Nam Van,	MOP172.8	18 October 2006	10 January
	contractor			lobby and	Macau	million			2008
				corridor
				fitting-out
Grand Lisboa Hotel	Main	Subcontractor	Casino and	Casino gaming	Macau	MOP152.4	24 April 2006	21 January
and Casino	contractor		hotel	areas at 1/F,		million			2008
				2/F, 3/F, casino
				VIP rooms at
				2/F, U2/F, and
				3/F and VIP lift
				lobbies and
				passageways at
				LG3, LG1, G/F
				and 3/F and
				hotel banquet
				hall at UG/F
				interior
				fitting-out
Grand Lisboa Hotel	Main	Subcontractor	Hotel	Hotel guestrooms	Macau	MOP112.8	31 July 2007	14 February
	contractor			11/F to 22/F		million			2008
				(except 13/F,
				15/F & 16/F
				interior
				fitting-out

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BUSINESS

						Contract		Contractual/	Contractual/
						sum		estimated
	Type of	Our				attributable	commencement			Completion
Project name	customer	capacity(1)	Project type	Scope of works	District	to us			date		date
Parcel 1 of the Cotai	Major trade	Subcontractor	Hotel	VIP Suites at L38	Cotai, Macau	MOP250.6		20 September			14 August
Casino, Exhibition	contractor			& L39 and VIP,		million		2006	(L38 &	2007 (L38 &
and the Hotel				hospitality and					L39)		L39)
Complex				club lounge at
				L6 and L7,				5 April 2006		20	July 2007
				hotel suites and				(L6 & L7)		(L6 & L7)
				corridors at
				central wing,				6 November		31	May 2007
				guest lift					2005	hotel suites
				lobbies and			hotel suites and			and corridors
				guest elevators				corridors at			at central
				of typical floors				central wing,		wing, guest
				fitting-out			guest lift lobbies			lift lobbies
								and guest			and guest
								elevators of		elevators of
								typical floors		typical floors
Wynn Resort Macau	Contractor	Subcontractor	Casino and	Fitout and	Macau	HK$16.0		June 2006			December
			hotel	Drywall to		million(3)					2007
				Ground Floor
				Promenade and
				Ground Floor
				Noodle
				(Expansion
				Phase)
Waldo Hotel	Property	Contractor	Casino and	G/F and M/F	Macau	HK$27.0		20 September			October
	owner		hotel	Casino and		million(4)			2007		2008
				Lobby
				renovation and
				fitting-out
The Long Beach, KIL	Main	Subcontractor	Residence	Typical lift lobby,	Hoi Fan Road,	HK$75.5	10	October 2003		25	November
No. 11152, Hoi Fan	contractor			bathroom,	Hong Kong	million					2004
Road, Kowloon				kitchen, living
				room and maid
				lavatory for
				residential
				towers
Parc Palais, Kowloon	Main	Nominated	Residence	Typical	King’s Park,	HK$78.9		10 July 2003		3	May 2004
Inland Lot No.	contractor	subcontractor		bathrooms,	Hong Kong	million
11118, King’s Park				shuttle lift
				lobbies,
				entrance lobbies
				and lift lobbies
				fitting-out
Central Park Towers,	Property	Contractor	Residence	Typical flats and	Tin Shui Wai,	HK$123.0		27 September			2 January
Tin Shui Wai Town	owner			lift lobbies	Hong Kong	million			2004		2008
Lot No. 24, Area 33				fitting-out
Harbourview Horizon	Property	Contractor	Hotel	Loose Furniture	Hung Hom,	HK$56.3		22 June 2005		1	May 2006
KIL 11103 Hung	owner			and lighting to	Hong Kong	million
Hom Bay				the typical suite
				units fitting-out
Wynn Resorts Macau	Contractor	Subcontractor	Hotel	Fit-out to SPA,	Macau	HK$36.4		15 July 2005		April 2007
				Restaurants,		million(5)
				Hotel Lobbies,
				G/F Promenade
				and Lobby
				Lounge, Italian
				Restaurant and
				Public
				Restrooms in
				Area 2

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BUSINESS

						Contract	Contractual/
						sum	estimated
	Type of	Our				attributable	commencement	Completion
Project name	customer	capacity(1)	Project type	Scope of works	District	to us	date	date
One Island East,	Main	Subcontractor	Office	Passenger,	Quarry Bay,	HK$59.1	12 June 2007	24 May 2008
Quarry Bay	contractor			Carpark and	Hong Kong	million
				Service lift
				lobbies, toilets
				smoke lobbies
				outside toilets
				and lift car
				interiors
				fitting-out
Butterfly On Prat	Main	Subcontractor	Hotel	Provision of	Tsim Sha Tsui,	HK$55.3	8 December	14 November
(Hotel Conversion	contractor			alteration	Hong Kong	million	2007	2008
at 21-23A Prat				works,
Avenue, Kowloon)				fitting-out
				works and
				building
				services
				installation
				works

Notes:

For those projects which our capacity was classified as contractor/trade contractor, we were directly employed by the property owners to execute the fitting-out works of the contracts.

Fitting-out works have been completed pending written confirmation from our customer.
The actual value of the works exceeded HK$66.5 million due to subsequent variation of orders received from our customer.
The actual value of the works exceeded HK$100.0 million due to subsequent variation of orders received from our customer.
The actual value of the works exceeded HK$56.8 million due to subsequent variation of orders received from our customer.

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BUSINESS

As at the Latest Practicable Date, we had a number of projects in progress. The following tables set out those projects with contract sum of not less than HK$50 million:

A. Contract sum of more than HK$100 million:

										Approximate
										percentage
										of progress
										payments
							Contract			received and
							sum	Contractual		receivable
			Type of	Our			attributable	commencement	Contractual	as at 30
Project name			customer	capacity(1)	Project type	Scope of works	to us	date	completion date	June 2009
Hong Kong
Lohas Park			Property	Contractor	Residence	Typical Kitchens,	HK$183.8	23 April 2008	14 September	46%
Phase II			owner			bathrooms, lift	million		2010
						lobbies, lift cars
						fitting-out
Central Park			Property	Contractor	Residence	Typical Flats and	HK$125.7	13 May 2008	9 November	5%
Towers II			owner			Lift Lobbies	million		2010
						interior
						fitting-out
Celestial	Heights		Property	Contractor	Residence	Typical flats and	HK$273.0	22 December	November 2009	23%
(Phase	2)		owner			lift lobbies	million	2008
						fitting-out
Macau
Serviced Apartments			Property	Trade	Hotel	Typical bathroom,	MOP445.4	24 June 2008	[10 June	39%
for Parcel 2 Cotai			owner	contractor		kitchen & Front	million		2009](2)
Resort						of House Area
Development						Finishes
						fitting-out
City of Dream at			Property	Trade	Hotel	Guestroom Front	HK$147.3	11 July 2008	30 July 2009(2)	78%
Cotai, Macau –			owner	contractor		of House Area	million
C2388D		Hotel				& Back of
Block 1						House Area
						fitting-out
						(L05-UR/F)
City of Dream at			Property	Trade	Hotel	Guestroom Front	HK$154.5	11 July 2008	30 June 2009(2)	94%
Cotai, Macau –			owner	contractor		of House Area	million
C2388E		Hotel				& Back of
Block 2						House Area
						fitting-out
						(L05-UR/F)
Shanghai
Ritz Carlton Hotel			Property	Nominated	Hotel	Guest rooms, lift	RMB88.3	December	November 2009	2.4%
(		)	owner	subcontractor		lobbies and	million	2008(3)
						corridor of
						south tower
						hotel fitting-out

Notes:

For those projects which our capacity was classified as contractor/trade contractor, we were directly employed by the property owners to execute the fitting-out works of the contracts.

For the projects which our capacity was classified as nominated subcontractor, we were nominated by the property owners and entered into sub-contracts with the main contractors to execute the fitting-out works.

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BUSINESS

Contractual completion date has to be extended and application for extension of time has been submitted to our customer. The delay was caused by additional and variation of works as instructed by our customer during the course of execution of works. There is no default on our part.
The project was at the stage of design during the first half of 2009 and the mass production is expected to commence in August 2009.
B. Contract sum between HK$50 million and HK$100 million:

								Approximate	Approximate
								percentage
								of progress
									payments
								received and
					Contract sum	Contractual			receivable
	Type of	Our			attributable	commencement	Contractual		as at 30
Project name	customer	capacity(1)	Project type	Scope of works	to us	date	completion date		June 2009
Hong Kong
Harbour Grand	Property	Contractor	Hotel	Guest rooms, lift	HK$91.8	16 March 2008	7 November		96%
(21/F – 40/F for	owner			lobbies and	million (2)		2008 (3)
Hotel				corridor
Development at				fitting-out
15-17 Oil Street,
North Point)
13-15 Tai Hang	Main	Nominated	Residence	Typical Lift	HK$85.9	17 July 2008	30 September		41%
Road, Causeway	contractor	subcontractor		Lobbies,	million		2009
Bay, Hong Kong				kitchens and
				bathrooms
				fitting-out

Notes:

For the projects which our capacity was classified as nominated subcontractor, we were nominated by the property owners and entered into sub-contracts with the main contractors to execute the fitting-out works.
The actual value of the works certified by our customer has reached HK$173.0 million, which is larger than the original contract sum due to additional works as instructed by our customer.
Contractual completion date has to be extended and application for extension of time has been submitted to our customer. The delay was caused by additional and variation of works as instructed by our customer during the course of execution of works. There is no default on our part.

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BUSINESS

Operating procedures

Our operating procedures in respect of fitting-out works principally involve identifying potential projects, sale and marketing, tendering and project implementation. We have developed a comprehensive project management system in respect of our fitting-out works including tendering preparation, contract management, project administration and project completion and handover. For illustrative purposes, the flow of our operating procedures is outlined below:

==> picture [409 x 505] intentionally omitted <==

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

Start
Identifying
Potential End End End
Projects
Unfeasible Not Approved Unsuccessful
Sales & Tender Feasible Preparation Review by Tender Review by
Marketing Analysis of Tender Directors Submission Directors
Engineering
Design /
Technical
Submission Successful
Material
Procurement /
Subcontracting
Site
Management
Acceptable InspectionStatutory Acceptable Customer’s Inspection Products and Provision of Services to Customer Management & Costs ControlQS AdministrationProject Job Review and Costs Budgeting
Financial
Management
Customer
Relationship
Management
Unacceptable Unacceptable
Safety &
Quality
Management
Risk
Management
Completion HandoverProject and Liability PeriodDefect Preparation Accountsof Final SettlementFinal
End
----- End of picture text -----

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BUSINESS

Identifying potential projects

We will preliminarily review such potential projects in order to ascertain whether they are profitable and manageable. We normally make decisions based on a number of factors including the scope and complexity of work, project specification, achievability of specified timetable, availability of recourses and expertise and our financial conditions.

In case of new potential customers, we will assess and review their backgrounds, future development prospects and financial status by meeting with the customers and through public searches.

Sales and Marketing

After deciding to proceed with an identified project, our sales and marketing staff will prepare the necessary pre-qualification submission, study tender background, make forecast review and carry out site visit. Pre-qualification is a common practice adopted by developers whereby the developers require each candidate to make a submission in order to assess its eligibility to tender. Different factors may be considered by the developers in the assessment including company organisation and resources, past job experience, proposed human resources for the project, proposal for undertaking the project and safety and environmental protection track records, etc.

During the Track Record Period, nearly all of our revenue were derived from our fitting-out projects in the private sector. Therefore, nearly all of our customers are either property developers, hotel owners or main building contractors in Hong Kong, Macau or China. During the Track Record Period, sales to our largest customer accounted for approximately 27.6%, 38.2% and 40.2% of our revenue, respectively. During the Track Record Period, sales to our five largest customers accounted for approximately 64.9%, 80.2% and 78.7% of our revenue, respectively.

None of our Directors, their associates or any Shareholders (which to best knowledge of our Directors will own more than 5% of the issued share capital of our Company immediately upon completion of the [�]) has any interest in our five largest customers as at the Latest Practicable Date.

Tendering

In pricing a tender, we make reference to the information maintained in our computer database, the quotations of suppliers and subcontractors, the materials price trend, wage trend, our previous tender records and the awarded tender prices of similar jobs. During the tendering process, if any subsequent tender changes, modifications or addenda are received, we will review and take into account all such tender changes, modifications or addenda in the preparation of tender and reply customers as required. We take into account various possible risk factors in preparing an accurately budgeted, competitive and profitable tender. Most of our contracts are awarded and carried out on a fixed-price basis with a pre-determined timetable for project completion. Our bids are therefore prepared on this basis. This type of contracts generally commits the fitting-out contractor to provide all the resources required to complete a project for a fixed sum.

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BUSINESS

Tender analysis

On receipt of a tender, we will evaluate and conduct an analysis of the tender documents to identify the scope of works, costs, environment, quality, schedule, safety, statutory and technical requirements.

Tender analysis is an expedient process in the sense that we have to determine the feasibility of a particular project in a short period of time before placing substantive resources in preparing the tender proposal.

Preparation of tender

Tender preparation is a comprehensive procedure which mainly involves our QS and project management teams. It includes costing and pricing, competitor analysis, cash flow analysis and risk assessment, etc.

The time allowed to prepare the tender proposal varies from case to case, and depends on specific tender requirements of a project. Generally, it takes about three to four weeks from receipt of the tender documents to submission of the tender proposal. Additional time is usually allowed if there is any tender addendum or pre-tender interview. In certain circumstances, extension of tender return date may be granted by potential customers when so requested by us.

Tender interviews

After receiving tender proposals from candidates, the potential customer will have interviews with those short-listed candidates, at which the potential customer will have an in depth study on the tender, technicality and financial aspects of the candidates.

Project administration

On award of a contract, we will implement project administration to ensure the contract is executed effectively and efficiently.

The management process includes engineering design and technical submission, devising detailed works plan, procurement of materials, delegation of works to subcontractors, coordination with the customer or its consultants, and with subcontractors and suppliers and to take charge in the overall management of these works.

Works programme

Once a contract is awarded to us, we will assign a project team which is led by a project manager for on-site supervision and overall coordination of the day-to-day operation of the project.

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BUSINESS

A works programme will be prepared according to the contract requirements and the site activities in the works programme will be broken down into sufficient details such that individual task works can be monitored. The works programme will show the logic of the work sequence and incorporate the key dates and milestone dates which will be closely monitored during the execution of the project.

Based on the works programme, the subletting schedule, the resource schedule, the method statement submission schedule, the design submission schedule and the material requirements or sample submission schedule will be worked out. The above schedules will be used to monitor the planning work and to ensure that the subletting work, the resources allocation, the submission works are prepared and proceeded in a timely manner.

Engineering design / Technical submission

Ideas of customers are included in the tender documents which are usually in the form of architect’s drawings together with the specifications of materials and/or products to be used. Staff of our technical department has to prepare corresponding detail engineering drawings in order to transform such ideas into real and practicable solutions. Sometimes, product simulation and/or mould-up is required in order to let the customers have an in-depth understanding of what materials or products are to be used in the projects.

Procurement and allocation of resources

Our purchasing department sources materials, invites quotations, conducts price evaluation and negotiation, undertakes procurement of materials and equipments, allocates resources for all projects and aligns demands for each project. This centralised procurement and resources allocation system enables us to make bulk purchases in order to achieve cost savings, and to coordinate the allocation of our existing resources among different sites in order to maximise utilisation of resources.

Depending on contract requirements, we may be required to purchase raw materials such as marble, wood, veneer, paint and cement to furnished products such as door, bath tub, shower head and other furniture.

Proposed materials, together with actual sample, if possible, will be approved by the customer prior to order. Generally, our suppliers offered us credit terms of thirty days after receipt of invoices or demand notes. We have maintained good working relationship with our suppliers and, barring unforeseeable circumstances, do not foresee any difficulties in sourcing materials in the future.

Unless the customers require us to select suppliers nominated by them, we select our suppliers from our approved list of suppliers and only listed suppliers are invited to submit quotations. Starting from 2008, annual performance appraisal is conducted on all the listed suppliers and we assess their overall performances including quality, safety, environmental friendliness and timeliness of delivery. Generally, we select suppliers from the approved list based on their past performances and their capacity to comply with the specified project requirements. We will within 2009 start to implement regular assessment of our suppliers in the course of a project to ensure the quality of their products.

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BUSINESS

During the Track Record Period, purchases from members of the Sundart Living Group, our largest supplier accounted for approximately 11.9%, 6.0% and 4.8% of our total cost of sales, respectively and purchases from our five largest suppliers accounted for approximately 20.8%, 10.8% and 11.6%, respectively of our total cost of sales. Purchases from such suppliers mainly included timber products, tiles and marble, furniture, light fittings, wall covering and ironmongeries.

Save for Mr. Leung, who is the sole owner of the Sundart Living Group, none of our Directors, their associates or any Shareholders (which to the best knowledge of our Directors will own more than 5% of the issued share capital of our Company immediately upon completion of the [�]) has any interest in our five largest suppliers as at the Latest Practicable Date.

Subcontracting

Our contracts with subcontractors, to certain extent, vary in accordance with the main contracts with our customers or the main contractors (as the case may be), but we consistently adopt the following principal terms in our contracts with subcontractors in order to protect our interest:

(a) restrain our subcontractors from further assignment or subcontracting of works without our permission;
(b) adoption of retention money;
(c) subcontractors’ obligations to maintain works in good repair and condition;
(d) early termination whereby we may terminate the subcontracts forthwith with cause by giving notice to the subcontractors such that we will reserve the rights to seek for remedies.

Our subcontractors are neither our employees nor agents and we are not a party to the employment arrangement between our subcontractors and their employees. Fitting-out works are labour intensive works. Usually a large number of workers from different trades with different skills will be required for a project. Given the variety of works undertaken by us, we may involve technical staff and labour with a wide variety of specialised skills at each stage. Subcontracting provides a flexible means of meeting fluctuating workload and maximising the utilisation of expertise in the industry.

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BUSINESS

We maintain long-standing working relationship with our subcontractors. As at the Latest Practicable Date, we had over 200 subcontractors, of which 33 have five years or above of working relationship with us. Long-standing relationship with subcontractors enables us to have comprehensive assessment of the subcontractors over years, ensuring the quality of works in the long run. With the relatively large pool of approved subcontractors in our pre-qualified list, our Directors do not foresee any difficulties in finding substitute subcontractors should that become necessary.

For any given project, we select subcontractors based on a number of parameters including the requirements in the main contract with our customer, previous cooperation experience and our valuation of their performance from the list of pre-qualified subcontractors maintained by us which is regularly reviewed and updated.

As at the Latest Practicable Date, all of our subsisting subcontractors were Independent Third Parties. Project owners also typically require us to obtain their consent before we subcontract. Unless the customers require us to select subcontractors nominated by them, we will select subcontractors from our pre-qualified list of subcontractors. Starting from 2008, an annual performance appraisal is conducted in respect of all listed subcontractors and we will assess their overall performances including workmanship, progress control, safety, environment/pollution control, organisation and resources. We will within 2009 start to implement regular assessment of our subcontractors during the course of a project to ensure quality of their works because pursuant to either the contract or applicable laws, we remain liable to the project owners for the performance of our subcontractors. In doing so, we, in addition to daily site visits made by our project managers to ensure general compliance by subcontractors in all respects and regular site visits made by our safety officers and environmental officers to particularly uphold our safety and environmental requirements, maintain records of non-compliance regarding safety, environmental and other issues, of our subcontractors. In addition, during the continuance of the contracts with our subcontractors, we will supply with them our internal guidelines on safety and environmental issues and we will also regularly hold meetings with our subcontractors to update their knowledge on such issues.

We are committed to prohibiting recruitment of illegal workers and when recruiting employees, whether in our offices or the sites for which we are responsible, we will carefully check the identification documents provided by the candidates. We will report to the police when we come across any candidate with suspicious identity. During the Track Record Period, no illegal workers have been reported in the sites for which we are responsible. In addition, the contracts with our subcontractors have expressed provisions to prohibit them from hiring any illegal workers and we require our subcontractors to carefully check the identity documents of their workers to ensure that no illegal workers are hired to work in the sites for which we are responsible.

During the Track Record Period, subcontracting costs attributable to our five largest subcontractors accounted for approximately 22.2%, 22.1% and 21.7%, respectively of our total cost of sales and our largest subcontractor accounted for approximately 7.2%, 8.5% and 8.2%, respectively of our total cost of sales.

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BUSINESS

None of our Directors, their associates or any Shareholders (which to the best knowledge of our Directors will own more than 5% of the issued share capital of our Company immediately upon completion of the [�]) has any interest in our five largest subcontractors as at the Latest Practicable Date.

Defect liability period

Our customers would normally require a defect liability period, during which we are responsible to rectify defects. Defect liability period normally lasts for one year after project completion and handover. In order to protect our interest, similar defect liability period has to be provided by our subcontractors. Under the usual terms of our contracts, we are liable to rectify all defective works during the defect liability period, if any. Our site management conducts review regularly on the defective works identified. If necessary, additional costs for repairs and maintenance are provided for in the financial statements. During the Track Record Period, we have not experienced any material claim by our customers in respect of our fitting-out works.

Progress payment and retention money

We normally receive progress payment from customers on a monthly basis with reference to the value of works done. Generally, the authorised persons, such as the architects or consulting quantity surveyors employed by the customers, would issue a progress certificate certifying the work progress in the preceding month. The customers will then make payments with reference to such certificates.

In most contracts, there is a contract term for the customers to hold up a portion, normally about 10%, from each progress payment until a particular percentage of the total contract sum is reached and such sum of money is known as retention money. The retention money for each project is normally 5% the total contract sum. Generally, the first half of the retention money is released upon the issue of certificate of completion of the project and the second half of the retention money is released to us upon the issue of certificate of completion of making good defect after the expiry of the defective liability period.

Performance bonds/Advanced payment bonds

In order to secure due and timely performance, our customers will request us to take out performance bonds issued by a bank or an insurance company in their favour. In case where advanced payment is provided by our customer, we have to take out advanced payment bonds for equal amount as guarantee of repayment of such advanced payment to the customer.

Generally, the amount of performance bond required for a project undertaken out by us would not exceed 10% of the total contract sum and the performance bond normally expires after completion of the project. We believe that we have a reputation for completing projects on schedule, and during the Track Record Period, no performance bond had been called by our customers by reason of late completion of any of our projects.

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BUSINESS

Credit management

Our Group does not have a standardised and universal credit period granted to our customers. The credit period of individual customers is considered on a case-by-case basis and set out in the project contracts, as appropriate. We receive payments from our customers in the form of advance payment, progress payment and the return of retention money. For some of the projects, our customers may make an advance payment to us upon the commencement of the projects. Our customers usually retain 5% of the total contract value of the projects as retention money. The remaining balance will mainly be in the form of progress payment to be billed based on the progress of the project.

Similarly, we normally pay our subcontractors on a monthly basis with reference to the value of the works done and if the main contract adopts milestone payment, we will, to the extent practicable, seek payment term for subcontractors on similar basis. Each of the subcontractors is required to submit a request for payment to us every month. Once we have verified the subcontractor’s request against the actual works done or their payment entitlement according to the milestone payment term, we will release the relevant portion of the subcontracting amounts but hold up a retention money. Payments are generally made within one month after we receive and verify the subcontractor’s request.

The provision for impairment of trade receivable, including retention money, is made when there is objective evidence (such as the probability of insolvency or significant financial difficulties of the debtor and significant changes in the technological, market economic or legal environment that have an adverse effect on the debtor) that our Group will not be able to collect all of the amounts due under the original terms of the invoice. The carrying amount of the receivables, including retention money, is reduced through the use of an allowance account. Impaired debts are derecognised when they are assessed as uncollectibles. The balance of allowance for trade and other receivables amounted to approximately HK$0.5 million, nil and nil, respectively, as at 31 March 2007, 2008 and 2009. If any trade receivable, including retention money, is overdue for six months, our accounting staff will discuss with our Directors and/or senior management about the recoverability of such overdue trade receivable or retention money. If our Directors and/or senior management have doubt, bad debt provision will be made accordingly and assessment as to whether to collect the debt through external legal counsel will be made. If there is still no further progress after it has been overdue for one year, our accounting staff will seek approval by our Directors and/or senior management to write off the same as bad debt unless we have reasonable ground to believe such overdue debts can be collected in the future.

During the Track Record Period, there were incidents which we failed to receive payments from customers due to their financial problems, as a result of which bad debts in the sum of HK$1.5 million were recorded. We will continue to select our customers by assessing their credit worthiness. Our Directors consider that we have sufficient working capital (in form of cash at banks) and available banking facilities to finance our business and we have never failed to pay any of our suppliers and/or subcontractors due to cashflow problems during the Track Record Period. Although there were incidents which we had

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withheld payments to suppliers/subcontractors, they were solely due to defective goods and/ or services delivered/provided by suppliers/subcontractors. The Directors confirm that we have never withheld payments to suppliers/subcontractors because of insufficient cashflow.

Up to 31 May 2009, amounts due from customers for contract work as at 31 March 2009 were fully certified by surveyors and transferred to trade receivables.

Up to 31 May 2009, trade payables in the amount of HK$124.5 million, which represented approximately 55% of the balances as at 31 March 2009 have been subsequently settled.

Quality control

Our Directors believe that our results and hence our profits depend on our ability to meet our customers’ and the end-users’ requirements in all respects. In pursuit of quality excellence, we have established formal quality management system in accordance with the requirements of ISO 9001:2008 to develop a sustainable performance-oriented culture with an emphasis on pursuing continuous improvement rather than adopting a short-term, project based approach. Please refer to the section headed “Business – Major qualifications, certifications and awards” in this document for further details of the ISO certifications.

Environment

Fitting-out works inevitably have an impact on the environment and our fitting-out business, whether in Hong Kong, Macau or the PRC, is subject to certain laws and regulations in relation to environmental protection. Please refer to the section headed “Regulations” in this document for further information about such laws and regulations. We have obtained all the required permits and approvals for the projects carried out by us during the Track Record Period. Our Directors believe that it is essential for us to act as an environmentally responsible fitting-out contractor to meet the customers’ demands in environmental protection and the expectation of the community for a health living environment and in return it will ensure the healthy growth and development of our business.

We are committed to minimisation of any adverse impact on the environment resulting from our business activities. In addition, in order to comply with the applicable environmental protection laws, we have established an environmental management system in our operations in the PRC in accordance with ISO 14001:2004 international standards and Sundart (Beijing) was awarded ISO 14001 certification in 2006. We assign separate resources to update our environment management system and maintain our ISO 14001 certification in order to reduce our risks related to environmental issues.

We require our subcontractors to comply with our environmental protection policy. We also encourage our staff to contribute towards sustainability by planning their works to efficiently eliminate waste to the maximum extent with a view to achieving long-term cost savings.

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Safety

Our Directors are of the view that if safety is not managed properly; it can be extremely costly not only in human terms, but in monetary terms as well. Therefore, safety is treated as the highest priority during the delivery of our services and we are committed to providing a safe and healthy working environment for the benefit of our staff, our subcontractors and the general public.

We have adopted a preventive approach with an emphasis on hazard management and risk assessment and in addition, we have developed and maintained a safety management system where a record of non-compliance with any safety procedure as well as subsequent remedial measures are properly managed and reviewed in order to manage safety and health at all of the construction sites for which we are responsible and comply with applicable laws and regulations. Our safety system is documented in written procedures and supplemented with oral instructions, training and demonstration. Our Directors require strict implementation of our safety system with supervision by our Group’s or the subcontractors’ management staff. In Hong Kong, we have employed qualified safety officers approved by the Labour Department in Hong Kong to monitor and implement our safety system. We will continue to put adequate resources and effort to uphold and improve our safety management system in order to reduce our risks related to safety issues.

To pursue the safety and health of all personnel working on sites, we conduct regular internal safety inspections to ensure our operations are conducted in a manner so as to reduce the risks to persons and properties. In addition, we provide safety training to all of our workers at the sites for which we are responsible for compliance with the safety regulations. We require our subcontractors to abide by all legislations, codes and guidelines as well as all safety requirements as stated in our safety manuals and project safety plans and to comply with all current and future enactments relating to their works. In particular, we hold regular meetings with subcontractors to discuss safety issues and to follow up safety measures during the course of projects.

We also evaluate our safety measures regularly and in the event of the occurrence of significant accidents, in order to improve safety control and to avoid reoccurrence of accidents.

During the Track Record Period, no prosecution has been laid against us by any relevant authorities in respect of violation of applicable laws or regulations of safety and health. Save for the personal injuries litigation as mentioned in the section headed “Business – Litigation” in this document and personal injuries suffered by workers of our subcontractors which compensations including sick leave and medical expenses were covered by relevant insurance policy, no material injury and fatal accidents were happened in the sites for which we were responsible during the Track Record Period. Our Directors are of the view that our Group has maintained sufficient third party liability insurance.

Our Directors confirm that we have complied with all the relevant laws, rules and regulations relating to environment, safety and health.

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Insurance

All fitting-out projects undertaken by us are normally protected by contractor’s all-risk and third party liability insurance which, depending on the terms of the relevant contracts, are taken out either by the customers, the main contractors or us. Such insurance policy generally extends for the entire contract period, including the defect liability period following completion of the project.

SOURCING AND DISTRIBUTION OF INTERIOR DECORATIVE MATERIALS

Leveraging on our proven track record and good reputation in the fitting-out industry, we intend to expand our operation scale by further developing our business of sourcing and distribution of interior decorative materials. With a view to strengthening this business, we invited Mr. Leung to re-join us as director and shareholder of Sundart Holdings in 2009. This act not only allows us to have Mr. Leung, an expert in manufacturing and trading in timber products, but also enables us to form an arrangement with DSTP pursuant to the DSTP Agreement. Please refer to the section headed “Connected transactions – Purchase of timber products from DSTP” in this document for further details about our business transactions with DSTP.

Mr. Leung left us in July 2006 (at which time he was the chief executive officer of DSTP and mainly responsible for overseeing and managing the manufacturing business of timber products) when the then other shareholders of Sundart Holdings intended to focus on fitting-out business and not to continue to be involved in timber products manufacturing business and as such, it ended up in the agreement between the then shareholders of Sundart Holdings and Mr. Leung that the timber products manufacturing business be taken up and run by Mr. Leung. SIL and Win Venture were disposed of by us in 2007 for the purposes of streamlining our business and simplifying our corporate structure.

The sourcing and distribution business of interior decorative materials has been undermined by us during the Track Record Period when most of our efforts and resources have been placed to develop our fitting-out business in Macau and Hong Kong. With the re-joining of Mr. Leung, we plan to develop such business as our second largest source of revenue. In order to achieve this goal, we have formed arrangements with DSTP and other suppliers and subcontractors. Please refer to the sections headed “Business – Relationship with DSTP” and “Connected transactions −Purchase of timber products from DSTP” in this document for further details about our transactions with DSTP. Given our long-term business relationship with DSTP and the established goodwill of DSTP in the timber products market, we anticipate to purchase timber products, which principally include timber doors, wall panels and furniture for our business of sourcing and distribution of decorative materials from DSTP in the coming one or two years and our Directors currently anticipate that purchases of timber products from DSTP (excluding those for uses in our fitting-out projects) will account for about [30]% of our total purchases for our business of sourcing and distribution of decorative materials in the coming one or two years. In addition, we believe that such business will, to certain extent, act as a stepping stone for us to participate in fitting-out industry in other countries. By supplying interior decorative materials such as good-quality timber doors and joineries, we may be required to provide related installation services. On the other hand, local fitting-out companies in those advanced countries are

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continuously looking for cost saving opportunities such as outsourcing, forming cooperative relationship with experienced fitting-out companies which have strong network of sourcing interior decorative materials, custom made products and furniture in China in increase their competitiveness. Such exposure, as our Directors believe, serves as a good medium for us to introduce ourselves and hence our fitting-out services, either in reverse alliance with local fitting-out companies or directly, to potential customers. If this expansion path is proved to be successful, we will further develop into other countries if and when appropriate.

RELATIONSHIP WITH DSTP

With a view to strengthen our competitiveness, we have entered into the DSTP Agreement with DSTP in relation to the supply of timber products. These timber products principally include timber doors, wall panels and furniture.

Major terms of the DSTP Agreement

The term of the DSTP Agreement is three years commencing from 1 April 2009 and may be terminated by either party by serving written notice to the other party. Save for the purchase prices of products, no other type of fees will be payable by our Company and no minimum purchase amount is imposed on our Group under the DSTP Agreement. Pursuant to the DSTP Agreement, DSTP shall supply timber doors, wall panels and furniture manufactured by itself to our Group. Please refer to the section headed “Connected transactions – Purchase of timber products from DSTP” in this document for further details about the major terms of the DSTP Agreement.

Background of DSTP

DSTP was established in 1992. It has its own factory located in the Guangdong Province of the PRC with a floor area of over 60,000 sq.m. and as at the Latest Practicable Date, employed over 500 workers and other staff. DSTP used to be a member of our Group before we disposed of its interest in 2005. Since then, we have been purchasing timber products of DSTP for our fitting-out projects either directly from DSTP or indirectly from other members of the Sundart Living Group, including DYBM (a past subsidiary of the Sundart Living Group and which was deregistered in May 2008) and Win Venture and SI (Macau) (both of them are the trading arms within the Sundart Living Group which mainly sell DSTP’s timber products). Our Group has been viewing members of the Sundart Living Group as a single supplier of our Group as a whole.

Our Group plans to purchase in the future timber products directly from DSTP and cease to purchase timber products from SI (Macau) or Win Venture (save and except for the existing orders already placed) since Win Venture and SI (Macau) will cease to engage in the sourcing and distribution of timber products after they finish their existing orders on hand (which is anticipated to be in September 2009). The Sundart Living Group intends to focus on the timber products manufacturing business and in line with such intention, its sales team had already been dismissed.

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During the Track Record Period, major customers of the Sundart Living Group (excluding our Group) were either trading or construction companies located in Hong Kong and Macau, U.S., the United Kingdom, the Middle East and other European countries.

During the Track Record Period, the gross profit margins for sales made by the Sundart Living Group to our Group are approximately 15.17%, 10.78% and 14.84% respectively and to their other customers are approximately 42.03%, 46.67% and 30.76% respectively. Despite of the lower gross profit margin, the Sundart Living Group made sales to our Group so as to better utilise the production capacity of DSTP and as a result of which, the gross profit margin of sales of timber products by the Sundart Living Group during the Track Record Period has been maintained at a stable level of approximately 23.1%, 22.2% and 22.6% respectively.

In determining whether to award any orders of timber products to the Sundart Living Group, our Group underwent its usual tendering process to select the supplier with the lowest quote. As such, the Sundart Living Group was awarded the orders in circumstances when it quoted the lowest price among all other suppliers and could meet our Group’s products requirements and production and delivery schedules.

Despite the fact that relevant orders of timber products placed with the Sundart Living Group were at the lowest price offered among various suppliers who had submitted tenders for such orders, the purchase price of timber products from the Sundart Living Group was not lower than the market rates. There were circumstances the Sundart Living Group could not offer the lowest quote among the bidders, our Directors therefore considered that purchases from the Sundart Living Group did not have any impact on our Group’s financial results during the Track Record Period.

Historical and future transaction amounts

The following table sets out the historical transaction amounts between our Group and the Sundart Living Group respectively and the relevant percentages during the Track Record Period:

		For	the year ended	the year ended	31 March
	2007		2008			2009
	HK$’000	%	HK$’000		%	HK$’000	%
	(approx.)	(approx.)	(approx.)	(approx.)		(approx.)	(approx.)
Purchase amount from the Sundart
Living Group and percentage of
our Group’s costs of sales	93,770	11.9	78,593		6.0	60,356	4.8
Sales amount to our Group and
percentage of total sales amount
of the Sundart Living Group	93,770	71	78,593		68	60,356	52

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Purchase amount from the Sundart Living Group for the year ended 31 March 2007 was exceptionally high when comparing with the purchase amount for each of the two years ended 31 March 2009 because fitting-out projects undertaken by us during the year ended 31 March 2007 involved much more timber-related works such as timber flooring and timber doors.

It is currently estimated that the total amount of purchase of timber products from DSTP for the three years ending 31 March 2012 will not exceed HK$120,000,000, HK$138,000,000 and HK$158,700,000 respectively. It is estimated that the amounts of sales of timber products of the Sundart Living Group attributable to its customers other than our Group for the year ending 31 March 2010 will amount to approximately HK$25,000,000 which represents approximately 10% to 15% of the estimated total amount of sales of timber products of the Sundart Living Group for that year.

Our Directors estimated the purchases of timber products form DSTP for the three years ending 31 March 2012 will account for approximately 35%, 32% and 33% respectively of the total estimated purchases of timber products by our Group. The remaining timber products will be purchased from other suppliers.

It is expected that our Group’s orders for the two years ending 31 March 2012 will take up almost all of DSTP’s existing manufacturing capacity and therefore it is expected that no sale of DSTP will be attributable to customers other than our Group for these two years.

As many of the ultimate customers of timber products which we purchased from DSTP are our fitting-out customers with which DSTP has no direct contact and our Group’s distribution network is better than that of the Sundart Living Group, by supplying timber products to our Group, the Sundart Living Group will be able to distribute the timber products of DSTP without having to put in the resources and to bear the risk associated with such sourcing and distribution business. As such, the Sundart Living Group entered into the DSTP Agreement with our Group to supply timber products to us and chooses not to distribute its products directly to the ultimate customers.

Benefits of the DSTP Agreement

Given that fitting-out projects have to be completed within a short period of time, a stable and reliable supply of good quality timber products, in terms of short lead time and pricing, is exceptionally important. Our established relationship with DSTP and the arrangement pursuant to the DSTP Agreement allow us to have advantages over other competitors when bidding for tenders and over other suppliers in our business of sourcing and distribution of interior decorative materials. Our Directors estimated that the gross profit margin of our Group in distributing products provided by the DSTP will be approximately 15%.

DSTP is an authorised manufacturer of UL certified products certified by UL. It is common for U.S.-based customers to designate UL certified timber products to be used in their projects and DSTP and our Directors believe that DSTP is one of the very few manufacturers in the PRC which manufactures timber products certified by UL. Therefore,

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our relationship with DSTP and the arrangement under the DSTP Agreement not only allow us to have stable and reliable supply of timber products and cost advantage but also considerable advantage when bidding for tenders made by U.S.-based customers.

Although it is expected that DSTP will be our major supplier of timber products, it is not our sole supplier of timber products. The total purchase amount paid by our Group to suppliers of timber products other than the Sundart Living Group during the Track Record Period were approximately HK$78,775,000, HK$69,532,000 and HK$75,401,000 respectively, representing approximately 46%, 47% and 56% respectively of our total purchase amount of timber products. Given that our Group has also purchased timber products from several other suppliers with which we have an established relationship and we have entered into a manufacturing and supply agreement with another timber products supplier and there are also other suppliers of timber products in the market, in the event that DSTP fails to supply timber products as required by our Group, our Directors expect that our Group will be able to obtain supply of such timber products from other suppliers within a reasonable period of time and at reasonable price and therefore believe that our Group will not be materially adversely affected thereby.

Business delineation

DSTP is engaged in timber products manufacturing business in which our Group is not involved. As timber products manufacturing business and sourcing and distribution of interior decorative materials business are two distinct types of businesses, we consider that no competition exists.

With respect to timber products manufacturing business, back in 2006 it had been decided that our Group should focus on fitting-out business and not to continue with the timber products manufacturing business. Since (i) it is our plan to expand our sourcing and distribution of interior decorative materials business and thus, it is more beneficial to us to put our resources in the sourcing and distribution of interior decorative materials business rather than in the timber product manufacturing business; and (ii) timber products manufacturing business requires a significantly higher capital expenditure and is much more labour-intensive when compared to our existing businesses, therefore, our Group had no intention to include the timber products manufacturing businesses of DSTP in our Group prior to Listing, and our Group currently has no intention to include such business of DSTP in our Group after the Listing.

With respect to sourcing and distribution of interior decorative material business, during the Track Record Period, most of our Group’s efforts and resources had been placed to develop its fitting-out business in Macau and Hong Kong rather than such sourcing and distribution business, so our Group had no intention to include the sourcing and distribution business of the Sundart Living Group in our Group prior to Listing. In light of the intended cessation of such sourcing and distribution businesses by the Sundart Living Group, its such business will not be included in our Group after the proposed Listing.

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MAJOR QUALIFICATIONS, CERTIFICATIONS AND AWARDS

The following table set out our major qualifications and certifications:

Year				Awarding
of				organisation				or		Period of
grant	Nature	Recipient Award		authority						validity
2004	Qualification for	Sundart (Beijing) Construction		Ministry of						–
	decoration work	Enterprise		Construction			of		the
		Qualification		People’s Republic of
		Certificate (Grade I in the specialised contract series for		China ( ) (now
		architectural		known as	Ministry
		decoration projects) (		) of Housing and Urban-Rural
		(		Development				of	the
			)	People’s Republic of
				China) (					)
2006	Environmental	Sundart (Beijing) Environmental		Beijing						22 June 2009 to
	management	Management	System	Zhongdahuayuan						21 June 2012
	system	Certificate		Certification			Centre
	certification	(Assessment
		standard GB/T
		24001-2004/ISO
		14001:2004)
2006	Occupational	Sundart (Beijing) Occupational Health		Beijing						22 June 2009 to
	health and safety	and safety		Zhongdahuayuan						21 June 2012
	management	management	System	Certification			Centre
	system	Certificate
	certification	(Assessment
		standard GB/T
		28001-2001)
2008	Safety	Sundart (Beijing) Safety Production		Beijing Construction						30 July 2008 to
	Production	Permit		Committee						29 July 2011
	Permit
2008	Credit rank	Sundart (Beijing) Credit Rank		Beijing Association						Subject to
	certification	Certificate		for Quality Credit						renewal on 22
				Evaluation		Center				September 2009
2009	Quality	Sundart Timber ISO 9001:2008		Hong Kong Quality						30 March 2009
	management	quality management		Assurance		Agency				to 29 March
	system standard	system standard								2012 (subject to
	certification									satisfactory
										maintenance of
										the system which
										will be
										monitored by
										Hong Kong
										Quality
										Assurance
										Agency)

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The following table set out the major awards and recognition obtained by us:

==> picture [406 x 328] intentionally omitted <==

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

|||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
|Year(s)|
|of|Awarding|organisation|or|
|award|Nature|Recipient|Award|authority|
|2004|Business|award|Sundart|Timber|Cross-century|Dongguan|and|The|People’s|Government|
|Hong|Kong|Manufacturing|of|Dongguan|City|
|Outstanding|Business|Award|(|)|
|(|)|Guangdong|Science|and|
|Technology|Department|
|(|)|
|2004|Fire|services|Sundart|Timber|Outstanding|Subcontractor|Shimizu|–|China|State|
|inspection|award|(Bronze)|Award|in|Fire|Services|Joint|Venture|
|Inspection|Award|Scheme|
|2006|Performance|Sundart|Best|Subcontractor|Award|Gammon|
|award|
|2007|Quality|Sundart|(Beijing)|Shanghai|Construction|Shanghai|Construction|
|engineering|Engineering|Magnolia|Award|Trade|Association|
|award|2006|(Municipal|high-quality|(|)|
|engineering)|
|(|
|)|
|2008|Brand|excellence|Sundart|Holdings|Macau|Prime|Awards|For|Brand|Prime|Magazine|
|Excellence|2008|
|2009|Performance|Sundart|Holdings|Outstanding|Strategic|Capital|Weekly|
|award|Performance|Award|

----- End of picture text -----

COMPETITION

Our Directors consider all sizeable fitting-out companies actively operating in Hong Kong, Macau and the PRC to be our competitors.

The fitting-out industry in Hong Kong is scattered and competitive. Entrance barrier to this industry is not high and new comers may enter the industry without industry specific qualifications, licenses or permits. We are able to withstand the intense competition in the past few years and maintain a steady growth of our business because of our competitive strengths:

Established reputation and a proven track record
Long working relationships with major property developers and hotel owners in Hong Kong, Macau and the PRC
Competitive edge on material costs and arrangements with reliable suppliers and subcontractors
Possession of qualifications, capabilities and excellent job reference to undertake sizeable fitting-out projects

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Experienced and efficient management team
Commitment to safety, quality and environment through well-established management system

Please refer to the section headed “Business – Competitive strengths” above.

PROPERTIES

As at the Latest Practicable Date, we owned one property in the PRC and all of our places of operations in Hong Kong, Macau, Qatar and the PRC are leased properties. Please refer to Appendix IV to this document for the valuation report of the leased properties.

LITIGATION

Hong Kong

There were six litigations made against us during the Track Record Period, of which four were personal injuries claims, one was commercial claim and the remaining one was labour claim.

The four personal injuries litigation, which were made by workers who have suffered personal injuries at our sites, have either been closed or settled.

Of these settled personal injury claims, the one involving a more material sum was instituted by a worker of our subcontractor who alleged to have suffered injury to his left eye when he was working in a site in which we were responsible for. The worker as plaintiff claimed against us and our subcontractor as joint defendants for damages. A total settlement sum of HK$2,826,461.37 was eventually paid to the relevant plaintiff for the injury sustained in satisfaction of all the claims and actions arising form this accident and the incident was covered by the relevant contractor’s all risk and third party liability insurance.

For the other two personal injury cases, which were of a more minor nature, the respective settlement amounts were HK$460,000 and HK$50,000.

The remaining personal injury case was settled and has now proceeded to taxation of legal costs involving an estimated sum of approximately HK$200,000. The plaintiff of the case was engaged by our subcontractor. During the course of employment, the plaintiff slipped on a wet staircase at a construction site and suffered back injury. The case was settled at a sum of HK$600,000.

Apart from personal injury cases, we were involved in two other claims in the Track Record Period. One was a Small Claims Tribunal case involving an outstanding amount of HK$6,153 for goods sold and delivered. The other case was a Labour Tribunal case involving arrears of wage payment of a sum of HK$52,000 claimed by two employees of our subcontractor. We, as the contractor, were named as one of the defendants in this Labour Tribunal case. Both cases had been settled, the settlement sum involved was not more than HK$58,153.

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PRC

The Shanghai Branch of Sundart (Beijing) is currently involved in one outstanding legal proceedings in which it is being sued for a contract sum of approximately RMB 150,791 for timber products delivered together with interests and administrative fees. In this regard, the People’s Court of Shanghai Jingan District, the PRC has ordered the Shanghai Branch of Sundart (Beijing)’s bank account with deposits of RMB181,660 to be frozen or properties with equivalent value to be seized pending the final outcome of the proceedings. If such deposits or properties of Shanghai Branch of Sundart (Beijing) are not sufficient for settling the final judgement sum, Sundart (Beijing) may be liable for any shortfall. Pursuant to the Deed of Indemnity, the Controlling Shareholders, Mr. Ng, Mr. Leung and Mr. Wong have given indemnities on a joint and several basis in favour of our Company (for itself and as trustee as its subsidiaries and jointly-controlled entities) in connection with, among others, all or any damages, losses, claims, fines, penalties to be imposed, charges, fees, costs, interests, expenses (including all legal costs and expenses), actions, proceedings arising from or in connection with any litigation, arbitration and/or legal proceedings, whether of criminal or administrative or contractual or tortuous or any other nature, against any member of the Group which was issued and/or accrued and/or arising from any act or non-performance or omission or otherwise of any member of our Group on or before the date on which the [�] becomes unconditional in Hong Kong, Macau, the PRC, Qatar or elsewhere. Another company was also added as party to the proceedings as defendant. Our Directors believe that should the legal proceedings be decided against the Shanghai Branch of Sundart (Beijing), there will be no material adverse impact on our business and financial conditions.

Macau

Sundart (Macau) is currently involved in only one litigation. Such litigation was related to an industry accident and instituted by a worker of our subcontractor in the Basic Judicial Court of Macau as a result of dispute on the amount of compensation of HK$39,000. The case is now pending on the plaintiff’s submission of medical proof to sustain his claim. The plaintiff sued us because we were the contractor of the site where the incident took place. The compensations will be covered by relevant insurance policy if the plaintiff can produce sufficient medical proof.

BREACHES OF RULES AND REGULATIONS

In 2007, an administrative sanction was imposed on the Shanghai Branch of Sundart (Beijing) by Shanghai Jingan District Bureau of Quality and Technical Supervision for installing timber doors which did not meet the required safety standards in the PRC. Sundart (Beijing) was ordered to stop using or selling the relevant timber doors and to pay a fine of RMB277,246 which was fully paid in 2007. The relevant timber doors were forfeited as well. The relevant timber doors supplied and used by us for installation were in accordance with the design specification required by the relevant customer but the design of the timber doors failed to fulfill the required safety standards in the PRC. Shanghai Branch of Sundart (Beijing) took full responsibility for such breach and given the sanction is not of a material nature, it had not taken any action against the then customer or other third parties or received compensation from the customer.

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Our Group has subsequently implemented the ISO 9001 and the quality manual and the operation manual have been adopted by our Group for staff of members of our Group to follow. According to the quality manual, the members of our Group are required to demonstrate their commitment to meeting customers’ requirements as well as the relevant regulatory and legal requirements.

The quality manual also covers several areas which are relevant to the prevention of breaches of rules and regulations in relation to products’ quality or standard. Project development control is one of the areas covered in the operation manual and it is in place with written procedures set out to control our Group’s projects from receipt of the order to the final completion of the projects. The project managers of the relevant projects, who are usually staff with professional qualifications or qualified engineers with knowledge of relevant rules and regulations, will be required to check against applicable statutory and regulatory requirements after drawing and details are obtained from clients. They then review and resolve any requirements of clients which will be conflicting with the applicable statutory and regulatory requirements. It is an ongoing process for keeping track of the work in progress throughout the projects.

Periodic inspection and testing activities during the project are also in place to ensure compliance with inspection and testing requirements. The operation manual contains procedures regarding inspection and/or testing controls at different stages: when materials and equipments are delivered to the members of our Group, when the fitting-out and installation work is partly completed and when the completed works are to be delivered to the clients.

Save as disclosed above, we have not been involved as defendant or respondent in any other legal proceedings, regulatory inquiries or investigations during the Track Record Period, and there are no legal proceedings, regulatory inquiries or investigations currently pending or, to our knowledge, threatened against us. We may from time to time be subject to various legal or administrative proceedings arising in the ordinary course of business.

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RELATIONSHIPS WITH THE CONTROLLING SHAREHOLDERS

INDEPENDENCE OF OUR GROUP FROM THE CONTROLLING SHAREHOLDERS

The Controlling Shareholders, being Mr. Chan, Tiger Crown, Mr. Li, Ms. Li and Scenemay Holdings, are regarded as a group of controlling shareholders acting in concert to exercise their voting right in our Company and they together will be interested in a total of 40.46% of the issued share capital of our Company upon completion of the [�] (assuming the [�] is not exercised).

Management independence

We have our own management team with substantial experience and expertise in the fitting-out industry independent from the Controlling Shareholders or their respective associates.

The principal business of each of Tiger Crown and Scenemay Holdings is investment holding while each of Mr. Chan, Mr. Li and Ms. Li does not have any other business or investment which is competing with our business. Mr. Li is a director of a charitable organisation, Tung Wah Group of Hospitals (2006/2010) and the chief executive of Macau Jockey Club. Ms. Li is a council member to the board of a charitable organisation, Sowers Action. Mr. Li is the brother of Ms. Li.

Our Directors are satisfied that we can manage our business independently of the Controlling Shareholders and their respective subsidiaries particularly with respect to the following factors:

(a) Board structure

The Board comprises eight Directors, among them three are independent non-executive Directors who are either well-educated, having extensive experience in different areas or professionals and appointed pursuant to the requirements under the Listing Rules to ensure that the decisions of the Board are made only after due consideration of independent and impartial opinions.

Our Directors believe that the presence of the Directors from different background provides a balance of opinion. Furthermore, the Board acts collectively by majority decisions in accordance with the Articles of Association and the laws, and no single Director is supposed to have any decision-making unless authorised by the Board.

(b) Disclosure of interest

According to the Articles of Association, if any Director is in any way, directly or indirectly, interested in a contract or arrangement or proposed contract or arrangement with our Company (“ Interested Director ”), he will declare the nature of his interest to the Board at his earliest convenience.

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In addition, such Interested Director shall not vote (nor be counted in the quorum) on any resolution of the Board approving such contract or arrangement or other proposal in which he or any of his associates is to his knowledge materially interested except in certain circumstances as set out in the Articles as summarised in paragraph 2(a)(v) in Appendix V to this document.

However, for good corporate governance practice, an Interested Director shall absent himself from any board meeting, or the relevant part of the meeting, at which matter(s) in which he has a material interest is (are) discussed, unless he is specifically requested to attend or to remain in the meeting by the Directors who have no interest in such matter(s).

(c) Participation in board meeting and voting therein

According to the Articles of Association, each Director is entitled to one vote in meetings of the Board and a simple majority is required to approve any business considered therein.

(d) Participation in general meeting and voting therein

The Articles of Association do not impose any restriction on Shareholders to attend general meetings of our Company nor to vote on any resolution proposed therein; however where our Company has knowledge that any Shareholder, under the Listing Rules, is required to abstain from voting on any particular resolution of our Company or restricted to voting only for or only against any particular resolution of our Company, any votes cast by or on behalf of such Shareholder in contravention of such requirement or restriction shall not be counted.

Any transaction between our Group and the Controlling Shareholders shall be governed by Chapter 14A of the Listing Rules, which provides that certain categories of connected transactions shall be subject to independent Shareholders’ approval.

Tiger Crown and Scenemay Holdings, as Shareholders, have the right to attend any general meeting of our Company through their respective authorised representative. However, they shall not vote on any resolution proposed at a general meeting in approving any contract or arrangement or other proposal in which any of them, Mr. Chan, Mr. Li and/or Ms. Li has any material interest when independent Shareholders’ approval is required under Chapter 14A of the Listing Rules.

Operational independence

Although the Controlling Shareholders will retain a controlling interest in our Company after the Listing, the Board of Directors has full rights to make all decisions on, and to carry out, our own business operations independently. Although Mr. Chan, being one of the Controlling Shareholders of our Company, is an executive Director, our Company has our own management team, of which most members are independent of the Controlling Shareholders, have served our Company or its subsidiaries for a substantial period of time and have substantial experience in the industry in which our Company is engaged.

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RELATIONSHIPS WITH THE CONTROLLING SHAREHOLDERS

Waldo Hotel Limited, a company in which Mr. Chan’s father has an indirect and minority interest and Ms. Li has a controlling interest, directly and indirectly, has engaged our Group to provide fitting-out works for a hotel it owns which is due to be completed in December 2009. Please refer to the section headed “Connected transactions – Provision of fitting-out works to Waldo Hotel Limited” in this document for the revenue expected to be derived from such fitting-out works.

Giant World Corporation Limited, a company in which Mr. Chan has a 25% indirect shareholding interest, has also engaged a member of our Group to provide construction works for a golf driving range located at Tseung Kwan O. The revenue expected to be derived from such construction works amounts to approximately [HK$46,060,000].

Given the revenue of our Group attributable to the above companies, being only two of the customers of our Group, is relatively small and our Group is engaged by them on a project-by-project basis during our ordinary course of business, our Directors consider that our Group’s operational independence will not be affected by either of them.

Save for certain services provided to Waldo Hotel Limited and Giant World Corporation Limited mentioned above, we operate independently from the Controlling Shareholders and their respective associates as (a) we have established our business independent of that of the Controlling Shareholders; and (b) the business nature of each of the Controlling Shareholders is distinct from that of our Group. We have independent access to our customers and suppliers and can use our own intellectual properties without relying on any third party and develop technology independently of any third party and do not place undue reliance on any third party in relation to the use or development of technology.

Having considered the above, our Directors are satisfied that our business are delineated from the business or investment of the Controlling Shareholders and there is no competition between the parties. As such, our Directors and the Sponsor are satisfied that we can operate independently of the Controlling Shareholders and their respective associates.

Financial independence

We have our own accounting and finance department and independent financial system and makes financial decisions according to our own business need. Our Directors confirm that as at the Latest Practicable Date, we were not indebted to any of the Controlling Shareholders. As at 30 June 2009, being the latest practicable date for the purpose of the indebtedness statement prior to the printing of this document, we had total bank borrowings of approximately HK$32,250,000, which were secured by certain trade receivables of the Group and personal guarantees given by certain directors, including Mr. Chan, a Controlling Shareholder. It is expected that the guarantees will be released and will be replaced by guarantees from our Company upon Listing. Therefore, there is no financial dependence on the Controlling Shareholders or any of their respective associates.

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RELATIONSHIPS WITH THE CONTROLLING SHAREHOLDERS

DEED OF NON-COMPETITION

For the purpose of the Listing, each of the Controlling Shareholders, Mr Leung, Mr. Ng and Mr. Wong (collectively, the “ Covenantors ”) has entered into the Deed of Non-competition in favour of our Company (for its own and on behalf of all members of the Group), pursuant to which each of the Covenantors, irrevocably and unconditionally, undertakes with us that with effect from the Listing Date and for as long as the Shares remain so listed on the Stock Exchange and it, individually or collectively with any other Covenantor(s), is, directly or indirectly, interested in 30% or more of the Shares in issue, or is otherwise regarded as a controlling shareholder (as defined under the Listing Rules from time to time) of our Company, each of the Covenantors shall not, and shall procure that none of its associates (for the purpose of the Deed of Non-competition, shall have the meaning as defined under Rule 1.01 of the Listing Rules, but excluding our Group) shall:–

(a) directly or indirectly (other than through our Group) engage, participate or hold any right or interest in or render any services to or otherwise be involved in any business in competition with or likely to be in competition with our existing business activity and any business activities undertaken by us from time to time (the “ Restricted Business ”) save for the holding of not more than 5% shareholding interests (individually or any of the Covenantors with their associates collectively) in any listed company in Hong Kong; and
(b) take any direct or indirect action which constitutes an interference with or a disruption to the Restricted Business including, but not limited to, solicitation of our customers, suppliers or staff.

In addition, each of the Covenantors, irrevocably and unconditionally, undertakes that if any new business opportunity relating to any of our products and/or services (the “ Business Opportunity ”) is made available to it or any company or entity (other than a company within our Group) in which a Covenantor is, or with any other Covenantors together are, directly or indirectly interested so as to exercise more than 50% of the voting power at general meetings, or to control the composition of a majority of the board of its directors or its decision making body (a “ Controlled Company ”), it will direct or procure the relevant Controlled Company to direct such Business Opportunity to us together with such required information to enable us to evaluate the merits of the Business Opportunity. The relevant Covenantor shall provide, or procure the relevant Controlled Company to provide, us with all such assistance to secure the Business Opportunity as our Company or the relevant member of our Group may reasonably require.

None of the Covenantors and their relevant Controlled Companies shall pursue the Business Opportunity unless we decide not to pursue the Business Opportunity. Any decision of our Company as to whether to pursue the Business Opportunity shall have to be approved by our independent non-executive Directors. For the avoidance of doubt, we shall not be required to pay any fees to any of the Covenantors and/or their relevant Controlled Companies in relation to the direction of Business Opportunity.

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RELATIONSHIPS WITH THE CONTROLLING SHAREHOLDERS

Each of the Covenantors further, irrevocably and unconditionally, undertakes that it will provide to us all information necessary for the enforcement of the above non-competition undertakings.

Each of the Covenantors also represents and warrants that neither it nor any of its Controlled Companies is currently carrying on or engaging in, directly or indirectly, any business that competes or may compete with us.

The Deed of Non-competition also provides that:

(i) the Covenantors shall provide all information necessary for the annual review by our independent non-executive Directors and the enforcement of the Deed of Non-competition;
(ii) the Covenantors shall make declaration(s) on compliance with the Deed of Non-competition in accordance with the requirements under Appendix 14 (Code of Corporate Governance) and Appendix 23 (Corporate Governance Report) of the Listing Rules; and
(iii) the Covenantors shall abstain from voting at any general meeting of our Company if there is any actual or potential conflict of interests.

Our independent non-executive Directors will review, at least on an annual basis, the compliance with the Deed of Non-competition by the Covenantors and their respective Controlled Companies, the options, pre-emptive rights or first rights of refusal (if any) provided by the Covenantors and their respective Controlling Companies on their existing or future competing businesses. As and when appropriate, our Company will disclose decisions on matters reviewed by our independent non-executive Directors relating to the compliance and enforcement of the undertaking (for example, the exercise of options or first rights of refusal) either through the annual report, or by way of announcements to the public.

The Deed of Non-competition will cease to have effect on a Covenantor on the earliest of the date on which such Covenantor, individually or collectively with any other Covenantor(s) ceases to be interested, directly or indirectly, in 30% or more of the Shares in issue, or otherwise ceases to be regarded as a controlling shareholder (as that term is defined from time to time under the Listing Rules) of our Company or the Shares cease to be listed on the Stock Exchange.

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CONNECTED TRANSACTIONS

Exempt continuing connected transaction

We have entered into the following transaction which is expected to continue after the Listing and which will constitute exempt continuing connected transaction of our Company under Rule 14A.33(3) of the Listing Rules and our Company will be exempt from all reporting, announcement and independent shareholders’ approval requirements under Chapter 14A of the Listing Rules. Particulars of such exempt continuing connected transaction are set out below.

Licence to use patents

Pursuant to two assignments both dated 20 May 2009 and entered into between DSTP (as assignor) and Sundart (Beijing) (as assignee), DSTP has assigned the patents registered in the PRC as set out in the section headed “Further information about our business – Intellectual property rights” in Appendix VI to this document (the “ PRC Patents ”) to Sundart (Beijing) for a total consideration of HK$2.00. As an interim arrangement to better protect our Group’s interests pending the recordal of assignment of such patents being completed in the PRC, DSTP (as licensor) and Sundart (Beijing) (as licensee) entered into a licence agreement ( ) dated 20 May 2009 pursuant to which DSTP granted an exclusive licence to Sundart (Beijing), any of its holding companies, subsidiaries and associated companies, any subsidiaries and associated companies of its holding companies and such other persons or entities as designated by Sundart (Beijing) to use the PRC Patents free of royalty until the occurrence of any of the following events, namely, the recordal of assignment of such patents is completed in the PRC, the revocation or termination of such patents or the parties agree to terminate this agreement. The PRC Patents are patents related to the design of timber products. The PRC Patents have never been used by DSTP or by our Group on any products for commercial purpose. However, in the future, the PRC Patents may be utilised in products required by our Group if there is any demand for products that require the utilisation of the PRC Patents and we consider it commercially beneficial to do so.

We consider the above assignment of the PRC Patents by DSTP to Sundart (Beijing) to be commercially beneficial to our Group. As owner of the PRC Patents, other manufacturers cannot utilise them to manufacture the relevant products without our consent. This also allows us to have greater flexibility in choosing and thus greater control over which timber products manufacturer to engage in manufacturing the relevant products required by our Group. Therefore, we can choose among various manufacturers (including DSTP) and license the PRC Patents to the manufacturers chosen by our Group to manufacture the relevant products.

Non-exempt continuing connected transactions

We have entered into the following transactions which are expected to continue after the Listing and which will constitute non-exempt continuing connected transactions of our Group under the Listing Rules and are subject to the reporting, announcement and independent shareholder’s approval requirements under Chapter 14A of the Listing Rules. Particulars of non-exempt continuing connected transactions are set out below.

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CONNECTED TRANSACTIONS

Purchase of timber products from DSTP

We have been purchasing timber products from, among others, DSTP from DYBM, which was deregistered in May 2008, and from Win Venture and SI (Macau), both of which are the two trading arms within the Sundart Living Group which mainly sell DSTP’s timber products. Our Group has been viewing members of the Sundart Living Group as a single supplier of our Group as a whole. During the Track Record Period, the total consideration paid by us in respect of such purchases with such members of the Sundart Living Group in aggregate amounted to approximately HK$93,800,000, HK$78,600,000 and HK$60,400,000, respectively, representing approximately 54%, 53% and 44% respectively of our Group’s total purchase amount of timber products. As at the end of the financial year ended 31 March 2009, orders placed with the Sundart Living Group which were still outstanding amounted to not more than HK$[27,800,000], and it is expected that all such outstanding orders will be completed before Listing.

Since 1 April 2009, our Group has purchased timber products directly from DSTP and has ceased to purchase timber products from SI (Macau) or Win Venture (save and except for the outstanding orders already placed as mentioned above) since Win Venture and SI (Macau) plan to cease their timber products trading business after completing their existing orders on hand and the Sundart Living Group intends to focus on the timber products manufacturing business. In this connection, on 14 March 2009, Sundart Holdings, DSTP and SPG entered into the DSTP Agreement pursuant to which SPG agreed with Sundart Holdings to procure DSTP to, and DSTP agreed with Sundart Holdings to, manufacture and supply timber products to members of our Group whenever requested by any member of our Group for the period commencing from 1 April 2009 to 31 March 2012 on and subject to the terms therein provided, in particular, the terms of the manufacture and supply of the requested timber products shall be arrived at after arm’s length negotiations and shall be fair and reasonable and be on normal commercial terms or, if there are no or not sufficient comparable transactions to judge whether they are on normal commercial terms, on terms no less favourable to our Group than terms available from Independent Third Parties and, without limitation to the generality of the foregoing, for those timber products where there are available market rates for timber product comparable to the requested timber product (taking into account factors such as the design, type, standard, amount and quality of the timber product required and the time frame for the manufacturing and supply of such products), the payment terms to be offered to our Group by DSTP shall be no less favourable to our Group than the payment terms that may be offered to our Group by other Independent Third Party manufacturers or suppliers for such/similar product. If DSTP and the relevant members of our Group are unable to reach an agreement on the terms governing the manufacture and supply of any timber product requested, neither of them shall be obliged to manufacture and supply or accept (as the case may be) such timber product.

As DSTP is a company indirectly wholly-owned by Mr. Leung, who is an executive Director, accordingly, DSTP is an associate of Mr. Leung and thus a connected person of our Company within the meaning of the Listing Rules once the Shares are listed on the Stock Exchange.

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CONNECTED TRANSACTIONS

It is currently expected that the amount payable by our Group to DSTP pursuant to the DSTP Agreement for the three years ending 31 March 2012 will not exceed HK$120,000,000, HK$138,000,000 and HK$158,700,000 respectively.

Our Group has had a stable demand of timber products in the amount of more than HK$60,000,000 for the fitting-out business during the Track Record Period. As part of our Group’s business strategy, our Group will expand the fitting-out business to other markets such as Qatar and Abu Dhabi in the Middle East. Our Group will first involve in sourcing and distribution of interior decorative materials. Timber products are one of the main interior decorative materials. From 1 April 2009 to [the Latest Practicable Date], our Group had already secured purchase orders of timber products from the Middle East, U.S., and Hong Kong and Macau markets with an aggregate contract value of approximately [HK$65,000,000] (of which more than HK$[56] million were from the Middle East market). Up to [the Latest Practicable Date], our Group has secured orders of approximately HK$[41,800,000], approximately HK$[4,100,000] and approximately HK$[2,500,000] from the Middle East, U.S., and Hong Kong and Macau respectively to be placed to DSTP for the sourcing and distribution business, of which orders of approximately HK$[32,300,000] are scheduled to be delivered by 31 March 2010. In respect of the fitting-out projects, up to [the Latest Practicable Date], our Group has placed orders of approximately HK$[53,800,000] to DSTP. Our Directors anticipated that there will be significant and continuous growth in demand of timber products from Middle East market in the future notwithstanding the global financial crisis. As shown in the Synovate Report, the Qatari and Abu Dhabi governments are focusing on the development of the construction industry and our Directors are of the view that the demand for timber products will continue to increase with the growth in construction industry of residential properties, commercial properties and especially hotels in these two countries. This is further supported by the fact that our Group has already submitted tenders of over HK$[500] million in respect of sourcing and distribution orders and fitting-out projects in the Middle East market. The cap amount for the year ending 31 March 2010 was estimated by our Company based on the amount of the secured orders to be placed to DSTP, the forecast of our business of sourcing and distribution of interior decorative materials, in particular, the demands from the Middle East market and the forecast of materials utilised by our fitting-out business.

The cap amount for each of the years ending 31 March 2011 and 2012 was determined by applying a 15% increment to the cap amount for the immediately preceding year. The 15% increment represents our estimation that the amount of purchase of timber products from DSTP for the two years ending 31 March 2012 will account for approximately 32% and 33% respectively of the estimated total purchases of timber products by our Group during such period. The said 32% to 33% are in line with our estimation that approximately 35% of the estimated total purchases of timber products by our Group for the year ending 31 March 2010 will be purchased from DSTP. Our Directors consider such expectation of 15% increment in the purchase from DSTP by our Group for each of the two years ending 31 March 2012 is reasonable since our Group (i) has dedicated staff specialising in procuring business for our sourcing and distribution business and expects to increase our human resources dedicated thereto; (ii) intends to apply approximately 15% of the total estimated net proceeds from the [�] to develop our fitting-out business in the Middle East which is expected to facilitate our sourcing and distribution business and propel the demand for timber products; (iii) had already secured purchase orders in the aggregate amount of

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CONNECTED TRANSACTIONS

over HK$[65] million since April 2009 from our customers up to the Latest Practicable Date; and (iv) intends to enhance our sales and marketing efforts dedicated to further development and ongoing expansion of our sourcing and distribution business.

Pursuant to the DSTP Agreement, Sundart Holdings has agreed to grant, and to procure the relevant members of our Group to grant, DSTP a limited, non-exclusive, royalty-free license to use such of our Group’s intellectual property to the extent necessary to permit DSTP to carry out its obligation under the DSTP Agreement. Any such licence will expire upon termination of the DSTP Agreement and shall not be transferable or sublicensible. DSTP has undertaken to Sundart Holdings (for itself and on behalf of members of our Group) that any intellectual property licensed to it shall be used solely for the purposes of the manufacturing and supply of the timber products to our Group by DSTP in accordance with the DSTP Agreement.

Pursuant to the DSTP Agreement, Sundart Holdings has agreed to authorise and permit, and shall procure the relevant members of our Group to authorise and permit, DSTP to apply marks and labels in respect of which UL, Intertek Testing Services NA, Inc., CERTIFIRE, FM Approvals or any internationally recognised product safety testing and certification organisation have given authorisation, approval or permission to members of our Group to apply on the timber products (“ Relevant Marks ”) requested by our Group to the extent necessary to permit DSTP to carry out its obligation under the DSTP Agreement. Any such authorisation will expire upon termination of the DSTP Agreement. DSTP has undertaken to Sundart Holdings (for itself and on behalf of members of our Group) that any Relevant Marks which it is authorised to apply shall be applied to the timber products requested by our Group only and used solely for the purposes of manufacturing and supply of such products to our Group in accordance with the DSTP Agreement.

DSTP has been able to deliver timber products to our Group with the required [quality, at competitive prices and on time]. The Directors believe that the DSTP Agreement shall benefit our Group [as we can have stable and reliable supply of timber products required for our fitting-out projects as well as in our business of sourcing and distribution of interior decorative materials].

Provision of fitting-out works to Waldo Hotel Limited

Our Group has been providing fitting-out works to Waldo Hotel Limited since September 2007 and is still providing fitting-out works to it. Waldo Hotel Limited is a company in which Mr. Chan’s father has an indirect and minority interest and Ms. Li has a controlling interest, directly and indirectly. During the last two financial years of the Track Record Period, the total consideration received by our Group from Waldo Hotel Limited amounted to approximately HK$40,426,000 and HK$64,605,000 respectively. Our Group received HK$9,740,000 from Waldo Hotel Limited for actual work done for the period from 1 April 2009 to 30 June 2009.

On 30 June 2009, Sundart (Macau) and Waldo Hotel Limited entered into an agreement (the “ WHL Agreement ”) pursuant to which Sundart (Macau) has agreed with Waldo Hotel Limited to provide fitting-out works in respect of certain areas/floors of Waldo Hotel, Macau for the period commencing from 1 July 2009 up to 31 December 2009. The contract sum is

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CONNECTED TRANSACTIONS

HK$25,248,400 and no adjustment shall be made unless any variations to the fitting-out works which have cost effects are required. Down payment of HK$25,248,400 shall be made by Waldo Hotel Limited by 31 July 2009. The Directors expect that the fitting-out works under the WHL Agreement would be completed by the end of 2009.

As Ms. Li has a controlling interest, directly or indirectly, in Waldo Hotel Limited, Waldo Hotel Limited therefore is an associate of a Controlling Shareholder and thus a connected person of the Company for the purposes of the Listing Rules once the Shares are listed on the Stock Exchange.

It is currently expected that the amount payable to our Group by Waldo Hotel Limited pursuant to the WHL Agreement for the period from 1 July 2009 to 31 March 2010 will not exceed HK$29,040,000. Such cap amount was estimated by the Company based on the contract sum of the WHL Agreement and a buffer of 15% for possible variation orders. No cap amounts are required for the two years ending 31 March 2012.

Our Directors believe that the WHL Agreement benefits our Group by providing our Group a contract with good profit margin.

Waiver

Since, in respect of the expected annual consideration payable under the DSTP Agreement and the expected contract sum payable under the WHL Agreement, not all of the percentage ratios (other than the profit ratio which is not applicable) are less than 2.5% and the respective amount is not less than HK$10,000,000, the transactions under the DSTP Agreement and the WHL Agreement will, upon Listing, respectively constitute continuing connected transactions for our Company and will normally require full compliance with the reporting, announcement and independent shareholders’ approval requirements under Rules 14A.45 to 14A.48 of the Listing Rules.

As the transactions contemplated under the DSTP Agreement and the WHL Agreement are of an ongoing nature, our Directors consider that compliance with all the applicable requirements under Chapter 14A of the Listing Rules on each occasion such transaction arises would be impracticable and add unnecessary administrative costs to our Company. Accordingly, our Company had applied for, and the Stock Exchange has granted our Company, a waiver from strict compliance with the announcement and independent shareholders’ approval requirements under Chapter 14A of the Listing Rules in respect of such transactions subject to the following conditions:

(a) the annual consideration payable under the DSTP Agreement for each of the financial years ending 31 March 2012 not exceeding the respective caps stated above;
(b) the total consideration payable under the WHL Agreement for the period from 1 July 2009 to 31 March 2010 not exceeding the relevant cap stated above; and
(c) our Company will comply with Rules 14A.35(1), 14A.35(2), 14A.36, 14A.37, 14A.38, 14A.39 and 14A.40 of the Listing Rules.

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CONNECTED TRANSACTIONS

Confirmation from the Directors

Our Directors (including the independent non-executive Directors) are of the view that all the continuing connected transactions under the DSTP Agreement and the WHL Agreement have been and shall be entered into on normal commercial terms and in the ordinary and usual course of business of our Group, and the terms of the DSTP Agreement and the WHL Agreement and the cap amounts are fair and reasonable and in the interests of the Shareholders as a whole.

Confirmation from the Sponsor

The Sponsor is of the view that all the continuing connected transactions under the DSTP Agreement and the WHL Agreement have been and shall be entered into on normal commercial terms and in the ordinary and usual course of business of our Group, and the terms of the DSTP Agreement and the WHL Agreement and the cap amounts are fair and reasonable and in the interests of the Shareholders as a whole.

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DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

DIRECTORS

The Board consists of eight members, of whom three are independent non-executive Directors. The table below sets forth certain information of our Directors:

Name	Age	Position
Mr. CHAN William	35	Chairman and executive Director
Mr. NG Tak Kwan	55	Executive Director and Chief
		Executive Officer
Mr. LEUNG Kai Ming	55	Executive Director and Chief
		Operating Officer
Mr. WONG Kim Hung, Patrick	55	Executive Director
Mr. YIP Chun Kwok	35	Executive Director
Mr. TO King Yan, Adam	49	Independent non-executive Director
Mr. WONG Hoi Ki	55	Independent non-executive Director
Mr. WONG Kwok Wai, Albert	50	Independent non-executive Director

Executive Directors

Mr. CHAN William was designated as our executive Director on 29 May 2009 and is also a director of each of Sundart Holdings, Sundart Products, Sundart Development, Sundart Investments, Sundart International, Sundart (Middle East), Sundart Timber, Sundart (Macau) and Sundart (Beijing). He is primarily responsible for overall strategies, planning and business development of our Group. Mr. Chan graduated from the University of La Verne, California of the United States with a bachelor of business administration degree in 2000 and a master of business administrative degree in 2002. Mr. Chan joined us in March 2008 and did not have any fitting-out related experience at that time. Mr. Chan was an executive director of Macau Success Limited (a company whose shares are listed and traded on the Main Board of the Stock Exchange) during June 2004 to September 2006. Mr. Chan is an executive director for certain companies which are in various businesses including the management of a golf driving range and manufacturing and installation of exterior signage. He was a director of the Tung Wah Group of Hospitals (2003/2004) a director of Yan Chai Hospital (35th Term Board of Directors (2002/2003)) and a committee member of the Central and Sai Ying Poon Area Committee of Home Affairs Department of Hong Kong Government for the two years ended 31 March 2006. Mr. Chan will allocate approximately 95% of his time and resources to our Group’s business.

Mr. NG Tak Kwan is one of the founders of our Group’s business. Mr. Ng was designated as our executive Director on 29 May 2009 and is also a director of each of Sundart Holdings, Sundart Products, Sundart Development, Sundart Investments, Sundart International, Sundart (Middle East), Sundart Timber, Sundart (Macau) and Sundart (Beijing). Mr. Ng is responsible for overseeing our fitting-out projects in Hong Kong, Macau and the PRC. Mr. Ng graduated from the University of Calgary with a bachelor of science degree in civil engineering in 1978 and the Asia International Open University (Macau) with a master of business administration degree in 1995. Mr. Ng will allocate substantially all of his time and resources to our Group’s business.

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DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

Mr. LEUNG Kai Ming is one of the founders of our Group’s business. Mr. Leung left our Group in July 2006 and then ran DSTP on his own. Before Mr. Leung left our Group in 2006, he was the chief executive officer of DSTP and mainly responsible for overseeing and managing the manufacturing business of timber products. He re-joined us in April 2009 and was designated as our executive Director on 29 May 2009. He is also a director of each of Sundart Holdings, Sundart Products, Sundart Development, Sundart International, Sundart (Middle East) and Sundart Interior. Mr. Leung is mainly responsible for overseeing our technical and engineering activities, our sourcing and distribution of materials business and our business development to and/or our fitting-out projects in the Middle East. Mr. Leung graduated from the Hong Kong Polytechnic with an ordinary certificate in electrical engineering in 1974. He is the inventor of each of the patents set out in the section headed “Further information about our business – Intellectual property rights” in this Appendix VI] in this document. Mr. Leung will allocate approximately 90% of his time and resources to our Group’s business.

Mr. WONG Kim Hung, Patrick was designated as our executive Director on 29 May 2009 and is also a director of each of Sundart Holdings, Sundart Products, Sundart Development, Sundart Investments, Sundart International, Sundart (Middle East), Sundart Timber, Sundart (Macau) and Sundart (Beijing). Mr. Wong joined us in 2002 and is responsible for overseeing our human resources and the financial, banking and administrative activities of our Group. Prior to joining us, Mr. Wong had worked in the Hong Kong offices of some international banks including Sanwa Bank (now known as the Bank of Tokyo-Mitsubishi UFJ, Limited) and the Bank of America for about 20 years. His last position was an assistant general manager at the Hong Kong branch of Sanwa Bank (now known as the Bank of Tokyo-Mitsubishi UFJ, Limited). Mr. Wong will allocate substantially all of his time and resources to our Group’s business.

Mr. YIP Chun Kwok is also our financial controller and the company secretary of our Company. Mr. Yip was appointed as our executive Director on 3 August 2009 and is responsible for overseeing the compliance matters and accounting activities of our Group. He graduated from the University of Hong Kong with a bachelor of business administration degree in 1996. He is a fellow of the Association of Chartered Certified Accountants, an associate of the Hong Kong Institute of Certified Public Accountants, a member of each of the Hong Kong Institute of Chartered Secretaries and the Institute of Chartered Secretaries and Administrators and a CFA charterholder of the CFA Institute. Prior to joining us in April 2008, Mr. Yip had worked as accountant for some sizeable CPA firms in Hong Kong and in-house accountant for a public listed company. He is currently a part-time practising director of a CPA firm in Hong Kong. Mr. Yip will allocate approximately 95% of his time and resources to our Group’s business.

Independent Non-executive Directors

Mr. TO King Yan, Adam was appointed as an independent non-executive Director on 3 August 2009. Mr. To graduated from the University of London with a bachelor of laws degree in 1983. Mr. To has been a practising solicitor of the High Court of Hong Kong since 1986. In addition, he is also qualified to practice law in England and Wales and Australia and is a China Appointed Attesting Officer. He is currently a partner of K.B.Chau & Co., a firm of solicitors in Hong Kong with his practice focusing on conveyancing and litigation.

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DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

Mr. WONG Hoi Ki was appointed as an independent non-executive Director on 3 August 2009. He is a registered professional surveyor (general practice) and has been practising in the surveying profession for over 25 years. Mr Wong is a fellow of the Hong Kong Institute of Surveyors and a member of the Royal Institution of Chartered Surveyors. He is the founder and at present the managing director of Memfus Wong Surveyors Limited, an estate surveying firm in Hong Kong. Over the years, he has served the profession by working on the general council of the Hong Kong Institute of Surveyors as honorary secretary and honorary treasurer.

Mr. WONG Kwok Wai, Albert was appointed as an independent non-executive Director on 3 August 2009. Mr. Wong is a fellow of each of the Hong Kong Institute of Certified Public Accountants and the Association of Chartered Certified Accountants. He was also a former president of the Hong Kong Association of Accounting Technicians. He is currently the managing partner of Chu & Chu, a firm of certified public accountants in Hong Kong with his practice focusing on assurance services as well as management advisory services.

Each of the independent non-executive Directors confirms that he will allocate sufficient time and resources to our Group’s business.

SENIOR MANAGEMENT

Mr. CHAN Yok Fai, Freddy , aged 43, is the general manager of our China division. Mr. Chan first joined us in 2001 and left in 2006 as [an assistant general manager]. He re-joined us in April 2008 as the general manager of our China division and is responsible for our Group’s business development in the PRC. Mr. Chan graduated from the Hong Kong Baptist College (now known as Hong Kong Baptist University) with a bachelor of business administration degree in 1991. After graduation, Mr. Chan has been serving sales and marketing positions in the building and construction related field. With about 20 years of experience, Mr. Chan has focused on business development of interior decoration projects.

Mr. CHUNG Tsz Lung, Jimmy , aged 49, is our assistant general manager and a director of Sundart Interior. Mr. Chung joined us in 2000 and is now responsible for our projects in the Middle East. Mr. Chung completed a program in architectural drafting at the Centennial College of Applied Arts and Technology of Toronto, Canada in 1990. He is a member of the Chartered Institute of Building of the United Kingdom. Prior to joining us, Mr. Chung has been worked as quantity surveyor, contracts manager, assistant maintenance supervisor and project manager for various companies in Hong Kong and Canada.

Mr. CHAN Hak Man , aged 54, is one of our senior project managers. Mr. Chan joined us in 2007, at which time he was in charge of our fitting-out projects in Macau. Due to the expansion of our PRC business, Mr. Chan is now seconded to the PRC and managing our projects in Shanghai. Prior to joining us, Mr. Chan has been serving in the building and construction related field for over 20 years.

Mr. TAM King Cheung, Raymond , aged 52, is one of our senior project managers. Mr. Tam first joined us in 1990 and left in 1997 and re-joined us in 2000. He had accumulated over 15 years of experience in project management with main focus in interior

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DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

fitting out projects. Mr. Tam has gained relevant experience in various types of premises including residential, hotel, commercial complex, apartment, etc. in Hong Kong, Shenzhen and Guangzhou. He was awarded as one of our best performing staff in 2008 for his excellent performance in project management.

Mr. CHIU Yeuk Ho , aged 49, is one of our senior project managers. Mr. Chiu joined us in 2004 and was promoted to the position of senior project manager in 2009. Mr. Chiu graduated from the University of Alberta of Canada with a bachelor of science degree in geography surveying. Prior to joining us, Mr. Chiu has been serving as estimator, assistant engineer, and project coordinator in other companies in Hong Kong and Canada for over 20 years and has headed various projects like constructions, civil works as well as interior fitting-out works.

Mr. CHAN Tze Chiu , aged 46, is one of our senior project managers. Mr. Chan joined us in 2008 and is responsible for our local fitting-out projects. He graduated from the Hua Chiao University (China) in 1987 with a bachelor of engineering degree in civil engineering. After graduation, Mr. Chan began his career in the interior fitting-out field has gained rich project experience from the PRC, Hong Kong and Macau. Prior to joining us, he has been working as project manager for other engineering companies.

Mr. CHAN Chung Ming , aged 41, is our design manager. Mr. Chan joined us in 2000 and was promoted to the position of design manager in 2007. Mr. Chan graduated from the City University of Hong Kong in 1996 with a higher diploma in architectural studies. After graduation, he has been working for various and participating in interior design and drawing of different fitting-out projects. With over 12 years of experience, Mr. Chan has very rich experience in interior design and drawing for various types of buildings.

Mr. LAU Mong Yu, Alex , aged 46, is our purchasing manager. Mr. Lau joined us in August 2003 and was promoted to the position of purchasing manager in January 2008. He is in charge of our purchasing department whose primary duty is to coordinates all of our purchasing activities. With over 15 years of experience in the procurement field, Mr. Lau is experienced in procuring professional timer products and building and decoration related materials, vendor sourcing, price negotiation and vendor performance analysis. He was awarded as one of our best performing staff in 2008.

Mr. NG Chi Hang , aged 33, is our quantity surveying manager. Mr. Ng joined us in 2005 and has undertaken quantity surveying and project management for various projects in both Hong Kong and Macau. Before joining us, Mr. Ng has been working in the quantity surveying field with professional recognition. He graduated from the University of Hong Kong with a bachelor of science degree in surveying in 1998 and from the Hong Kong Polytechnic University in 2004 with a master of science degree in construction and real estate. Mr. Ng is a registered professional surveyor and a member of each of the Hong Kong Institute of Surveyors and the Royal Institution of Chartered Surveyors.

Mr. BOO Kai Ming, Richard , aged 48, is our technical manager. Mr. Boo first joined us in 2001 and left in 2006. He re-joined us in 2009 and is responsible for providing technical support to our project team and research and development of timber products and pre-fabrication and installation technique. Mr. Boo graduated from the University of Reading

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DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

in 1992 with a bachelor of science degree in estate management and from the Hong Kong Polytechnic University in 2002 with a master of science degree in project management. He is a member of the Chartered Institute of Building from the United Kingdom. Prior to joining us, Mr. Boo has been working in various companies and has extensive project management experience from different aspects like property development, interior design, building maintenance, etc.

Mr. WONG Hing Fai , aged 55, is our mechanical & electrical manager. Mr. Wong joined us in 2007 as mechanical & electrical manager of Sundart (Macau). Prior to joining us, Mr. Wong has had over 30 years of experience in design, contract administration and construction management as contractor and consulting electrical and mechanical engineer in the construction industry in Hong Kong and the United Kingdom. Mr. Wong graduated from the University of Hong Kong with a bachelor of science in engineering degree in 1981 and from the University of Paisley with a master of science degree in quality management in 1997. He is a member of each of the Hong Kong Institution of Engineers, the Institution of Electrical Engineers, the Chartered Institution of Building Services Engineers, the Institution of Electronic and Radio Engineers and the Institute of Quality Assurance.

Mr. HO Sai Leung , aged 42, is our marketing manager. Mr. Ho joined us in 1995 as a marketing officer and was promoted to assistant marketing manager in 2005 and marketing manager in 2009. Mr. Ho is in charge of our sales and marketing department and responsible for coordinating sales and marketing and tendering activities, building up corporate image, and handling customer enquiries of our Group. He graduated from the Hong Kong Baptist College (now known as Hong Kong Baptist University) in 1991 with a bachelor of business administration degree. Before joining us, Mr. Ho has been serving in the sales and marketing division of some television/audio and plastic products companies.

Ms. CHUI Muk Heung , aged 40, is our chief accountant. Ms. Chui joined us in 2003 as a senior accountant and was promoted to chief accountant in 2007. She is an associate of the Hong Kong Institute of Certified Public Accountants and a member of the Association of Chartered Certified Accountants. Prior to joining us, Ms. Chui has been working as accounting professional in various companies including construction firm and accounting consultancy firm for over 12 years.

Ms. YIU Yuen Ngo, Fion , aged 39, is our human resources and administration manager, who joined us in 2005 and was promoted to human resources and administration manager in April 2008. Ms. Yiu graduated from the Ryerson Polytechnic University of Toronto, Canada in 1994 with a bachelor of business management degree. Prior to joining us, Ms. Yiu has been working in the administration department and serving as management professional in different companies for over 10 years.

COMPANY SECRETARY

Mr. YIP Chun Kwok , aged 35, is the company secretary of our Company. Please refer to the section headed “Directors, senior management and employees – Directors” for the personal profile of Mr. Yip.

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DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

DIRECTORS’ REMUNERATION

We reimburse our Directors for expenses which are necessarily and reasonably incurred for providing services to us or executing their functions in relation to our operations. Our executive Directors are also our employees and receive, in their capacity as our employees, compensation in the form of salaries and other allowances and benefits in kind.

During the Track Record Period, the aggregate amount of salaries and other allowances and benefits in kind paid to our Directors was approximately HK$2.3 million, HK$2.1 million and HK$4.0 million, respectively.

Under the arrangements currently in force, we estimate the aggregate remuneration, excluding discretionary bonuses, payable to our Directors for the year ended 31 March 2010 to be approximately HK$5.8 million.

Further details of the terms of the above service agreements are set out in the section headed “Further information about our Directors and substantial Shareholders – Directors – Particulars of service agreements” in Appendix VI to this document.

BOARD COMMITTEES

Audit Committee

Our Company established an audit committee on 3 August 2009 in compliance with Rules 3.21 and 3.22 and Appendix 14 to the Listing Rules. The primary duties of our audit committee will be to review and supervise our financial reporting process and internal control system and to provide advice and comments to the Board. Our audit committee consists of three members who are all independent non-executive Directors and Mr. Wong Kwok Wai, Albert was appointed as the chairman of our audit committee.

Remuneration Committee

Our Company established a remuneration committee on 3 August 2009 in compliance with the Code of Corporate Governance Practices set out in Appendix 14 of the Listing Rules. Our remuneration committee comprises three members, namely, Mr. Chan, Mr. Wong Hoi Ki and Mr. Wong Kwok Wai, Albert. Our remuneration committee considers and recommends to the Board the remuneration and other benefits paid to our Directors. The remuneration of our Directors is subject to regular monitoring by our remuneration committee to ensure that the levels of their remuneration and compensation are appropriate.

Nomination Committee

Our Company established a nomination committee on 3 August 2009 in compliance with the Code of Corporate Governance Practices set out in Appendix 14 of the Listing Rules. Our nomination committee comprises three members, namely, Mr. Chan, Mr. Wong Hoi Ki and Mr. Wong Kwok Wai, Albert. Our nomination committee considers and recommends to the Board on the appointment of executive Directors and senior management staff.

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DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

COMPLIANCE ADVISER

Our Company has appointed ICBCI as its compliance adviser upon the Listing in compliance with Rule 3A.19 of the Listing Rules. Our Company has entered into a compliance adviser’s agreement with ICBCI, the material terms of which are summarised as follows:

(a) our Company has appointed ICBCI as its compliance adviser for the purpose of Rule 3A.19 of the Listing Rules for a period commencing on the Listing Date and ending on the date on which our Company complies with Rule 13.46 of the Listing Rules in respect of the financial results for the first full financial year of our Group commencing after such Listing Date, or until the agreement is terminated, whichever is earlier;
(b) ICBCI shall provide our Company with services, including guidance and advice as to compliance with the requirements under the Listing Rules and applicable laws, rules, codes and guidelines;
(c) our Company shall consult with and, if necessary, seek advice from ICBCI on a timely basis in the following circumstances:
(i) before the publication of any regulatory announcement, circular or financial report;
(ii) where a transaction, which might be a notifiable or connected transaction, is contemplated including share issues and share repurchases;
(iii) where our Company proposes to use the proceeds of the Listing in a manner different from that detailed in this document or where the business activities, developments or results of our Group deviate from any forecast, estimate, or other information in this document;
(iv) where the Stock Exchange makes an inquiry of our Company under Rule 13.10 of the Listing Rules;
(d) our Company has agreed to indemnify ICBCI for certain actions against it and losses incurred by it arising out of or in connection with the performance by ICBCI of its duties under the agreement; and
(e) our Company may terminate the appointment of ICBCI as its compliance adviser only if its work is of an unacceptable standard as determined under the Listing Rules and the relevant laws and regulations or if there is a material dispute (which cannot be resolved within 30 days) over fees payable to it as permitted by Rule 3A.26 of the Listing Rules. ICBCI will have the right to resign or terminate its appointment by service of a three-month notice to our Company if our Company materially breaches the agreement.

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DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

EMPLOYEES

Overview

As at 30 June 2009, we had 257 full-time employees. An analysis by function as at 30 June 2009 is as follows:

Executive Directors Project Team Quantity Surveying Design and Drawing Purchasing Marketing Furnishing Trading and distribution Administration and Human Resources Finance & Account Total:	Hong Kong 5 89 19 15 5 3 6 6 10 10 168	Number of employees Macau PRC – – 41 18 2 4 1 4 – 1 – – – – – – 8 6 – 4 52 37	Total 5 148 25 20 6 3 6 6 24 14
			257

MANAGEMENT STRUCTURE

The following chart set forth our management structure:

==> picture [389 x 151] intentionally omitted <==

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

Board of
Directors
Senior
Management /
Heads of
Departments
Administrative & Accounting Supporting Division Development & Investment Business Division Supporting DivisionProject Project DivisionHK / Macau PRC Project Division Project DivisionMiddle East Distribution Sourcing & Division Technical Division
----- End of picture text -----

Professionals

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DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

Relationship with employees

Our Directors consider that we maintain good working relationships with our employees. We have not experienced any strikes, work stoppages or material labour disputes which affected our operations.

Staff benefits

In Hong Kong, we operate a defined contribution retirement benefits scheme (“ MPF Scheme ”) under the Mandatory Provident Fund Scheme Ordinance (Chapter 485 of the Laws of Hong Kong) for all of our employees in Hong Kong who join us after the commencement of this Ordinance. Contributions are made based on a percentage of the employees’ basic salaries and are charged to our profit and loss account as they become payable in accordance with the rules of the MPF Scheme. Our contributions as employer vest fully with the employees when we contribute to the scheme in accordance with the rules of the MPF Scheme. We contribute the lower of HK$1,000 or 5% of the relevant monthly salary to the MPF Scheme, a contribution matched by employees.

In China, we participate in the relevant social insurance contribution plans organised by the relevant local governmental bodies in Beijing and Shanghai. In accordance with relevant PRC laws, the member of our Group in China is required to pay its relevant employees a monthly social insurance premium covering pension insurance, medical insurance, unemployment insurance, personal injury and maternity (where applicable). We are also required by the relevant PRC regulations to register with the competent housing provident fund management centre and make contributions to the housing provident funds for our employees. Contributions to the housing provident funds have been made by us in compliance with the relevant PRC regulations.

In Macau, we have participated and contributed to the mandatory social security funds and have purchased compulsory industrial accident insurance for our Macau employees in accordance with the relevant applicable legislation.

Share Option Scheme

Our Directors (including independent non-executive Directors) and employees are entitled to participate in the Share Option Scheme. The principal terms of the Share Option Scheme are summarised in the section headed “Other information – Share Option Scheme” in Appendix VI to this document.

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SUBSTANTIAL SHAREHOLDERS

So far as our Directors are aware, the following persons will, immediately following the completion of the [�] and the Capitalisation Issue and taking no account of any Shares which may be taken up under the [�] or which may be allotted and issued pursuant to the exercise of the [�] or any Shares to be issued pursuant to the exercise of options which may be granted under the Share Option Scheme, have beneficial interests or short positions in any Shares or underlying Shares of our Company which would fall to be disclosed to our Company under the provisions of Divisions 2 and 3 of Part XV of the SFO:

					Approximate	Approximate
					percentage of
					shareholding in
			Number of	Shares	our Company
			(immediately after		(immediately after
			completion of the		completion of the
			[�] but without		[�] but without
			taking into		taking into
	Long/Short		account the		account the
Name	position	Type of interest	exercise of the [�])		exercise	of the [�])
Tiger Crown	Long position	Beneficial owner		[�]		[�]
	Long position	Other(3)		[�]		[�]
Scenemay Holdings	Long position	Beneficial owner		[�]		[�]
	Long position	Other(3)		[�]		[�]
Mr. Chan	Long position	Interest in a		[�]		[�]
		controlled
		corporation(1)
	Long position	Other(3)		[�]		[�]
Mr. Li	Long position	Interest in a		[�]		[�]
		controlled
		corporation(2)
	Long position	Other(3)		[�]		[�]
Ms. Li	Long position	Interest in a		[�]		[�]
		controlled
		corporation(2)
	Long position	Other(3)		[�]		[�]
Mr. Ng	Long position	Beneficial owner		[�]		[�]
Mr. Leung	Long position	Beneficial owner		[�]		[�]
Mr. Wong	Long position	Beneficial owner		[�]		[�]

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SUBSTANTIAL SHAREHOLDERS

Notes:

The entire issued share capital of Tiger Crown is owned by Mr. Chan. As Mr. Chan controls more than one-third of the voting power in general meetings of Tiger Crown, he is deemed to be interested in the [�] Shares which will be beneficially owned by Tiger Crown upon Listing.
The entire issued share capital of Scenemay Holdings is owned by Mr. Li and Ms. Li in equal shares. As each of Mr. Li and Ms. Li respectively controls more than one-third of the voting power in general meetings of Scenemay Holdings, each of Mr. Li and Ms. Li is deemed to be interested in the [�] Shares which will be beneficially owned by Scenemay Holdings upon Listing.
Since Tiger Crown, Scenemay Holdings, Mr. Chan, Mr. Li and Ms. Li are regarded as a group of controlling shareholders acting in concert to exercise their voting right in our Company, pursuant to the provisions of the SFO, each of them is deemed to be interested in the [�] Shares beneficially or deemed to be owned by each other. Tiger Crown, Scenemay Holdings, Mr. Chan, Mr. Li and Ms. Li together are therefore interested in a total of [�]% of the issued share capital of our Company upon completion of the [�] (assuming the [�] is not exercised).

NON-DISPOSAL UNDERTAKINGS

Each of the Controlling Shareholders has, jointly and severally, undertaken with the Stock Exchange and us that each of them shall not and shall procure that the relevant registered holder(s) shall not, save as permitted under the Listing Rules:–

(a) in the First Six-month Period, whether directly or indirectly dispose of, nor enter into any agreement to dispose of or otherwise create any options, rights, interests or encumbrances in respect of, any of the Shares in respect of which it/he is shown by this document to be the beneficial owner(s); and
(b) in the Second Six-month Period, whether directly or indirectly dispose of, nor enter into any agreement to dispose of or otherwise create any options, rights, interests or encumbrances in respect of, any of the Shares in respect of which it/ he/she is shown by this document to be the beneficial owner(s), if, immediately following such disposal or upon the exercise or enforcement of such options, rights, interests or encumbrances, it/he/she ceases to be regarded as a controlling shareholder of our Company, i.e. they cease to control in aggregate at least 30% of the voting right at our general meetings.

Each of the Controlling Shareholders has, jointly and severally, undertaken with the Stock Exchange and us that within a period commencing from the Listing Date and ending on the date on which is the first anniversary of the Listing Date, he or she or it shall:

(a) when he or she or it pledges or charges any securities beneficially owned or ultimately controlled by him or her or it in favour of an authorised institution (as defined under the Banking Ordinance (Chapter 155 of the Laws of Hong Kong)) for a bona fide commercial loan, immediately inform us of such pledge or charge together with the number of securities so pledged or charged; and
(b) when he or she or it receives indications, either verbal or written, from the pledgee or chargee that any of the pledged or charged securities will be disposed of, immediately inform us of such indications.

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SUBSTANTIAL SHAREHOLDERS

We will inform the Stock Exchange as soon as we have been informed of matters referred in above by any of the Controlling Shareholders and disclose such matters by way of announcement pursuant to the requirements under the Listing Rules as soon as possible.

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SHARE CAPITAL

The authorised and issued share capital of our Company is as follows:

(HK$)

Number of Shares comprised in the authorised share capital:

1,000,000,000 Shares 10,000,000

Assuming the [�] is not exercised, the share capital of our Company immediately following the [�] will be as follows:

(HK$)

Issued and to be issued, fully paid or credited as fully paid upon completion of the [�] 70,000,000 Shares in issue 290,000,000 Shares to be issued pursuant to the Capitalisation Issue [�] Shares to be issued in the [�] [�] Shares	700,000 2,900,000 [�]
	[�]

Assuming the [�] is exercised in full, the share capital of our Company immediately following the [�] will be as follows:

(HK$)

Issued and to be issued, fully paid or credited as fully paid upon completion of the [�] 70,000,000 Shares in issue 290,000,000 Shares to be issued pursuant to the Capitalisation Issue [�] Shares to be issued in the [�] [�] Shares	700,000 2,900,000 [�]
	[�]

Assumptions

The above tables assume that the [�] has become unconditional and the issues of Shares pursuant to the [�] and the Capitalisation Issue are made. They take no account of any Shares which may be allotted and issued pursuant to the exercise of the options which may be granted under the Share Option Scheme or which may be allotted and issued or repurchased by our Company under the general mandates referred to below.

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SHARE CAPITAL

Ranking

The [�], including the Shares issuable pursuant to the [�], will rank pari passu in all respects with all other Shares in issue or to be issued as mentioned in this document, and in particular, will rank in full for all dividends and other distributions hereafter declared, paid or made on the Shares after the date of this document save for the entitlement under the Capitalisation Issue.

Our Company has conditionally adopted the Share Option Scheme, the principal terms of which are summarised in the section headed “Share Option Scheme – Summary of the terms of the Share Option Scheme” in Appendix VI to this document.

GENERAL MANDATE TO ISSUE SHARES

Subject to the [�] being unconditional, our Directors have been granted a general unconditional mandate to allot, issue and deal with unissued Shares with an aggregate nominal value not exceeding the sum of:

(i) 20% of the total nominal amount of the Shares in issue immediately following completion of the [�] and the Capitalisation Issue (excluding any Shares which may be allotted and issued pursuant to the exercise of the [�]); and
(ii) the total nominal amount of Shares repurchased by our Company pursuant to the mandate referred to in the section headed “Share capital – General mandate to repurchase Shares” below.

Our Directors may, in addition to the Shares which they are authorised to issue under the mandate, allot, issue and deal in the Shares pursuant to a rights issue, or any scrip dividend shares or similar arrangements providing for allotment and issue of Shares in lieu of the whole or part of a dividend on Shares in accordance with the Articles or upon the exercise of any options which may be granted under the Share Option Scheme or other similar arrangement.

The mandate will expire:

at the conclusion of our Company’s next annual general meeting;
at the expiration of the period within which our Company is required by any applicable laws of the Cayman Islands or the Articles to hold its next annual general meeting; or
when varied or revoked or renewed by an ordinary resolution of the Shareholders in general meeting,

whichever is the earliest.

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SHARE CAPITAL

For further details of this general mandate, please see the section headed “Further information about our Company – Written resolutions of all the Shareholders passed on 3 August 2009” in Appendix VI to this document.

GENERAL MANDATE TO REPURCHASE SHARES

Subject to the [�] becoming unconditional, our Directors have been granted a general unconditional mandate to exercise all the powers of our Company to repurchase Shares with a total nominal value of not more than 10% of the total nominal amount of the Shares in issue immediately following completion of the [�] and the Capitalisation Issue (excluding any Shares which may be allotted and issued pursuant to the exercise of the [�]).

This mandate only relates to repurchases made on the Stock Exchange and/or on any other stock exchange on which the Shares are listed (and which are recognised by the SFC and the Stock Exchange for this purpose), and which are made in accordance with the Listing Rules. A summary of the relevant Listing Rules is set out in the section headed “Further information about our Company – Repurchase by our Company of its own securities” in Appendix VI to this document.

This mandate will expire:

at the conclusion of our Company’s next annual general meeting;
at the expiration of the period within which our Company is required by applicable laws or the Articles to hold its next annual general meeting; or
when varied or revoked by an ordinary resolution of the Shareholders in general meeting,

whichever is the earliest.

For further information about the Share Repurchase Mandate, please refer to the section headed “Further information about our Company – Written resolutions of all the Shareholders passed on 3 August 2009” in Appendix VI to this document.

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FINANCIAL INFORMATION

You should read this section in conjunction with our combined financial information including the notes thereto, as set forth in the accountants’ report in Appendix I to this document. The accountants’ report has been prepared on the basis set out in Appendix I to this document and in accordance with our accounting policies that are in conformity with HKFRS.

This section contains forward-looking statements that involve risks and uncertainties. Our actual results may differ from those anticipated in these forward-looking statements as a result of a number of factors, including those set forth in the section headed “Risk factors” in this document.

MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

Our fitting-out business was started in 1988 when Sundart Engineering, our past subsidiary, was involved as a subcontractor in works relating to structural spray fire-protection ( ) and fitting-out works in respect of Jing Guang Centre in the PRC. Since then, we, through Sundart Engineering, continued to participate in several projects in the PRC on a project-by-project basis until Sundart (Beijing) was established in 2003. Then we have operated our fitting-out business in Hong Kong since 1996. We further expanded our fitting-out business to Macau in 2005 through Sundart (Macau). Over the years, we have participated in a number of sizeable fitting-out projects.

As a professional fitting-out contractor, we are responsible for the overall project implementation by providing or arranging for the necessary materials, labour, engineering expertise and technical know-how required for the fitting-out works and carrying out corresponding project management so as to ensure that the fitting-out works conform to the contractual requirements, meet customers’ expectation and are completed on time and within budget. Our fitting-out projects normally commence with the tendering process. After tenders are awarded, we usually set up the detailed working plans, delegate part of the fitting-out works to subcontractors and coordinate among customers, subcontractors and suppliers in completing the projects. Progress payments are received from the customers periodically according to the stages of completion of the works done, and the corresponding subcontracting fees and costs for materials payable to suppliers/subcontractors are settled accordingly.

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FINANCIAL INFORMATION

KEY FACTORS AFFECTING OUR RESULTS OF OPERATIONS

Our results of operations are subject to the influence of numerous factors, the principal of which are set out below:

� The level of investment in fitting-out in respect of residential buildings and hotels

A significant portion of our revenue is derived from fitting-out projects in respect of residential buildings, serviced apartments and hotels, which account for approximately 94.1%, 94.8% and 98.4%, respectively of our revenue for each of the three years ended 31 March 2009. Our business therefore depends to a certain extent on the level of investment in residential property, serviced apartments and hotel projects by the private sector. In the event that the fitting-out expenditures are substantially reduced in residential buildings, serviced apartments and hotels as a result of economic downturn, our business, financial condition and results of operation, our profitability and future growth in revenue may be adversely affected.

� Pricing of our projects

The majority of our revenue in the Track Record Period is derived from our fitting-out projects, which are generally obtained by means of tender. The tender price of our fitting-out projects is based on our estimated project costs plus a mark-up margin. In relation to some of the projects that we wish to undertake to enhance our corporate profile, we may submit a lower tender price with a lower profit margin in order to remain competitive in the tendering process. The lower profit margin will affect our profitability.

� Change in our subcontracting and materials costs

Our subcontracting costs and material costs represent a significant portion of our cost of sales. During the Track Record Period, our subcontracting costs and material costs amounted to approximately HK$728.3 million, HK$1,205.5 million and HK$1,152.2 million, respectively and accounted for approximately 92.2%, 92.3% and 91.4% of our cost of sales, respectively. Our ability to control and manage our subcontracting and materials cost will enhance our profitability. In addition, our contract price is based on our estimated project costs (which mainly include subcontracting costs and material costs) plus a mark-up margin at the time when we submit our tender for projects or our initial proposals to our potential customers but the actual subcontracting costs and material costs will not be determined until after we have entered into agreements with our subcontractors/suppliers. Any fluctuations in the subcontracting and material costs during this period will affect our profitability.

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FINANCIAL INFORMATION

� Failure to complete fitting-out projects according to specifications, quality standards, safety measures or timetable

We have to complete our projects in accordance with the specifications, quality standards, safety measures and timetable. If we fail to comply with any of these requirements, we will be liable to pay penalties or damages and our results of operations and hence our profits will be adversely affected. We have not been claimed for any damages or penalties by our customers for any of the aforesaid reasons. We will continue to give full effort to ensure our current and future projects are completed in accordance with the specifications, quality standards, safety measures and timetable.

� Recent global economic developments and credit crunch

The recent global economic developments and credit crunch has adversely affected the global economy. Under such deteriorating global economy and with the continual weak economic sentiment, the investment in residential, commercial and industrial property sectors may decrease and there may be delay or suspension with respect to construction including fitting-out projects. As such, these factors may affect our profitability and revenue growth. Moreover, banks have been tightening credit which may aggravate the interest expenses on our bank borrowings, or banks may even reduce the amount of or discontinue the banking facilities. If the economic downturn and the weak economic sentiment continue, our business, financial condition and results of operations may be adversely affected.

CRITICAL ACCOUNTING POLICIES

The discussion and analysis of our financial position and results of operations as included in this document is based on the combined financial statements prepared in accordance with the significant accounting policies set forth in note 3 in section A to the accountants’ report set out in Appendix I to this document, which conform with the HKFRS. Accounting methods, assumptions and estimates that underlie the preparation of a company’s financial statements affect its financial position and results of operations reported. Such assumptions and estimates are made based on historical experience and various other assumptions that we believe to be reasonable, the results of which form the basis of judgments on our carrying amounts of assets and liabilities and our results. Results may differ under different assumptions or conditions.

The selection of critical accounting policies, the judgments and other uncertainties affecting application of those policies and the sensitivity of reported results to changes in conditions and assumptions are factors to be considered when reviewing our combined financial statements. We believe that the following accounting policies involve the most significant accounting judgments and estimates used in the preparation of its combined financial statements:

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FINANCIAL INFORMATION

Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for goods sold and services provided in the normal course of business, net of discounts.

Revenue from fixed price supply and installation contracts including fitting-out works is recognised on the percentage of completion method, measured by reference to the value of work certified during the year. Variations in contract work, claims and incentive payments are included to the extent that they have been agreed with the customers.

Revenue from sales of goods are recognised when goods are delivered and title has been passed.

Rental income, including rentals invoiced in advance, from properties under operating lease is recognised on a straight-line basis over the term of the relevant lease.

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

Supply and installation contracts

When the outcome of a supply and installation contract including fitting-out works can be estimated reliably, contract costs are charged to the combined income statement by reference to the stage of completion of the contract activity at the balance sheet date on the same basis as contract revenue.

When the outcome of a supply and installation contract including fitting-out works cannot be estimated reliably, contract costs incurred are recognised as expenses in the year in which they are incurred. When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognised as an expense immediately.

Where contract costs incurred to date plus recognised profits less recognised losses exceed progress billings, the surplus is shown as amounts due from customers for contract work. For contracts where progress billings exceed contract costs incurred to date plus recognised profits less recognised losses, the surplus is shown as amounts due to customers for contract work. Amounts received before the related work is performed are included in the combined balance sheet, as a liability, as advance received. Amounts billed for work performed but not yet paid by the customers are included in the combined balance sheet under trade and other receivables.

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FINANCIAL INFORMATION

Land and building

Impairment of financial assets – loans and receivables

Loans and receivables are assessed for indicators of impairment at each balance sheet date. Loans and receivables are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the financial assets have been impacted. Objective evidence of impairment could include:

significant financial difficulty of the issuer or counterparty; or
default or delinquency in interest or principal payments; or
it becoming probable that the borrower will enter bankruptcy or financial re-organisation.

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

For financial asset carried at amortised cost, an impairment loss is recognised in profit or loss when there is objective evidence that the asset is impaired, and is measured as the difference between the asset’s carrying amount and the present value of the estimated future cash flows discounted at the original effective interest rate.

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

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

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FINANCIAL INFORMATION

Results of operations

The following table presents selected financial data from our combined income statements during the Track Record Period, details of which are set out in the accountants’ report in Appendix I to this document. The financial information contained herein and in the accountants’ report in the Appendix I to this document is prepared in accordance with HKFRS and is presented as if our current group structure had been in existence throughout the periods presented.

For the year ended 31 March 2007 2008 2009 HK$’000 HK$’000 HK$’000 921,334 1,443,742 1,465,230 (790,203) (1,306,520) (1,260,105) 131,131 137,222 205,125 1,838 3,274 2,627 2,554 379 – (40,366) (36,050) (35,659) (4,920) (1,266) (1,656) (7,413) (10,984) (2,920) 82,824 92,575 167,517 (12,382) (12,071) (23,810) 70,442 80,504 143,707 36,800 25,000 113,000 9.98 0.3 0.4	For the year ended 31 March 2007 2008 2009 HK$’000 HK$’000 HK$’000 921,334 1,443,742 1,465,230 (790,203) (1,306,520) (1,260,105) 131,131 137,222 205,125 1,838 3,274 2,627 2,554 379 – (40,366) (36,050) (35,659) (4,920) (1,266) (1,656) (7,413) (10,984) (2,920) 82,824 92,575 167,517 (12,382) (12,071) (23,810) 70,442 80,504 143,707 36,800 25,000 113,000 9.98 0.3 0.4	For the year ended 31 March 2007 2008 2009 HK$’000 HK$’000 HK$’000 921,334 1,443,742 1,465,230 (790,203) (1,306,520) (1,260,105) 131,131 137,222 205,125 1,838 3,274 2,627 2,554 379 – (40,366) (36,050) (35,659) (4,920) (1,266) (1,656) (7,413) (10,984) (2,920) 82,824 92,575 167,517 (12,382) (12,071) (23,810) 70,442 80,504 143,707 36,800 25,000 113,000 9.98 0.3 0.4
131,131 1,838 2,554 (40,366) (4,920) (7,413) 82,824 (12,382)	137,222 3,274 379 (36,050) (1,266) (10,984) 92,575 (12,071)	205,125 2,627 – (35,659 (1,656 (2,920
		167,517 (23,810
70,442 36,800 9.98	80,504 25,000 0.3

Note:

Hong Kong Accounting Standard 33 “Earnings Per Share” requires the number of ordinary shares outstanding before a capitalization issue to be adjusted proportionately as if the capitalisation issue had occurred at the beginning of the earliest period presented (i.e. 1 April 2006) for the purpose of computing earnings per share (“EPS”). The EPS calculation has also taken into account the effect of the shares swap under which 69,990,000 shares were issued in exchange for the 5,100 shares of Sundart Holdings effected on 3 August 2009 by reference to the guidance set out in Accounting Guideline 5 “Merger Accounting for Common Control Combinations”. Before the Capitalization Issue of 290 million shares and the shares swap, the number of outstanding ordinary shares of Sundart Holdings is 5,100, of which only 100 shares were outstanding throughout the year ended 31 March 2007. Therefore, the number of ordinary shares for the purpose of calculating EPS during the year ended 31 March 2007 is adjusted for both the effect of the Capitalization Issue and the share swap (using a factor of 100/5100), resulting in a lower number of ordinary shares outstanding for that year and a considerably higher amount of EPS.

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FINANCIAL INFORMATION

PRINCIPAL INCOME STATEMENT ITEMS

Revenue

We derive our revenue mainly from our fitting-out business. The following table sets out our revenue from different business segments during the Track Record Period:

Fitting-out works – Hotel and serviced apartment – Residential apartment – Others Sub-total: Sourcing and distribution of interior decorative materials Total:	2007 (HK$’ million) 528.2 338.8 31.4	% 57.3 36.8 3.4	Year ended 31 March 2008 (HK$’ million) % 1,025.6 71.0 343.8 23.8 74.3 5.2	Year ended 31 March 2008 (HK$’ million) % 1,025.6 71.0 343.8 23.8 74.3 5.2	2009 (HK$’ million) 843.5 598.2 23.5	% 57.6 40.8 1.6
	898.4 22.9	97.5 2.5	1,443.7 –	100 –	1,465.2 –	100 –
	921.3	100	1,443.7	100	1,465.2	100

Revenue derived from our fitting-out business has increased from approximately HK$898.4 million for the year ended 31 March 2007 to approximately HK$1,465.2 million for the year ended 31 March 2009, representing a CAGR of 27.7% per annum.

Revenue derived from fitting-out works for hotel and serviced apartment increased from approximately HK$528.2 million for the year ended 31 March 2007 to approximately HK$1,025.6 million for the year ended 31 March 2008 and then decreased to approximately HK$843.5 million for the year ended 31 March 2009. Such pattern was primarily attributable to the fact that most of our Macau projects, which were hotel and serviced apartment related, had been completed before 31 March 2008.

Revenue derived from fitting-out works for residential apartment increased from approximately HK$338.8 million for the year ended 31 March 2007 to approximately HK$343.8 million for the year ended 31 March 2008 and then to approximately HK$598.2 million for the year ended 31 March 2009. Such pattern was in line with the increasing revenue derived from fitting-out projects in Hong Kong, which mainly comprised projects for residential apartment. This has compensated for the drop of revenue from hotel and serviced apartment projects in Macau.

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FINANCIAL INFORMATION

An analysis of the impact of certain major fitting-out projects undertaken by us and the corresponding revenue recognised during the Track Record Period is set out in the following table:

	Year	ended 31 March	ended 31 March
	2007	2008	2009
	HK$’000	HK$’000	HK$’000
Hotel and serviced apartment
Cotai Casino, Exhibition and the Hotel Complex	181,492	190,514	15,934
MGM Grand Macau	25,408	264,964	62,955
Grand Lisboa Hotel and Casino	229,544	288,514	20,517
Wynn Resort Macau	54,278	64,582	22,670
Waldo Hotel	–	40,426	64,605
Serviced Apartments for Parcel 2 Cotai Resort
Development	–	–	114,187
City of Dream at Cotai, Macau	–	–	116,822
Harbour Grand (21/F – 40/F for Hotel
Development at 15-17 Oil street, North Point)	–	–	159,328
Garden East Serviced Apartment (Hotel
Development at Queen’s Road 214-224)	–	3,919	46,082
Residential apartment
Celestial Heights (Phase 1)	–	22,680	263,099
The Capitol, Lohas Park	–	48,710	127,076
Metro Town Phase 1 (Tiu Keng Leng Station
Development)	21,386	1,937	–
Le Point, Phase 2 (Tiu Keng Leng Station)	51,894	115,440	6,944
The Legend	82,759	20,538	19,765
Phase RIII, RIVa and RV of the Residential
Development at Pokfulam	18,751	36,679	53,572
The Palazzo (Ho Tung Lau Development)	–	–	53,513
13-15 Tai Hang Road, Causeway Bay, Hong Kong	–	–	8,672

The overall revenue significantly increased by HK$522.4 million from HK$921.3 million for the year ended 31 March 2007 to HK$1,443.7 million for the year ended 31 March 2008 and maintained stable for the year ended 31 March 2009. The major reasons are as follows:

Major hotel and serviced apartment projects, such as MGM Grand Macau, Grand Lisboa Hotel and Casino, Cotai Casino, Exhibition and the Hotel Complex in Macau, which were commenced during the year ended 31 March 2007, were nearly completed in the year ended 31 March 2008. In addition, the residential apartment projects, including Le Point, Phase 2 (Tiu Keng Leng Station), were substantially completed in the year ended 31 March 2008. These projects contributed for the significant increase in revenue for the year ended 31 March 2008.

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FINANCIAL INFORMATION

With the hotel and serviced apartment projects in Macau substantially completed in the year ended 31 March 2008, the main source of revenue for the year ended 31 March 2009 shifted to the residential apartment projects including Celestial Heights (Phase 1), The Capitol, Lohas Park and Harbour Grand (21/F – 40/F for Hotel Development at 15-17 Oil Street, North Point). In addition, Serviced Apartments for Parcel 2 Cotai Resort Development and City of Dream at Cotai, Macau, being new projects commenced in Macau and they further contributed to the revenue.

Revenue derived from our business of sourcing and distribution of interior decorative materials decreased from approximately HK$22.9 million for the year ended 31 March 2007 to nil for each of the two years ended 31 March 2009. Such decrease was mainly attributable to the fact that our efforts have been put to concentrate on the fitting-out works due to rapidly expanding business in Macau.

The following table sets out our revenue from different geographic locations during the Track Record Period:

Hong Kong Macau China Total:	2007 (HK$’ million) 310.7 500.5 110.1 921.3	% 33.7 54.3 12.0 100	Year ended 31 March 2008 (HK$’ million) % 445.7 30.9 939.1 65.0 58.9 4.1 1,443.7 100	2009 (HK$’ million) 867.9 547.8 49.5 1,465.2	% 59.2 37.4 3.4
					100

Our revenue derived from Hong Kong increased from approximately HK$310.7 million for the year ended 31 March 2007 to approximately HK$445.7 million for the year ended 31 March 2008 and then to approximately HK$867.9 million for the year ended 31 March 2009. The increase was mainly attributable to the fact that we have secured a number of sizeable projects for hotel and residential apartment in Hong Kong such as The Capitol, Lohas Park, Celestial Heights (Phase 1) and The Legend, etc.

Our revenue from Macau grew significantly from approximately HK$500.5 million for the year ended 31 March 2007 to approximately HK$939.1 million for the year ended 31 March 2008 and then decreased to nearly HK$547.8 million for the year ended 31 March 2009. Such pattern was mainly attributable to the fact that most of our projects in Macau had been completed before 31 March 2008.

Our revenue from the PRC decreased from approximately HK$110.1 million for the year ended 31 March 2007 to approximately HK$58.9 million for the year ended 31 March 2008 and then to approximately HK$49.5 million for the year ended 31 March 2009. Such decreasing pattern was primarily attributable to the fact that we have placed most of our efforts and resources to penetrate our fitting-out business into the rapidly growing Macau market and Hong Kong market during the Track Record Period. As a result, less resource was placed in the China’s segment and hence decreasing revenues were recorded in the two years ended 31 March 2009. The results for China by geographical segment recorded losses

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FINANCIAL INFORMATION

of HK$2,694,000, HK$919,000 and HK$3,900,000 for the three years ended 31 March 2009. Since less resources were placed in the PRC market due to a small scale of operation as discussed above, the revenue generated was not sufficient to cover the overhead expenses incurred during the Track Record Period and thereby resulted in losses.

Cost of sales

Cost of sales mainly represents subcontracting fees, purchasing costs of materials from raw materials to finished products and other furnishing materials and staff costs. During the Track Record Period, breakdown of our cost of sales were as follows:

Material purchases Subcontracting fees(1) Staff costs Others	For the year ended 31 March 2007 2008 2009 HK$’000 HK$’000 HK$’000 327,646 404,164 308,399 400,632 801,348 843,777 20,787 29,198 51,763 41,138 71,810 56,166 790,203 1,306,520 1,260,105	For the year ended 31 March 2007 2008 2009 HK$’000 HK$’000 HK$’000 327,646 404,164 308,399 400,632 801,348 843,777 20,787 29,198 51,763 41,138 71,810 56,166 790,203 1,306,520 1,260,105
		1,260,105

Note:

Some material purchase costs and labour costs were included in the subcontracting fees and they could not be segregated as the terms of subcontracting contracts would sometimes include provision of both services.

Gross profit

During the Track Record Period, our gross profit and gross profit margin by business segments were as follows:

		For the year ended 31 March
_Gross _	profit	2007 2008 2009
		HK$’million HK$’million HK$’million
		131.1 137.2 205.1

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FINANCIAL INFORMATION

	For the year ended 31 March	For the year ended 31 March	For the year ended 31 March
Gross profit margin	2007	2008	2009
	(%)	(%)	(%)
Fitting-out works
– Hotel and serviced apartment	17.1	11.6	14.7
– Residential apartment	10.1	3.3	13.4
– Others	20.6	9.2	2.3
Overall for fitting-out works	14.6	9.5	14.0
Sourcing and distribution of interior decorative
materials	0.3	N/A	N/A
Overall	14.2	9.5	14.0

Gross profit margin for fitting-out works decreased from approximately 14.6% for the year ended 31 March 2007 to approximately 9.5% for the year ended 31 March 2008 and then increased to approximately 14.0% for the year ended 31 March 2009. The fluctuation was mainly attributable to the fitting-out projects in Hong Kong and Macau.

For the year ended 31 March 2008, gross profit margin was significantly decreased, in particular, segments of hotel and serviced apartment and residential apartment dropped from 17.1% to 11.6% and from 10.1% to 3.3%, respectively. Regarding the hotel and serviced apartment segment, the decrease in gross profit margin was mainly attributable to the fact that the wage level of direct labour costs, which account for an approximately from 30% to 40% of subcontracting fees, rose dramatically for approximately 30% at relevant time due to shortage in labour in Macau, as a result of a number of sizeable hotel and casino projects in Macau commenced construction at that time. Regarding the residential apartment segment, the decrease of gross profit margin from 10.1% to 3.3% was mainly attributable to the fact that additional labour costs was incurred by us to implement the design and specifications for two luxurious projects, namely, The Legend and Phase RIII, RIVa and RV of the Residential Development at Pokfulam.

In the absence of the above factors, our gross profit margin for the year ended 31 March 2009 restored to about the same level in 2007. Gross profit margin for our business of sourcing and distribution of interior decorative materials recorded a slight margin as such business was carried out at a small scale and not our main revenue stream at that time. We placed most of our efforts and resources in our fitting-out business in Hong Kong and Macau.

Other income

Other income mainly includes interest income, rental income and sundry income. During the Track Record Period, other income amounted to approximately HK$1.8 million, HK$3.3 million and HK$2.6 million, respectively. Interest income is recognised as it accrues using the effective interest method. During the Track Record Period, interest income amounted to approximately HK$0.8 million, HK$1.2 million and HK$0.9 million, respectively.

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FINANCIAL INFORMATION

Gain on disposal of subsidiaries

During the year ended 31 March 2007, our Group has disposed of certain subsidiaries, namely, Sundart Creation and its wholly-owned subsidiary, Taishan Sundart (collectively referred to as “ Sundart Creation Group ”), SIL, Win Venture and its 51% owned subsidiary, LPI. Sundart Creation Group, which was principally engaged in property investment, was disposed of to an Independent Third Party; while SIL and Win Venture, which were the entities used by us in the business of sourcing and distribution of timber products and LPI, which was the entity used by us in the business of sourcing and distribution of building materials, were disposed of to SPG. The gain on disposal of subsidiaries amounted to HK$2.6 million for the year ended 31 March 2007.

During the year ended 31 March 2008, our Group has disposed of a subsidiary, namely, Sundart Engineering. Sundart Engineering used to be principally engaged in supply and installation of timber doors and floorsets and interior fitting-out works. After its business was taken up by Sundart Timber and Sundart (Beijing), Sundart Engineering ceased to carry on any business. After the completion of its final accounts in respect of its last project in March 2008, Sundart Engineering was disposed of to Mr. Leung Chung Lim, who is the son of Mr. Leung. The gain on disposal of subsidiary amounted to HK$0.4 million for the year ended 31 March 2008.

Such disposals of subsidiaries were made with a view to simplifying our corporate structure by disposing of inactive subsidiary (such as Sundart Engineering) and subsidiaries with overlapping functions (such as the business of sourcing and distribution of timber products then carried on by SIL and Win Venture, which is now solely carried on by Sundart International).

Administrative expenses

Administrative expenses mainly include staff costs and other miscellaneous administrative expenses. During the Track Record Period, the administrative expenses amounted to approximately HK$40.4 million, HK$36.1 million and HK$35.7 million, respectively.

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FINANCIAL INFORMATION

The following table sets forth the breakdown of our administrative expenses during the Track Record Period:

Depreciation Insurance Legal and professional fees(1) Rent & rates and building management fees Staff costs Travelling expenses Entertainment expenses Research and development Others Total:	2007 HK$’000 710 862 3,030 2,218 27,004 589 407 1,697 3,849 40,366	For the year ended 31 March 2008 2009 % HK$’000 % HK$’000 1.8 624 1.7 753 2.1 978 2.7 1,274 7.5 2,845 7.9 2,285 5.5 3,164 8.8 4,133 66.9 23,612 65.5 21,719 1.5 489 1.4 668 1.0 564 1.6 848 4.2 – – – 9.5 3,774 10.4 3,979 100 36,050 100 35,659	% 2.1 3.6 6.4 11.6 60.9 1.9 2.4 – 11.1
			100

Note:

Legal and professional fees mainly include professional fees paid to our legal advisers in providing us with legal services or representing us in legal proceedings in which we were a party but have not been reimbursed to us under any insurance policy, audit fees and project consultancy and advisory fees.

Administrative expenses decreased from approximately HK$40.4 million for the year ended 31 March 2007 to approximately HK$35.7 million for the year ended 31 March 2009 despite the revenue increased from HK$921.3 million for the year ended 31 March 2007 to approximately HK$1,465.2 million for the year ended 31 March 2009. Such phenomenon was primarily attributable to the significant decreases in both R&D costs and staff costs. The decrease in staff costs from the year ended 31 March 2007 to the year ended 31 March 2008 was mainly attributable to the fact that there were significant amount of staff costs incurred for the year ended 31 March 2007, which in turn was due to a combination of factors such as (i) significant administrative staff costs were incurred in the Macau related projects to facilitate the tendering procedures and preparation of pre-tendering works when we penetrated into the Macau market; (ii) special bonus payment to our staff; and (iii) a reduction in number of our marketing and R&D staff and senior management of our Group for the year ended 31 March 2007. Moreover, administrative staff costs related to tendering procedures and preparation of pre-tendering work for Macau market further decreased for the year ended 31 March 2009.

Other expenses

Other expenses mainly include net decrease in fair value of investment properties and written-off of trade receivables. During the Track Record Period, other expenses amounted to approximately HK$4.9 million, HK$1.3 million and HK$1.7 million, respectively.

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FINANCIAL INFORMATION

Finance costs

Finance costs represent interest expenses on bank borrowings wholly repayable within five years.

Income tax expenses

During the Track Record Period, our income tax expenses amounted to approximately HK$12.4 million, HK$12.1 million and HK$23.8 million, respectively.

On 26 June 2008, the Hong Kong Legislative Council passed the Revenue Bill 2008 which reduced corporate profits tax rate from 17.5% to 16.5% effective from the year of assessment 2008/2009. Therefore, Hong Kong Profits Tax is calculated at 16.5% (2007 and 2008: 17.5%) of the estimated assessable profit for the year. The deferred tax balance as at 31 March 2008 has been adjusted to reflect the tax rate that are expected to apply to the respective periods when the asset is realised or the liability is settled.

Macau Profits Complementary Tax is calculated at the progressive rates from 3% to 12%, 9% to 12% and 9% to 12% of the estimated assessable profits for the years ended 31 March 2007, 2008 and 2009 respectively.

On 16 March 2007, the PRC promulgated the Law of the PRC on Enterprise Income Tax (the “ New Law ”) by Order No. 63 of the President of the PRC. On 6 December 2007, the State Council of the PRC issued Implementation Regulations of the New Law. The New Law and Implementation Regulations changed the tax rate from 33% to 25% from 1 January 2008. The deferred tax balance has been adjusted to reflect the tax rates that are expected to apply to the respective periods when the asset is realised or the liability is settled. The applicable tax rates for Sundart (Beijing) from 1 April 2006 to 31 December 2007 and 1 January 2008 to 31 March 2009 are 33% and 25% respectively.

The effective tax rate of our Group during the Track Record Period were 14.9%, 13.0% and 14.2%, respectively.

Period to period comparison of results of operations

Year ended 31 March 2009 compared to year ended 31 March 2008

Revenue

Our revenue increased by approximately HK$21.5 million, or approximately 1.5%, from approximately HK$1,443.7 million for the year ended 31 March 2008 to approximately HK$1,465.2 million for the year ended 31 March 2009. Revenue derived in Hong Kong increased by approximately HK$422.2 million from approximately HK$445.7 million for the year ended 31 March 2008 to approximately HK$867.9 million for the year ended 31 March 2009, whereas revenue derived in Macau decreased by approximately HK$391.3 million from approximately HK$939.1 million for the year ended 31 March 2008 to approximately HK$547.8 million for the year ended 31 March 2009 and the revenue derived in the PRC decreased by approximately HK$9.4 million from approximately HK$58.9 million for the

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FINANCIAL INFORMATION

year ended 31 March 2008 to approximately HK$49.5 million for the year ended 31 March 2009. The increase in our revenue was mainly attributable to the increases of works done in respect of some major projects in Hong Kong such as Celestial Heights (Phase 1), Central Park Towers II and Lohas Park Phase II during the year ended 31 March 2009 which off set the decreases in revenue derived in Macau and the PRC.

Cost of sales

Cost of sales decreased from approximately HK$1,306.5 million for the year ended 31 March 2008 to approximately HK$1,260.1 million for the year ended 31 March 2009 despite the fact that our revenue increased from approximately HK$1,443.7 million for the year ended 31 March 2008 to approximately HK$1,465.2 million for the year ended 31 March 2009. During the Track Record Period, material purchases and subcontracting fees in general constitute approximately over 85% of the total cost of sales. Such phenomenon was mainly attributable to the fact that subcontracting fees and material costs, which amounted to approximately HK$801.3 million and HK$404.2 million respectively, were exceptionally high during the year ended 31 March 2008, particularly, for projects MGM Grand Macau, Cotai Casino, Exhibition and the Hotel Complex and The Legend. Direct labour costs, which account for an approximately 30% to 40% of subcontracting fees, rose dramatically at relevant time due to shortage in labour in Macau.

Gross profit and gross profit margin

Gross profit increased by approximately HK$67.9 million, or approximately 49.5% from approximately HK$137.2 million for the year ended 31 March 2008 to approximately HK$205.1 million for the year ended 31 March 2009.

The gross profit margin for the year ended 31 March 2008 was approximately 9.5%, whereas the gross profit margin for the year ended 31 March 2009 increased to 14.0%. This was mainly attributable to the fact that some of our projects in Macau and Hong Kong, whose gross profits were significant influenced by higher labour costs as a result of shortage in labour in Macau, had been substantially completed before 31 March 2008.

Other income

Other income decreased by approximately HK$0.7 million, or approximately 21.2%, from approximately HK$3.3 million for the year ended 31 March 2008 to approximately HK$2.6 million for the year ended 31 March 2009. The decrease was primarily associated with the combined effect in decreases in interest income and rental income.

Gain on disposal of subsidiaries

No subsidiary has been disposed of by us during the year ended 31 March 2009. As a result, no gain (or loss) was recorded by us for the same period.

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FINANCIAL INFORMATION

Administrative expenses

Administrative expenses decreased slightly by approximately HK$0.4 million, or approximately 1.1%, from approximately HK$36.1 million for the year ended 31 March 2008 to approximately HK$35.7 million for the year ended 31 March 2009. Such decrease was due to administrative staff costs related to tendering procedures and preparation of pre-tendering work for Macau market further decreased for the year.

Other expenses

Other expenses increased by approximately HK$0.4 million, or approximately 30.8%, from approximately HK$1.3 million for the year ended 31 March 2008 to approximately HK$1.7 million for the year ended 31 March 2009.

Finance costs

Finance costs decreased by approximately HK$8.1 million, or approximately 73.6%, from approximately HK$11.0 million for the year ended 31 March 2008 to approximately HK$2.9 million for the year ended 31 March 2009. The decrease was mainly attributable to the significant decrease in bank borrowings resulting from collection of retention moneys in respect of our fitting-out projects in Macau.

Income tax expenses

Income tax expenses increased by approximately HK$11.7 million, or approximately 96.7%, from approximately HK$12.1 million for the year ended 31 March 2008 to approximately HK$23.8 million for the year ended 31 March 2009. Such increase was mainly attributable to the increase of effective tax rate from approximately 13.0% for the year ended 31 March 2008 to approximately 14.2% for the year ended 31 March 2009 and the significant increase in profit before tax from approximately HK$92.6 million for the year ended 31 March 2008 to approximately HK$167.5 million for the year ended 31 March 2009.

Profit for the year

Based on the above factors, profit for the year increased by approximately HK$63.2 million, or approximately 78.5%, from approximately HK$80.5 million for the year ended 31 March 2008 to approximately HK$143.7 million for the year ended 31 March 2009. Net profit margin increased from approximately 5.6% for the year ended 31 March 2008 to approximately 9.8% for the year ended 31 March 2009.

Dividends

We declared interim dividends of HK$113 million in aggregate for the year ended 31 March 2009 and an interim dividend of HK$25 million during the year ended 31 March 2008.

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FINANCIAL INFORMATION

Year ended 31 March 2008 compared to year ended 31 March 2007

Revenue

Our revenue increased by approximately HK$522.4 million, or approximately 56.7%, from approximately HK$921.3 million for the year ended 31 March 2007 to approximately HK$1,443.7 million for the year ended 31 March 2008. Revenue derived in Hong Kong increased by approximately HK$135.0 million from approximately HK$310.7 million for the year ended 31 March 2007 to approximately HK$445.7 million for the year ended 31 March 2008, whereas revenue derived in Macau increased by approximately HK$438.6 million from approximately HK$500.5 million for the year ended 31 March 2007 to approximately HK$939.1 million for the year ended 31 March 2008. The increase in our revenue was mainly attributable to the increases of works done in respect of some major projects in Macau and Hong Kong such as projects in respect of the Cotai Casino, Exhibition and the Hotel Complex, The Capitol, Lohas Park, Grand Lisboa Hotel and Casino and Waldo Hotel during the year ended 31 March 2008.

Cost of sales

Our cost of sales increased by approximately HK$516.3 million, or approximately 65.3%, from approximately HK$790.2 million for the year ended 31 March 2007 to approximately HK$1,306.5 million for the year ended 31 March 2008. The increase was mainly attributable to increases in material costs and labour costs as a result of payment of extra wages to meet exceptional tight project timetables. The increase in cost of sales was also in line with the increase of revenue for the year ended 31 March 2008 as compared with the revenue for the year ended 31 March 2007.

Gross profit and gross profit margin

Gross profit increased by approximately HK$6.1 million, or approximately 4.6% from approximately HK$131.1 million for the year ended 31 March 2007 to approximately HK$137.2 million for the year ended 31 March 2008.

Other income

Other income increased by approximately HK$1.5 million, or approximately 83.3%, from approximately HK$1.8 million for the year ended 31 March 2007 to approximately HK$3.3 million for the year ended 31 March 2008. The increase was primarily associated with (1) the increase in interest income from approximately HK$0.8 million to approximately HK$1.2 million as a result of significant increase in the amounts of bank deposits; and (2) increase in sundry income arising from write-back of unclaimed retention money by subcontractors from approximately HK$0.4 million to approximately HK$1.5 million.

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FINANCIAL INFORMATION

Gain on disposal of subsidiaries

To streamline our business, we have disposed of certain subsidiaries during the two years ended 31 March 2008. Gain on disposal of subsidiaries decreased by approximately HK$2.2 million, or approximately 84.6%, from approximately HK$2.6 million for the year ended 31 March 2007 to approximately HK$0.4 million for the year ended 31 March 2008. The disposal of Sundart Creation Group in the year ended 31 March 2007 gave rise to a gain on disposal of approximately HK$2.6 million and the disposal of the entire interest in Sundart Engineering in the year ended 31 March 2008 at a consideration of HK$2.0 gave rise on a gain of disposal profit of approximately HK$0.4 million.

Administrative expenses

Administrative expenses decreased by approximately HK$4.3 million, or approximately 10.6%, from approximately HK$40.4 million for the year ended 31 March 2007 to approximately HK$36.1 million for the year ended 31 March 2008. The decrease was mainly attributable to the fact that staff costs were decreased in 2008. There were significant staff costs incurred for the year ended 31 March 2007 due to a combination of factors such as (i) significant administrative staff costs were incurred in the Macau related projects to facilitate the tendering procedures and preparation of pre-tendering works for Macau market; (ii) special bonus payment to the staff; and (iii) a reduction in the number of our marketing and R&D staff and senior management of our Group for year ended 31 March 2007.

Other expenses

Other expenses decreased by approximately HK$3.6 million, or approximately 73.5%, from approximately HK$4.9 million for the year ended 31 March 2007 to approximately HK$1.3 million for the year ended 31 March 2008. The decrease was mainly attributable to the net decrease in fair-value of investment property before it was disposed in the year ended 31 March 2007.

Finance costs

Finance costs increased by approximately HK$3.6 million, or approximately 48.6%, from approximately HK$7.4 million for the year ended 31 March 2007 to approximately HK$11.0 million for the year ended 31 March 2008. The increase was mainly attributable to the increase in number of fitting-out projects undertaken by us which caused us to use additional bank borrowings to pay for increased start-up costs.

Income tax expenses

Income tax expenses decreased by approximately HK$0.3 million, or approximately 2.4%, from approximately HK$12.4 million for the year ended 31 March 2007 to approximately HK$12.1 million for the year ended 31 March 2008. This is because the effective tax rate decreased slightly from approximately 14.9% for the year ended 31 March 2007 to approximately 13.0% for the year ended 31 March 2008.

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FINANCIAL INFORMATION

Profit for the year

Based on the above factors, profit for the year increased by approximately HK$10.1 million, or approximately 14.3%, from approximately HK$70.4 million for the year ended 31 March 2007 to approximately HK$80.5 million for the year ended 31 March 2008. Net profit margin decreased from approximately 7.6% for the year ended 31 March 2007 to approximately 5.6% for the year ended 31 March 2008.

Dividends

We declared an interim dividend of HK$36.8 million during the year ended 31 March 2007 and an interim dividend of HK$25 million during the year ended 31 March 2008.

LIQUIDITY AND CAPITAL RESOURCES

Cash flows

The following table is a condensed summary of our combined cash flow statements for the periods indicated:

	For the	year ended 31	March
	2007	2008	2009
	HK$’ million	HK$’ million	HK$’ million
Net cash generated from operating
activities	15.5	117.4	284.6
Net cash (used in) generated from
investing activities	(11.8)	(59.1)	69.4
Net cash generated from (used in)
financing activities	5.0	(3.7)	(244.7)
Cash and cash equivalents as at the
beginning of the financial year	15.4	25.1	81.1
Cash and cash equivalents as at the end
of the financial year	25.1	81.1	191.1

Net cash generated from operating activities

Net cash inflow from operating activities primarily consists of profit before taxation adjusted for finance costs, depreciation and the effect of changes in working capital.

Our Group derives its cash inflow from operating activities principally from the receipt of payments from contract work. Our Group’s cash outflow from operations mainly includes purchases of raw materials, as well as for staff costs and subcontracting costs.

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FINANCIAL INFORMATION

Net cash generated from operating activities for the year ended 31 March 2007 amounted to approximately HK$15.5 million, while our Group’s profit before tax for the same period was approximately HK$82.8 million. The difference of approximately HK$67.3 million was primarily attributable to the combined effect of the increase in amounts due from customers for contract work of approximately HK$117.4 million and the increase in trade and other payables of approximately HK$59.1 million.

Net cash generated from operating activities for the year ended 31 March 2008 amounted to approximately HK$117.4 million, while our Group’s profit before tax for the same period was approximately HK$92.6 million. The difference of approximately HK$24.8 million was primarily attributable to the combined effect of the increase in trade and other receivables of approximately HK$124.0 million and the increase in trade and other payables of approximately HK$142.1 million.

Net cash generated from operating activities for the year ended 31 March 2009 amounted to approximately HK$284.6 million, while our Group’s profit before tax for the same period was approximately HK$167.5 million. The difference of approximately HK$117.1 million was primarily attributable to the combined effect of the increase in amounts due from customers for contract work of approximately HK$71.2 million and the increase in trade and other payables of approximately HK$81.8 million.

Net cash (used in) generated from investing activities

Net cash used in investing activities for the year ended 31 March 2007 amounted to approximately HK$11.8 million, which was primarily attributable to the increase in pledged bank deposits of approximately HK$5.5 million and the purchase of available-for-sale investment of HK$5.0 million.

Net cash used in investing activities for the year ended 31 March 2008 amounted to approximately HK$59.1 million, which was primarily attributable to the increase in pledged bank deposits of approximately HK$65.3 million.

Net cash generated from investing activities for the year ended 31 March 2009 amounted to approximately HK$69.4 million, which was primarily attributable to the decrease in pledged bank deposits of approximately HK$70.0 million.

Net cash generated from (used in) financing activities

Net cash generated from financing activities for the year ended 31 March 2007 amounted to approximately HK$5.0 million, which was mainly the difference between new bank borrowings raised of approximately HK$348.7 million and repayments of bank borrowings of approximately HK$306.9 million and dividends paid of HK$36.8 million.

Net cash used in financing activities for the year ended 31 March 2008 amounted to approximately HK$3.7 million, which was mainly the difference between new bank borrowings raised of approximately HK$406.5 million and repayments of bank borrowings of approximately HK$385.2 million and dividends paid of HK$25.0 million.

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FINANCIAL INFORMATION

Net cash used in financing activities for the year ended 31 March 2009 amounted to approximately HK$244.7 million, which was the difference between new bank borrowings raised of approximately HK$138.0 million and repayments of bank borrowings of approximately HK$269.7 million and the dividends paid of HK$113.0 million.

MAJOR FINANCIAL RATIOS

	For the year	ended 31	December
	2007	2008	2009
Trade receivable turnover (days)(1)	58	49	63
Trade payable turnover (days)(2)	26	27	41
Gearing ratio(3)	30%	22.9%	4%
Current ratio(4)	1.68	1.53	1.59
Return on equity(5)	40.5%	34.7%	54.5%

Notes:

The trade receivable turnover is calculated based on the average of the beginning and ending balance of trade receivables, net of provision on impairment, for the year divided by revenue during the year and multiplied by 365 days.
The trade payable turnover is calculated based on the average of the beginning and ending balance of trade payables for the year divided by cost of sales for the year, and multiplied by 365 days.
The gearing ratio is calculated by dividing total borrowings with total assets as at the end of respective years multiplied by 100%.
The current ratio is calculated by dividing current assets with current liabilities as at the end of the respective years.
Return on equity equals the profit for each year divided by the ending balance of total equity as at the end of the respective years.

Trade receivable turnover

The majority of our Group’s revenues are generated through fitting-out contracts and settlement is made in accordance with the terms specified in the contracts governing the relevant transactions. The credit period of individual customer is considered on a case-by-case basis and set out in the relevant contracts, as appropriate. In general, the projects in Track Record Period were granted a credit period of 14 to 60 days. We receive payments from our customers in the form of advance payment and progress payment and the return of retention money. For some of the projects, our customers may pay an advance payment of 15% to 29% of the total contract sum to us at the beginning of the projects. Our customers usually retain 5% to 10% of the total contract sum of the projects as retention money. The remaining balance will mainly be in the form of progress payment to be billed periodically according to the progress of the projects.

Trade receivable turnover decreased from 58 days for the year ended 31 March 2007 to 49 days for the year ended 31 March 2008 because of the shorter credit terms given to our customers in respect of certain projects in Macau.

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FINANCIAL INFORMATION

Trade receivable turnover increased to 63 days for the year ended 31 March 2009 because most of the projects in Macau of shorter credit terms had been completed before 31 March 2008 and two sizeable projects were nearly completed in March 2009 which resulted in higher trade receivable at that time.

Included in the allowance for doubtful debts as at 31 March 2007 were individually impaired trade receivables with an aggregate balance of HK$500,000 which was due from a debtor under severe financial difficulties. Up to 30 June 2009, approximately HK$207.5 million of the trade receivables, being approximately 85.7% of the trade receivables as at 31 March 2009, had been settled.

The following is an aged analysis of trade receivables (net of allowance for doubtful debts) at each balance sheet dates:

1 – 30 days 31 – 60 days 61 – 90 days Over 90 days	As at 31 March 2007 2008 2009 HK$’000 HK$’000 HK$’000 79,274 190,991 223,802 42,437 56,042 7,185 20 – 5,865 3,837 14,022 5,398 125,568 261,055 242,250	As at 31 March 2007 2008 2009 HK$’000 HK$’000 HK$’000 79,274 190,991 223,802 42,437 56,042 7,185 20 – 5,865 3,837 14,022 5,398 125,568 261,055 242,250
		242,250

Retentions receivable

Retentions receivable which: – will be recovered within twelve months – will be recovered more than twelve months after the balance sheet date	As 2007 HK$’000 52,164 31,591 83,755	at 31st March 2008 2009 HK$’000 HK$’000 83,880 88,699 27,793 26,215 111,673 114,914	at 31st March 2008 2009 HK$’000 HK$’000 83,880 88,699 27,793 26,215 111,673 114,914
			114,914

Retentions receivable is recognised immediately when the customers hold up a portion of each progress payments since payment of the first progress payment until 5% of the contract sum is reached rather than at the time when the certificate of completion is issued. Also, some of our fitting-out projects may last for over 12 months. For most of the fitting-out projects, half of the retentions receivable will generally be released to us by our customers after the defect liability period and the remaining portion will be released after the issue of the certificate of completion. Therefore, a significant portion of retentions receivable remained outstanding as at each balance sheet date.

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FINANCIAL INFORMATION

As at 31 March 2009, retentions receivable, which would be recovered within 12 months, amounted to be approximately HK$88.7 million. Up to 30 June 2009, retentions receivable in the amount of approximately HK$3.6 million, which represented approximately 4% of the said retention receivables of HK$88.7 million has been subsequently settled, leaving an amount of HK$85.1 million remained outstanding. Our Directors confirmed that the outstanding amount is related to projects which are currently either still in progress or under the defect liability period and hence is not overdue. Moreover, our Directors expect that approximately 48% of the said retentions receivable of approximately HK$88.7 million will be due and received by September 2009; 22% of the said retentions receivable of approximately HK$88.7 million will be due and received by December 2009; and 26% of the said retentions receivable of approximately HK$88.7 million will be due and received by March 2010. For the retention receivables will be recovered more than twelve months in the sum of approximately HK$26.2 million as at 31 March 2009, the Directors confirmed that such outstanding amount is related to projects which are in progress or under the defect liability period and hence is not overdue.

Trade payable turnover

Our trade payables excluding retentions payable are derived primarily from payables relating to the purchase of materials and subcontracting fees. The credit period is granted by our suppliers and subcontractors on a case-by-case basis. In general, the projects in Track Record Period were granted a credit period of approximately 30 days.

Trade payable turnover increased from 27 days for each of the year ended 31 March 2008 to 41 days for the year ended 31 March 2009. Since it is our practice to match the cash received by us with the payment to be paid by us in order to control our cash flow, we usually settle the trade payables after our trade receivables are settled. The increase in trade payable turnovers was therefore in line with the increasing trend of our trade receivable turnover for the year ended 31 March 2009.

The aged analysis of contract creditors and suppliers is stated as follows:

Within 30 days 31 days to 60 days 61-90 days Over 90 days Retentions payables Other payables	As at 31 March 2007 2008 2009 HK$’000 HK$’000 HK$’000 61,901 90,308 152,817 7,203 11,399 6,689 2,796 3,625 1,780 7,970 7,277 6,465	As at 31 March 2007 2008 2009 HK$’000 HK$’000 HK$’000 61,901 90,308 152,817 7,203 11,399 6,689 2,796 3,625 1,780 7,970 7,277 6,465	As at 31 March 2007 2008 2009 HK$’000 HK$’000 HK$’000 61,901 90,308 152,817 7,203 11,399 6,689 2,796 3,625 1,780 7,970 7,277 6,465
	79,870 40,086 10,391	112,609 56,110 103,047	167,751 58,728 127,041
	130,347	271,766	353,520

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FINANCIAL INFORMATION

Our Directors confirm that trade payables aged over 90 days during the Track Record Period were not due to disputes with relevant creditors.

As at 31 March 2007, 2008 and 2009, retentions payables of approximately HK$20,178,000, HK$14,175,000 and HK$15,680,000 respectively are expected to be paid after more than one year. Retentions payable is recognised immediately after we deduct each progress payments from the subcontractors since payment of the first progress payment rather than at the time when the certificate of completion is issued. Also, some of our fitting-out projects may last for over 12 months and the retentions payable will generally be released by us to our subcontractors after the defect liability period. Therefore, a significant portion of retentions payable remained outstanding as at each balance sheet date.

Other payables generally include accrued expenses, temporary receipt and project deposit received. Other payables increased significantly from approximately HK$10.4 million for the year ended 31 March 2007 to approximately HK$103.0 million for the year ended 31 March 2008 and then to approximately HK$127.0 million for the year ended 31 March 2009 because of our participation of larger fitting-out projects in Macau and PRC, where the customers, unlike those in Hong Kong, would pay us deposit in advance. Such deposits amounted to approximately HK$88.8 million and HK$105.5 million for the years ended 31 March 2008 and 31 March 2009, respectively.

Gearing ratio

Gearing ratio decreased from 30% for the year ended 31 March 2007 to 22.9% for the year ended 31 March 2008 because of the increase in total assets as a result of sharp business growth.

Gearing ratio decreased to 4% for the year ended 31 March 2009 because of the decrease of bank borrowings.

Current ratio

We commenced our fitting-out business in Macau in 2005 and such business attained its peak in 2008. Therefore, higher working capital was required for 2008, resulting in lower liquidity in that year. As such, current ratio dropped from 1.68 for the year ended 31 March 2007 to 1.53 for the year ended 31 March 2008. The current ratio slightly increased to 1.59 for the year ended 31 March 2009.

Return on equity

Return on equity decreased from 40.5% for the year ended 31 March 2007 to 34.7% for the year ended 31 March 2008 because of the lower profitability resulting from increased labour and material costs for the year ended 31 March 2008 and increase in equity as a result of increase in accumulated profits. Return on equity increase to 54.5% for the year ended 31 March 2009 because of several projects whose profitability were equivalently influenced by higher labour and material costs had been completed before 31 March 2008 and the decrease of shareholders’ fund as a result of the declaration of a dividend of HK$113 million.

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FINANCIAL INFORMATION

Available-for-sale equity investment

As at 31 March 2007, our Group had an available for sale investment, being an unlisted mutual fund of HK$5 million. The fair value of the unlisted mutual fund was determined by reference to the quoted price provided by an authorised financial institution. The amount was denominated in US$. The fund was pledged to secure the banking facilities granted to our Group as at 31 March 2007.

WORKING CAPITAL

Our Directors are of the opinion that, taking into consideration the financial resources presently available to us, including banking facilities and other internal resources, and the estimated net proceeds of the [�], we have sufficient working capital for our present requirements, that is, for at least in the next 12 months commencing from the date of this document.

We strive to effectively manage its cash flow and capital commitments and to ensure that it has sufficient funds to meet its existing and future cash requirements. In addition to cash generated from our operations, we also seek bank borrowings to fund our working capital cash requirement. We have maintained long-term relationships with various commercial banks in Hong Kong, Macau and China and it is believed that the existing short-term bank loans will be accepted for renewal upon their maturity, if necessary. Since the beginning of the global financial tsunami, we have neither encountered major difficulties in securing and/or renewing bank borrowings, nor being charged an exceptionally high interest rate on the bank borrowings. In addition, the credit facilities currently available to our Group would not be tightened nor cancelled as a result of the any unfavourable financial results of our Group, in accordance with terms and conditions of the relevant bank loan agreements.

We expect to finance our operations through a combination of operating cash inflows, our proceeds from the [�] and/or bank borrowings.

OFF-BALANCE SHEET TRANSACTIONS

As at the Latest Practicable Date, we did not enter into any material off-balance sheet transactions.

JOINTLY-CONTROLLED ENTITY

Sundart (Middle East) occupies two out of four directorships in Sundart Interior and the following key operating activities of the Sundart Interior require the joint authorisation of Sundart (Middle East) and Abdullateef M. A Al-Kuwari, the 47% and 51% equity holders of Sundart Interior respectively:

(a) all tenders of Sundart Interior;
(b) all commercial contracts;

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FINANCIAL INFORMATION

(c) all single payments of more than QAR50,000; and
(d) all tax and government documents.

In addition, certain key financial and operating decisions of Sundart Interior require unanimous consent of all its shareholders in general meetings pursuant to the SI-JV Agreement, examples of which are:

(a) any changes in its articles of association;
(b) any change in capital and debt structure, including any variation in its share capital, any placing under option of its shares or other securities (if any) whatsoever, all calls in respect of its shares or other securities (if any) and any borrowings which taken together with any existing borrowings of it, cause the aggregate borrowings of it to exceed one hundred percent of the nominal value of the share capital of it from time to time;
(c) any change in dividend policy or any capitalisation of profits or reserves, or the approval, declaration or payment of dividends; and
(d) any proposal for company’s reconstruction, consolidation, amalgamation or merger with, or acquisition by, another corporation.

Hence, Sundart (Middle East) is unable to exercise control over Sundart Interior as defined under Hong Kong Accounting Standard 27 Consolidated and Separate Financial Statements. Since certain key operating activities require the joint authorisation of the said two shareholders and other key financial and operating activities requires the unanimous consent of all of its shareholders, Sundart Interior is classified as a jointly-controlled entity of our Group.

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FINANCIAL INFORMATION

NET CURRENT ASSETS AND INDEBTEDNESS

Net current assets as at 30 June 2009

As at 30 June 2009, being the latest practicable date for the preparation of the working capital sufficiency statement in this document, we had net current assets of approximately HK$332.4 million, comprising current assets of approximately HK$830.6 million and current liabilities of approximately HK$498.2 million. The following table sets out the composition of our unaudited current assets and liabilities as at 30 June 2009:

	HK$’000
	(unaudited)
Current assets
Trade and other receivables	427,338
Amounts due from customers for contract work	60,803
Retentions receivable	147,296
Tax recoverable	40
Amounts due from related parties	23,819
Pledged bank deposits	829
Bank balances and cash	170,440
	830,565
Current liabilities
Trade and other payables	237,167
Bills payable	13,466
Amount due to a related party	8,318
Amounts due to customers for contract work	159,749
Tax payable	47,242
Bank borrowings	32,250
	498,192
Net current assets	332,373

Indebtedness

As at 30 June 2009, being the latest practicable date for the purpose of this statement prior to the printing of this document, we had total bank borrowings of approximately HK$32,250,000, which were secured by certain trade receivables of the Group and personal guarantees given by certain directors, including Mr. Chan, a Controlling Shareholder. It is expected that the guarantees will be released and will be replaced by guarantees from our Company upon Listing. We have no present intention to raise any funds by means of debt financing after Listing.

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FINANCIAL INFORMATION

Our Directors confirm that, taking into consideration the financial resources available to us as at 30 June 2009, including banking facilities and other internal resources, we have sufficient working capital for our requirements as at 30 June 2009, including funds necessary to meet our contractual obligations, maintain our operations and complete our existing projects that were under progress as at 30 June 2009. Other than the risk factors set out in the section headed “Risk factors” in this document, our Directors are not aware of any other factors that would have a material impact on our Group’s liquidity as at 30 June 2009, including those that may materially and adversely affect our future cash requirements associated with trends known to our Group. As at 30 June 2009, our Directors are not aware of any change in the applicable legal and regulatory requirements that would have a material adverse impact on our Group’s liquidity.

Cash flows

Our Group has financed our operations and growth mainly through a combination of cash from operations and external borrowings and we applied our cash mainly to finance our operations and capital expenditures and to repay our borrowings. As at 30 June 2009, save as disclosed in the section headed “Future plan and use of proceeds” in this document, our Directors are not aware any material change to the sources of cash of our Group and the use of cash by our Group. Our Directors are of the view that as at the Latest Practicable Date, the recent global economic downturn had no material adverse effect on the liquidity position of our Group.

Prior to the Listing, we funded our operations principally from the revenue derive from contract work and through bank borrowings. Our principal liquidity and capital requirements were mainly related to the following:

payment of dividends to their then shareholders;
costs and expenses related to the operation of our business and procurement of materials and raw materials; and
capital expenditures for the purchase of equipment [and investment properties].

After the Listing, we expect to meet our liquidity needs from cash generated from our operations, and debt and equity financings, including the proceeds of the [�].

Capital expenditures

During the Track Record Period, we incurred capital expenditure mainly for the purchase of properties and equipment. Our capital expenditures were approximately HK$0.3 million, HK$0.2 million and HK$1.5 million for the three years ended 31 March 2009 respectively.

We anticipate that the funds needed to finance the capital expenditures will be financed by cash generated from our operations and bank borrowings, as well as net proceeds from the [�]. If necessary, we may raise additional funds on terms that are acceptable to us.

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FINANCIAL INFORMATION

Our current plan with respect to future capital expenditures may be subject to change based on the implementation of our business plan, including potential acquisitions, the progress of our fitting-out projects, market conditions and our outlook of future business conditions. As we continue to expand, we may incur additional capital expenditures.

Our ability to obtain additional funding in the future is subject to a variety of uncertainties including our future results of operations, financial condition and cash flows, economic, political and other conditions in the PRC, Hong Kong, Macau and other jurisdiction(s) in which we operate.

Operating lease commitments – Group as lessee

At the balance sheet dates, our Group had commitments for future minimum lease payments under non-cancellable operating leases in respect of rented premises which fall due as follows:

Within one year In the second to fifth years inclusive	As at 31 March 2007 2008 2009 HK$’000 HK$’000 HK$’000 2,699 2,746 2,108 2,105 66 902 4,804 2,812 3,010	As at 31 March 2007 2008 2009 HK$’000 HK$’000 HK$’000 2,699 2,746 2,108 2,105 66 902 4,804 2,812 3,010
		3,010

Leases for rented premises are negotiated for a period of one to three years with fixed rental.

Contingent liabilities

Our Directors confirm that there were no material contingent liabilities as at 30 June 2009. We are currently not involved in any material legal proceedings, nor are we aware of any pending or potential material legal proceedings involving us.

Disclaimers

Save as disclosed in the sections headed “Financial information – Net current assets and indebtedness – Indebtedness” and “Financial information – Net current assets and indebtedness – Contingent liabilities” in this document, and apart from intra-group liabilities, we did not have, at the close of business on 30 June 2009, any outstanding loan capital issued and outstanding or agreed to be issued loans, or other similar indebtedness, liabilities under acceptances (other than normal trade bills) or acceptance credits, debentures, mortgages, charges, finance leases or hire purchase commitments, guarantees or other material contingent liabilities.

Our Directors confirm that there has been no material change in indebtedness, commitments and contingent liabilities of our Group since 30 June 2009.

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FINANCIAL INFORMATION

QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISKS

We during our conduct of business are exposed to various types of market risks including currency risk, interest rate risk, price risk, credit risk and liquidity risk.

Currency risk

Members of our Group collect most of the revenue and incur most of the expenditures in their respective functional currencies. The Directors consider that our Group’s exposure to foreign currency exchange risk is insignificant as the majority of our Group’s transactions are denominated in the functional currency of each individual group entity.

Our Group currently does not have a foreign currency hedging policy. However, the management of our Company monitors foreign exchange exposure and will consider hedging significant foreign currency exposure should the need arise.

Interest rate risk

Our Group’s interest rate risk arises from pledged bank deposits, bank balances and bank borrowings. Our Group is exposed to the fair value interest rate risk in relation to the fixed-rate pledged bank deposits. Our Group is also exposed to cash flow interest rate risk in relation to variable-rate bank balances and bank borrowings. Our Group does not have an interest rate hedging policy. However, the management of our Company monitors interest rate exposure and will consider hedging significant interest rate exposure should the need arise.

Other price risk

Our Group’s available-for-sale investment was measured at fair value as at 31 March 2007. Therefore, our Group was exposed to equity security price risk. The management closely monitors the performance of our Group’s investments and would consider risk management actions should the need arise.

Credit risk

Our Group’s maximum exposure to credit risk in the event of the counterparties’ failure to perform their obligations as at each of the balance sheet dates in relation to each class of recognised financial assets is the carrying amounts of those assets as stated in the combined balance sheet. In order to minimise the credit risk, management of our Group has delegated a team responsible for determination of credit limits, credit approvals and other monitoring procedures to ensure that follow-up action is taken to recover overdue debts. In addition, our Group reviews the recoverable amount of each individual trade receivable and other receivables at each balance sheet date to ensure that adequate impairment losses are made for irrecoverable amounts. In this regard, the Directors consider that our Group’s credit risk is significantly reduced. Our Group has no significant concentration of credit risk, with exposure spread over a number of counterparties and customers.

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FINANCIAL INFORMATION

Our Group’s bank balances are deposited with banks with high credit-ratings, so our Group has limited credit risk on liquid funds.

Liquidity risk

In the management of the liquidity risk, our Group monitors and maintains a level of cash and cash equivalents deemed adequate by the management to finance our Group’s operations and mitigate the effects of fluctuations in cash flows. The management of our Company monitors the utilisation of bank borrowings and ensures compliance with loan covenants.

Our Group relies on bank borrowings as a significant source of liquidity. As at 31 March 2007, 2008 and 2009, our Group has available unutilised short-term bank loan facilities of approximately HK$161,840,000, HK$91,471,000 and HK$268,723,000, respectively.

DISCLOSURE REQUIRED UNDER THE LISTING RULES

Our Directors have confirmed that, as at the Latest Practicable Date, there are no circumstances that would give rise to a disclosure requirement under Rules 13.13 to 13.19 of the Listing Rules.

PROPERTY INTERESTS

As at the Latest Practicable Date, we owned one property located in the PRC with an aggregate floor area of approximately [159 sq.m.] for office uses and leased [31] properties located in Hong Kong, Macau, PRC and Qatar with an aggregate floor area of approximately [4,489] sq.m. for office, staff quarter, carpark and warehouse uses. For more details of our leased properties, please refer to the valuation report as set out in Appendix IV in this document.

The table below shows the reconciliation of aggregate amounts of land and buildings from our Group’s audited combined balance sheet as at 31 March 2009 to the unaudited net book value of our Group’s property interests as at 30 June 2009.

Net book value of land and building as at 31 March 2009 Movements for the three months ended 30 June 2009 – Depreciation and amortisation Net Book Value as at 30 June 2009 Valuation surplus Valuation as at 30 June 2009 per Appendix IV to this document	HK$’000 4,368 (25) 4,343 287 4,630

– 191 –

FINANCIAL INFORMATION

UNAUDITED PROFIT FORECAST FOR SIX MONTHS ENDING 30 SEPTEMBER 2009[(1)]

Forecast combined profit attributable to equity holders of our Company[(2)] . . . . . . . . . . . . . . . . . Not less than HK$[�] million

Notes:

Pursuant to Rule 11.18 of the Listing Rules, our Company has given an undertaking to the Stock Exchange that the interim financial statements of our Company for the six months ending 30 September 2009 will be audited.
The forecast combined profit attributable to equity holders of our Company for the six months ending 30 September 2009 is extracted from the section headed “Financial information – Profit forecast for the six months ending 30 September 2009” in this document. The bases and assumptions on which the above profit forecast has been prepared are summarised in Appendix III to this document. The forecast combined profit attributable to equity holders of our Company for the six months ending 30 September 2009 is based on the unaudited combined results of our Group for the three months ended 30 June 2009 and a forecast of the combined results of our Group for the remaining three months ending 30 September 2009.

DIVIDEND POLICY

We paid our pre-IPO dividends using net cash generated from our operating activities and did not obtain external funding for the distributions. The Directors confirm that payments of the aforementioned pre-IPO dividends have all been settled before Listing.

Our Directors intend to declare dividends, if any, in Hong Kong dollars with respect to Shares on a per Share basis and will pay such dividends in Hong Kong dollars. Any final dividend for a financial year will be subject to the Shareholders’ approval. Our Directors consider that dividends to be declared and paid in future by our Group will depend on a number of factors, including our results of operations, financial conditions, capital requirements, prevailing economic climate and other factors that our Directors may deem relevant at such time. At present, our Directors intend, subject to certain limitations, and in the absence of any circumstances which might reduce the amount available for distribution whether by losses or otherwise, to distribute to the Shareholders approximately [40]% of our profits available for distribution for the financial years subsequent to the Listing. Such declarations of dividends, however, will only be recommended by our Directors after taking into account, among other things, our results of operations, cashflows and financial condition, operating and capital requirements, the amount of distributable profits based on HKFRS, the Memorandum and Articles of Association, the Companies Law, applicable laws and regulations and such other factors which our Directors may deem relevant. There is, however, no assurance that dividends of such amount or any amount will be declared or distributed in any year.

– 192 –

FINANCIAL INFORMATION

RECENT DEVELOPMENTS

The pressure experienced by global capital and credit markets that began in the second half of 2007 continues and substantially increased during the second half of 2008. Concerns over the availability and cost of credit, the U.S. mortgage market, energy costs, inflation, and a declining U.S. real estate market have contributed to increased volatility and diminished expectations for the global economy and the financial markets going forward. These factors, combined with declining business and increased unemployment in the United States and Europe, have precipitated a recession worldwide. The PRC and international equity markets have also been experiencing heightened volatility. These events and the continuing upheavals have resulted in an economic slowdown, which has in turn affected corporates’ spending preferences and patterns including property developers and hotel owners.

We believe we managed to continue to maintain profitability despite the economic downturn primarily as a result of our experienced management team, proven track record and excellent cost-saving measures by having arrangements with major suppliers and subcontractors.

Furthermore, we believe our revenue and net profit level will improve in subsequent periods as a result of (i) an expected stabilisation and recovery from the economic downturn during the later part of 2009, thereby improving sentiment of property developers and hotel owners to spend on fitting-out works, (ii) our development in the business of sourcing and distribution of interior decorative materials; and (iii) our further expansion into new markets such as Qatar and Abu Dhabi.

RELATED PARTY TRANSACTIONS

With respect to the related parties transactions set out in note 33 of section (A) to the accountants’ report in Appendix I to this document, our Directors confirm that these transactions were conducted on normal commercial terms and/or that such terms that were no less favourable to us than terms available from Independent Third Parties which are fair and reasonable and in the interest of the Shareholders as a whole.

DISTRIBUTABLE RESERVES

Our Company was incorporated on 27 April 2009 and has not carried out any business since the date of its incorporation save for investment holdings and the transactions related to the Reorganisation. Accordingly, save for the special reserve of HK$66,139,220 arising from the Reorganisation, our Company has no reserve available for distribution to the Shareholders as at the Latest Practicable Date.

– 193 –

FINANCIAL INFORMATION

NO MATERIAL ADVERSE CHANGE

Our Directors have confirmed that, up to the Latest Practicable Date, there has been no material adverse change in our financial or trading position since 31 March 2009, the end of period reported in the accountants’ report set out in Appendix I to this document, and there has been no event since 31 March 2009 which would materially affect the information shown in the accountants’ report set out in Appendix I to this document.

– 194 –

FUTURE PLANS

FUTURE PLANS AND PROSPECTS

Our objective is to become a global fitting-out contractor having significant presence in other countries in addition to Hong Kong, Macau and China. We intend to achieve this through our business strategies, details of which are set out in the section headed “Business – Business strategies” in this document.

USE OF PROCEEDS

approximately HK$[�] million (equivalent to approximately [�]% of the total estimated net proceeds) to finance our future fitting-out projects in the PRC, which will include procurement of equipments, hiring of additional staff, and payments of start-up costs for new projects such as prepayment of subcontracting fees and material purchase costs. As at the Latest Practicable Date, our Group is in the stage of bidding for the tenders and tenders for [12] fitting-out projects in the PRC had been submitted;
approximately HK$[�] million (equivalent to approximately [�]% of the total estimated net proceeds) to set up our own procurement and pre-fabrication facility and for our R&D developments as more particularised in the section headed “Business – Business strategies” in this document;
approximately HK$[�] million (equivalent to approximately [�]% of the total estimated net proceeds) to finance our future fitting-out projects in the Middle East, which will include procurement of equipments, hiring of additional staff, and payments of start-up costs for new projects such as prepayment of subcontracting fees and material purchase costs. As at the Latest Practicable Date, our Group is in the stage of bidding for the tenders and tenders for [12] fitting-out projects in the Middle East had been submitted;
approximately HK$[�] million (equivalent to approximately [�]% of the total estimated net proceeds) as reserve for potential future acquisitions. As at the Latest Practicable Date, the Directors confirm that our Company has not entered into any agreement or negotiation nor do we have any definite plans at present in relation to any potential acquisition;
approximately HK$[�] million (equivalent to approximately [�]% of the total estimated net proceeds) to finance our fitting-out projects in Hong Kong and Macau;
approximately HK$[�] million (equivalent to approximately [�]% of the total estimated net proceeds) for our marketing activities; and

– 195 –

FUTURE PLANS

approximately HK$[�] million (equivalent to approximately [�]% of the total estimated net proceeds) for working capital requirements and other general corporate purposes.

– 196 –

APPENDIX I

ACCOUNTANTS’ REPORT

The following is the text of a report, prepared for the purpose of incorporation in this document, received from the independent reporting accountants, Deloitte Touche Tohmatsu, Certified Public Accountants, Hong Kong. As described in the section headed “Documents available for inspection” in Appendix VII to this document, a copy of the accountants’ report is available for inspection.

==> picture [80 x 37] intentionally omitted <==

[�] 2009

The Directors

Sundart International Holdings Limited ICBC International Capital Limited

Dear Sirs,

We set out below our report on the financial information (the “Financial Information”) regarding Sundart International Holdings Limited (the “Company”) and its subsidiaries (hereinafter collectively referred to as the “Group”) for each of the three years ended 31st March, 2009 (the “Relevant Periods”) for inclusion in the prospectus of the Company dated 11th August, 2009 (the “Prospectus”) in connection with the proposed listing of the Company’s shares on the Main Board of The Stock Exchange of Hong Kong Limited (the “Stock Exchange”).

The Company was incorporated as an exempted company and registered in the Cayman Islands with limited liability under the Companies Law, Cap 22 (Law 1961, as consolidated and revised) of the Cayman Islands on 27th April, 2009. Pursuant to a corporate reorganisation (“Reorganisation”), as more fully explained in the paragraph headed “History, reorganisation and group structure” to the Prospectus, the Company became the holding company of the companies now comprising the Group on 3rd August, 2009.

As at the date of this report, the particulars of the Company’s subsidiaries are as follows:

		Equity interest	Equity interest			Issued and fully
		attributable to				paid share
	Place and date of	the Group as at			Date of	capital/paid up
	incorporation/		31st March,		this	registered
Name of the company	establishment	2007	2008	2009	report	capital	Principal activities
Sundart Holdings	British Virgin Islands	100%	100%	100%	100%	US$5,100	Investment holding
Limited (“Sundart	(“BVI”)
Holdings”)	21st May, 2001
Sundart Investments	Hong Kong	100%	100%	100%	100%	HK$1,000	Investment holding
Limited (“Sundart	7th April, 2005
Investments “)

– I-1 –

APPENDIX I

ACCOUNTANTS’ REPORT

		Equity interest	Equity interest			Issued and fully
		attributable to				paid share
	Place and date of	the Group as at			Date of	capital/paid up
	incorporation/		31st March,		this	registered
Name of the company	establishment	2007	2008	2009	report	capital	Principal activities
Sundart Timber	Hong Kong	100%	100%	100%	100%	HK$46,510,000	Investment holding
Products Company	10th January, 1995						and supply and
Limited (“Sundart							installation of
Timber”)							timber doors and
							floorsets and
							interior
							fitting-out works
Sundart Investments	Hong Kong	100%	100%	100%	100%	HK$17,000	Investment holding
(Middle East)	4th November, 2002
Limited (formerly
known as Giovanni
& Company Limited)
(“Sundart Middle
East”)
Sundart International	Hong Kong	100%	100%	100%	100%	HK$10,000	Sourcing and
Supply Limited	4th November, 2002						distribution of
(formerly known as							interior
Sundart Home							decorative
Planner Limited)							materials
(“Sundart
International”)
Sundart Engineering &	The People’s	100%	100%	100%	100%	HK$28,000,000	Supply and
Contracting (Beijing)	Republic of China						installation of
Limited# (“Sundart	(“PRC”)						timber doors and
Beijing”)	19th September 2003						floorsets and
							interior
							fitting-out works
Sundart Engineering	Macau	100%	100%	100%	100%	MOP$100,000	Supply and
Services (Macau)	18th March, 2005						installation of
Limited (“Sundart							timber doors and
Macau”)							floorsets and
							interior
							fitting-out works
Sundart Products	BVI	N/A	N/A	100%	100%	US$1	Investment holding
Limited (“Sundart	11th November, 2008
Products”)
Sundart Development	BVI	N/A	N/A	100%	100%	US$1	Investment holding
Limited (“Sundart	21st May, 2008
Development”)
Sundart Engineering	Hong Kong	100%	N/A	N/A	N/A	HK$6,666,667	Supply and
Limited##	12th September						installation of
(“Sundart	1986						timber doors and
Engineering”)							floorsets and
							interior
							fitting-out works
Sundart Build Idea	Hong Kong	N/A	65%	N/A	N/A	HK$1,000	Inactive
Limited###	15th August, 2007
(“Sundart Build
Idea”)

The entity is a wholly foreign owned enterprise established in the PRC.

Sundart Engineering was disposed of to an independent third party during the year ended 31st March, 2008 as set out in note 28 of section (A).

Sundart Build Idea was deregistered during the year ended 31st March, 2009.
Other than Sundart Holdings, all of the Company’s subsidiaries are indirectly held by the Company.

– I-2 –

APPENDIX I ACCOUNTANTS’ REPORT

All the companies within the Group, except Sundart Beijing, adopt 31st March as financial year end date. Sundart Beijing adopts 31st December as financial year end date.

No statutory audited financial statements have been prepared for the Company, Sundart Products and Sundart Development since their respective dates of incorporation, as these companies have not carried on any business other than acting as investment holding companies and they are incorporated in country where there is no statutory audit requirement.

No statutory audited financial statements have been issued for Sundart Build Idea since its incorporation.

The audited financial statements of Sundart Beijing for each of the three years ended 31st December 2008 were prepared in accordance with the relevant accounting principles and financial regulations applicable to enterprises established in the PRC and were audited by 有限責任公司 , the certified public accountants registered in the PRC.

We have acted as statutory auditor of Sundart Investments, Sundart Timber, Sundart Middle East and Sundart International for each of the three years ended 31st March, 2009.

We have acted as statutory auditor of Sundart Engineering for the year ended 31st March, 2007.

We have audited the financial statements of Sundart Macau for each of the three years ended 31st March 2009.

The Financial Information of the Group for the Relevant Periods set out in this report has been prepared from the audited consolidated financial statements of Sundart Holdings (the “Underlying Financial Statements”) which are prepared in accordance with Hong Kong Financial Reporting Standards issued by the Hong Kong Institute of Certified Public Accountants (“HKICPA”) on the basis set out in Note 1 to the Financial Information. No adjustments were deemed necessary by us to the Underlying Financial Statements in preparing our report for inclusion in the Prospectus.

We have audited the Underlying Financial Statements in accordance with the Hong Kong Standards on Auditing issued by HKICPA and examined the Underlying Financial Statements in accordance with the Auditing Guideline 3.340 “Prospectuses and the Reporting Accountant” as recommended by the HKICPA.

The Underlying Financial Statements are the responsibility of the directors of Sundart Holdings who approve their issues. The directors of the Company are responsible for the contents of the Prospectus in which this report is included. It is our responsibility to compile the Financial Information set out in this report from the Underlying Financial Statements, to form an independent opinion on the Financial Information and to report our opinion to you.

In our opinion, on the basis of presentation set out in Note 1 to the Financial Information, the Financial Information gives, for the purpose of this report, a true and fair view of the state of affairs of the Group as at 31st March, 2007, 2008 and 2009 and of the combined results and combined cash flows of the Group for the Relevant Periods.

– I-3 –

APPENDIX I

ACCOUNTANTS’ REPORT

(A) FINANCIAL INFORMATION

Combined income statements

Year ended 31st March, 2007 2008 2009 HK$’000 HK$’000 HK$’000 921,334 1,443,742 1,465,230 (790,203) (1,306,520) (1,260,105) 131,131 137,222 205,125 1,838 3,274 2,627 2,554 379 – (40,366) (36,050) (35,659) (4,920) (1,266) (1,656) (7,413) (10,984) (2,920) 82,824 92,575 167,517 (12,382) (12,071) (23,810) 70,442 80,504 143,707 36,800 25,000 113,000 9.98 0.30 0.40	Year ended 31st March, 2007 2008 2009 HK$’000 HK$’000 HK$’000 921,334 1,443,742 1,465,230 (790,203) (1,306,520) (1,260,105) 131,131 137,222 205,125 1,838 3,274 2,627 2,554 379 – (40,366) (36,050) (35,659) (4,920) (1,266) (1,656) (7,413) (10,984) (2,920) 82,824 92,575 167,517 (12,382) (12,071) (23,810) 70,442 80,504 143,707 36,800 25,000 113,000 9.98 0.30 0.40	Year ended 31st March, 2007 2008 2009 HK$’000 HK$’000 HK$’000 921,334 1,443,742 1,465,230 (790,203) (1,306,520) (1,260,105) 131,131 137,222 205,125 1,838 3,274 2,627 2,554 379 – (40,366) (36,050) (35,659) (4,920) (1,266) (1,656) (7,413) (10,984) (2,920) 82,824 92,575 167,517 (12,382) (12,071) (23,810) 70,442 80,504 143,707 36,800 25,000 113,000 9.98 0.30 0.40
131,131 1,838 2,554 (40,366) (4,920) (7,413) 82,824 (12,382)	137,222 3,274 379 (36,050) (1,266) (10,984) 92,575 (12,071)	205,125 2,627 – (35,659 (1,656 (2,920
		167,517 (23,810
70,442 36,800 9.98	80,504 25,000 0.30

– I-4 –

APPENDIX I

ACCOUNTANTS’ REPORT

Combined balance sheets

As at 31st March, 2007 2008 2009 HK$’000 HK$’000 HK$’000 4,010 – – 1,192 5,135 6,000 746 746 746	As at 31st March, 2007 2008 2009 HK$’000 HK$’000 HK$’000 4,010 – – 1,192 5,135 6,000 746 746 746	As at 31st March, 2007 2008 2009 HK$’000 HK$’000 HK$’000 4,010 – – 1,192 5,135 6,000 746 746 746
5,948 163,205 171,496 83,755 3,083 5,000 5,506 25,144 457,189 130,347 996 – 6,474 12,365 122,326 272,508 184,681	5,881 285,540 141,287 111,673 1,293 – 70,790 81,064 691,647 271,766 370 – 10,302 22,653 148,362 453,453 238,194	6,746
		320,047 70,056 114,914 43 – 809 191,074
		696,943
		353,520 2,291 5,181 15,512 35,017 26,667
		438,188
		258,755
190,629	244,075	265,501

1 173,845 173,846 16,500 283 16,783	40 231,924 231,964 11,666 445 12,111	40 263,437
		263,477
		1,667 357
		2,024
190,629	244,075	265,501

– I-5 –

APPENDIX I

ACCOUNTANTS’ REPORT

Combined statements of changes in equity

Share capital HK$’000 1	Share premium HK$’000 66,799	Legal reserve Translation reserve Accumulated profits HK$’000 (Note) HK$’000 HK$’000 – 509 71,761	Legal reserve Translation reserve Accumulated profits HK$’000 (Note) HK$’000 HK$’000 – 509 71,761	Legal reserve Translation reserve Accumulated profits HK$’000 (Note) HK$’000 HK$’000 – 509 71,761	Total HK$’000 139,070 1,306 (172) 70,442 71,576 (36,800) 173,846 2,013 562 80,504 83,079 39 – (25,000) 231,964 806 143,707 144,513 (113,000) 263,477
– – – – – 1 – – – – 39 – – 40 – – – –	– – – − − 66,799 – – – – – – – 66,799 – – – –	– – – – – – – – – – – 49 – 49 – – – –	1,306 (172) – 1,134 – 1,643 2,013 562 – 2,575 – – – 4,218 806 – 806 –	– – 70,442 70,442 (36,800) 105,403 – – 80,504 80,504 – (49) (25,000) 160,858 – 143,707 143,707 (113,000)	1,306 (172 70,442
					71,576 (36,800
					173,846
					2,013 562 80,504
					83,079 39 – (25,000
					231,964
					806 143,707
					144,513 (113,000
40	66,799	49	5,024	191,565

Note: In accordance with the provisions of the Macau Commercial Code, Sundart Macau is required to transfer a minimum of 25% of its profit for the Relevant Periods to a legal reserve before appropriation of dividends until the legal reserve equals half of the quota capital of Sundart Macau. This reserve is not distributable to the shareholders.

– I-6 –

APPENDIX I

ACCOUNTANTS’ REPORT

Combined cash flow statements

Year ended 31st March, 2007 2008 2009 HK$’000 HK$’000 HK$’000 82,824 92,575 167,517 710 624 753 (2,554) (379) – 41 (6) (8) – (197) – 344 1,165 – (808) (1,168) (932) 7,413 10,984 2,920 3,442 – – 91,412 103,598 170,250 (362) – – 21,837 (123,952) (34,507) (117,426) 30,650 71,231 (18,794) (28,819) (3,241) 38,372 – – 59,136 142,101 81,754 (252) (626) 1,921 (27,968) 3,828 5,210 (13,151) – 5,181 32,804 126,780 297,799 (7,413) (10,984) (2,920) – 1,895 127 (9,928) (242) (10,421) 15,463 117,449 284,585	Year ended 31st March, 2007 2008 2009 HK$’000 HK$’000 HK$’000 82,824 92,575 167,517 710 624 753 (2,554) (379) – 41 (6) (8) – (197) – 344 1,165 – (808) (1,168) (932) 7,413 10,984 2,920 3,442 – – 91,412 103,598 170,250 (362) – – 21,837 (123,952) (34,507) (117,426) 30,650 71,231 (18,794) (28,819) (3,241) 38,372 – – 59,136 142,101 81,754 (252) (626) 1,921 (27,968) 3,828 5,210 (13,151) – 5,181 32,804 126,780 297,799 (7,413) (10,984) (2,920) – 1,895 127 (9,928) (242) (10,421) 15,463 117,449 284,585	Year ended 31st March, 2007 2008 2009 HK$’000 HK$’000 HK$’000 82,824 92,575 167,517 710 624 753 (2,554) (379) – 41 (6) (8) – (197) – 344 1,165 – (808) (1,168) (932) 7,413 10,984 2,920 3,442 – – 91,412 103,598 170,250 (362) – – 21,837 (123,952) (34,507) (117,426) 30,650 71,231 (18,794) (28,819) (3,241) 38,372 – – 59,136 142,101 81,754 (252) (626) 1,921 (27,968) 3,828 5,210 (13,151) – 5,181 32,804 126,780 297,799 (7,413) (10,984) (2,920) – 1,895 127 (9,928) (242) (10,421) 15,463 117,449 284,585
91,412 (362) 21,837 (117,426) (18,794) 38,372 59,136 (252) (27,968) (13,151) 32,804 (7,413) – (9,928) 15,463	103,598 – (123,952) 30,650 (28,819) – 142,101 (626) 3,828 – 126,780 (10,984) 1,895 (242) 117,449	170,250 – (34,507 71,231 (3,241 – 81,754 1,921 5,210 5,181
		297,799 (2,920 127 (10,421
		284,585

– I-7 –

APPENDIX I

ACCOUNTANTS’ REPORT

Year ended 31st March, 2007 2008 2009 HK$’000 HK$’000 HK$’000 (346) (200) (1,516) 88 75 16 808 1,168 932 (1,873) (15) – – 5,197 – (5,506) (65,284) 69,981 (5,000) – – 37 – – (11,792) (59,059) 69,413 348,708 406,544 137,992 (306,917) (385,259) (269,686) – 39 – (36,800) (25,000) (113,000) 4,991 (3,676) (244,694) 8,662 54,714 109,304 15,427 25,144 81,064 1,055 1,206 706 25,144 81,064 191,074	Year ended 31st March, 2007 2008 2009 HK$’000 HK$’000 HK$’000 (346) (200) (1,516) 88 75 16 808 1,168 932 (1,873) (15) – – 5,197 – (5,506) (65,284) 69,981 (5,000) – – 37 – – (11,792) (59,059) 69,413 348,708 406,544 137,992 (306,917) (385,259) (269,686) – 39 – (36,800) (25,000) (113,000) 4,991 (3,676) (244,694) 8,662 54,714 109,304 15,427 25,144 81,064 1,055 1,206 706 25,144 81,064 191,074	Year ended 31st March, 2007 2008 2009 HK$’000 HK$’000 HK$’000 (346) (200) (1,516) 88 75 16 808 1,168 932 (1,873) (15) – – 5,197 – (5,506) (65,284) 69,981 (5,000) – – 37 – – (11,792) (59,059) 69,413 348,708 406,544 137,992 (306,917) (385,259) (269,686) – 39 – (36,800) (25,000) (113,000) 4,991 (3,676) (244,694) 8,662 54,714 109,304 15,427 25,144 81,064 1,055 1,206 706 25,144 81,064 191,074
(11,792) 348,708 (306,917) – (36,800) 4,991 8,662 15,427 1,055	(59,059) 406,544 (385,259) 39 (25,000) (3,676) 54,714 25,144 1,206	69,413
		137,992 (269,686 – (113,000
		(244,694
		109,304 81,064 706
25,144	81,064

– I-8 –

APPENDIX I

ACCOUNTANTS’ REPORT

NOTES TO THE FINANCIAL INFORMATION

1. BASIS OF PRESENTATION OF FINANCIAL INFORMATION

The combined income statements, combined statements of changes in equity and combined cash flow statements are prepared as if the current group structure had been in existence throughout the Relevant Periods, or since the respective dates of incorporation of the relevant entity, where this is a shorter period. The combined balance sheets as at 31st March, 2007, 2008 and 2009, present the assets and liabilities of the companies now comprising the Group which had been incorporated/established as at the relevant balance sheet dates as if the current group structure had been in existence at those dates. Pursuant to the Reorganisation completed on 3rd August, 2009, the Company was incorporated and interspersed between Sundart Holdings and the shareholders of Sundart Holdings and became the holding company of Sundart Holdings and its subsidiaries.

The Financial Information is presented in Hong Kong Dollars (“HKD”), which is the same as the functional currency of the Company and its subsidiary, Sundart Holdings.

2. APPLICATION OF NEW AND REVISED HONG KONG FINANCIAL REPORTING STANDARDS (“HKFRSs”)

The HKICPA has issued a number of Hong Kong Accounting Standards (“HKAS(s)”), Hong Kong Financial Reporting Standards (“HKFRS(s)”), amendments and interpretations (“HK(IFRIC) – INT”) (hereinafter collectively referred to as the “New HKFRSs”) which are effective for the Group’s financial year beginning on 1st April, 2009. For the purposes of preparing and presenting the Financial Information of the Relevant Periods, the Group has consistently adopted all these New HKFRSs throughout the Relevant Periods.

At the date of this report, the HKICPA has issued the following standards, amendments and interpretations that are not yet effective. The Group has not early applied these standards, amendments or interpretations.

HKFRSs (Amendments) Improvements to HKFRSs[1] HKFRSs (Amendments) Improvements to HKFRSs 2009[2] HKAS 1 (Revised) Presentation of financial statements[3] HKAS 23 (Revised) Borrowing costs[3] HKAS 27 (Revised) Consolidated and separate financial statements[4] HKAS 32 and HKAS 1 Puttable financial instruments and obligations arising on (Amendments) liquidation[3] HKAS 39 (Amendment) Eligible hedged items[4] HKFRS 1 First-time adoption of Hong Kong Financial Reporting Standards[4] HKFRS 1 & HKAS 27 (Amendments) Cost of investment in a subsidiary, jointly controlled entity or associate[3] HKFRS 2 (Amendment) Vesting conditions and cancellations[3] HKFRS 2 (Amendment) Group cash – settled share-based payment transactions[5] HKFRS 3 (Revised) Business combinations[4] HKFRS 7 (Amendment) Improving disclosures about financial instruments[3] HKFRS 8 Operating segments[3] HK(IFRIC) – INT 9 and HKAS 39 Embedded derivatives[6] (Amendments) HK(IFRIC) – INT 13 Customer loyalty programmes[7] HK(IFRIC) – INT 15 Agreements for the construction of real estate[3] HK(IFRIC) – INT 16 Hedges of a net investment in a foreign operation[8] HK(IFRIC) – INT 17 Distribution of non-cash assets to owners[4] HK(IFRIC) – INT 18 Transfer of assets from customers[9]

1 Effective for annual periods beginning on or after 1st January, 2009 except the amendments to HKFRS 5, effective for annual periods beginning on or after 1st July, 2009.
2 Effective for annual periods beginning on or after 1st January, 2009, 1st July, 2009 and 1st January, 2010, as appropriate.

– I-9 –

APPENDIX I

ACCOUNTANTS’ REPORT

3 Effective for annual periods beginning on or after 1st January, 2009.
4 Effective for annual periods beginning on or after 1st July, 2009.
5 Effective for annual periods beginning on or after 1st January, 2010.
6 Effective for annual periods ending on or after 30th June, 2009.
7 Effective for annual periods beginning on or after 1st July, 2008.
8 Effective for annual periods beginning on or after 1st October, 2008.
9 Effective for transfers on or after 1st July, 2009.

The adoption of HKFRS 3 (Revised) may affect the Group’s accounting for the business combination for which the acquisition date is on or after 1st April, 2010. HKAS 27 (Revised) will affect the Group’s accounting treatment on changes in the Group’s ownership interest in a subsidiary.

The directors of the Company anticipate that the application of the other new or revised standards, amendments or interpretations will have no material impact on the results and the financial position of the Group.

3. SIGNIFICANT ACCOUNTING POLICIES

The Financial Information has been prepared on the historical cost basis, except for investment properties and certain financial instruments, which are measured at fair values as explained in the accounting policies set out below. The Financial Information has been prepared in accordance with accounting policies which conform to HKFRSs issued by the HKICPA. In addition, the Financial Information includes applicable disclosures required by the Rules Governing the Listing of Securities on the Stock Exchange and by the Hong Kong Companies Ordinance.

Basis of combination

The Financial Information incorporates the financial information of the entities controlled by the Company (subsidiaries). Control is achieved where the 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 subsidiaries acquired or disposed of during the Relevant Periods are included in the combined 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 subsidiaries to bring their accounting policies into line with those used by other members of the Group.

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

Business combinations

The acquisition of a business is accounted for using the purchase method. The cost of the acquisition is measured at the aggregate of the fair values, at the date of exchange, of assets given, liabilities incurred or assumed, and equity instruments issued by the Group in exchange for control of the acquiree, plus any costs directly attributable to the business combination. The acquiree’s identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition under HKFRS 3 “Business Combinations” are recognised at their fair values at the acquisition date.

Goodwill arising on acquisition is recognised as an asset and initially measured at cost, being the excess of the cost of the business combination over the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities recognised. If, after reassessment, the Group’s interest in the net fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities exceeds the cost of the business combination, the excess is recognised immediately in profit or loss.

– I-10 –

APPENDIX I

ACCOUNTANTS’ REPORT

Goodwill

Goodwill arising on an acquisition of a business for which the agreement date is before 1st January, 2005 represents the excess of the cost of acquisition over the Group’s interest in the fair value of the identifiable assets and liabilities of the relevant subsidiary at the date of acquisition.

For previously capitalised goodwill arising on acquisitions after 1st April, 2001, the Group has discontinued amortisation from 1st April, 2005 onwards, and such goodwill is tested for impairment annually, and whenever there is an indication that the cash generating unit to which the goodwill relates may be impaired.

Capitalised goodwill arising on an acquisition of a subsidiary is presented separately in the combined balance sheet.

For the purposes 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 year, the cash-generating unit to which goodwill has been allocated is tested for impairment before the end of that financial year. When the recoverable amount of the 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 combined income statement. An impairment loss for goodwill is not reversed in subsequent periods.

On subsequent disposal of the relevant cash-generating unit, the attributable amount of goodwill capitalised is included in the determination of the amount of profit or loss on disposal.

Revenue recognition

Revenue from sales of goods including sourcing and distribution of interior decorative materials are recognised when goods are delivered and title has been passed.

Rental income, including rentals invoiced in advance, from properties under operating lease is recognised on a straight-line basis over the term of the relevant lease.

Property, plant and equipment

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

Land and buildings originally classified as investment properties carried at fair value is transferred to property, plant and equipment at a deemed cost equal to its fair value at the date of commencement of owner-occupation.

– I-11 –

APPENDIX I ACCOUNTANTS’ REPORT

Depreciation is provided to write off the cost or deemed cost of items of property, plant and equipment over their estimated useful lives and after taking into account their estimated residual value, using the straight-line method.

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the item) is included in the combined income statement in the year in which the item is derecognised.

Investment properties

Investment properties are properties held to earn rentals.

On initial recognition, investment properties are measured at cost, including any directly attributable expenditure. Subsequent to initial recognition, investment properties are measured at their fair values using the fair value model. Gains or losses arising from changes in the fair value of investment property are included in profit or loss for the year in which they arise.

An investment property is derecognised upon disposal or when the investment property is permanently withdrawn from use or no future economic benefits are expected from its disposals. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the combined income statement in the year in which the item is derecognised.

Supply and installation contracts including fitting-out works

When the outcome of a supply and installation contract including fitting-out works cannot be estimated reliably, contract revenue is recognised to the extent of contract costs incurred that it is probable will be recoverable. Contract costs incurred are recognised as expenses in the year in which they are incurred.

When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognised as an expense immediately.

Where contract costs incurred to date plus recognised profits less recognised losses exceed progress billings, the surplus is shown as amounts due from customers for contract work. For contracts where progress billings exceed contract costs incurred to date plus recognised profits less recognised losses, the surplus is shown as amounts due to customers for contract work. Amounts received before the related work is performed are included in the combined balance sheet, as a liability, as other payables. Amounts billed for work performed but not yet paid by the customers are included in the combined balance sheet under trade and other receivables.

Borrowing costs

All borrowing costs are recognised as and included in finance costs in the combined income statement in the year in which they are incurred.

Leasing

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

– I-12 –

APPENDIX I

ACCOUNTANTS’ REPORT

The Group as lessor

Rental income from operating leases is recognised in the combined income statement on a straight-line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised as an expense on a straight-line basis over the lease term.

The Group as lessee

Rentals payable under operating leases are charged to profit or loss on a straight-line basis over the term of the relevant lease. Benefits received and receivable as an incentive to enter into an operating lease are recognised as a reduction of rental expense over the lease term on a straight-line basis.

Land and building

The land and building elements of a lease of land and building are considered separately for the purpose of lease classification, unless the lease payments cannot be allocated reliably between the land and building elements, in which case, the entire lease is generally treated as a finance lease and accounted for as property, plant and equipment. To the extent the allocation of the lease payments can be made reliably, leasehold interests in land are accounted for as operating leases except for those that are classified and accounted for as investment properties under the fair value model.

Retirement benefits costs

Payments to the Mandatory Provident Fund Scheme (“MPF Scheme”) and other defined contribution retirement benefit schemes are charged as an expense when employees have rendered services entitling them to the contributions.

Taxation

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

The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as reported in the combined income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date.

Deferred tax is recognised on differences between the carrying amounts of assets and liabilities in the combined financial information and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.

Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.

The carrying amount of deferred tax asset is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

Deferred tax is calculated at the tax rates that are expected to apply in the year when the liability is settled or the asset is realised. Deferred tax is charged or credited to combined income statement, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity.

– I-13 –

APPENDIX I

ACCOUNTANTS’ REPORT

Financial instruments

Financial assets and financial liabilities are recognised on the combined balance sheet when a group entity becomes a party to the contractual provisions of the instrument. Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities are added to or deducted from the fair values of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in profit or loss.

Financial assets

The Group’s financial assets include available-for-sale financial assets and loans and receivables. All regular way purchases or sales of financial assets are recognised and derecognised on a trade date basis. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the time frame established by regulation or convention in the marketplace. The accounting policies adopted in respect of each category of financial assets are set out below.

Effective interest method

The effective interest method is a method of calculating the amortised cost of a financial asset and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial asset, or, where appropriate, a shorter period.

Interest income is recognised on an effective interest basis for debt instruments.

Available-for-sale financial assets

Available-for-sale financial assets are non-derivatives that are either designated or not classified as any of the other categories of financial assets. 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 loss on available-for-sale equity investment will not reverse in profit or loss in subsequent periods.

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. At each balance sheet date subsequent to initial recognition, receivables (including trade and other receivables, retentions receivable, pledged bank deposits and bank balances) are carried at amortised cost using the effective interest method, less any identified impairment losses (see accounting policy on impairment loss of financial assets below).

Impairment of financial assets

Financial assets are assessed for indicators of impairment at each balance sheet date. Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial assets, the estimated future cash flows of the financial assets have been affected. For an available-for-sale equity investment, a significant or prolonged decline in the fair value of that investment below its cost is considered to be objective evidence of impairment.

For all other financial assets, objective evidence of impairment could include:

significant financial difficulty of the issuer or counterparty; or
default or delinquency in interest or principal payments; or

– I-14 –

APPENDIX I

ACCOUNTANTS’ REPORT

it becoming probable that the borrower will enter bankruptcy or financial re-organisation.

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

For financial assets carried at amortised cost, impairment loss is recognised in profit or loss when there is objective evidence that the asset is impaired, and is measured as the difference between the asset’s carrying amount and the present value of the estimated future cash flows discounted at the original effective interest rate.

Financial liabilities and equity

Financial liabilities and equity instruments issued by a group entity are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability and an equity instrument.

An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities.

Effective interest method

The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability, or, where appropriate, a shorter period.

Interest expense is recognised on an effective interest basis.

Financial liabilities

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

Equity instruments

Equity instruments are recorded at the proceeds received, net of direct issue costs.

Derecognition

Financial assets are derecognised when the rights to receive cash flows from the assets expire or, the financial assets are transferred and the Group has transferred substantially all the risks and rewards of ownership of the financial assets. On derecognition of a financial asset, the difference between the asset’s carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss that had been recognised directly in equity is recognised in profit or loss.

– I-15 –

Financial liabilities are derecognised when the obligation specified in the relevant contract is discharged, cancelled or expired. The difference between the carrying amount of the financial liability derecognised and the consideration paid and payable is recognised in profit or loss.

Foreign currencies

In preparing the financial statements of each individual group entity, transactions in currencies other than the functional currency of that entity (foreign currencies) are recorded in the respective functional currency (i.e. the currency of the primary economic environment in which the entity operates) at the rates of exchange prevailing on the dates of the transactions. At each balance sheet date, monetary items denominated in foreign currencies are retranslated at the rates prevailing on the balance sheet date. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.

Exchange differences arising on the settlement of monetary items, and on the translation of monetary items, are recognised in profit or loss in the year in which they arise.

For the purposes of presenting the Financial Information, the assets and liabilities of the Group’s foreign operations are translated into the presentation currency of the Group (i.e. HKD) at the rate of exchange prevailing at the balance sheet date, and their income and expenses are translated at the average exchange rates for the year, unless exchange rates fluctuate significantly during the year, in which case, the exchange rates prevailing at the dates of transactions are used. Exchange differences arising, if any, are recognised as a separate component of equity (the translation reserve). Such exchange differences are recognised in profit or loss in the year in which the foreign operation is disposed of.

Impairment losses on tangible assets other than goodwill (see the accounting policy in respect of goodwill above)

At each balance sheet date, the Group reviews the carrying amounts of its 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.

When an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in prior years. A reversal of an impairment loss is recognised as income immediately.

4. CRITICAL ACCOUNTING JUDGEMENT AND KEY SOURCES OF ESTIMATION UNCERTAINTY

In the application of the Group’s accounting policies, which are described in note 3, the directors of the Company are required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. 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 key sources of estimation uncertainty and critical judgements that can significantly affect the amounts recognised in the Financial Information are set out below.

Critical judgement on determination of functional currency of the Company and Sundart Holdings

The Group operates in Hong Kong, Macau and PRC. Its revenue and expenses are denominated in the respective local currency of the subsidiaries it operates which includes HKD, Macau Pataca (“MOP”) and RMB which are the functional currencies of the respective subsidiaries. In determining the functional currency of the Company and Sundart Holdings, the management has carefully considered the currencies that mainly affect its revenue and operating expenses and the currency of funds from financing activities.

– I-16 –

APPENDIX I

ACCOUNTANTS’ REPORT

The management considered HKD is able to represent most faithfully the economic environment the Group operates because substantial revenue and financing activity of the Group are denominated in HKD and therefore selected HKD as the functional currency of the Company and Sundart Holdings.

Estimation uncertainty on supply and installation contracts including fitting-out works

The Group’s contract profit or loss arising from supply and installation contracts is estimated by reference to the latest available budgets of individual supply and installation contracts prepared by the management of the Company. The estimation of budget contract costs is based on management’s best estimates and judgments. Contract costs include costs for interior decorative materials, labour costs and subcontractor fees. If the price of interior decorative materials or the wages of labour or the subcontracting fees varied significantly in the coming months from the budgets, the contract profit for each of the individual projects will differ significantly from the estimated contract profit. If estimated costs exceed contract revenue, a contract loss will be recognised.

5. CAPITAL RISK MANAGEMENT

The Group’s policy is to maintain a strong capital base so as to maintain creditors’ and market confidence and to sustain future development of business. The Group’s overall strategy remains unchanged during the Relevant Periods.

The capital structure of the Group consists of debt, which include bank borrowings disclosed in note 24 and equity attributable to equity holders of the Company, comprising issued share capital, reserves and accumulated profits.

The directors of the Company review the capital structure on a continuous basis. As part of this review, the directors of the Company consider the cost of capital and the risks associated with each class of capital. Based on recommendations of the directors, the Group will balance its overall capital structure through the payment of dividends, new share issues as well as the issue of new debts or the repayment of existing debt.

6. FINANCIAL INSTRUMENTS

Categories of financial instruments

Financial assets Loans and receivables (including cash and cash equivalents) Available-for-sale investment Financial liabilities Amortised cost	As at 31st March, 2007 2008 2009 HK$’000 HK$’000 HK$’000 254,948 541,482 593,712 5,000 – – 259,948 541,482 593,712 270,015 340,555 269,171	As at 31st March, 2007 2008 2009 HK$’000 HK$’000 HK$’000 254,948 541,482 593,712 5,000 – – 259,948 541,482 593,712 270,015 340,555 269,171
		593,712

		269,171

Financial risk management objectives and policies

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

– I-17 –

APPENDIX I

ACCOUNTANTS’ REPORT

Market risk

Currency risk

The group entities collect most of the revenue and incur most of the expenditures in their respective functional currencies. The directors of the Company consider that the Group’s exposure to foreign currency exchange risk is insignificant as the majority of the Group’s transactions are denominated in the functional currency of each individual group entity.

The Group currently does not have a foreign currency hedging policy. However, the management of the Company monitors foreign exchange exposure and will consider hedging significant foreign currency exposure should the need arise.

The carrying amounts of the Group’s foreign currency denominated monetary assets and liabilities at the reporting date are as follows:

HKD against MOP United States Dollars (“USD”) Euro	Assets As at 31st March, 2007 2008 2009 HK$’000 HK$’000 HK$’000 16,231 61,551 82,493 – – 870 – – 10,737	Liabilities As at 31st March, 2007 2008 2009 HK$’000 HK$’000 HK$’000 81,692 24,316 17,471 5,277 3,069 1,248 1,500 – 2,377

Sensitivity analysis

As HKD is pegged to USD and the exchange rate of HKD/MOP is relatively stable, the Group does not expect any significant foreign currency exposure arising from the fluctuation of the USD/HKD and HKD/MOP exchange rates. As a result, the directors of the Company consider that the sensitivity of the Group’s exposures towards the change in foreign exchange rates between USD/HKD and HKD/MOP is minimal.

The following table details the Group’s sensitivity to a 5% increase and decrease in HKD against Euro. 5% is the sensitivity rate used by management in the assessment of the reasonably possible change in foreign exchange rates. The sensitivity analysis includes only outstanding Euro denominated monetary items and adjusts its translation at the year end for a 5% change in HKD/Euro exchange rate. A positive (negative) number below indicates an increase (decrease) in profit for the year where Euro strengthens 5% against HKD. For a 5% weakening of Euro against HKD there would be an equal and opposite impact on the profit for the year below:

(Decrease) increase in post-tax profit	Year 2007 HK$’000 (62)	ended 31st March, 2008 2009 HK$’000 HK$’000 – 349

In management’s opinion, the sensitivity analysis is unrepresentative of the inherent foreign exchange risk as the year end exposure does not reflect the exposure during the year.

Interest rate risk

The Group’s interest rate risk arises from pledged bank deposits, bank balances and bank borrowings. The Group is exposed to the fair value interest rate risk in relation to the fixed-rate pledged bank deposits. The Group is also exposed to cash flow interest rate risk in relation to variable-rate bank balances and bank

– I-18 –

APPENDIX I ACCOUNTANTS’ REPORT

borrowings (see note 24 for details). The Group does not have an interest rate hedging policy. However, the management of the Company monitors interest rate exposure and will consider hedging significant interest rate exposure should the need arise.

Sensitivity analysis

The sensitivity analyses below have been determined based on the exposure to interest rates for non-derivative instruments at the balance sheet dates. The Group’s interest rate risk exposure for bank deposits and bank balances is insignificant, therefore a sensitivity analysis is not presented. For variable-rate bank borrowings, the analysis is prepared assuming the amount of liability outstanding at the balance sheet date was outstanding for the whole year. A 50 basis point increase or decrease is used when reporting interest rate risk internally to key management personnel and represents management’s assessment of the reasonably possible change in interest rates.

If interest rates had been 50 basis points higher/lower and all other variables were held constant, the Group’s post-tax profits for the years ended 31st March, 2007, 2008 and 2009 would decrease/increase by approximately HK$584,000, HK$660,000 and HK$118,000 respectively.

Other price risk

The Group’s available-for-sale investment was measured at fair value as at 31st March, 2007. Therefore, the Group was exposed to equity security price risk before the investment was disposed of during the year ended 31st March, 2008. The management closely monitors the performance of the Group’s investments and would consider risk management actions should the need arise.

Sensitivity analysis

The sensitivity analyses below have been determined based on the exposure to equity price risks at 31st March, 2007. If the prices of the available-for-sale investment had been 5% higher/lower, investment valuation reserve as at 31st March, 2007 would increase/decrease by approximately HK$250,000 for the Group as a result of the changes in fair value of available-for-sale investment.

Credit risk

The Group’s maximum exposure to credit risk in the event of the counterparties’ failure to perform their obligations as at each of the balance sheet dates in relation to each class of recognised financial assets is the carrying amounts of those assets as stated in the combined balance sheet. In order to minimise the credit risk, management of the Company has delegated a team responsible for determination of credit limits, credit approvals and other monitoring procedures to ensure that follow-up action is taken to recover overdue debts. In addition, the Group reviews the recoverable amount of each individual trade receivable and other receivable at each balance sheet date to ensure that adequate impairment losses are made for irrecoverable amounts. In this regard, the directors of the Company consider that the Group’s credit risk is significantly reduced. Most of the customers and trade receivables of the Group are located in Hong Kong and Macau. The Group has no other significant concentration of credit risk, with exposure spread over a number of counterparties and customers.

The Group’s bank balances are deposited with banks with high credit-ratings, so the Group has limited credit risk on liquid funds.

Liquidity risk

In the management of the liquidity risk, the Group monitors and maintains a level of cash and cash equivalents deemed adequate by the management to finance the Group’s operations and mitigate the effects of fluctuations in cash flows. The management of the Company monitors the utilisation of bank borrowings and ensures compliance with loan covenants.

– I-19 –

The Group relies on bank borrowings as a significant source of liquidity. As at 31st March, 2007, 2008 and 2009, the Group had available unutilised short-term bank loan facilities of approximately HK$161,840,000, HK$91,471,000 and HK$268,723,000 respectively.

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

Less than 4 months HK$’000 99,816 996 62,036 162,848	Between 4 to 6 months HK$’000 3,279 – 34,659 37,938	Between 7 to 12 months HK$’000 6,920 – 29,589 36,509	Between 1 to 5 years Total undiscounted cash flows HK$’000 HK$’000 20,178 130,193 – 996 17,123 143,407 37,301 274,596	Between 1 to 5 years Total undiscounted cash flows HK$’000 HK$’000 20,178 130,193 – 996 17,123 143,407 37,301 274,596	Total carrying amount HK$’000 130,193 996 138,826
					270,015

144,170 370 73,437	10,192 – 31,057	11,620 – 46,623	14,175 – 11,904	180,157 370 163,021	180,157 370 160,028
217,977	41,249	58,243	26,079	343,548	340,555

204,392 2,291 9,783	7,446 – 13,732	11,028 – 3,372	15,680 – 1,675	238,546 2,291 28,562	238,546 2,291 28,334
216,466	21,178	14,400	17,355	269,399	269,171

Fair value

The fair values of financial assets and financial liabilities are determined in accordance with generally accepted pricing models based on discounted cash flow analysis, except for the fair value of unlisted mutual fund which was determined by reference to the quoted prices provided by a financial institution.

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

– I-20 –

APPENDIX I

ACCOUNTANTS’ REPORT

7. REVENUE AND SEGMENT INFORMATION

Revenue

Revenue represents the net amounts received and receivable for sourcing and distribution of interior decorative materials and fitting-out works rendered by the Group to outside customers, net of discounts. An analysis of the Group’s revenue for the Relevant Periods is as follows:

Revenue from fitting-out works Sourcing and distribution of interior decorative materials	2007 HK$’000 898,364 22,970 921,334	2008 HK$’000 1,443,742 – 1,443,742	2009 HK$’000 1,465,230 –
			1,465,230

Segment information

The Group reports the geographical segments by location of customers as the Group’s primary segment information. The Group’s customers are mainly located in Hong Kong, Macau and the PRC (excluding Hong Kong and Macau).

The following table provides an analysis of the Group’s results, assets and liabilities by geographical segments based on location of customers:

Combined income statement for the year ended 31st March, 2007

Revenue Segment result Unallocated corporate expenses Unallocated corporate income Gain on disposal of subsidiaries Finance costs Profit before taxation Income tax expenses Profit for the year	Hong Kong HK$’000 310,754 18,932 2,554	Macau HK$’000 500,493 84,324 –	PRC HK$’000 110,087 (2,694)	Combined HK$’000 921,334
				100,562
			–	(13,734) 855 2,554 (7,413)
				82,824 (12,382)
				70,442

– I-21 –

APPENDIX I

ACCOUNTANTS’ REPORT

Combined balance sheet as at 31st March, 2007

Hong Kong Macau HK$’000 HK$’000 ASSETS Segment assets 183,292 204,339 Unallocated corporate assets LIABILITIES Segment liabilities 55,629 64,885 Unallocated corporate liabilities Other information for the year ended 31st March, 2007 Hong Kong Macau PRC HK$’000 HK$’000 HK$’000 Additions of property, plant and equipment – – – Depreciation of property, plant and equipment 416 49 245 Write-off of trade and other receivables 306 – 38 Loss on disposal of property, plant and equipment – – – Combined income statement for the year ended 31st March, 2008 Hong Kong Macau HK$’000 HK$’000 Revenue 445,686 939,106 Segment result 7,961 104,314 Unallocated corporate expenses Unallocated corporate income Gain on disposal of subsidiaries 379 – Finance costs Profit before taxation Income tax expenses Profit for the year	PRC HK$’000 31,435 16,936 Unallocated HK$’000 346 – – 41 PRC HK$’000 58,950 (919)	Combined HK$’000 419,066 44,071 463,137 137,450 151,841 289,291 Combined HK$’000 346 710 344 41 Combined HK$’000 1,443,742 111,356 (9,540) 1,364 379 (10,984) 92,575 (12,071) 80,504
	–	(9,540 1,364 379 (10,984
		92,575 (12,071

– I-22 –

APPENDIX I

ACCOUNTANTS’ REPORT

Combined balance sheet as at 31st March, 2008

Hong Kong Macau PRC HK$’000 HK$’000 HK$’000 ASSETS Segment assets 212,342 290,761 39,909 Unallocated corporate assets LIABILITIES Segment liabilities 92,319 168,247 21,233 Unallocated corporate liabilities	Combined HK$’000 543,012 154,516
	697,528

	281,799 183,765
	465,564

Other information for the year ended 31st March, 2008

	Hong Kong	Macau	PRC	Unallocated	Combined
	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000
Additions of
property, plant and
equipment	–	–	–	200	200
Depreciation of
property, plant and
equipment	265	49	310	–	624
Write-off of trade
and other
receivables	1,165	–	–	–	1,165

Combined income statement for the year ended 31st March, 2009

Revenue Segment result Unallocated corporate expenses Unallocated corporate income Finance costs Profit before taxation Income tax expenses Profit for the year	Hong Kong HK$’000 867,908 118,676	Macau HK$’000 547,786 66,463	PRC HK$’000 49,536 (3,900)	Combined HK$’000 1,465,230

				181,239
				(11,734 932 (2,920
				167,517 (23,810
				143,707

– I-23 –

APPENDIX I

ACCOUNTANTS’ REPORT

Combined balance sheet as at 31st March, 2009

Hong Kong Macau PRC HK$’000 HK$’000 HK$’000 ASSETS Segment assets 287,417 187,748 29,502 Unallocated corporate assets LIABILITIES Segment liabilities 181,800 163,298 30,199 Unallocated corporate liabilities	Combined HK$’000 504,667 199,022
	703,689

	375,297 64,915
	440,212

Other information for the year ended 31st March, 2009

Additions of property, plant and equipment Depreciation of property, plant and equipment	Hong Kong HK$’000 – 263	Macau HK$’000 – 201	PRC HK$’000 – 289	Unallocated HK$’000 1,516 –	Combined HK$’000 1,516 753

Business segments

For management purposes, the Group’s three geographic divisions are currently organised into four operating divisions, including fitting-out works for hotel and serviced apartment, residential buildings and others and sourcing and distribution of interior decorative materials. The following table provides an analysis of the Group’s sales by business operations:

Fitting-out works – Hotel and serviced apartment – Residential buildings – Others (including schools, commercial buildings and shopping arcades) Sourcing and distribution of interior decorative materials	Revenue from external customers Year ended 31st March, 2007 2008 2009 HK$’000 HK$’000 HK$’000 528,156 1,025,647 843,477 338,840 343,779 598,251 31,368 74,316 23,502 22,970 – – 921,334 1,443,742 1,465,230	Revenue from external customers Year ended 31st March, 2007 2008 2009 HK$’000 HK$’000 HK$’000 528,156 1,025,647 843,477 338,840 343,779 598,251 31,368 74,316 23,502 22,970 – – 921,334 1,443,742 1,465,230
		1,465,230

– I-24 –

APPENDIX I

ACCOUNTANTS’ REPORT

The following is an analysis of the carrying amount of segment assets and additions to property, plant and equipment, analysed by the business operations in which the assets are used for:

Fitting-out works – Hotel and serviced apartment – Residential buildings – Others Sourcing and distribution of interior decorative materials Unallocated	Carrying amount of segment assets As at 31st March, 2007 2008 2009 HK$’000 HK$’000 HK$’000 227,422 343,714 281,842 184,319 174,716 203,522 7,325 24,582 19,303 – – – 44,071 154,516 199,022 463,137 697,528 703,689	Additions to property, plant and equipment As at 31st March, 2007 2008 2009 HK$’000 HK$’000 HK$’000 – – – – – – – – – – – – 346 200 1,516 346 200 1,516	Additions to property, plant and equipment As at 31st March, 2007 2008 2009 HK$’000 HK$’000 HK$’000 – – – – – – – – – – – – 346 200 1,516 346 200 1,516
			1,516

8. OTHER INCOME

Interest income Rental income Others	Year 2007 HK$’000 808 174 856 1,838	ended 31st March, 2008 2009 HK$’000 HK$’000 1,168 932 127 – 1,979 1,695 3,274 2,627	ended 31st March, 2008 2009 HK$’000 HK$’000 1,168 932 127 – 1,979 1,695 3,274 2,627
			2,627

9. FINANCE COSTS

Finance costs represent interest on bank borrowings wholly repayable within five years.

– I-25 –

APPENDIX I

ACCOUNTANTS’ REPORT

10. DIRECTORS’ EMOLUMENTS AND EMPLOYEES’ EMOLUMENTS

The emoluments paid or payable to each of the directors of the Company during the Relevant Periods were as follows:

Salaries and other benefits Executive directors: Mr. Chan William (“Mr. Chan”) Mr. Ng Tak Kwan (“Mr. Ng”) Mr. Leung Kai Ming (“Mr. Leung”) (Note) Mr. Wong Kim Hung, Patrick (“Mr. Wong”) Mr. Yip Chun Kwok, Sunny Independent non-executive directors: Mr. To King Yan, Adam Mr. Wong Hoi Ki Mr. Wong Kwok Wai, Albert Retirement benefit scheme contributions Executive directors: Mr. Chan Mr. Ng Mr. Leung Mr. Wong Mr. Yip Chun Kwok Independent non-executive directors: Mr. To King Yan, Adam Mr. Wong Hoi Ki Mr. Wong Kwok Wai, Albert	Year 2007 HK$’000 – 1,080 339 840 – – – – 2,259 Year 2007 HK$’000 – 12 4 12 – – – – 28	ended 31st March, 2008 2009 HK$’000 HK$’000 – 960 1,200 1,200 – – 840 840 – 900 – – – – – – 2,040 3,900 ended 31st March, 2008 2009 HK$’000 HK$’000 – 12 12 12 – – 12 12 – 12 – – – – – – 24 48	ended 31st March, 2008 2009 HK$’000 HK$’000 – 960 1,200 1,200 – – 840 840 – 900 – – – – – – 2,040 3,900 ended 31st March, 2008 2009 HK$’000 HK$’000 – 12 12 12 – – 12 12 – 12 – – – – – – 24 48
			48

Note: Mr. Leung resigned as an executive director of Sundart Holdings on 14th July, 2006 and was appointed as an executive director of the Company on 1st April, 2009.

– I-26 –

APPENDIX I

ACCOUNTANTS’ REPORT

The emoluments for the five individuals with the highest emoluments in the Group included two, two and one executive directors of the Company for the years ended 31st March, 2007, 2008 and 2009, respectively. The emoluments of these executive directors are included in the disclosure set out above. The emoluments of the remaining individuals were as follows:

Salaries and other benefits Retirement benefit scheme contributions	Year 2007 HK$’000 2,162 36 2,198	ended 31st March, 2008 2009 HK$’000 HK$’000 2,970 5,748 23 36 2,993 5,784	ended 31st March, 2008 2009 HK$’000 HK$’000 2,970 5,748 23 36 2,993 5,784
			5,784

Their emoluments were within the following bands:

	Number of individuals	Number of individuals
	2007	2008	2009
Nil to HK$1,000,000	3	2	–
HK$1,000,001 to HK$1,500,000	−	1	3
HK$2,000,001 to HK$2,500,000	–	–	1

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

11. INCOME TAX EXPENSES

Year 2007 HK$’000 1,296 10,194	ended 31st March, 2008 2009 HK$’000 HK$’000 46 15,940 12,108 7,999	ended 31st March, 2008 2009 HK$’000 HK$’000 46 15,940 12,108 7,999
11,490 (31) – 647 616 276 – 276	12,154 14 (223) 1 (208) 196 (71) 125	23,939
		(31 – –
		(31
		(98 –
		(98
12,382	12,071	23,810

– I-27 –

ACCOUNTANTS’ REPORT

On 26th June, 2008, the Hong Kong Legislative Council passed the Revenue Bill 2008 which reduced corporate profits tax rate from 17.5% to 16.5% effective from the year of assessment 2008/2009. Therefore, Hong Kong Profits Tax is calculated at 16.5% (2007 and 2008: 17.5%) of the estimated assessable profit for the year. The deferred tax balance as at 31st March, 2008 has been adjusted to reflect the tax rate that are expected to apply to the respective periods when the asset is realised or the liability is settled.

Macau Profits Complementary Tax is calculated at the progressive rates from 3% to 12%, 9% to 12% and 9% to 12% of the estimated assessable profits for the years ended 31st March 2007, 2008 and 2009 respectively.

On 16th March, 2007, the PRC promulgated the Law of the PRC on Enterprise Income Tax (the “New Law”) by Order No. 63 of the President of the PRC. On 6th December, 2007, the State Council of the PRC issued Implementation Regulations of the New Law. The New Law and Implementation Regulations changed the tax rate from 33% to 25% from 1st January, 2008. The deferred tax balance has been adjusted to reflect the tax rates that are expected to apply to the respective periods when the asset is realised or the liability is settled. The applicable tax rates for Sundart Beijing from 1st April 2006 to 31st December 2007 and 1st January 2008 to 31 March 2009 are 33% and 25% respectively.

The tax charge for the year can be reconciled to the profit before taxation per the combined income statement as follows:

Profit before taxation Tax at the weighted average tax rate (Note) Tax effect of expenses not deductible for tax purpose Tax effect of income not taxable for tax purpose Under (over) provision in respect of prior years Tax effect of tax losses not recognised Utilisation of tax losses previously not recognised Decrease in opening deferred tax liability resulting from a decrease in applicable tax rate Others Tax charge for the year	Year 2007 HK$’000 82,824	ended 31st March, 2008 2009 HK$’000 HK$’000 92,575 167,517 10,490 24,296 869 201 (987) (174) (208) (31) 1,789 901 – (1,400) (71) – 189 17 12,071 23,810	ended 31st March, 2008 2009 HK$’000 HK$’000 92,575 167,517 10,490 24,296 869 201 (987) (174) (208) (31) 1,789 901 – (1,400) (71) – 189 17 12,071 23,810
	9,976 1,236 (199) 616 424 – – 329	10,490 869 (987) (208) 1,789 – (71) 189	24,296 201 (174 (31 901 (1,400 – 17
	12,382	12,071

Note: For the years ended 31st March, 2007, 2008 and 2009, the weighted average applicable tax rate for different jurisdictions are approximately 12%, 11% and 14% respectively. The weighted average applicable tax rate represents the weighted average tax rate in different jurisdictions in which the Group operates and is calculated on the basis of the profit or loss before taxation arising in these jurisdictions and on the statutory rates applicable.

– I-28 –

APPENDIX I

ACCOUNTANTS’ REPORT

12. PROFIT FOR THE YEAR

Profit for the year has been arrived at after charging (crediting): Auditor’s remuneration – Provision for the year – Overprovision in prior year Depreciation Net foreign exchange losses (gain) Net decrease in fair value of investment properties (included in other expenses) Loss (gain) on disposal of property, plant and equipment Gain on disposal of available-for-sale investment Operating lease payments in respect of rented properties Write off of trade and other receivables (included in other expenses) Bad debt recovery (included in other income) Staff costs – Gross staff costs (including directors’ emoluments) Less: Staff costs capitalised to contract costs	Year 2007 HK$’000 550 (93)	ended 31st March, 2008 2009 HK$’000 HK$’000 620 650 – –	ended 31st March, 2008 2009 HK$’000 HK$’000 620 650 – –
	457 710 349 3,442 41 – 2,896 344 (496) 53,561 (26,557)	620 624 (293) – (6) (197) 3,938 1,165 – 59,265 (35,653)	650 753 4 – (8) – 5,228 – (890) 73,142 (51,423)
	27,004	23,612	21,719

13. DIVIDENDS

Pursuant to the directors’ meeting of Sundart Holdings on 21st October, 2006 and 4th July, 2007, interim dividends of HK$368,000 and HK$250,000 per share amounting to HK$36,800,000 and HK$25,000,000 in total respectively, were declared and distributed to the then shareholders according to their respective shareholdings and recognised as distributions.

On 3rd December, 2008 and 11th March, 2009, Sundart Holdings declared interim dividends of HK$8,431 and HK$13,725 per share amounting to HK$43,000,000 and HK$70,000,000 in total respectively. The aggregate amount of HK$113,000,000 was distributed to the then shareholders according to their respective shareholdings and recognised as distributions.

14. EARNINGS PER SHARE

The calculation of basic earnings per share is based on the profit attributable to equity holders of the Company for the Relevant Periods and on the number of shares as follows:

Weighted average number of ordinary shares issued	Year 2007 7,057,815	ended 31st March, 2008 2009 268,351,244 359,948,571

Note: The number of shares for the purpose of calculating basic earnings per share during the Relevant Periods is based on the weighted average number of shares in issue adjusted for the 290,000,000 shares to be issued pursuant to the capitalisation issue.

– I-29 –

APPENDIX I

ACCOUNTANTS’ REPORT

There was no diluted earnings per share for the Relevant Periods as there were no potential ordinary shares in issue during the Relevant Periods.

15. INVESTMENT PROPERTIES

FAIR VALUE At 1st April, 2006 Exchange adjustments Net decrease in fair value recognised in the combined income statement Disposal of a subsidiary At 31st March, 2007 Exchange adjustments Transfer to property, plant and equipment At 31st March, 2008 and 31st March, 2009	HK$’000 12,070 319 (3,442) (4,937) 4,010 136 (4,146) –

As at 31st March, 2007, the Group has not yet completed the transfer of the title of the investment property with a carrying value of approximately HK$4,010,000. In the opinion of the directors of the Company, the absence of formal title to this investment property does not impair the value of the relevant investment property to the Group. The formal title to this investment property has been granted to the Group during the year ended 31st March, 2008.

On the date of the transfer of investment property to property, plant and equipment, the investment property was revalued by Greater China Appraisal Limited, Chartered Surveyors, which is not connected with the Group, at open market value on a continued use basis. The valuation method was based on the direct comparison approach by making reference to recent comparable sales transaction as available in the relevant market. At the date of transfer, the fair value of the investment property approximated to the carrying value.

The fair value of the Group’s investment property as at 1st April, 2006 and 31st March, 2007 has been determined by the directors of the Company. The valuation performed by the directors of the Company was arrived at by reference to recent market prices for similar properties in the same locations and conditions.

As at 31st March, 2007, the investment property was situated in the PRC under medium term leases and leased out under operating leases. The Group’s property interests held under operating leases to earn rental was measured using the fair value model and was classified and accounted for as investment property.

– I-30 –

APPENDIX I

ACCOUNTANTS’ REPORT

16. PROPERTY, PLANT AND EQUIPMENT

Land and building Leasehold improvements HK$’000 HK$’000 – 723 – 14 – – – – – –	Land and building Leasehold improvements HK$’000 HK$’000 – 723 – 14 – – – – – –	Furniture, fixtures and equipment HK$’000 5,295 46 346 (192) (12)	Motor vehicles HK$’000 478 9 – – –	Total HK$’000 6,496 69 346 (192) (12) 6,707 405 200 4,146 (75) (1,051) 10,332 116 1,516 (375) 11,589 4,838 37 710 (63) (7) 5,515 105 624 (6) (1,041) 5,197 6 753 (367) 5,589 1,192 5,135 6,000
– 261 – 4,146 – – 4,407 103 – – 4,510 – – – – – – 3 36 – – 39 1 102 – 142	737 28 – – – (314) 451 – 925 (52) 1,324 397 7 204 – – 608 25 129 – (314) 448 – 249 (52) 645	5,483 97 54 – – (737) 4,897 8 326 (23) 5,208 4,107 28 487 (63) (7) 4,552 71 418 – (727) 4,314 3 298 (15) 4,600	487 19 146 – (75) – 577 5 265 (300) 547 334 2 19 – – 355 6 41 (6) – 396 2 104 (300) 202	6,707 405 200 4,146 (75 (1,051
				10,332 116 1,516 (375
				11,589
				4,838 37 710 (63 (7
				5,515 105 624 (6 (1,041
				5,197 6 753 (367
				5,589
– 4,368 4,368	129 3 679	931 583 608	132 181 345

– I-31 –

APPENDIX I

ACCOUNTANTS’ REPORT

Depreciation is provided to write off the cost or deemed cost of items of property, plant and equipment over their estimated useful lives and after taking into account of their estimated residual value, using the straight line method, at the following rates per annum:

Land and building	2% or over the remaining term of lease, if shorter
Leasehold improvements	331⁄3% or over the remaining term of lease, if shorter
Furniture, fixtures and equipment	20% – 25%
Motor vehicles	20% – 331⁄3%

The land and building is situated in the PRC under medium term leases.

17. GOODWILL

	HK$’000
Carrying amount as at 1st April, 2006, 31st March, 2007,
31st March, 2008 and 31st March, 2009	746

Goodwill represents the excess of consideration paid over the fair value of net assets taken over on the acquisition of a subsidiary, Sundart Timber.

For the purpose of impairment test, the carrying amount of goodwill has been allocated to the supply and installation cash generating unit (“CGU”) of Sundart Timber.

The recoverable amount of CGU has been determined based on a value in use calculation. For each of the year ended 31st March, 2007, 2008 and 2009, the calculation uses cash flow projections based on the most recent financial budgets approved by management covering a 3-year period, 2-year period and 2-year period respectively and discount rate of 10%. Another key assumption for the value in use calculation is the budgeted gross margin, which is determined based on the unit’s past performance and management’s expectations for the market development. Management believes that any reasonably possible change in any of these assumptions would not cause the aggregate carrying amount of CGU to exceed the aggregate recoverable amount of CGU.

18. OTHER FINANCIAL ASSETS

Trade and other receivables and retentions receivable at the balance sheet date comprise receivables from third parties and a related party as set out in note 33.

Trade and other receivables

Trade receivables Less: allowance for doubtful debts Other receivables Total trade and other receivables	As at 31st March, 2007 2008 2009 HK$’000 HK$’000 HK$’000 126,068 261,055 242,250 (500) – –	As at 31st March, 2007 2008 2009 HK$’000 HK$’000 HK$’000 126,068 261,055 242,250 (500) – –	As at 31st March, 2007 2008 2009 HK$’000 HK$’000 HK$’000 126,068 261,055 242,250 (500) – –
	125,568 37,637	261,055 24,485	242,250 77,797
	163,205	285,540	320,047

– I-32 –

APPENDIX I

ACCOUNTANTS’ REPORT

The Group allows a credit period ranging from 14 days to 60 days to its trade customers. The following is an aged analysis of trade receivables (net of allowance for doubtful debts) at each balance sheet dates:

1 – 30 days 31 – 60 days 61 – 90 days Over 90 days	As at 31st March, 2007 2008 2009 HK$’000 HK$’000 HK$’000 79,274 190,991 223,802 42,437 56,042 7,185 20 – 5,865 3,837 14,022 5,398 125,568 261,055 242,250	As at 31st March, 2007 2008 2009 HK$’000 HK$’000 HK$’000 79,274 190,991 223,802 42,437 56,042 7,185 20 – 5,865 3,837 14,022 5,398 125,568 261,055 242,250
		242,250

Before accepting any new customer, the Group assesses the potential customer’s credit quality and defines credit limits by customers. Recoverability of the existing customers is reviewed by the Group regularly.

As at 31st March, 2007, 2008 and 2009, included in the Group’s trade receivable balances were receivables with aggregate carrying amount of approximately HK$15,223,000, HK$63,120,000 and HK$18,549,000 respectively which were past due at the reporting date for which the Group has not provided for impairment loss as the balances were either subsequently settled or there has not been a significant change in credit quality and the amounts are still considered recoverable. Accordingly, the directors of the Company believe that there is no further credit provision required in excess of the allowance for bad and doubtful debts. The Group does not hold any collateral over these balances.

Ageing of trade receivables which are past due but not impaired:

Overdue 1 – 30 days 31 – 60 days 61 – 90 days Over 90 days	As at 31st March, 2007 2008 2009 HK$’000 HK$’000 HK$’000 10,822 50,291 10,376 1,677 – 2,237 982 4,845 692 1,742 7,984 5,244 15,223 63,120 18,549	As at 31st March, 2007 2008 2009 HK$’000 HK$’000 HK$’000 10,822 50,291 10,376 1,677 – 2,237 982 4,845 692 1,742 7,984 5,244 15,223 63,120 18,549
		18,549

Movement in the allowance for doubtful debts

Balance at beginning of the year Amounts written off as uncollectible Balance at end of the year	As at 31st March, 2007 2008 2009 HK$’000 HK$’000 HK$’000 500 500 – – (500) – 500 – –	As at 31st March, 2007 2008 2009 HK$’000 HK$’000 HK$’000 500 500 – – (500) – 500 – –
		–

Included in the allowance for doubtful debts as at 31st March, 2007 were individually impaired trade receivables with an aggregate balance of HK$500,000 which was due from a debtor under severe financial difficulties.

– I-33 –

APPENDIX I

ACCOUNTANTS’ REPORT

Other receivables

Other receivables at the balance sheet date comprise receivables from third parties and deposits paid to suppliers and are unsecured, interest free and recoverable within one year. All balances are neither past due nor impaired as at 31st March, 2007, 2008 and 2009.

Retentions receivable

Retentions receivable which: – will be recovered within twelve months – will be recovered more than twelve months after the balance sheet date	As at 31st March, 2007 2008 2009 HK$’000 HK$’000 HK$’000 52,164 83,880 88,699 31,591 27,793 26,215 83,755 111,673 114,914	As at 31st March, 2007 2008 2009 HK$’000 HK$’000 HK$’000 52,164 83,880 88,699 31,591 27,793 26,215 83,755 111,673 114,914
		114,914

As at 31st March, 2007, 2008 and 2009, the Group’s trade and other receivables and retentions receivable denominated in foreign currencies of the group entities are as follows:

	2007	2008	2009
	HK$’000	HK$’000	HK$’000
Trade receivables
Denominated in:
HKD (against MOP)	10,786	13,213	48,754
Other receivables
Denominated in:
HKD (against MOP)	450	−	6,644
Euro	–	–	337
Retentions receivable
Denominated in:
HKD (against MOP)	2,654	4,225	11,196

Certain trade receivables and retentions receivable were pledged to banks to secure banking facilities granted to the Group. Details are set out in note 32.

– I-34 –

APPENDIX I

ACCOUNTANTS’ REPORT

19. AMOUNTS DUE FROM (TO) CUSTOMERS FOR CONTRACT WORK

As at 31st March, 2007 2008 2009 HK$’000 HK$’000 HK$’000 1,955,120 2,050,837 1,880,735 (1,790,098) (1,919,852) (1,826,191) 165,022 130,985 54,544	As at 31st March, 2007 2008 2009 HK$’000 HK$’000 HK$’000 1,955,120 2,050,837 1,880,735 (1,790,098) (1,919,852) (1,826,191) 165,022 130,985 54,544	As at 31st March, 2007 2008 2009 HK$’000 HK$’000 HK$’000 1,955,120 2,050,837 1,880,735 (1,790,098) (1,919,852) (1,826,191) 165,022 130,985 54,544
		54,544

171,496 (6,474)	141,287 (10,302)	70,056 (15,512)
165,022	130,985	54,544

At 31st March, 2007, 2008 and 2009, retentions held by customers for contract work amounted to approximately HK$83,755,000, HK$111,673,000 and HK$114,914,000 respectively. Advances received from customers for contract work amounted to approximately HK$47,000, HK$88,791,000 and HK$105,519,000 respectively which were included in other payables.

20. AVAILABLE-FOR-SALE INVESTMENT

				31st March,
			2007	2008	2009
			HK$’000	HK$’000	HK$’000
Unlisted	mutual	fund	5,000	–	–

As at 31st March, 2007, the fair value of unlisted mutual fund was determined by reference to the quoted price provided by an authorised financial institution. The amount was denominated in USD, foreign currency of the relevant group entity.

The fund was pledged to secure the banking facilities granted to the Group as at 31st March, 2007. Details are set out in note 32.

21. PLEDGED BANK DEPOSITS AND BANK BALANCES AND CASH

The pledged bank deposits represent deposits pledged to banks to secure the banking facilities granted to the Group. All deposits are pledged to secure certain short-term bank loans, performance bonds and advance payment bonds and are therefore classified as current assets. For the years ended 31st March, 2007, 2008 and 2009, the pledged bank deposits carried interest at average market rate of 3.02%, 1.28% and 1.98% per annum respectively and will be released upon the settlement of the bank borrowings and/or the release of banking facilities granted by banks.

The bank balances carried interest at prevailing market interest rates.

As at 31st March, 2007, 2008 and 2009, the aggregate amounts of pledged bank deposits and bank balances and cash amounting to approximately HK$10,951,000, HK$11,260,000 and HK$31,714,000 respectively were denominated in Renminbi which is not freely convertible into other currencies.

– I-35 –

APPENDIX I

ACCOUNTANTS’ REPORT

As at 31st March, 2007, 2008 and 2009, the Group’s pledged bank deposits and bank balances and cash denominated in foreign currencies of the relevant group entities were as follows:

	2007	2008	2009
	HK$’000	HK$’000	HK$’000
Pledged bank deposits
Denominated in:
HKD (against MOP)	–	35,025	–
Bank balances and cash
Denominated in:
HKD (against MOP)	2,341	9,088	15,899
USD	–	–	870
Euro	–	–	10,400

22. FINANCIAL LIABILITIES

Trade and other payables at the balance sheet dates comprise amounts outstanding for trade purposes and daily operating costs. The average credit period taken for trade purchase is 30 days.

Contract creditors and suppliers Retentions payable Other payables Trade and other payables	As at 31st March, 2007 2008 2009 HK$’000 HK$’000 HK$’000 79,870 112,609 167,751 40,086 56,110 58,728	As at 31st March, 2007 2008 2009 HK$’000 HK$’000 HK$’000 79,870 112,609 167,751 40,086 56,110 58,728	As at 31st March, 2007 2008 2009 HK$’000 HK$’000 HK$’000 79,870 112,609 167,751 40,086 56,110 58,728
	119,956 10,391	168,719 103,047	226,479 127,041
	130,347	271,766	353,520

As at 31st March, 2007, 2008 and 2009, retentions payable of approximately HK$20,178,000, HK$14,175,000 and HK$15,680,000 respectively are expected to be paid after more than one year.

As at 31st March, 2007, 2008 and 2009, the Group’s trade and other payables and bills payable denominated in foreign currencies of the relevant group entities are as follows:

	2007	2008	2009
	HK$’000	HK$’000	HK$’000
Trade and other payables
Denominated in:
HKD (against MOP)	39,192	24,316	17,471
USD	679	3,069	1,248
Euro	–	–	86
Bills payable
Denominated in:
Euro	–	–	2,291

– I-36 –

APPENDIX I

ACCOUNTANTS’ REPORT

The aged analysis of contract creditors and suppliers is stated as follows:

– within 30 days – 31 days to 60 days – 61-90 days – Over 90 days	As at 31st March, 2007 2008 2009 HK$’000 HK$’000 HK$’000 61,901 90,308 152,817 7,203 11,399 6,689 2,796 3,625 1,780 7,970 7,277 6,465 79,870 112,609 167,751	As at 31st March, 2007 2008 2009 HK$’000 HK$’000 HK$’000 61,901 90,308 152,817 7,203 11,399 6,689 2,796 3,625 1,780 7,970 7,277 6,465 79,870 112,609 167,751
		167,751

All bills payable are repayable within 90 days and are secured by pledged assets and directors’ guarantee set out in note 32 and 33 respectively.

23. AMOUNT DUE TO A RELATED COMPANY

The amount represents deposits for fitting-out works received from Giant World Corporation Limited (“Giant World”) which is beneficially owned by Mr. Chan that gives him significant influence on Giant World.

24. BANK BORROWINGS

As at 31st March, 2007 2008 2009 HK$’000 HK$’000 HK$’000 35,166 16,500 – 103,660 143,528 28,334 138,826 160,028 28,334	As at 31st March, 2007 2008 2009 HK$’000 HK$’000 HK$’000 35,166 16,500 – 103,660 143,528 28,334 138,826 160,028 28,334	As at 31st March, 2007 2008 2009 HK$’000 HK$’000 HK$’000 35,166 16,500 – 103,660 143,528 28,334 138,826 160,028 28,334
		28,334

122,326 13,167 3,333 138,826 (122,326)	148,362 10,000 1,666 160,028 (148,362)	26,667 1,667 –
		28,334 (26,667)
16,500	11,666	1,667

The bank loans are variable-rate borrowings which bear interest at 1.00% to 1.5% per annum, 1.00% to 1.5% per annum and 1.00% to 1.25% per annum over the Hong Kong interbank offer rate and interest was repriced every one to three months for the years ended 31st March, 2007, 2008 and 2009 respectively. For the years ended 31st March, 2007, 2008 and 2009, the average effective interest rate (which is also equal to contracted interest rate) on the Group’s bank loans is approximately 5.35% and 3.40% and 1.73% per annum respectively. As at 31st March, 2007, the bank borrowings of HK$4,598,000, HK$1,500,000 and HK$42,500,000 were denominated in USD, Euro and HKD respectively which were not the functional currencies of the relevant group entities. As at 31st March, 2008 and 2009, all bank borrowings were denominated in functional currencies of the relevant group entities.

Details of the pledge of assets and directors’ guarantee to secure banking facilities are set out in note 32 and 33 respectively.

– I-37 –

APPENDIX I

ACCOUNTANTS’ REPORT

25. DEFERRED TAXATION

The followings are the major deferred tax balances recognised and movements thereon during the Relevant Periods:

At 1st April, 2006 Exchange adjustments Charge to combined income statement for the year (note 11) At 31st March, 2007 Exchange adjustments Charge to combined income statement for the year (note 11) Effect of change in tax rate At 31st March, 2008 Exchange adjustments Charge to combined income statement for the year (note 11) At 31st March, 2009	HK$’000 – 7 276
	283 37 196 (71)
	445 10 (98)
	357

Deferred taxation represents the temporary differences between the carrying amounts of the property situated in the PRC and the corresponding tax bases as at the balance sheet dates.

At 31st March, 2007, 2008 and 2009, the Group had unused estimated tax losses of approximately HK$16,953,000, HK$10,911,000 and HK$6,098,000 respectively available for offset against future profits. No deferred tax asset has been recognised in respect of the unrecognised estimated tax losses due to unpredictability of future profit streams. The unrecognised tax losses may be carried forward indefinitely except for the following tax losses which will expire on various dates up to 2013 as set out below:

Expired in: 2011 2012 2013	2007 HK$’000 1,284 – – 1,284	2008 HK$’000 1,450 984 – 2,434	2009 HK$’000 1,484 1,007 3,607
			6,098

– I-38 –

APPENDIX I

ACCOUNTANTS’ REPORT

26. SHARE CAPITAL

THE GROUP

The share capital of the Group as at 31st March, 2007, 2008 and 2009 represents the share capital of Sundart Holdings.

Number of shares As at 31st March, 2007 2008 2009 50,000 50,000 50,000	Number of shares As at 31st March, 2007 2008 2009 50,000 50,000 50,000	Number of shares As at 31st March, 2007 2008 2009 50,000 50,000 50,000	Nominal value As at 31st March, 2007 2008 2009 HK$’000 HK$’000 HK$’000 390 390 390	Nominal value As at 31st March, 2007 2008 2009 HK$’000 HK$’000 HK$’000 390 390 390	Nominal value As at 31st March, 2007 2008 2009 HK$’000 HK$’000 HK$’000 390 390 390

100 –	100 5,000	5,100 –	1 –	1 39	40 –
100	5,100	5,100	1	40	40

Note: On 4th July, 2007, Sundart Holdings issued and allotted 5,000 ordinary shares of US$1 each at par for cash. The new shares rank pari passu with the existing shares in all respects.

27. ACQUISITION OF ASSETS AND LIABILITIES THROUGH ACQUISITION OF A SUBSIDIARY

On 29th May, 2006, the Group acquired assets and liabilities through the acquisition of the remaining 50% issued share capital of Sundart Middle East at a consideration of HK$1 from Mr. Anthony Ng, a former director of Sundart Holdings.

The assets and liabilities acquired in the transaction are as follows:

Assets and liabilities acquired: Trade and other receivables Bank balances and cash Amount due to the Group Trade and other payables Net cash inflow arising on acquisition: Bank balances and cash acquired	Acquiree’s carrying amount before combination HK$’000 13 37 (45) (5)
	–

	37

– I-39 –

APPENDIX I

ACCOUNTANTS’ REPORT

28. DISPOSAL OF SUBSIDIARIES

During the year ended 31st March, 2007, the Group has disposed of certain subsidiaries namely Sundart Creation Limited and its subsidiary, Taishan Sundart Building Materials Co., Ltd. (collectively refer to as “Sundart Creation Group”), Sundart International Limited and Win Venture Trading Limited and its subsidiary LPI (HK) Limited (“Win Venture Group”). Sundart Creation Group, which was principally engaged in property investment, was disposed of to an independent third party; while Sundart International Limited and Win Venture Group, which were principally engaged in the sourcing and distribution of interior decorative materials, were disposed of to Mr. Leung and a company which is controlled and beneficially owned by Mr. Leung. The aggregate net liabilities of these subsidiaries at the date of disposal are as follows:

Net liabilities disposed of: Investment property Property, plant and equipment Trade and other receivables Inventories Bank balances and cash Trade and other payables Tax payable Exchange gain realised Profit on disposal Total consideration satisfied by cash Net cash outflow arising on disposal: Cash consideration Bank balances and cash disposed of	HK$’000 4,937 5 557 2,005 1,874 (11,720) (39) (2,381) (172) (2,553) 2,554 1 1 (1,874) (1,873)

The subsidiaries disposed of during the year ended 31st March, 2007 contributed approximately HK$21,481,000 to the Group’s revenue and incurred operating loss of approximately HK$2,834,000 up to the date of disposal.

– I-40 –

APPENDIX I

ACCOUNTANTS’ REPORT

During the year ended 31st March, 2008, the Group has disposed of a subsidiary namely, Sundart Engineering at a consideration of HK$2. Sundart Engineering, which was principally engaged in supply and installation of timber doors and floorsets and interior fitting-out works, was disposed of to an independent third party. The aggregate net liabilities of the subsidiary at the date of disposal are as follows:

Net liabilities disposed of: Property, plant and equipment Trade and other receivables Retentions receivable Bank balances and cash Trade and other payables Tax payable Exchange loss realised Profit on disposal Total consideration satisfied by cash Net cash outflow arising on disposal: Bank balances and cash disposed of	HK$’000 10 452 901 15 (682) (1,637)
	(941) 562
	(379) 379
	–

	(15)

The subsidiary disposed of during the year ended 31st March, 2008 contributed approximately HK$649,000 and HK$23,000 to the Group’s revenue and profit after tax respectively up to the date of disposal.

29. OPERATING LEASES

The Group as lessee

At the balance sheet dates, the Group had commitments for future minimum lease payments under non-cancellable operating leases in respect of rented premises which fall due as follows:

Within one year In the second to fifth years inclusive	As at 31st March, 2007 2008 2009 HK$’000 HK$’000 HK$’000 2,699 2,746 2,108 2,105 66 902 4,804 2,812 3,010	As at 31st March, 2007 2008 2009 HK$’000 HK$’000 HK$’000 2,699 2,746 2,108 2,105 66 902 4,804 2,812 3,010
		3,010

Leases for rented premises are negotiated for a period of one to three years with fixed rental.

The Group as lessor

As 31st March, 2007, the Group had contracted with a tenant for the future minimum lease payment receivable within one year of approximately HK$95,000.

– I-41 –

APPENDIX I

ACCOUNTANTS’ REPORT

30. PERFORMANCE BOND AND ADVANCE PAYMENT BOND

As at 31st March, 2007, 2008 and 2009, the Group had issued performance bonds and advance payment bonds in respect of supply and installation contracts through the banks amounting to approximately HK$82,615,000, HK$184,069,000 and HK$307,448,000 respectively. The bonds were secured by pledged assets and directors’ guarantee set out in notes 32 and 33 respectively.

31. RETIREMENT BENEFITS PLANS

The Group operates a MPF Scheme for all qualifying employees in Hong Kong. The assets of the scheme are held separately from those of the Group, in funds under the control of trustees. The Group contributes at the lower of HK$1,000 or 5% of the relevant payroll costs to the scheme, which contribution is matched by employees.

The employees of the subsidiaries operated in the PRC are members of a state-managed retirement benefit scheme operated by the PRC government. Those subsidiaries are required to contribute a specified percentage of payroll costs to the retirement benefit scheme to fund the benefits.

Eligible employees in Macau currently participate in a defined contribution pension scheme operated by the local government which is a fixed amount for each employee.

The only obligation of the Group with respect to the retirement benefit scheme is to make the specified contributions.

During the Relevant Periods, the total costs charged to the combined income statement are approximately HK$922,000, HK$752,000 and HK$941,000 represent contributions payable to these plans by the Group in respect of approximately HK$1,427,000, HK$1,418,000 and HK$1,855,000 less contributions capitalised to contract works of approximately HK$505,000, HK$666,000 and HK$914,000 respectively. The amounts capitalised to contract works were subsequently charged to cost of sales.

32. PLEDGE OF ASSETS

The Group had pledged certain bank deposits, trade receivables, retentions receivable and available-for-sale investment to secure the general banking facilities including bank borrowings, bills payable, performance bonds and advance payment bonds granted to the Group. The carrying value of the pledged assets are as follows:

Trade receivables Retentions receivable Available-for-sale investment Pledged bank deposits	As at 31st March, 2007 2008 2009 HK$’000 HK$’000 HK$’000 – 11,968 48,565 – 4,871 14,127 5,000 – – 5,506 70,790 809

– I-42 –

APPENDIX I

ACCOUNTANTS’ REPORT

33. RELATED PARTY TRANSACTIONS

Apart from the amount due to a related company as set out in note 23, during the Relevant Periods, the Group had entered into the following significant transactions with related companies:

Year 2007 HK$’000 4,894 3,764 – – 8,658 Year 2007 HK$’000 15,446 3,297 18,743	ended 31st March, 2008 2009 HK$’000 HK$’000 – – – – – 7,619 – 64,605 – 72,224 ended 31st March, 2008 2009 HK$’000 HK$’000 – – – – – –	ended 31st March, 2008 2009 HK$’000 HK$’000 – – – – – 7,619 – 64,605 – 72,224 ended 31st March, 2008 2009 HK$’000 HK$’000 – – – – – –
		–

329 600	300 600	− –
929	900	−

Notes:

(1) This is a company in which Mr. Leung, Mr. Anthony Ng, Mr. Ng, and Mr. Wong have beneficial interests that give them significant influence over this company.
(2) This is a company in which Mr. Chan, has beneficial interest that gives him significant influence over this company.

– I-43 –

APPENDIX I

ACCOUNTANTS’ REPORT

(3) Waldo is a company in which Ms. Li Wing Yin (“Ms Li”), a beneficial shareholder of the Company, and Mr. Chan’s father have beneficial interests that give them control over this company.

Ms. Li became the beneficial shareholder of Sundart Holdings in March 2008. Mr. Chan was appointed as the director of Sundart Holdings on 20th March, 2008. Accordingly, Waldo became a related party of the Group since then. As at 31st March 2008 and 31st March 2009, the amounts due from Waldo included in trade receivables and retentions receivable are as follows:

		As at 31st March,
	2007	2008	2009
	HK$’000	HK$’000	HK$’000
Trade receivable	–	4,723	5,128
Retentions receivable	–	2,511	–

(4) Mr. Chen Chien, a former director of Sundart Holdings, is also a director of this company.
(5) This is a company in which Mr. Anthony Ng, has beneficial interest that gives him significant influence over this company.

On 20th July, 2006, the Group disposed of certain of its subsidiaries namely Sundart International Limited and Win Venture Group to Mr. Leung, and a company controlled and beneficially owned by Mr. Leung for a total consideration of HK$4.

On 29th May, 2006, the Group acquired the remaining 50% issued share capital of Sundart Middle East from Mr. Anthony Ng for a total consideration of HK$1.

Certain directors and a former director of the Sundart Holdings guaranteed the banking facilities of the Group. The directors and the former director did not charge the Group for such guarantee provided.

Compensation of key management personnel

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

Salaries and short-term benefits Post-employment benefits	Year 2007 HK$’000 6,743 135 6,878	ended 31st March, 2008 2009 HK$’000 HK$’000 7,761 10,895 143 143 7,904 11,038	ended 31st March, 2008 2009 HK$’000 HK$’000 7,761 10,895 143 143 7,904 11,038
			11,038

The remuneration of key management personnel is determined by the directors of the Sundart Holdings having regard to the performance of individuals and market trends.

– I-44 –

APPENDIX I

ACCOUNTANTS’ REPORT

(B) SUBSEQUENT EVENTS

The following events took place subsequent to 31st March, 2009:

(1) On 17th May, 2009, the Group established Sundart Interior Contracting (Middle East) L.L.C., a jointly controlled entity incorporated in the State of Qatar.
(2) On 30th July, 2009, Sundart Holdings declared dividend of HK$120 million, which was distributed to its then shareholders according to their respective shareholding on 5th August, 2009.
(3) On 3rd August 2009, the Company issued and allotted 69,990,000 shares, all credited as fully paid, to the shareholders of Sundart Holdings in exchange for the entire share capital of Sundart Holdings in proportion to their respective holding in Sundart Holdings.

(C) SUBSEQUENT FINANCIAL STATEMENTS

No audited financial statements of the Group, the Company or any of its subsidiaries have been prepared in respect of any period subsequent to 31st March, 2009.

Yours faithfully, Deloitte Touche Tohmatsu Certified Public Accountants Hong Kong

– I-45 –

APPENDIX III

PROFIT FORECAST

The forecast of the profit attributable to equity holders of the Company for six months ending 30 September 2009 is set out in the sections headed “Summary – Unaudited profit forecast for the six months ending 30 September 2009” and “Financial information – Unaudited profit forecast for the six months ending 30 September 2009” of this document.

(A) BASES AND ASSUMPTIONS

Our Directors have prepared the combined profit attributable to equity holders of our Company for six months ending 30 September 2009 based on the unaudited management accounts of our Group for the three months ended 30 June 2009 and a forecast of the combined results of our Group for the remaining three months ending 30 September 2009. The forecast has been prepared on the basis of accounting policies consistent in all material respects with those adopted by our Group as summarised in the accountants’ report, the text of which is set out in Appendix I to this document.

Our Directors have made the following principal assumptions in the preparation of the profit forecast:

(a) there will be no material changes in existing political, legal, fiscal, market or economic conditions in Hong Kong, Macau, the PRC or any other countries or territories in which our Group currently operates or which may have a material adverse effect on our Group’s income;
(b) there will be no material changes in the bases or rates of taxation or duties in Hong Kong, Macau, the PRC or any of the countries in which companies in our Group are incorporated or registered;
(c) there will be no material changes in the policies, legislation, regulations or practices in Hong Kong, Macau, the PRC or any other countries or territories in which our Group currently operates or with which our Group has arrangements or agreements, which may materially adversely affect our Group’s business or operations; and
(d) there will be no material changes in inflation rate, foreign currency exchange rates and interest rates from those currently prevailing.

– III-1 –

APPENDIX IV

PROPERTY VALUATION

The following is the text of a letter, summary of values and valuation certificates, prepared for the purpose of incorporation in this document received from Jones Lang LaSalle Sallmanns Limited, an independent valuer, in connection with its valuation as at 30 June 2009 of the property interests of the Group.

Jones Lang LaSalle Sallmanns Limited 17/F Dorset House Taikoo Place 979 King’s Road Quarry Bay Hong Kong tel +852 2169 6000 fax +852 2169 6001 Licence No: C-030171

[�] 2009

The Board of Directors Sundart International Holdings Limited 7/F, Millennium City 3 370 Kwun Tong Road Kowloon Hong Kong

Dear Sirs,

In accordance with your instructions to value the properties in which Sundart International Holdings Limited (the “Company”) and its subsidiaries (hereinafter together referred to as the “Group”) have interests in the People’s Republic of China (the “PRC”) Hong Kong, Macau and State of Qatar we confirm that we have carried out inspections, made relevant enquiries and searches and obtained such further information as we consider necessary for the purpose of providing you with our opinion of the capital values of the property interests as at [30 June 2009] (the “date of valuation”).

Our valuation of the property interests represents the market value which we would define as intended to mean “the estimated amount for which a property should exchange on the date of valuation between a willing buyer and a willing seller in an arm’s-length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently, and without compulsion”.

We have valued the property interest in Group I by direct comparison approach assuming sale of the property interest in its existing state with the benefit of immediate vacant possession and by making reference to comparable sales transactions as available in the relevant market.

We have attributed no commercial value to the property interests in Group [II, III, IV and V], which are leased 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.

Our valuation has been made on the assumption that the seller sells the property interests in the market without the benefit of a deferred term contract, leaseback, joint venture, management agreement or any similar arrangement, which could serve to affect the values of the property interests.

– IV-1 –

APPENDIX IV

PROPERTY VALUATION

No allowance has been made in our report for any charge, mortgage or amount owing on any of the property interests valued nor for any expense 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.

In valuing the property interests, we have complied with all requirements contained in Chapter 5 and Practice Note 12 of the Rules Governing the Listing of Securities issued by The Stock Exchange of Hong Kong Limited; the RICS Valuation Standards (6th Edition) published by the Royal Institution of Chartered Surveyors; and the HKIS Valuation Standards on Properties (1st Edition 2005) published by the Hong Kong Institute of Surveyors.

We have relied to a very considerable extent on the information given by the Group and have accepted advice given to us on such matters as tenure, planning approvals, statutory notices, easements, particulars of occupancy, lettings, and all other relevant matters.

We have been provided with copies of tenancy agreements relating to the property interests and have caused searches to be made at the Hong Kong Land Registry and Macau Land Registry. However, we have not searched the original documents to verify the ownership or to ascertain any amendment.

We have been shown copies of various title documents including State-owned Land Use Rights Certificates, Building Ownership Certificates, [Real Estate Title Certificates and official plans] relating to the property interests and have made relevant enquiries. Where possible, we have examined the original documents to verify the existing title to the property interests in the PRC and any material encumbrance that might be attached to the property interests or any tenancy amendment. We have relied considerably on the advice given by the Company’s PRC legal advisers – JINGTIAN & GONGCHENG ATTORNEYS AT LAW concerning the validity of the property interests in the PRC.

We have not carried out detailed measurements to verify the correctness of the areas in respect of the properties but have assumed that the areas shown on the title documents and official site plans handed to us are correct. All documents and contracts have been used as reference only and all dimensions, measurements and areas are approximations. No on-site measurement has been taken.

We have inspected the exterior and, where possible, the interior of the properties. However, we have not carried out investigation to determine the suitability of the ground conditions and services for any development thereon. Our valuation has been prepared on the assumption that these aspects are satisfactory. Moreover, no structural survey has been made, but in the course of our inspection, we did not note any serious defect. We are not, however, able to report whether the properties are free of rot, infestation or any other structural defect. No tests were carried out on any of the services.

– IV-2 –

APPENDIX IV

PROPERTY VALUATION

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

Unless otherwise stated, all monetary figures stated in this report are in Hong Kong Dollar (HKD). The exchange rate adopted in our valuations is approximately HKD1 = RMB [0.88] which was approximately the prevailing exchange rate as at the date of valuation.

Our valuation is summarised below and the valuation certificates are attached.

Yours faithfully, for and on behalf of

Jones Lang LaSalle Sallmanns Limited Paul L. Brown

B.Sc. FRICS FHKIS Director

Note: Paul L. Brown is a Chartered Surveyor who has 26 years’ experience in the valuation of properties in the PRC and 29 years of property valuation experience in Hong Kong, the United Kingdom and the Asia-Pacific region.

– IV-3 –

APPENDIX IV

PROPERTY VALUATION

SUMMARY OF VALUES

Group I – Property interest owned and occupied by the Group in the PRC

No. Property 1. Office unit No. 11C Oriental Kenzo Plaza No. 48 Dongzhimen Wai Avenue Dongcheng District Beijing The PRC Sub-total:	Capital value attributable to the Group as at 30 June 2009 HKD [4,630,000]
	[4,630,000]

Group II – Property interests rented and occupied by the Group in Hong Kong

		Capital value
		attributable to
		the Group as at
No.	Property	30 June 2009
		HKD
2.	7th Floor	No commercial
	Millennium City 3	value
	No. 370 Kwun Tong Road
	Kowloon
	Hong Kong
3.	Flat A on 11th Floor	No commercial
	Chen Yip Industrial Building	value
	No. 5 Lai Yip Street
	Kowloon
	Hong Kong
4.	Factories 2 on 21st Floor	No commercial
	2 and 6 – 7 on 22nd Floor	value
	1 and 6 on 23rd Floor
	Luen Cheong Can Centre
	No. 8 Yip Wong Road
	Tuen Mun
	New Territories
	Hong Kong

– IV-4 –

APPENDIX IV

PROPERTY VALUATION

			Capital value	Capital value
			attributable to
			the Group as at
No.	Property		30 June 2009
				HKD
5.	Unit No. 1 on 2nd Floor		No commercial
	Fu Lee Loy Mansion			value
	Nos. 9-27 King Wah Road
	Hong Kong
		Sub-total:		Nil

Group III – Property interests rented and occupied by		the Group in the	PRC
			Capital value
			attributable to
			the Group as at
No.	Property		30 June 2009
				HKD
6.	Level 1		No commercial
	Comprehensive Building			value
	Standardisation plant area
	Zhaofeng Industrial Zone
	Zhao Quan Ying
	Shunyi District
	Beijing
	The PRC
7.	Units 603 – 605		No commercial
	Shunyuan Enterprise Development Building			value
	No. 28 Xuanhua Road
	Changning District
	Shanghai
	The PRC
8.	Unit 208		No commercial
	Building No.9			value
	No. 628 Nong
	Zhangyang Road
	Pudong New District
	Shanghai
	The PRC

– IV-5 –

APPENDIX IV

PROPERTY VALUATION

No. Property
9.
Unit 601
Building No.10
No. 1818 Nong
Changning Road
Changning District
Shanghai
The PRC
10.
Unit 601
Building No.25
No. 1818 Nong
Changning Road
Changning District
Shanghai
The PRC
11.
Unit 12A05
Building No.77
No. 999 Nong
Loushanguan Road
Changning District
Shanghai
The PRC
12.
Room 206
Building No.7
No. 628 Nong
Zhangyang Road
Pudong District
Shanghai
The PRC
Sub-total:

Capital value
attributable to
the Group as at
30 June 2009
HKD
No commercial
value
No commercial
value
No commercial
value
No commercial
value

Nil

– IV-6 –

APPENDIX IV

PROPERTY VALUATION

Group IV – Property interests rented and occupied by the Group in Macau

		Capital value
		attributable to
		the Group as at
No.	Property	30 June 2009
		HKD
13.	Unit 1110, 11th Floor	No commercial
	Macau Landmark	value
	Nos. 549 – 567 Avenida Da Amizade
	Macau
14.	Unit AD, 8th Floor	No commercial
	Kin Fu Kuok	value
	Praca Kin Heng Long – Heng Hoi Kuok
	No. 94 Rua De Bruxelas
	Macau
15.	Unit B, 6th Floor	No commercial
	Centro Polytex	value
	No. 45 Estrada Marginal Da Areia Preta
	Macau
16.	Unit W, 5th Floor	No commercial
	Ind. Kek Seng	value
	No. 41
	Avenida Do Almirante Magalhaes Correia
	Macau
17.	Unit F, 9th Floor	No commercial
	Ind. Kek Seng	value
	No. 149 Avenida De Venceslau De Morais
	Macau
18.	Unit F, 6th Floor	No commercial
	Nova Vila Chong San	value
	No. 36 Rua Da Barran
	Macau
19.	Unit L, 15th Floor	No commercial
	Lei Tou, Lei Wai, Lei Ip	value
	Fa Seng Lei Hong
	No. 181 Rua De Evora
	Na Taipa
	Macau

– IV-7 –

APPENDIX IV

PROPERTY VALUATION

Capital value attributable to the Group as at No. Property 30 June 2009 HKD 20. Unit S, 9th Floor No commercial Lei Fung, Lei Hau, Lei Yeng, Lei Mau value Fa Seng Lei Seng No. 73 Rua De Nam Keng Na Taipa Macau 21. Unit R, 14th Floor No commercial Chun Hung Garden value (Leong Iun, Foe Iu, Pek Iun) Nos. 656 – 668 Avenida Dr. Sun Yat Sen (Taipa) Na Taipa Macau 22. Unit H, 9th Floor No commercial Lei Lo, Lei Tak value Lei Loi Tak Hoi Pan Fa Un Tai Ha No. 147 Avenida Dos Jardins Do Oceano Na Taipa Macau 23. Unit D, 15th Floor No commercial Chun Hung Garden value (Leong Iun, Foe Iun, Pek Iun) No. 615 Caminho Das Hortas Na Taipa Macau 24. Flat G, 10th Floor No commercial Chun Hung Garden value (Leong Iun, Foe Iun, Pek Iun) Nos. 690 – 694 Avenida Dr. Sun Yat Sen (Taipa) Na Taipa Macau

– IV-8 –

APPENDIX IV

PROPERTY VALUATION

		Capital value
		attributable to
		the Group as at
No.	Property	30 June 2009
		HKD
25.	Flat L, 2nd Floor	No commercial
	Phase I Block 28, 30	value
	Urbanizacao Da Nova Taipa
	No. 442 Rua De Braganca
	Na Taipa
	Macau
26.	Flat A, 3rd Floor	No commercial
	Hung Ip Mansion	value
	No. 221 Avenida De Kwong Tung
	Na Taipa
	Macau
27.	Flat D, 15th Floor	No commercial
	Harvest Palace	value
	Palacio Do Sucesso
	No. 410 Rua De Evora
	Na Taipa
	Macau
28.	CR/C (also known as Car Park No. 365)	No commercial
	Block III, Phase I	value
	Urbanizacao Da Nova Taipa
	Nos. 286 – 470 Rua De Braganca
	Na Taipa
	Macau
29.	AM/Z (also known as Car Park No. 329)	No commercial
	Block III, Phase I	value
	Nos. 286 – 470 Rua De Braganca
	Urbanizacao Da Nova Taipa
	Na Taipa
	Macau
30.	BR/C (also known as Car Park No. 651)	No commercial
	Block III, Phase I	value
	Urbanizacao Da Nova Taipa
	Nos. 286 – 470 Rua De Braganca
	Na Taipa
	Macau

– IV-9 –

APPENDIX IV

PROPERTY VALUATION

Capital value attributable to the Group as at No. Property 30 June 2009 HKD 31. Flat Y, 18th Floor No commercial Block III value Lok Chon Ieng Hin No. 185 Rua de Chiu Chau Na Taipa Macau

Sub-total: Nil

Group V - Property interest rented and occupied by the Group in State of Qatar

	Nil
	of Qatar
No. Property 32. Office Unit 2nd Floor and 2 Car Parking Spaces On Ground Floor A1 Shareef Building Doha International Airport Area Doha City State of Qatar Sub-total Total:	Capital value attributable to the Group as at 30 June 2009 HKD No commercial value
	Nil

	[4,630,000]

– IV-10 –

APPENDIX IV

PROPERTY VALUATION

VALUATION CERTIFICATE

Group I – Property interests owned and occupied by the Group in the PRC

				Capital value
				in existing state
			Particulars of	as at
No.	Property	Description and tenure	occupancy	30 June 2009
				HKD
1.	Office unit No. 11C	The property comprises a unit	The property is	[4,630,000]
	Oriental Kenzo Plaza	of Oriental Kenzo Plaza	currently occupied by
	No. 48	completed in 2006.	the Group for office	[100%] interest
	Dongzhimen Wai Avenue		purpose.	attributable to the
	Dongcheng District	The unit has a gross floor area		Group:
	Beijing	of approximately 158.59 sq.m.		HKD4,630,000
	The PRC	(or 1707 sq.ft).
		The apportioned land use
		rights of the property have
		been granted for a term of 50
		years expiring on 5 November
		2051 for office use.

Notes:

Pursuant to a State-owned Land Use Rights Certificate – Jing Shi Dong Gang Ao Tai Guo Yong 2008 Chu Di No. 7001697, the land use rights with an apportioned area of approximately 16.07 sq.m. have been granted to Sundart Engineering & Contracting (Beijing) Limited (“Sundart”), a [100%] interest owned subsidiary of the Company, for a term of 50 years expiring on 5 November 2051 for office uses.
Pursuant to a Real Estate Sale Contract entered into between Oriental Ginza Holdings Limited and Sundart, dated on 29 June 2004. Office unit No. 11C of Oriental Kenzo Plaza was purchased by Sundart at a consideration of RMB[2,845,977].
Pursuant to a Building Ownership Certificate – X Jing Fang Quan Zheng Shi Gang Ao Tai Zi Di No. 009996, the office unit of the Oriental Kenzo Plaza with a gross floor area of approximately 158.59 sq.m.
We have been provided with a legal opinion regarding the property interest by the Company’s PRC legal advisers, which contains, inter alia , the following:
a. The building ownership rights of the property are legally owned by the Group and the Group has the right to transfer, lease, mortgage or otherwise dispose of the property; and
b. The property is not subject to any encumbrances or mortgage.

– IV-11 –

APPENDIX IV

PROPERTY VALUATION

VALUATION CERTIFICATE

Group II – Property interests rented and occupied by the Group in Hong Kong

				Capital value
				in existing state
			Particulars of	as at
No.	Property	Description and tenure	occupancy	30 June 2009
				HKD
2.	7th Floor	The property comprises a unit	The property is	No commercial value
	Millennium City 3	on the 7th floor of a 21-storey	currently occupied by
	No. 370	office building completed in	the Group for office
	Kwun Tong Road	about 2002.	purpose.
	Kowloon
	Hong Kong	The unit has a lettable area of
		approximately 8,140 sq.ft. (or
		756.22 sq.m.).
		Pursuant to Tenancy
		Agreement made between
		Sundart Holdings Limited, as
		Tenant and Hong Kong
		Baptist University, as
		Landlord an independent third
		party, the property was leased
		by the Group for a term of 2
		years commencing from 15
		April 2009 and expiring on 14
		April 2011 at a monthly rental
		of HKD113,295 exclusive of
		rates and management fees,
		air-conditioning charges and
		other outgoings.

Notes:

The registered owner of the property is Hong Kong Baptist University vide Memorial No. 08061600710030 dated 25 May 2008.

– IV-12 –

APPENDIX IV

PROPERTY VALUATION

VALUATION CERTIFICATE

Capital value in existing state Particulars of as at No. Property Description and tenure occupancy 30 June 2009 HKD 3. Flat A on 11th Floor The property comprises a unit The property is No commercial value Chen Yip Industrial on the 11th floor of an currently occupied by Building 11-storey industrial building the Group for storage No. 5 Lai Yip Street completed in about 1971. purpose. Kowloon Hong Kong The unit has a gross floor area of approximately [1,800] sq.ft. (or [167.22] sq.m.). Pursuant to a Tenancy Agreement made between Sundart Holdings Limited, as Tenant and Simking Development Limited, as Landlord [an independent third party], the property is leased by the Group for a term of 2 years commencing from 18 November 2008 and expiring on 17 November 2010 at a monthly rental of HKD13,870 exclusive of rates, government rent and management fees.

Note: The registered owner of the property is Simking Development Limited vide Memorial No. UB 6055451 dated 2 June 1994.

– IV-13 –

APPENDIX IV

PROPERTY VALUATION

VALUATION CERTIFICATE

				Capital value
				in existing state
			Particulars of	as at
No.	Property	Description and tenure	occupancy	30 June 2009
				HKD
4.	Factories 2 on 21st Floor	The property comprises units	The property is	No commercial value
	2 and 6 – 7 on 22nd	on the 21st – 23rd floor of a	currently occupied by
	Floor	26-storey industrial building	the Group for storage
	1 and 6 on 23rd Floor	completed in about 1992.	purpose.
	Luen Cheong Can Centre
	No. 8 Yip Wong Road	The units have a total gross
	Tuen Mun	floor area of approximately
	New Territories	[17,360] sq.ft. (or [1,612.78]
	Hong Kong	sq.m.).
		Pursuant to a Licence made
		between Sundart Timber
		Products Company Limited, as
		Licencee and Hang Lung Real
		Estate Agency Limited, as
		agent of Licensor [an
		independent third party], the
		property is leased by the
		Group for a term of 1 year
		commencing from 1 January
		2009 and expiring on 31
		December 2010 at a whole
		period rental of HKD1
		inclusive of rates, government
		rent, management fees and
		electricity charge.

Notes:

The registered owner of the property is Dynamia Company Limited vide Memorial No. TM 1074709 dated 30 July 2003.

– IV-14 –

APPENDIX IV

PROPERTY VALUATION

VALUATION CERTIFICATE

				Capital value
				in existing state
			Particulars of	as at
No.	Property	Description and tenure	occupancy	30 June 2009
				HKD
5.	Unit No. 1 on 2nd Floor	The property comprises a unit	The property is	No commercial value
	Fu Lee Loy Mansion	on the 2nd floor of a	currently occupied by
	Nos. 9-27	23-storey composite	the Group for
	King Wah Road	residential/commercial	ancillary office
	Hong Kong	building completed in about	purpose.
		1982.
		The unit has a saleable area of
		approximately 140 sq.ft. (or
		13 sq.m.).
		Pursuant to a Tenancy
		Agreement made between
		Sundart Timber Products
		Company Limited, as Tenant
		and Super Capital Hong Kong
		Investment Limited, as
		Landlord [an independent
		third party], the property is
		leased by the Group for a
		term of 1 year commencing
		from 1 April 2009 and
		expiring on 30 September
		2009 at a monthly rental of
		HKD4,500 inclusive of rates,
		government rent and
		management fees.

Note: The registered owner of the property is Super Capital Hong Kong Investment Limited vide Memorial No. 07073000190360 dated 31 July 2007.

– IV-15 –

APPENDIX IV

PROPERTY VALUATION

VALUATION CERTIFICATE

Group [III] – Property interests rented and occupied by the Group in the PRC

Capital value in existing state Particulars of as at No. Property Description and tenure occupancy 30 June 2009 HKD 6. Level 1 Comprehensive The property comprises a The property is No commercial value Building Standardisation units on the Level 1 of a currently occupied by plant area 6-storey composite building the Group for office Zhaofeng Industrial Zone completed in about [ 2003]. purpose. Zhao Quan Ying Shunyi District The property has a gross area Beijing of approximately [20] sq.m. The PRC (or 215 sq.ft.). Pursuant to a Tenancy Agreements made between Sundart Engineering & Contracting (Beijing) Limited, as Tenant and Beijing Zhao Quan Ying Development Center of Zhaofeng Industrial Zone, as Landlord [an independent third party], the property is leased by the Group for a term of 3 years commencing from 1 January 2007 and expiring on 31 December 2009 at an annual rental of RMB10,950 exclusive of water and electricity charges and other outgoings.

Notes:

[Pursuant to a promise letter dated 4 January 2007 issued by the Landlord, all the rent and other outgoings during the whole tenancy period are waived].
We have been provided with a legal opinion on the legality of the tenancy agreement to the property issued by the Company’s PRC legal advisers, which contains, inter alia, the following:
a. The Tenancy Agreement regarding the property is legal, valid and blinding. The lessor has rights to lease out the property and leasee has the rights to use the property according to the prescribed use as stated in the Tenancy Agreement; and
b. The Tenancy Agreement has not been registered with the relevant government authority, but the validity of the agreement will not be affected.

– IV-16 –

APPENDIX IV

PROPERTY VALUATION

VALUATION CERTIFICATE

Capital value
in existing state
Particulars of as at
No. Property Description and tenure occupancy 30 June 2009 HKD
1. Units 603 – 605 The property comprises 3 The property is No commercial value Shunyuan Enterprise office units on the 6th floor of currently occupied by Development Building a [15]-storey office building the Group for office No. 28 Xuanhua Road completed in about [2007]. purpose. Changning District Shanghai The property has a total gross The PRC area of approximately [247.66] sq.m. (or 2,666 sq.ft.).

Pursuant to 3 Tenancy Agreements made between Sundart Engineering & Contracting (Beijing) Limited – Shanghai Branch, as Tenant and Wang Chunhua and Fan Daren, as Landlords [an independent third parties], the property is leased by the Group for a common term commencing of 3 years from 18 August 2008 and expiring on 17 August 2011 at a total monthly rental of RMB38,500 exclusive of water and electricity charges and other outgoings.

Notes:

We have been provided with a legal opinion on the legality of the tenancy agreement to the property issued by the Company’s PRC legal advisers, which contains, inter alia , the following:
a. The Tenancy Agreement regarding the property is legal, valid and binding. The lessor has rights to lease out the property and leasee has the rights to use the property according to the prescribed use as stated in the Tenancy Agreement; and
b. The Tenancy Agreement has not been registered with the relevant government authority, but the validity of the agreement will not be affected.

– IV-17 –

APPENDIX IV

PROPERTY VALUATION

VALUATION CERTIFICATE

Capital value in existing state Particulars of as at No. Property Description and tenure occupancy 30 June 2009 HKD 8. Unit 208 The property comprises a unit The property is No commercial value Building No. 9 on the 2nd floor of a currently occupied by No. 628 Nong [25]-storey residential building the Group for staff Zhangyang Road completed in about [1996]. quarter purpose. Pudong New District Shanghai The property has a lettable The PRC area of approximately 112.88 sq.m. or (1,346 sq.ft.).

Pursuant to a Tenancy Agreement made between Sundart Engineering & Contracting (Beijing) Limited – Shanghai Branch, as Tenant and Luo Meifang, as Landlord [an independent third party], the property is leased by the Group for a term of 1 year commencing from 28 December 2008 and expiring on 27 December 2009 at a monthly rental of RMB4,300 inclusive of management fees.

Notes:

We have been provided with a legal opinion on the legality of the tenancy agreement to the property issued by the Company’s PRC legal advisers, which contains, inter alia , the following:
a. The Tenancy Agreement regarding the property is legal, valid and binding. The lessor has rights to lease out the property and leasee has the rights to use the property according to the prescribed use as stated in the Tenancy Agreement; and
b. The Tenancy Agreement has not been registered with the relevant government authority, but the validity of the agreement will not be affected.

– IV-18 –

APPENDIX IV

PROPERTY VALUATION

VALUATION CERTIFICATE

Capital value
in existing state
Particulars of as at
No. Property Description and tenure occupancy 30 June 2009 HKD
1. Unit 601 The property comprises a unit The property is No commercial value Building No. 10 on the 6th floor of a currently occupied by No. 1818 Nong [10]-storey residential building the Group for staff Changning Road completed in about [2000]. quarter purpose. Changning District Shanghai The property has a lettable The PRC area of approximately 104.04 sq.m. (or 1,123 sq.ft.).

Pursuant to a Tenancy Agreement made between Sundart Engineering & Contracting (Beijing) Limited – Shanghai Branch, as Tenant and Pan Wen, as Landlord [an independent third party], the property is leased by the Group for a term of 1 year commencing from 10 January 2009 and expiring on 9 January 2010 at a monthly rental of RMB4,300 inclusive of management fees.

Notes:

We have been provided with a legal opinion on the legality of the tenancy agreement to the property issued by the Company’s PRC legal advisers, which contains, inter alia , the following:
a. The Tenancy Agreement regarding the property is legal, valid and binding. The lessor has rights to lease out the property and leasee has the rights to use the property according to the prescribed use as stated in the Tenancy Agreement; and
b. The Tenancy Agreement has not been registered with the relevant government authority, but the validity of the agreement will not be affected.

– IV-19 –

APPENDIX IV

PROPERTY VALUATION

VALUATION CERTIFICATE

Capital value
in existing state
Particulars of as at
No. Property Description and tenure occupancy 30 June 2009 HKD
1. Unit 601 The property comprises a unit The property is No commercial value Building No. 25 on the 6th floor of a currently occupied by No. 1818 Nong [11]-storey residential building the Group for staff Changning Road completed in about [2000]. quarter purpose. Changning District Shanghai The property has a gross floor The PRC area of approximately [107.73] sq.m. (or 1,160 sq.ft.).
Pursuant to a Tenancy Agreement made between Sundart Engineering & Contracting (Beijing) Limited – Shanghai Branch, as Tenant and Xu Fangfang, as Landlord [an independent third party], the property is leased by the Group for a term of 1 year commencing from 1 March 2009 and expiring on 28 February 2010 at a monthly rental of RMB4,500 inclusive of management fees.

Notes:

We have been provided with a legal opinion on the legality of the tenancy agreement to the property issued by the Company’s PRC legal advisers, which contains, inter alia , the following:
a. The Tenancy Agreement regarding the property is legal, valid and binding. The lessor has rights to lease out the property and leasee has the rights to use the property according to the prescribed use as stated in the Tenancy Agreement; and
b. The Tenancy Agreement has not been registered with the relevant government authority, but the validity of the agreement will not be affected.

– IV-20 –

APPENDIX IV

PROPERTY VALUATION

VALUATION CERTIFICATE

Capital value
in existing state
Particulars of as at
No. Property Description and tenure occupancy 30 June 2009 HKD
1. Unit 12A05 The property comprises a unit The property is No commercial value Building No. 77 on the [13th] floor of a currently occupied by No. 999 Nong [28]-storey residential building the Group for staff Loushanguan Road completed in about [2005]. quarter purpose. Changning District Shanghai The property has a gross floor The PRC area of approximately [59.72] sq.m. (or 643 sq.ft.).
Pursuant to a Tenancy Agreement made between Sundart Engineering & Contracting (Beijing) Limited – Shanghai Branch, as Tenant and Zhu Qun, Jiang Wenwen as Landlords [an independent third party], the property is leased by the Group for a term commencing from 1 April 2009 and expiring on 30 September 2009 at a monthly rental of RMB4,500 inclusive of management fees.

Notes:

We have been provided with a legal opinion on the legality of the tenancy agreement to the property issued by the Company’s PRC legal advisers, which contains, inter alia , the following:
a. The Tenancy Agreement regarding the property is legal, valid and binding. The lessor has rights to lease out the property and leasee has the rights to use the property according to the prescribed use as stated in the Tenancy Agreement; and
b. The Tenancy Agreement has not been registered with the relevant government authority, but the validity of the agreement will not be affected.

– IV-21 –

APPENDIX IV

PROPERTY VALUATION

VALUATION CERTIFICATE

Capital value in existing state Particulars of as at No. Property Description and tenure occupancy 30 June 2009 HKD 12. Room 206 The property comprises a unit The property is No commercial value Building No. 7 on the 2nd floor of a currently occupied by No. 628 [25]-storey residential building the Group for staff Nong Zhangyang Road completed in about [1996]. quarter purpose. Pudong District Shanghai The property has a total lease The PRC area of approximately 82.62 sq.m. (or 753 sq.ft.) Pursuant to a Tenancy Agreement made between Sundart Engineering & Contracting (Beijing) Limited – Shanghai Branch, as Tenant and Huang Fang as Landlord [an independent third party], the property is leased by the Group for a term commencing from 30 December 2008 and expiring on 29 December 2009 at a monthly rental of RMB3,300 inclusive of management fees.

Notes:

We have been provided with a legal opinion on the legality of the tenancy agreement to the property issued by the Company’s PRC legal advisers, which contains, inter alia , the following:
a. The Tenancy Agreement regarding the property is legal, valid and binding. The lessor has rights to lease out the property and leasee has the rights to use the property according to the prescribed use as stated in the Tenancy Agreement; and
b. The Tenancy Agreement has not been registered with the relevant government authority, but the validity of the agreement will not be affected.

– IV-22 –

APPENDIX IV

PROPERTY VALUATION

VALUATION CERTIFICATE

Group IV – Property interests rented and occupied by the Group in Macau

Capital value in existing state Particulars of as at No. Property Description and tenure occupancy 30 June 2009 HKD 13. Units 1110, 11th Floor The property comprises a unit The property is No commercial value Macau Landmark on the 11th floor of a currently occupied by Nos. 549 – 567 25-storey office building the Group for office Avenida Da Amizade completed in about 1997. purpose. Macau The unit has a saleable area of approximately 204.288 sq.m. (or 2,199 sq.ft.). Pursuant to a Tenancy Agreement made between Sundart Engineering Services (Macau) Limited, as Tenant and New Macau Landmark Management Limited, as agent for Landlord [an independent third party], the property is leased by the Group for a term of 2 year commencing from 1 May 2008 and expiring on 30 April 2010 at a monthly rental of HKD40,261 exclusive of management fees, air-conditioning charges and other outgoings.

Notes:

The registered owner of the property is Empresa Administradora De Imoveis Macu Landmark, Limitada.
The Tenancy Agreement has not been registered and stamped with the relevant government authorities, according to the legal opinion issued by the Company’s Macau legal adviser, the validity of the agreement will not be affected but the Landlord will subject to a fine.

– IV-23 –

APPENDIX IV

PROPERTY VALUATION

VALUATION CERTIFICATE

Capital value
in existing state
Particulars of as at
No. Property Description and tenure occupancy 30 June 2009 HKD
1. Unit AD, 8th Floor The property comprises a unit The property is No commercial value Kin Fu Kuok on the 8th floor of a 23-storey currently occupied by Praca Kin Heng Long – residential building completed the Group for staff Heng Hoi Kuok in about 1995. quarter purpose. No. 94 Rua De Bruxelas Macau The unit has a saleable area of approximately 85.1 sq.m. (or 916 sq.ft.)

Pursuant to a Tenancy Agreement made between Sundart Engineering Services (Macau) Limited, as Tenant and Chung Va Tei Chan, as agent of Landlord [an independent third party], the property is leased by the Group for a term of 1 year commencing from 1 August 2008 and expiring on 31 July 2009 at a monthly rental of HKD7,500 exclusive of water and electricity charges and other outgoings.

Notes:

The registered owner of the property is Bennett, Andrew Geoffrey and Ho Suk Fan.
The Tenancy Agreement has not been registered and stamped with the relevant government authorities, according to the legal opinion issued by the Company’s Macau legal adviser, the validity of the agreement will not be affected but the Landlord will subject to a fine.

– IV-24 –

APPENDIX IV

PROPERTY VALUATION

VALUATION CERTIFICATE

Capital value in existing state Particulars of as at No. Property Description and tenure occupancy 30 June 2009 HKD 15. Unit B, 6th Floor The property comprises a unit The property is No commercial value Centro Polytex on the 6th floor of a 7-storey currently occupied by Estrada Marginal industrial building completed the Group for storage No. 45 Da Areia Preta in about 1987. purpose. Macau The unit has a saleable area of approximately 199.5 sq.m. (or 2,147 sq.ft.) Pursuant to a Tenancy Agreement made between Sundart Engineering Services (Macau) Limited, as Tenant and Leong Miu Kau, as Landlord [an independent third party], the property is leased by the Group for a term of 1 year commencing from 10 May 2008 and expiring on 9 May 2009 and has been mutual extended to 9 August 2009 on 6 April 2009 at a monthly rental of HKD5,000 exclusive of management fees and other outgoings.

Notes:

The registered owner of the property is Cheang Kai Tim and Leong Miu Kau.
The Tenancy Agreement has not been registered and stamped with the relevant government authorities, according to the legal opinion issued by the Company’s Macau legal adviser, the validity of the agreement will not be affected but the Landlord will subject to a fine.

– IV-25 –

APPENDIX IV

PROPERTY VALUATION

VALUATION CERTIFICATE

Capital value in existing state Particulars of as at No. Property Description and tenure occupancy 30 June 2009 HKD 16. Unit W, 5th Floor The property comprises a unit The property is No commercial value Ind. Kek Seng on the 5th floor of a 15-storey currently occupied by No. 41 industrial building completed the Group for storage Avenida Do Almirante in about 1989. purpose. Magalhaes Correia Macau The unit has a saleable area of approximately 160.54 sq.m. (or 1,728 sq.ft.) Pursuant to a Tenancy Agreement made between Sundart Engineering Services (Macau) Limited, as Tenant and Fong Mun Keng, as Landlord [an independent third party], the property is leased by the Group for a term of 2 year commencing from 20 July 2008 and expiring on 19 July 2010 at a monthly rental of HKD8,000 inclusive of management fees.

Notes:

The registered owner of the property is Lam Chek Pui and Fong Mun Keng.
The Tenancy Agreement has not been registered and stamped with the relevant government authorities, according to the legal opinion issued by the Company’s Macau legal adviser, the validity of the agreement will not be affected but the Landlord will subject to a fine.

– IV-26 –

APPENDIX IV

PROPERTY VALUATION

VALUATION CERTIFICATE

Capital value
in existing state
Particulars of as at
No. Property Description and tenure occupancy 30 June 2009 HKD
1. Unit F, 9th Floor The property comprises a unit The property is No commercial value Ind. Kek Seng on the 9th floor of a 15-storey currently occupied by No. 149 Avenida De industrial building completed the Group for storage Venceslau De Morais in about 1989. purpose. Macau The unit has a saleable area of approximately 171.84 sq.m. (or 1,850 sq.ft.) Pursuant to a Tenancy Agreement made between Sundart Engineering Services (Macau) Limited, as Tenant and Lao Kit Hong, as Landlord [an independent third party], the property is leased by the Group for a term of commencing from 27 February 2009 and expiring on 26 August 2009 at a monthly rental of HKD8,000 inclusive of management fees.

Notes:

The registered owner of the property is Lei Hong Meng and Lao Kit Hong.
The Tenancy Agreement has not been registered and stamped with the relevant government authorities, according to the legal opinion issued by the Company’s Macau legal adviser, the validity of the agreement will not be affected but the Landlord will subject to a fine.

– IV-27 –

APPENDIX IV

PROPERTY VALUATION

VALUATION CERTIFICATE

Capital value in existing state Particulars of as at No. Property Description and tenure occupancy 30 June 2009 HKD 18. Unit F, 6th Floor The property comprises a unit The property is No commercial value Nova Vila Chong San on the 6th floor of a 18-storey currently occupied by No. 36 Rua Da Barran residential building completed the Group for staff Macau in about 1984. quarter purpose. The unit has a saleable area of approximately 84.57 sq.m. (or 910 sq.ft.) Pursuant to a Tenancy Agreement made between Sundart Engineering Services (Macau) Limited, as Tenant and Nam Kwong Uniao Commercial E Industrial Limitada, as Landlord [an independent third party], the property is leased by the Group for a term of 2 year commencing from 1 October 2007 and expiring on 30 September 2009 at a monthly rental of HKD5,000 inclusive of management fees.

Notes:

The registered owner of the property is Nam Kwong Uniao Commercial E Industrial Limitada.
The Tenancy Agreement has not been registered and stamped with the relevant government authorities, according to the legal opinion issued by the Company’s Macau legal adviser, the validity of the agreement will not be affected but the Landlord will subject to a fine.

– IV-28 –

APPENDIX IV

PROPERTY VALUATION

VALUATION CERTIFICATE

Capital value
in existing state
Particulars of as at
No. Property Description and tenure occupancy 30 June 2009 HKD
1. Unit L, 15th Floor The property comprises a unit The property is No commercial value Lei Tou, Lei Wai, on the 15th floor of a currently occupied by Lei Ip 35-storey residential building the Group for staff Fa Seng Lei Hong completed in about 1998. quarter purpose. No. 181 Rua De Evora Na Taipa The unit has a saleable area of Macau approximately 80.39 sq.m. (or 865 sq.ft.) Pursuant to a Tenancy Agreement made between Sundart Engineering Services (Macau) Limited, as Tenant and Si Tou Ieng Ieng, as Landlord [an independent third party], the property is leased by the Group for a term of 1 year commencing from 18 October 2008 and expiring on 17 October 2009 at a monthly rental of HKD7,000 inclusive of management fees.

Notes:

The registered owner of the property is Si Tou Ieng Ieng and Chong Tong Man.
The Tenancy Agreement has not been registered and stamped with the relevant government authorities, according to the legal opinion issued by the Company’s Macau legal adviser, the validity of the agreement will not be affected but the Landlord will subject to a fine.

– IV-29 –

APPENDIX IV

PROPERTY VALUATION

VALUATION CERTIFICATE

Capital value
in existing state
Particulars of as at
No. Property Description and tenure occupancy 30 June 2009 HKD
1. Unit S, 9th Floor The property comprises a unit The property is No commercial value Lei Fung, Lei Hau on the 9th floor of a 39-storey currently occupied by Lei Yeng, Lei Mau residential building completed the Group for staff Fa Seng Lei Seng in about 1995. quarter purpose. No. 73 Rua De Nam Keng The unit has a saleable area of Na Taipa approximately 74 sq.m. (or Macau 796 sq.ft.)
Pursuant to a Tenancy Agreement made between Sundart Engineering Services (Macau) Limited, as Tenant and Loi Iao Hap, as agent of Landlord [an independent third party], the property is leased by the Group for a term of 1 year commencing from 17 October 2008 and expiring on 16 October 2009 at a monthly rental of HKD6,400 inclusive of management fees.

Notes:

The registered owner of the property is [Wu Suk Wah] ( ).
The Tenancy Agreement has not been registered and stamped with the relevant government authorities, according to the legal opinion issued by the Company’s Macau legal adviser, the validity of the agreement will not be affected but the Landlord will subject to a fine.

– IV-30 –

APPENDIX IV

PROPERTY VALUATION

VALUATION CERTIFICATE

Capital value
in existing state
Particulars of as at
No. Property Description and tenure occupancy 30 June 2009 HKD
1. Unit R, 14th Floor The property comprises a unit The property is No commercial value Chun Hung Garden on the 14th floor of a currently occupied by (Leong Iun, Foe Iu, 33-storey residential building the Group for [staff Pek Iun) completed in about 1993. quarter] purpose. Nos. 656 – 668 Avenida Dr. Sun Yat Sen The unit has a saleable area of (Taipa) approximately 71.7 sq.m. (or Na Taipa 772 sq.ft.) Macau Pursuant to a Tenancy Agreement made between Sundart Engineering Services (Macau) Limited, as Tenant and *Ge Zhiping, as Landlord [an independent third party], the property is leased by the Group for a term of 1 year commencing from 5 March 2009 and expiring on 4 March 2010 at a monthly rental of HKD6,000 inclusive of management fees.

Notes:

The registered owner of the property is Ge Zhiping.
The Tenancy Agreement has not been registered and stamped with the relevant government authorities, according to the legal opinion issued by the Company’s Macau legal adviser, the validity of the agreement will not be affected but the Landlord will subject to a fine.

– IV-31 –

APPENDIX IV

PROPERTY VALUATION

VALUATION CERTIFICATE

Capital value
in existing state
Particulars of as at
No. Property Description and tenure occupancy 30 June 2009 HKD
1. Unit H, 9th Floor The property comprises a unit The property is No commercial value Lei Lo, Lei Tak on the 9th floor of a 20-storey currently occupied by Lei Loi Tak Hoi Pan residential building completed the Group for staff Fa Un Tai Ha in about 1995. quarter purpose. No. 147 Avenida Dos Jardins Do Oceano The unit has a saleable area of Na Taipa approximately 79.728 sq.m. Macau (or 858 sq.ft.) Pursuant to a Tenancy Agreement made between Sundart Engineering Services (Macau) Limited, as Tenant and Sing Wui Reality, as agent of Landlord [an independent third party], the property is leased by the Group for a term of 1 year commencing from 28 April 2008 and expiring on 27 April 2010 at a monthly rental of HKD6,000 inclusive of management fees.

Notes:

The registered owner of the property is Chen Yaocheng.
The Tenancy Agreement has not been registered and stamped with the relevant government authorities, according to the legal opinion issued by the Company’s Macau legal adviser, the validity of the agreement will not be affected but the Landlord will subject to a fine.

– IV-32 –

APPENDIX IV

PROPERTY VALUATION

VALUATION CERTIFICATE

Capital value
in existing state
Particulars of as at
No. Property Description and tenure occupancy 30 June 2009 HKD
1. Unit D, 15th Floor The property comprises a unit The property is No commercial value Chun Hung Garden on the 15th floor of a currently occupied by (Leong Iun, Foe Iun, Pek 33-storey residential building the Group for staff Iun) completed in about 1993. quarter purpose. No. 615 Caminho Das Hortas The unit has a saleable area of Na Taipa approximately 73.2 sq.m. (or Macau 788 sq.ft.) Pursuant to a Tenancy Agreement made between Sundart Engineering Services (Macau) Limited, as Tenant and [Wong Yuen Chong] [( )], as agent of Landlord [an independent third party], the property is leased by the Group for a term of 1 year commencing from 2 May 2009 and expiring on 1 May 2010 at a monthly rental of HKD6,000 inclusive of management fees.

Notes:

The registered owner of the property is YuYongj Ia.
The Tenancy Agreement has not been registered and stamped with the relevant government authorities, according to the legal opinion issued by the Company’s Macau legal adviser, the validity of the agreement will not be affected but the Landlord will subject to a fine.

– IV-33 –

APPENDIX IV

PROPERTY VALUATION

VALUATION CERTIFICATE

Capital value
in existing state
Particulars of as at
No. Property Description and tenure occupancy 30 June 2009 HKD
1. Flat G, 10th Floor The property comprises a unit The property is No commercial value Chun Hung Garden on the 10th floor of a currently occupied by (Leong Iun, Foe Iun, 33-storey residential building the Group for staff Pek Iun) completed in about 1993. quarter purpose. Nos. 690 – 694 Avenida Dr. Sun Yat Sen The unit has a saleable area of (Taipa) approximately 85.3 sq.m. (or Na Taipa 918 sq.ft.) Macau Pursuant to a Tenancy Agreement made between Sundart Engineering Services (Macau) Limited, as Tenant and [Wu Kim Ling] [( )], as agent of Landlord [an independent third party], the property is leased by the Group for a term of 1 year commencing from 11 August 2008 and expiring on 10 August 2009 at a monthly rental of HKD7,500 inclusive of management fees.

Notes:

The registered owner of the property is Wu Yongzhong.
The Tenancy Agreement has not been registered and stamped with the relevant government authorities, according to the legal opinion issued by the Company’s Macau legal adviser, the validity of the agreement will not be affected but the Landlord will subject to a fine.

– IV-34 –

APPENDIX IV

PROPERTY VALUATION

VALUATION CERTIFICATE

Capital value
in existing state
Particulars of as at
No. Property Description and tenure occupancy 30 June 2009 HKD
1. Flat L, 2nd Floor The property comprises a unit The property is No commercial value Phase I Block 28, 30 on the 2nd floor of a currently occupied by Urbanizacao Da Nova 25-storey residential building the Group for staff Taipa completed in about 1997. quarter purpose. No. 442 Rua De Braganca The unit has a saleable area of Na Taipa approximately 97.16 sq.m. (or Macau 1,046 sq.ft.) Pursuant to a Tenancy Agreement made between Sundart Engineering Services (Macau) Limited, as Tenant and Peng Lixiang, as Landlord [an independent third party], the property is leased by the Group for a term of 1 year commencing from 20 August 2008 and expiring on 19 August 2009 at a monthly rental of HKD7,500 inclusive of management fees.

Notes:

The registered owner of the property is Peng Lixiang.
The Tenancy Agreement has not been registered and stamped with the relevant government authorities, according to the legal opinion issued by the Company’s Macau legal adviser, the validity of the agreement will not be affected but the Landlord will subject to a fine.

– IV-35 –

APPENDIX IV

PROPERTY VALUATION

VALUATION CERTIFICATE

Capital value
in existing state
Particulars of as at
No. Property Description and tenure occupancy 30 June 2009 HKD
1. Flat A, 3rd Floor The property comprises a unit The property is No commercial value Hung Ip Mansion on the 3rd floor of a 22-storey currently occupied by No. 221 Avenida De residential building completed the Group for staff Kwong Tung in about 1997. quarter purpose. Na Taipa Macau The unit has a saleable area of approximately 89.05 sq.m. (or 959 sq.ft.) Pursuant to a Tenancy Agreement made between Sundart Engineering Services (Macau) Limited, as Tenant and [Kong Kam Tai] ( ), as Landlord [an independent third party], the property is leased by the Group for a term of 1 year commencing from 12 September 2008 and expiring on 11 September 2009 at a monthly rental of HKD7,500 inclusive of management fees.

Notes:

The registered owner of the property is [Kong Kim Tai] ( ).
The Tenancy Agreement has not been registered and stamped with the relevant government authorities, according to the legal opinion issued by the Company’s Macau legal adviser, the validity of the agreement will not be affected but the Landlord will subject to a fine.

– IV-36 –

APPENDIX IV

PROPERTY VALUATION

VALUATION CERTIFICATE

Capital value in existing state Particulars of as at No. Property Description and tenure occupancy 30 June 2009 HKD 27. Flat D, 15th Floor The property comprises a unit The property is No commercial value Harvest Palace on the 15th floor of a currently occupied by Palacio Do Sucesso 26-storey residential building the Group for staff No. 410 Rua De Evora completed in about 2000. quarter purpose. Na Taipa Macau The unit has a saleable area of approximately 69.91 sq.m. (or 753 sq.ft.) Pursuant to a Tenancy Agreement made between Sundart Engineering Services (Macau) Limited, as Tenant and Huang Laixang, as Landlord [an independent third party], the property is leased by the Group for a term of 1 year commencing from 10 June 2008 and expiring on 9 June 2009 at a monthly rental of HKD6,500 inclusive of management fees.

Notes:

The registered owner of the property is Huang Laixiang and Wen Miaozhang.
The Tenancy Agreement has not been registered and stamped with the relevant government authorities, according to the legal opinion issued by the Company’s Macau legal adviser, the validity of the agreement will not be affected but the Landlord will subject to a fine.

– IV-37 –

APPENDIX IV

PROPERTY VALUATION

VALUATION CERTIFICATE

				Capital value
				in existing state
			Particulars of	as at
No.	Property	Description and tenure	occupancy	30 June 2009
				HKD
28.	CR/C (also known as Car	The property comprises a car	The property is	No commercial value
	Park No. 365)	park space on the ground floor	currently occupied by
	Block III, Phase I	of a 39-storey residential	the Group for car
	Urbanizacao Da Nova	building completed in about	parking purpose.
	Taipa	1996.
	Rua De Braganca Nos.
	286 – 470	Pursuant to a Tenancy
	Na Taipa	Agreement made between
	Macau	Sundart Engineering Services
		(Macau) Limited, as Tenant
		and Cheong Choi Hong, as
		Landlord [an independent
		third party], the property is
		leased by the Group for a
		term of 1 year commencing
		from 19 April 2009 and
		expiring on 18 April 2010 at a
		monthly rental of HKD800
		inclusive of management fees.

Notes:

The registered owner of the property is Cheong Choi Hong.
The Tenancy Agreement has not been registered and stamped with the relevant government authorities, according to the legal opinion issued by the Company’s Macau legal adviser, the validity of the agreement will not be affected but the Landlord will subject to a fine.

– IV-38 –

APPENDIX IV

PROPERTY VALUATION

VALUATION CERTIFICATE

				Capital value
				in existing state
			Particulars of	as at
No.	Property	Description and tenure	occupancy	30 June 2009
				HKD
29.	AM/Z (also known as	The property comprises a car	The property is	No commercial value
	Car Park No. 329)	park space on the mezzanine	currently occupied by
	Block III, Phase I	floor of a 39-storey office	the Group for car
	Nos. 286 – 470	building completed in about	parking purpose.
	Rua De Braganca	1996.
	Urbanizacao Da Nova
	Taipa	Pursuant to a Tenancy
	Na Taipa	Agreement made between
	Macau	Sundart Engineering Services
		(Macau) Limited, as Tenant
		Chao Iek Pan and Ao Ieong Ip
		Lin, as Landlord [an
		independent third party], the
		property is leased by the
		Group for a term of 1 year
		commencing from 10 May
		2009 and expiring on 9 May
		2010 at a monthly rental of
		HKD800 inclusive of
		management fees.

Notes:

The registered owner of the property is Chao Iek Pan and Ao Ieong Ip Lin.
The Tenancy Agreement has not been registered and stamped with the relevant government authorities, according to the legal opinion issued by the Company’s Macau legal adviser, the validity of the agreement will not be affected but the Landlord will subject to a fine.

– IV-39 –

APPENDIX IV

PROPERTY VALUATION

VALUATION CERTIFICATE

				Capital value
				in existing state
			Particulars of	as at
No.	Property	Description and tenure	occupancy	30 June 2009
				HKD
30.	BR/C (also known as Car	The property comprises a car	The property is	No commercial value
	Park No. 651)	park space on the ground floor	currently occupied by
	Block III, Phase I	of a 39-storey residential	the Group for car
	Urbanizacao Da Nova	building completed in about	parking purpose.
	Taipa	1996.
	Nos. 286 – 470
	Rua De Braganca	Pursuant to a Tenancy
	Na Taipa	Agreement made between
	Macau	Sundart Engineering Services
		(Macau) Limited, as Tenant
		and Yu Jiewen, as Landlord
		[an independent third party],
		the property is leased by the
		Group for a term of 1 year
		commencing from 16
		September 2008 and expiring
		on 15 September 2009 at a
		monthly rental of HKD800
		inclusive of management fees.

Notes:

The registered owner of the property is Yu Jiewen.
The Tenancy Agreement has not been registered and stamped with the relevant government authorities, according to the legal opinion issued by the Company’s Macau legal adviser, the validity of the agreement will not be affected but the Landlord will subject to a fine.

– IV-40 –

APPENDIX IV

PROPERTY VALUATION

VALUATION CERTIFICATE

Capital value
in existing state
Particulars of as at
No. Property Description and tenure occupancy 30 June 2009 HKD
1. Flat Y, 18th Floor The property comprises a unit The property is No commercial value Block III on the 18th floor of a currently occupied by Lok Chon ieng Hin 29-storey residential building the Group for staff No. 185 completed in about 2001. quarter purpose. Rua de Chiu Chau Na Taipa The unit has a saleable area of Macau approximately 91.41 sq.m. (or 984 sq.ft.) Pursuant to a Tenancy Agreement made between Sundart Engineering Services (Macau) Limited, as Tenant and [Kwok Tak Kwong] ( ), as agent of Landlord [an independent third party], the property is leased by the Group for a term of 1 year commencing from 8 June 2009 and expiring on 7 June 2010 at a monthly rental of HKD 6,000 inclusive of management fees.

Note: The registered owner of the property is Lin Yi-In.

– IV-41 –

APPENDIX IV

PROPERTY VALUATION

VALUATION CERTIFICATE

Group V -Property interests rent and occupied by the Group in State of Qatar

Capital value in existing state Particulars of as at No. Property Description and tenure occupancy 30 June 2009 HKD 32. Office Unit The property comprises a unit The property is No commercial value 2nd Floor and on the 2nd floor of a 6-storey currently occupied by 2 Car Parking Spaces commercial building the Group for office On Ground Floor completed in about [2008]. purpose. A1 Shareef Building Doha International The unit has a lettable area of Airport Area approximately 247 sq.m. (or Doha City 2,658 sq.ft.). State of Qatar Pursuant to a Tenancy Agreement made between Sundart Interior Contacting Middle East LLC, as Tenant and Alshareef Trading & Contracting Company, as Landlord [an independent third party], the property is leased by the Group for a term of commencing from 1 May 2009 and expiring on 1 May 2011 at a monthly rental of Qatari riyals 37,500 exclusive other outgoings.

– IV-42 –

APPENDIX V SUMMARY OF THE CONSTITUTION OF THE COMPANY AND CAYMAN ISLANDS COMPANY LAW

Set out below is a summary of certain provisions of the Memorandum and Articles of Association of the Company and of certain aspects of the Cayman Islands company law. The Company was incorporated in the Cayman Islands as an exempted company with limited liability on 27 April 2009 under the Companies Law. The Memorandum and Articles of Association comprise its constitution.

1. MEMORANDUM OF ASSOCIATION

(a) The Memorandum states, among others, that the liability of members of the Company is limited to the amount, if any, for the time being unpaid on the Shares respectively held by them and that the objects for which the Company is established are unrestricted (including acting as an investment company), and that the Company shall have and be capable of exercising all the functions of a natural person of full capacity irrespective of any question of corporate benefit, as provided in section 27(2) of the Companies Law and in view of the fact that the Company is an exempted company that the Company will not trade in the Cayman Islands with any person, firm or corporation except in furtherance of the business of the Company carried on outside the Cayman Islands.
(b) The Company may by special resolution alter its Memorandum with respect to any objects, powers or other matters specified therein.

2. ARTICLES OF ASSOCIATION

The Articles were adopted on [�] 2009. The following is a summary of certain provisions of the Articles:

(a) Directors

(i) Power to allot and issue shares and warrants

Subject to the provisions of the Companies Law and the Memorandum and Articles and to any special rights conferred on the holders of any shares or class of shares, any share may be issued with or have attached thereto such rights, or such restrictions, whether with regard to dividend, voting, return of capital, or otherwise, as the Company may by ordinary resolution determine (or, in the absence of any such determination or so far as the same may not make specific provision, as the board may determine). Subject to the Companies Law, the rules of any Designated Stock Exchange (as defined in the Articles) and the Memorandum and Articles, any share may be issued on terms that, at the option of the Company or the holder thereof, they are liable to be redeemed.

The board may issue warrants conferring the right upon the holders thereof to subscribe for any class of shares or securities in the capital of the Company on such terms as it may from time to time determine.

– V-1 –

APPENDIX V SUMMARY OF THE CONSTITUTION OF THE COMPANY AND CAYMAN ISLANDS COMPANY LAW

Subject to the provisions of the Companies Law and the Articles and, where applicable, the rules of any Designated Stock Exchange (as defined in the Articles) and without prejudice to any special rights or restrictions for the time being attached to any shares or any class of shares, all unissued shares in the Company shall be at the disposal of the board, which may offer, allot, grant options over or otherwise dispose of them to such persons, at such times, for such consideration and on such terms and conditions as it in its absolute discretion thinks fit, but so that no shares shall be issued at a discount.

Neither the Company nor the board shall be obliged, when making or granting any allotment of, offer of, option over or disposal of shares, to make, or make available, any such allotment, offer, option or shares to members or others with registered addresses in any particular territory or territories being a territory or territories where, in the absence of a registration statement or other special formalities, this would or might, in the opinion of the board, be unlawful or impracticable. Members affected as a result of the foregoing sentence shall not be, or be deemed to be, a separate class of members for any purpose whatsoever.

(ii) Power to dispose of the assets of the Company or any subsidiary

There are no specific provisions in the Articles relating to the disposal of the assets of the Company or any of its subsidiaries. The Directors may, however, exercise all powers and do all acts and things which may be exercised or done or approved by the Company and which are not required by the Articles or the Companies Law to be exercised or done by the Company in general meeting.

(iii) Compensation or payments for loss of office

Pursuant to the Articles, payments to any Director or past Director of any sum by way of compensation for loss of office or as consideration for or in connection with his retirement from office (not being a payment to which the Director is contractually entitled) must be approved by the Company in general meeting.

(iv) Loans and provision of security for loans to Directors

There are provisions in the Articles prohibiting the making of loans to Directors.

(v) Disclosure of interests in contracts with the Company or any of its subsidiaries

A Director may hold any other office or place of profit with the Company (except that of the auditor of the Company) in conjunction with his office of Director for such period and, subject to the Articles, upon such terms as the board may determine, and may be paid such extra remuneration therefor (whether by way of salary, commission, participation in profits or otherwise) in addition to any

– V-2 –

APPENDIX V SUMMARY OF THE CONSTITUTION OF THE COMPANY AND CAYMAN ISLANDS COMPANY LAW

remuneration provided for by or pursuant to any other Articles. A Director may be or become a director or other officer of, or otherwise interested in, any company promoted by the Company or any other company in which the Company may be interested, and shall not be liable to account to the Company or the members for any remuneration, profits or other benefits received by him as a director, officer or member of, or from his interest in, such other company. Subject as otherwise provided by the Articles, the board may also cause the voting power conferred by the shares in any other company held or owned by the Company to be exercised in such manner in all respects as it thinks fit, including the exercise thereof in favour of any resolution appointing the Directors or any of them to be directors or officers of such other company, or voting or providing for the payment of remuneration to the directors or officers of such other company.

Subject to the Companies Law and the Articles, no Director or proposed or intended Director shall be disqualified by his office from contracting with the Company, either with regard to his tenure of any office or place of profit or as vendor, purchaser or in any other manner whatsoever, nor shall any such contract or any other contract or arrangement in which any Director is in any way interested be liable to be avoided, nor shall any Director so contracting or being so interested be liable to account to the Company or the members for any remuneration, profit or other benefits realised by any such contract or arrangement by reason of such Director holding that office or the fiduciary relationship thereby established. A Director who to his knowledge is in any way, whether directly or indirectly, interested in a contract or arrangement or proposed contract or arrangement with the Company shall declare the nature of his interest at the meeting of the board at which the question of entering into the contract or arrangement is first taken into consideration, if he knows his interest then exists, or in any other case, at the first meeting of the board after he knows that he is or has become so interested.

A Director shall not vote (nor be counted in the quorum) on any resolution of the board approving any contract or arrangement or other proposal in which he or any of his associates is materially interested, but this prohibition shall not apply to any of the following matters, namely:

(aa) any contract or arrangement for giving to such Director or his associate(s) any security or indemnity in respect of money lent by him or any of his associates or obligations incurred or undertaken by him or any of his associates at the request of or for the benefit of the Company or any of its subsidiaries;
(bb) any contract or arrangement for the giving of any security or indemnity to a third party in respect of a debt or obligation of the Company or any of its subsidiaries for which the Director or his associate(s) has himself/themselves assumed responsibility in whole or in part whether alone or jointly under a guarantee or indemnity or by the giving of security;

– V-3 –

APPENDIX V SUMMARY OF THE CONSTITUTION OF THE COMPANY AND CAYMAN ISLANDS COMPANY LAW

(cc) any contract or arrangement concerning an offer of shares or debentures or other securities of or by the Company or any other company which the Company may promote or be interested in for subscription or purchase, where the Director or his associate(s) is/are or is/are to be interested as a participant in the underwriting or sub-underwriting of the offer;
(dd) any contract or arrangement in which the Director or his associate(s) is/ are interested in the same manner as other holders of shares or debentures or other securities of the Company by virtue only of his/ their interest in shares or debentures or other securities of the Company;
(ee) any contract or arrangement concerning any other company in which the Director or his associate(s) is/are interested only, whether directly or indirectly, as an officer or executive or a shareholder or in which the Director and any of his associates are not in aggregate beneficially interested in 5 percent. or more of the issued shares or of the voting rights of any class of shares of such company (or of any third company through which his interest or that of any of his associates is derived); or
(ff) any proposal or arrangement concerning the adoption, modification or operation of a share option scheme, a pension fund or retirement, death, or disability benefits scheme or other arrangement which relates both to Directors, his associates and employees of the Company or of any of its subsidiaries and does not provide in respect of any Director, or his associate(s), as such any privilege or advantage not accorded generally to the class of persons to which such scheme or fund relates.

(vi) Remuneration

The ordinary remuneration of the Directors shall from time to time be determined by the Company in general meeting, such sum (unless otherwise directed by the resolution by which it is voted) to be divided among the Directors in such proportions and in such manner as the board may agree or, failing agreement, equally, except that any Director holding office for part only of the period in respect of which the remuneration is payable shall only rank in such division in proportion to the time during such period for which he held office. The Directors shall also be entitled to be prepaid or repaid all travelling, hotel and incidental expenses reasonably expected to be incurred or incurred by them in attending any board meetings, committee meetings or general meetings or separate meetings of any class of shares or of debentures of the Company or otherwise in connection with the discharge of their duties as Directors.

– V-4 –

APPENDIX V SUMMARY OF THE CONSTITUTION OF THE COMPANY AND CAYMAN ISLANDS COMPANY LAW

Any Director who, by request, goes or resides abroad for any purpose of the Company or who performs services which in the opinion of the board go beyond the ordinary duties of a Director may be paid such extra remuneration (whether by way of salary, commission, participation in profits or otherwise) as the board may determine and such extra remuneration shall be in addition to or in substitution for any ordinary remuneration as a Director. An executive Director appointed to be a managing director, joint managing director, deputy managing director or other executive officer shall receive such remuneration (whether by way of salary, commission or participation in profits or otherwise or by all or any of those modes) and such other benefits (including pension and/or gratuity and/or other benefits on retirement) and allowances as the board may from time to time decide. Such remuneration may be either in addition to or in lieu of his remuneration as a Director.

The board may establish or concur or join with other companies (being subsidiary companies of the Company or companies with which it is associated in business) in establishing and making contributions out of the Company’s monies to any schemes or funds for providing pensions, sickness or compassionate allowances, life assurance or other benefits for employees (which expression as used in this and the following paragraph shall include any Director or ex-Director who may hold or have held any executive office or any office of profit with the Company or any of its subsidiaries) and ex-employees of the Company and their dependents or any class or classes of such persons.

The board may pay, enter into agreements to pay or make grants of revocable or irrevocable, and either subject or not subject to any terms or conditions, pensions or other benefits to employees and ex-employees and their dependents, or to any of such persons, including pensions or benefits additional to those, if any, to which such employees or ex-employees or their dependents are or may become entitled under any such scheme or fund as is mentioned in the previous paragraph. Any such pension or benefit may, as the board considers desirable, be granted to an employee either before and in anticipation of, or upon or at any time after, his actual retirement.

(vii) Retirement, appointment and removal

At each annual general meeting, one third of the Directors for the time being (or if their number is not a multiple of three, then the number nearest to but not less than one third) will retire from office by rotation provided that every Director shall be subject to retirement at an annual general meeting at least once every three years. The Directors to retire in every year will be those who have been longest in office since their last re-election or appointment but as between persons who became or were last re-elected Directors on the same day those to retire will (unless they otherwise agree among themselves) be determined by lot. There are no provisions relating to retirement of Directors upon reaching any age limit.

– V-5 –

APPENDIX V SUMMARY OF THE CONSTITUTION OF THE COMPANY AND CAYMAN ISLANDS COMPANY LAW

The Directors shall have the power from time to time and at any time to appoint any person as a Director either to fill a casual vacancy on the board or as an addition to the existing board. Any Director appointed to fill a casual vacancy shall hold office until the first general meeting of members after his appointment and be subject to re-election at such meeting and any Director appointed as an addition to the existing board shall hold office only until the next following annual general meeting of the Company and shall then be eligible for re-election. Neither a Director nor an alternate Director is required to hold any shares in the Company by way of qualification.

A Director may be removed by an ordinary resolution of the Company before the expiration of his period of office (but without prejudice to any claim which such Director may have for damages for any breach of any contract between him and the Company) and may by ordinary resolution appoint another in his place. Unless otherwise determined by the Company in general meeting, the number of Directors shall not be less than two. There is no maximum number of Directors.

The office or director shall be vacated:

(aa) if he resigns his office by notice in writing delivered to the Company at the registered office of the Company for the time being or tendered at a meeting of the Board;
(bb) becomes of unsound mind or dies;
(cc) if, without special leave, he is absent from meetings of the board (unless an alternate director appointed by him attends) for six (6) consecutive months, and the board resolves that his office is vacated;
(dd) if he becomes bankrupt or has a receiving order made against him or suspends payment or compounds with his creditors;
(ee) if he is prohibited from being a director by law;
(ff) if he ceases to be a director by virtue of any provision of law or is removed from office pursuant to the Articles.

The board may from time to time appoint one or more of its body to be managing director, joint managing director, or deputy managing director or to hold any other employment or executive office with the Company for such period and upon such terms as the board may determine and the board may revoke or terminate any of such appointments. The board may delegate any of its powers, authorities and discretions to committees consisting of such Director or Directors and other persons as the board thinks fit, and it may from time to time revoke such delegation or revoke the appointment of and discharge any such committees either wholly or in part, and either as to persons or purposes, but every committee

– V-6 –

APPENDIX V SUMMARY OF THE CONSTITUTION OF THE COMPANY AND CAYMAN ISLANDS COMPANY LAW

so formed shall, in the exercise of the powers, authorities and discretions so delegated, conform to any regulations that may from time to time be imposed upon it by the board.

(viii) Borrowing powers

The board may exercise all the powers of the Company to raise or borrow money, to mortgage or charge all or any part of the undertaking, property and assets (present and future) and uncalled capital of the Company and, subject to the Companies Law, to issue debentures, bonds and other securities of the Company, whether outright or as collateral security for any debt, liability or obligation of the Company or of any third party.

Note: These provisions, in common with the Articles in general, can be varied with the sanction of a special resolution of the Company.

(ix) Proceedings of the Board

The board may meet for the despatch of business, adjourn and otherwise regulate their meetings as they think fit. Questions arising at any meeting shall be determined by a majority of votes. In the case of an equality of votes, the chairman of the meeting shall have an additional or casting vote.

(x) Register of Directors and Officers

The Companies Law and the Articles provide that the Company is required to maintain at its registered office a register of directors and officers which is not available for inspection by the public. A copy of such register must be filed with the Registrar of Companies in the Cayman Islands and any change must be notified to the Registrar within thirty (30) days of any change in such directors or officers.

(b) Alterations to constitutional documents

The Articles may be rescinded, altered or amended by the Company in general meeting by special resolution. The Articles state that a special resolution shall be required to alter the provisions of the Memorandum, to amend the Articles or to change the name of the Company.

(c) Alteration of capital

The Company may from time to time by ordinary resolution in accordance with the relevant provisions of the Companies Law:

(i) increase its capital by such sum, to be divided into shares of such amounts as the resolution shall prescribe;

– V-7 –

APPENDIX V SUMMARY OF THE CONSTITUTION OF THE COMPANY AND CAYMAN ISLANDS COMPANY LAW

(ii) consolidate and divide all or any of its capital into shares of larger amount than its existing shares;
(iii) divide its shares into several classes and without prejudice to any special rights previously conferred on the holders of existing shares attach thereto respectively any preferential, deferred, qualified or special rights, privileges, conditions or restrictions as the Company in general meeting or as the directors may determine;
(iv) sub-divide its shares or any of them into shares of smaller amount than is fixed by the Memorandum, subject nevertheless to the provisions of the Companies Law, and so that the resolution whereby any share is sub-divided may determine that, as between the holders of the shares resulting from such sub-division, one or more of the shares may have any such preferred or other special rights, over, or may have such deferred rights or be subject to any such restrictions as compared with the others as the Company has power to attach to unissued or new shares; or
(v) cancel any shares which, at the date of passing of the resolution, have not been taken, or agreed to be taken, by any person, and diminish the amount of its capital by the amount of the shares so cancelled.

The Company may subject to the provisions of the Companies Law reduce its share capital or any capital redemption reserve or other undistributable reserve in any way by special resolution.

(d) Variation of rights of existing shares or classes of shares

Subject to the Companies Law, all or any of the special rights attached to the shares or any class of shares may (unless otherwise provided for by the terms of issue of that class) be varied, modified or abrogated either with the consent in writing of the holders of not less than three-fourths in nominal value of the issued shares of that class or with the sanction of a special resolution passed at a separate general meeting of the holders of the shares of that class. To every such separate general meeting the provisions of the Articles relating to general meetings will mutatis mutandis apply, but so that the necessary quorum (other than at an adjourned meeting) shall be two persons holding or representing by proxy not less than one-third in nominal value of the issued shares of that class and at any adjourned meeting two holders present in person or by proxy whatever the number of shares held by them shall be a quorum. Every holder of shares of the class shall be entitled to one vote for every such share held by him.

The special rights conferred upon the holders of any shares or class of shares shall not, unless otherwise expressly provided in the rights attaching to the terms of issue of such shares, be deemed to be varied by the creation or issue of further shares ranking pari passu therewith.

– V-8 –

APPENDIX V SUMMARY OF THE CONSTITUTION OF THE COMPANY AND CAYMAN ISLANDS COMPANY LAW

(e) Special resolution-majority required

Pursuant to the Articles, a special resolution of the Company must be passed by a majority of not less than three-fourths of the votes cast by such members as, being entitled so to do, vote in person or, in the case of such members as are corporations, by their duly authorised representatives or, where proxies are allowed, by proxy at a general meeting of which notice of not less than twenty-one (21) clear days’ and not less than ten (10) clear business days specifying the intention to propose the resolution as a special resolution, has been duly given. Provided that if permitted by the Designated Stock Exchange (as defined in the Articles), except in the case of an annual general meeting, if it is so agreed by a majority in number of the members having a right to attend and vote at such meeting, being a majority together holding not less than ninety-five (95) per cent. In nominal value of the shares giving that right and, in the case of an annual general meeting, if so agreed by all Members entitled to attend and vote thereat, a resolution may be proposed and passed as a special resolution at a meeting of which notice of less than twenty-one (21) clear days’ and less than ten (10) clear business days has been given.

A copy of any special resolution must be forwarded to the Registrar of Companies in the Cayman Islands within fifteen (15) days of being passed.

An ordinary resolution is defined in the Articles to mean a resolution passed by a simple majority of the votes of such members of the Company as, being entitled to do so, vote in person or, in the case of corporations, by their duly authorised representatives or, where proxies are allowed, by proxy at a general meeting held in accordance with the Articles.

(f) Voting rights

Subject to any special rights or restrictions as to voting for the time being attached to any shares by or in accordance with the Articles, at any general meeting on a poll every member present in person or by proxy or, in the case of a member being a corporation, by its duly authorised representative shall have one vote for every fully paid share of which he is the holder but so that no amount paid up or credited as paid up on a share in advance of calls or instalments is treated for the foregoing purposes as paid up on the share. A member entitled to more than one vote need not use all his votes or cast all the votes he uses in the same way.

At any general meeting a resolution put to the vote of the meeting is to be decided by way of a poll.

If a recognised clearing house (or its nominee(s)) is a member of the Company it may authorise such person or persons as it thinks fit to act as its representative(s) at any meeting of the Company or at any meeting of any class of members of the Company provided that, if more than one person is so authorised, the authorisation shall specify the number and class of shares in respect of which each such person is so authorised. A person authorised pursuant to this provision shall be deemed to have been

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APPENDIX V SUMMARY OF THE CONSTITUTION OF THE COMPANY AND CAYMAN ISLANDS COMPANY LAW

duly authorised without further evidence of the facts and be entitled to exercise the same powers on behalf of the recognised clearing house (or its nominee(s)) as if such person was the registered holder of the shares of the Company held by that clearing house (or its nominee(s)).

Where the Company has any knowledge that any shareholder is, under the rules of the Designated Stock Exchange (as defined in the Articles), required to abstain from voting on any particular resolution of the Company or restricted to voting only for or only against any particular resolution of the Company, any votes cast by or on behalf of such shareholder in contravention of such requirement or restriction shall not be counted.

(g) Requirements for annual general meetings

An annual general meeting of the Company must be held in each year, other than the year of adoption of the Articles (within a period of not more than 15 months after the holding of the last preceding annual general meeting or a period of 18 months from the date of adoption of the Articles, unless a longer period would not infringe the rules of any Designated Stock Exchange (as defined in the Articles)) at such time and place as may be determined by the board.

(h) Accounts and audit

The board shall cause true accounts to be kept of the sums of money received and expended by the Company, and the matters in respect of which such receipt and expenditure take place, and of the property, assets, credits and liabilities of the Company and of all other matters required by the Companies Law or necessary to give a true and fair view of the Company’s affairs and to explain its transactions.

The accounting records shall be kept at the registered office or at such other place or places as the board decides and shall always be open to inspection by any Director. No member (other than a Director) shall have any right to inspect any accounting record or book or document of the Company except as conferred by law or authorised by the board or the Company in general meeting.

A copy of every balance sheet and profit and loss account (including every document required by law to be annexed thereto) which is to be laid before the Company at its general meeting, together with a printed copy of the Directors’ report and a copy of the auditors’ report, shall not less than twenty-one (21) days before the date of the meeting and at the same time as the notice of annual general meeting be sent to every person entitled to receive notices of general meetings of the Company under the provisions the Articles; however, subject to compliance with all applicable laws, including the rules of the Designated Stock Exchange (as defined in the Articles), the Company may send to such persons summarised financial statements derived from the Company’s annual accounts and the directors’ report instead provided that any such

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APPENDIX V SUMMARY OF THE CONSTITUTION OF THE COMPANY AND CAYMAN ISLANDS COMPANY LAW

person may by notice in writing served on the Company, demand that the Company sends to him, in addition to summarised financial statements, a complete printed copy of the Company’s annual financial statement and the directors’ report thereon.

Auditors shall be appointed and the terms and tenure of such appointment and their duties at all times regulated in accordance with the provisions of the Articles. The remuneration of the auditors shall be fixed by the Company in general meeting or in such manner as the members may determine.

The financial statements of the Company shall be audited by the auditor in accordance with generally accepted auditing standards. The auditor shall make a written report thereon in accordance with generally accepted auditing standards and the report of the auditor shall be submitted to the members in general meeting. The generally accepted auditing standards referred to herein may be those of a country or jurisdiction other than the Cayman Islands. If so, the financial statements and the report of the auditor should disclose this fact and name such country or jurisdiction.

(i) Notices of meetings and business to be conducted thereat

An annual general meeting shall be called by notice of not less than twenty-one (21) clear days and not less than twenty (20) clear business days and any extraordinary general meeting at which it is proposed to pass a special resolution shall (save as set out in sub-paragraph (e) above) be called by notice of at least twenty-one (21) clear days’ and not less than ten (10) clear business days. All other extraordinary general meeting shall be called by notice of at least fourteen (14) clear days’ and not less than ten (10) clear business days. The notice must specify the time and place of the meeting and, in the case of special business, the general nature of that business. In addition notice of every general meeting shall be given to all members of the Company other than such as, under the provisions of the Articles or the terms of issue of the shares they hold, are not entitled to receive such notices from the Company, and also to the auditors for the time being of the Company.

Notwithstanding that a meeting of the Company is called by shorter notice than that mentioned above if permitted by the rules of the Designated Stock Exchange, it shall be deemed to have been duly called if it is so agreed:

(i) in the case of a meeting called as an annual general meeting, by all members of the Company entitled to attend and vote thereat; and
(ii) in the case of any other meeting, by a majority in number of the members having a right to attend and vote at the meeting, being a majority together holding not less than ninety-five (95) per cent in nominal value of the issued shares giving that right.

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APPENDIX V SUMMARY OF THE CONSTITUTION OF THE COMPANY AND CAYMAN ISLANDS COMPANY LAW

All business shall be deemed special that is transacted at an extraordinary general meeting and also all business shall be deemed special that is transacted at an annual general meeting with the exception of the following, which shall be deemed ordinary business:

(aa) the declaration and sanctioning of dividends;
(bb) the consideration and adoption of the accounts and balance sheet and the reports of the directors and the auditors;
(cc) the election of directors in place of those retiring;
(dd) the appointment of auditors and other officers;
(ee) the fixing of the remuneration of the directors and of the auditors;
(ff) the granting of any mandate or authority to the directors to offer, allot, grant options over or otherwise dispose of the unissued shares of the Company representing not more than twenty (20) per cent in nominal value of its existing issued share capital; and
(gg) the granting of any mandate or authority to the directors to repurchase securities of the Company.

(j) Transfer of shares

All transfers of shares may be effected by an instrument of transfer in the usual or common form or in a form prescribed by the Designated Stock Exchange (as defined in the Articles) or in such other form as the board may approve and which may be under hand or, if the transferor or transferee is a clearing house or its nominee(s), by hand or by machine imprinted signature or by such other manner of execution as the board may approve from time to time. The instrument of transfer shall be executed by or on behalf of the transferor and the transferee provided that the board may dispense with the execution of the instrument of transfer by the transferee in any case in which it thinks fit, in its discretion, to do so and the transferor shall be deemed to remain the holder of the share until the name of the transferee is entered in the register of members in respect thereof. The board may also resolve either generally or in any particular case, upon request by either the transferor or the transferee, to accept mechanically executed transfers.

The board in so far as permitted by any applicable law may, in its absolute discretion, at any time and from time to time transfer any share upon the principal register to any branch register or any share on any branch register to the principal register or any other branch register.

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APPENDIX V SUMMARY OF THE CONSTITUTION OF THE COMPANY AND CAYMAN ISLANDS COMPANY LAW

Unless the board otherwise agrees, no shares on the principal register shall be transferred to any branch register nor may shares on any branch register be transferred to the principal register or any other branch register. All transfers and other documents of title shall be lodged for registration and registered, in the case of shares on a branch register, at the relevant registration office and, in the case of shares on the principal register, at the registered office in the Cayman Islands or such other place at which the principal register is kept in accordance with the Companies Law.

The board may, in its absolute discretion, and without assigning any reason, refuse to register a transfer of any share (not being a fully paid up share) to a person of whom it does not approve or any share issued under any share incentive scheme for employees upon which a restriction on transfer imposed thereby still subsists, and it may also refuse to register any transfer of any share to more than four joint holders or any transfer of any share (not being a fully paid up share) on which the Company has a lien.

The board may decline to recognise any instrument of transfer unless a fee of such maximum sum as any Designated Stock Exchange (as defined in the Articles) may determine to be payable or such lesser sum as the Directors may from time to time require is paid to the Company in respect thereof, the instrument of transfer, if applicable, is properly stamped, is in respect of only one class of share and is lodged at the relevant registration office or registered office or such other place at which the principal register is kept accompanied by the relevant share certificate(s) and such other evidence as the board may reasonably require to show the right of the transferor to make the transfer (and if the instrument of transfer is executed by some other person on his behalf, the authority of that person so to do).

The registration of transfers may be suspended and the register closed on giving notice by advertisement in a relevant newspaper and, where applicable, any other newspapers in accordance with the requirements of any Designated Stock Exchange (as defined in the Articles), at such times and for such periods as the board may determine and either generally or in respect of any class of shares. The register of members shall not be closed for periods exceeding in the whole thirty (30) days in any year.

(k) Power for the Company to purchase its own shares

The Company is empowered by the Companies Law and the Articles to purchase its own Shares subject to certain restrictions and the Board may only exercise this power on behalf of the Company subject to any applicable requirements imposed from time to time by any Designated Stock Exchange (as defined in the Articles).

(l) Power for any subsidiary of the Company to own shares in the Company

There are no provisions in the Articles relating to ownership of shares in the Company by a subsidiary.

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APPENDIX V SUMMARY OF THE CONSTITUTION OF THE COMPANY AND CAYMAN ISLANDS COMPANY LAW

(m) Dividends and other methods of distribution

Subject to the Companies Law, the Company in general meeting may declare dividends in any currency to be paid to the members but no dividend shall be declared in excess of the amount recommended by the board.

The Articles provide dividends may be declared and paid out of the profits of the Company, realised or unrealised, or from any reserve set aside from profits which the directors determine is no longer needed. With the sanction of an ordinary resolution dividends may also be declared and paid out of share premium account or any other fund or account which can be authorised for this purpose in accordance with the Companies Law.

Except in so far as the rights attaching to, or the terms of issue of, any share may otherwise provide, (i) all dividends shall be declared and paid according to the amounts paid up on the shares in respect whereof the dividend is paid but no amount paid up on a share in advance of calls shall for this purpose be treated as paid up on the share and (ii) all dividends shall be apportioned and paid pro rata according to the amount paid up on the shares during any portion or portions of the period in respect of which the dividend is paid. The Directors may deduct from any dividend or other monies payable to any member or in respect of any shares all sums of money (if any) presently payable by him to the Company on account of calls or otherwise.

Whenever the board or the Company in general meeting has resolved that a dividend be paid or declared on the share capital of the Company, the board may further resolve either (a) that such dividend be satisfied wholly or in part in the form of an allotment of shares credited as fully paid up, provided that the shareholders entitled thereto will be entitled to elect to receive such dividend (or part thereof) in cash in lieu of such allotment, or (b) that shareholders entitled to such dividend will be entitled to elect to receive an allotment of shares credited as fully paid up in lieu of the whole or such part of the dividend as the board may think fit. The Company may also upon the recommendation of the board by an ordinary resolution resolve in respect of any one particular dividend of the Company that it may be satisfied wholly in the form of an allotment of shares credited as fully paid up without offering any right to shareholders to elect to receive such dividend in cash in lieu of such allotment.

Any dividend, interest or other sum payable in cash to the holder of shares may be paid by cheque or warrant sent through the post addressed to the holder at his registered address, or in the case of joint holders, addressed to the holder whose name stands first in the register of the Company in respect of the shares at his address as appearing in the register or addressed to such person and at such addresses as the holder or joint holders may in writing direct. Every such cheque or warrant shall, unless the holder or joint holders otherwise direct, be made payable to the order of the holder or, in the case of joint holders, to the order of the holder whose name stands first on the register in respect of such shares, and shall be sent at his or their risk and payment of the cheque or warrant by the bank on which it is drawn shall constitute a

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APPENDIX V SUMMARY OF THE CONSTITUTION OF THE COMPANY AND CAYMAN ISLANDS COMPANY LAW

good discharge to the Company. Any one of two or more joint holders may give effectual receipts for any dividends or other moneys payable or property distributable in respect of the shares held by such joint holders.

Whenever the board or the Company in general meeting has resolved that a dividend be paid or declared the board may further resolve that such dividend be satisfied wholly or in part by the distribution of specific assets of any kind.

All dividends or bonuses unclaimed for one year after having been declared may be invested or otherwise made use of by the board for the benefit of the Company until claimed and the Company shall not be constituted a trustee in respect thereof. All dividends or bonuses unclaimed for six years after having been declared may be forfeited by the board and shall revert to the Company.

No dividend or other monies payable by the Company on or in respect of any share shall bear interest against the Company.

(n) Proxies

Any member of the Company entitled to attend and vote at a meeting of the Company is entitled to appoint another person as his proxy to attend and vote instead of him. A member who is the holder of two or more shares may appoint more than one proxy to represent him and vote on his behalf at a general meeting of the Company or at a class meeting. A proxy need not be a member of the Company and shall be entitled to exercise the same powers on behalf of a member who is an individual and for whom he acts as proxy as such member could exercise. In addition, a proxy shall be entitled to exercise the same powers on behalf of a member which is a corporation and for which he acts as proxy as such member could exercise if it were an individual member. Votes may be given either personally (or, in the case of a member being a corporation, by its duly authorised representative) or by proxy.

(o) Call on shares and forfeiture of shares

Subject to the Articles and to the terms of allotment, the board may from time to time make such calls upon the members in respect of any monies unpaid on the shares held by them respectively (whether on account of the nominal value of the shares or by way of premium). A call may be made payable either in one lump sum or by instalments. If the sum payable in respect of any call or instalment is not paid on or before the day appointed for payment thereof, the person or persons from whom the sum is due shall pay interest on the same at such rate not exceeding twenty (20) per cent. per annum as the board may agree to accept from the day appointed for the payment thereof to the time of actual payment, but the board may waive payment of such interest wholly or in part. The board may, if it thinks fit, receive from any member willing to advance the same, either in money or money’s worth, all or any part of the monies uncalled and unpaid or instalments payable upon any shares held by him, and upon all or any of the monies so advanced the Company may pay interest at such rate (if any) as the board may decide.

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APPENDIX V SUMMARY OF THE CONSTITUTION OF THE COMPANY AND CAYMAN ISLANDS COMPANY LAW

If a member fails to pay any call on the day appointed for payment thereof, the board may serve not less than fourteen (14) clear days’ notice on him requiring payment of so much of the call as is unpaid, together with any interest which may have accrued and which may still accrue up to the date of actual payment and stating that, in the event of non-payment at or before the time appointed, the shares in respect of which the call was made will be liable to be forfeited.

If the requirements of any such notice are not complied with, any share in respect of which the notice has been given may at any time thereafter, before the payment required by the notice has been made, be forfeited by a resolution of the board to that effect. Such forfeiture will include all dividends and bonuses declared in respect of the forfeited share and not actually paid before the forfeiture.

A person whose shares have been forfeited shall cease to be a member in respect of the forfeited shares but shall, notwithstanding, remain liable to pay to the Company all monies which, at the date of forfeiture, were payable by him to the Company in respect of the shares, together with (if the board shall in its discretion so require) interest thereon from the date of forfeiture until the date of actual payment at such rate not exceeding twenty (20) per cent. per annum as the board determines.

(p) Inspection of register of members

Pursuant to the Articles the register and branch register of members shall be open to inspection for at least two (2) hours on every business day by members without charge, or by any other person upon a maximum payment of HK$2.50 or such lesser sum specified by the board, at the registered office or such other place at which the register is kept in accordance with the Companies Law or, upon a maximum payment of HK$1.00 or such lesser sum specified by the board, at the Registration Office (as defined in the Articles), unless the register is closed in accordance with the Articles.

(q) Quorum for meetings and separate class meetings

No business shall be transacted at any general meeting unless a quorum is present when the meeting proceeds to business, but the absence of a quorum shall not preclude the appointment of a chairman.

Save as otherwise provided by the Articles the quorum for a general meeting shall be two members present in person (or, in the case of a member being a corporation, by its duly authorised representative) or by proxy and entitled to vote. In respect of a separate class meeting (other than an adjourned meeting) convened to sanction the modification of class rights the necessary quorum shall be two persons holding or representing by proxy not less than one-third in nominal value of the issued shares of that class.

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APPENDIX V SUMMARY OF THE CONSTITUTION OF THE COMPANY AND CAYMAN ISLANDS COMPANY LAW

A corporation being a member shall be deemed for the purpose of the Articles to be present in person if represented by its duly authorised representative being the person appointed by resolution of the directors or other governing body of such corporation to act as its representative at the relevant general meeting of the Company or at any relevant general meeting of any class of members of the Company.

(r) Rights of the minorities in relation to fraud or oppression

There are no provisions in the Articles relating to rights of minority shareholders in relation to fraud or oppression. However, certain remedies are available to shareholders of the Company under Cayman law, as summarised in paragraph 3(f) of this Appendix.

(s) Procedures on liquidation

A resolution that the Company be wound up by the court or be wound up voluntarily shall be a special resolution.

Subject to any special rights, privileges or restrictions as to the distribution of available surplus assets on liquidation for the time being attached to any class or classes of shares (i) if the Company shall be wound up and the assets available for distribution among the members of the Company shall be more than sufficient to repay the whole of the capital paid up at the commencement of the winding up, the excess shall be distributed pari passu among such members in proportion to the amount paid up on the shares held by them respectively and (ii) if the Company shall be wound up and the assets available for distribution among the members as such shall be insufficient to repay the whole of the paid-up capital, such assets shall be distributed so that, as nearly as may be, the losses shall be borne by the members in proportion to the capital paid up, or which ought to have been paid up, at the commencement of the winding up on the shares held by them respectively.

If the Company shall be wound up (whether the liquidation is voluntary or by the court) the liquidator may, with the authority of a special resolution and any other sanction required by the Companies Law divide among the members in specie or kind the whole or any part of the assets of the Company whether the assets shall consist of property of one kind or shall consist of properties of different kinds and the liquidator may, for such purpose, set such value as he deems fair upon any one or more class or classes of property to be divided as aforesaid and may determine how such division shall be carried out as between the members or different classes of members. The liquidator may, with the like authority, vest any part of the assets in trustees upon such trusts for the benefit of members as the liquidator, with the like authority, shall think fit, but so that no contributory shall be compelled to accept any shares or other property in respect of which there is a liability.

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APPENDIX V SUMMARY OF THE CONSTITUTION OF THE COMPANY AND CAYMAN ISLANDS COMPANY LAW

(t) Untraceable members

Pursuant to the Articles, the Company may sell any of the shares of a member who is untraceable if (i) all cheques or warrants in respect of dividends of the shares in question (being not less than three in total number) for any sum payable in cash to the holder of such shares have remained uncashed for a period of 12 years; (ii) upon the expiry of the 12 year period, the Company has not during that time received any indication of the existence of the member; and (iii) the Company has caused an advertisement to be published in accordance with the rules of the Designated Stock Exchange (as defined in the Articles) giving notice of its intention to sell such shares and a period of three months, or such shorter period as may be permitted by the Designated Stock Exchange (as defined in the Articles), has elapsed since the date of such advertisement and the Designated Stock Exchange (as defined in the Articles) has been notified of such intention. The net proceeds of any such sale shall belong to the Company and upon receipt by the Company of such net proceeds, it shall become indebted to the former member of the Company for an amount equal to such net proceeds.

(u) Subscription rights reserve

The Articles provide that to the extent that it is not prohibited by and is in compliance with the Companies Law, if warrants to subscribe for shares have been issued by the Company and the Company does any act or engages in any transaction which would result in the subscription price of such warrants being reduced below the par value of a share, a subscription rights reserve shall be established and applied in paying up the difference between the subscription price and the par value of a share on any exercise of the warrants.

3. CAYMAN ISLANDS COMPANY LAW

The Company is incorporated in the Cayman Islands subject to the Companies Law and, therefore, operates subject to Cayman Islands law. Set out below is a summary of certain provisions of Cayman Islands company law, although this does not purport to contain all applicable qualifications and exceptions or to be a complete review of all matters of Cayman Islands company law and taxation, which may differ from equivalent provisions in jurisdictions with which interested parties may be more familiar:

(a) Operations

As an exempted company, the Company’s operations must be conducted mainly outside the Cayman Islands. The Company is required to file an annual return each year with the Registrar of Companies of the Cayman Islands and pay a fee which is based on the amount of its authorised share capital.

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APPENDIX V SUMMARY OF THE CONSTITUTION OF THE COMPANY AND CAYMAN ISLANDS COMPANY LAW

(b) Share capital

The Companies Law provides that where a company issues shares at a premium, whether for cash or otherwise, a sum equal to the aggregate amount of the value of the premiums on those shares shall be transferred to an account, to be called the “share premium account”. At the option of a company, these provisions may not apply to premiums on shares of that company allotted pursuant to any arrangement in consideration of the acquisition or cancellation of shares in any other company and issued at a premium. The Companies Law provides that the share premium account may be applied by the company subject to the provisions, if any, of its memorandum and articles of association in (a) paying distributions or dividends to members; (b) paying up unissued shares of the company to be issued to members as fully paid bonus shares; (c) the redemption and repurchase of shares (subject to the provisions of section 37 of the Companies Law); (d) writing-off the preliminary expenses of the company; (e) writing-off the expenses of, or the commission paid or discount allowed on, any issue of shares or debentures of the company; and (f) providing for the premium payable on redemption or purchase of any shares or debentures of the company.

No distribution or dividend may be paid to members out of the share premium account unless immediately following the date on which the distribution or dividend is proposed to be paid, the company will be able to pay its debts as they fall due in the ordinary course business.

The Companies Law provides that, subject to confirmation by the Grand Court of the Cayman Islands (the “Court”), a company limited by shares or a company limited by guarantee and having a share capital may, if so authorised by its articles of association, by special resolution reduce its share capital in any way.

The Articles includes certain protections for holders of special classes of shares, requiring their consent to be obtained before their rights may be varied. The consent of the specified proportions of the holders of the issued shares of that class or the sanction of a resolution passed at a separate meeting of the holders of those shares is required.

(c) Financial assistance to purchase shares of a company or its holding company

Subject to all applicable laws, the Company may give financial assistance to Directors and employees of the Company, its subsidiaries, its holding company or any subsidiary of such holding company in order that they may buy Shares in the Company or shares in any subsidiary or holding company. Further, subject to all applicable laws, the Company may give financial assistance to a trustee for the acquisition of Shares in the Company or shares in any such subsidiary or holding company to be held for the benefit of employees of the Company, its subsidiaries, any holding company of the Company or any subsidiary of any such holding company (including salaried Directors).

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APPENDIX V SUMMARY OF THE CONSTITUTION OF THE COMPANY AND CAYMAN ISLANDS COMPANY LAW

There is no statutory restriction in the Cayman Islands on the provision of financial assistance by a company to another person for the purchase of, or subscription for, its own or its holding company’s shares. Accordingly, a company may provide financial assistance if the directors of the company consider, in discharging their duties of care and acting in good faith, for a proper purpose and in the interests of the company, that such assistance can properly be given. Such assistance should be on an arm’s-length basis.

(d) Purchase of shares and warrants by a company and its subsidiaries

Subject to the provisions of the Companies Law, a company limited by shares or a company limited by guarantee and having a share capital may, if so authorised by its articles of association, issue shares which are to be redeemed or are liable to be redeemed at the option of the company or a shareholder. In addition, such a company may, if authorised to do so by its articles of association, purchase its own shares, including any redeemable shares. However, if the articles of association do not authorise the manner or purchase, a company cannot purchase any of its own shares unless the manner of purchase has first been authorised by an ordinary resolution of the company. At no time may a company redeem or purchase its shares unless they are fully paid. A company may not redeem or purchase any of its shares if, as a result of the redemption or purchase, there would no longer be any member of the company holding shares. A payment out of capital by a company for the redemption or purchase of its own shares is not lawful unless immediately following the date on which the payment is proposed to be made, the company shall be able to pay its debts as they fall due in the ordinary course of business.

A company is not prohibited from purchasing and may purchase its own warrants subject to and in accordance with the terms and conditions of the relevant warrant instrument or certificate. There is no requirement under Cayman Islands law that a company’s memorandum or articles of association contain a specific provision enabling such purchases and the directors of a company may rely upon the general power contained in its memorandum of association to buy and sell and deal in personal property of all kinds.

Under Cayman Islands law, a subsidiary may hold shares in its holding company and, in certain circumstances, may acquire such shares.

(e) Dividends and distributions

With the exception of section 34 of the Companies Law, there is no statutory provisions relating to the payment of dividends. Based upon English case law, which is regarded as persuasive in the Cayman Islands, dividends may be paid only out of profits. In addition, section 34 of the Companies Law permits, subject to a solvency test and the provisions, if any, of the company’s memorandum and articles of association, the payment of dividends and distributions out of the share premium account (see paragraph 2(m) above for further details).

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APPENDIX V SUMMARY OF THE CONSTITUTION OF THE COMPANY AND CAYMAN ISLANDS COMPANY LAW

(f) Protection of minorities

The Cayman Islands courts ordinarily would be expected to follow English case law precedents which permit a minority shareholder to commence a representative action against or derivative actions in the name of the company to challenge (a) an act which is ultra vires the company or illegal, (b) an act which constitutes a fraud against the minority and the wrongdoers are themselves in control of the company, and (c) an irregularity in the passing of a resolution which requires a qualified (or special) majority.

In the case of a company (not being a bank) having a share capital divided into shares, the Court may, on the application of members holding not less than one fifth of the shares of the company in issue, appoint an inspector to examine into the affairs of the company and to report thereon in such manner as the Court shall direct.

Any shareholder of a company may petition the Court which may make a winding up order if the Court is of the opinion that it is just and equitable that the company should be wound up or, as an alternative to a winding up order, (a) an order regulating the conduct of the company’s affairs in the future, (b) an order requiring the company to refrain from doing or continuing an act complained of by the shareholder petitioner or to do an act which the shareholder petitioner has complained it has omitted to do, (c) an order authorising civil proceedings to be brought in the name and on behalf of the company by the shareholder petitioner on such terms as the Court may direct, or (d) an order providing for the purchase of the shares of any shareholders of the company by other shareholders or by the company itself and, in the case of a purchase by the company itself, a reduction of the company’s capital accordingly.

Generally claims against a company by its shareholders must be based on the general laws of contract or tort applicable in the Cayman Islands or their individual rights as shareholders as established by the company’s memorandum and articles of association.

(g) Management

The Companies Law contains no specific restrictions on the power of directors to dispose of assets of a company. However, as a matter of general law, every officer of a company, which includes a director, managing director and secretary, in exercising his powers and discharging his duties must do so honestly and in good faith with a view to the best interests of the company and exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances.

(h) Accounting and auditing requirements

A company shall cause proper books of account to be kept with respect to (i) all sums of money received and expended by the company and the matters in respect of which the receipt and expenditure takes place; (ii) all sales and purchases of goods by the company; and (iii) the assets and liabilities of the company.

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APPENDIX V SUMMARY OF THE CONSTITUTION OF THE COMPANY AND CAYMAN ISLANDS COMPANY LAW

Proper books of account shall not be deemed to be kept if there are not kept such books as are necessary to give a true and fair view of the state of the company’s affairs and to explain its transactions.

(i) Exchange control

There are no exchange control regulations or currency restrictions in the Cayman Islands.

(j) Taxation

Pursuant to section 6 of the Tax Concessions Law (1999 Revision) of the Cayman Islands, the Company has obtained an undertaking from the Governor-in-Cabinet:

(1) that no law which is enacted in the Cayman Islands imposing any tax to be levied on profits, income, gains or appreciation shall apply to the Company or its operations; and
(2) that the aforesaid tax or any tax in the nature of estate duty or inheritance tax shall not be payable on or in respect of the shares, debentures or other obligations of the Company.

The undertaking for the Company is for a period of twenty years from 12 May 2009.

The Cayman Islands currently levy no taxes on individuals or corporations based upon profits, income, gains or appreciations and there is no taxation in the nature of inheritance tax or estate duty. There are no other taxes likely to be material to the Company levied by the Government of the Cayman Islands save certain stamp duties which may be applicable, from time to time, on certain instruments executed in or brought within the jurisdiction of the Cayman Islands. The Cayman Islands are not party to any double tax treaties.

(k) Stamp duty on transfers

No stamp duty is payable in the Cayman Islands on transfers of shares of Cayman Islands companies except those which hold interests in land in the Cayman Islands.

(l) Loans to directors

There is no express provision in the Companies Law prohibiting the making of loans by a company to any of its directors.

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APPENDIX V SUMMARY OF THE CONSTITUTION OF THE COMPANY AND CAYMAN ISLANDS COMPANY LAW

(m) Inspection of corporate records

Members of the Company will have no general right under the Companies Law to inspect or obtain copies of the register of members or corporate records of the Company. They will, however, have such rights as may be set out in the Articles.

An exempted company may, subject to the provisions of its articles of association, maintain its principal register of members and any branch registers at such locations, whether within or without the Cayman Islands, as the directors may, from time to time, think fit. There is no requirement under the Companies Law for an exempted company to make any returns of members to the Registrar of Companies of the Cayman Islands. The names and addresses of the members are, accordingly, not a matter of public record and are not available for public inspection.

(n) Winding up

A company may be wound up compulsorily by the Court; voluntarily; or, under supervision of the Court. The Court has authority to order winding up in a number of specified circumstances including where it is, in the opinion of the Court, just and equitable to do so.

A company may be wound up voluntarily when the members so resolve in general meeting by special resolution, or, in the case of a limited duration company, when the period fixed for the duration of the company by its memorandum expires, or the event occurs on the occurrence of which the memorandum provides that the company is to be dissolved, or, the company does not commence business for a year from its incorporation (or suspends its business for a year), or, the company is unable to pay its debts. In the case of a voluntary winding up, such company is obliged to cease to carry on its business from the time of passing the resolution for voluntary winding up or upon the expiry of the period or the occurrence of the event referred to above.

For the purpose of conducting the proceedings in winding up a company and assisting the Court, there may be appointed one or more than one person to be called an official liquidator or official liquidators; and the Court may appoint to such office such qualified person or persons, either provisionally or otherwise, as it thinks fit, and if more persons than one are appointed to such office, the Court shall declare whether any act hereby required or authorised to be done by the official liquidator is to be done by all or any one or more of such persons. The Court may also determine whether any and what security is to be given by an official liquidator on his appointment; if no official liquidator is appointed, or during any vacancy in such office, all the property of the company shall be in the custody of the Court. A person shall be qualified to accept an appointment as an official liquidator if he is duly qualified in terms of the Insolvency Practitioners Regulations. A foreign practitioner may be appointed to act jointly with a qualified insolvency practitioner.

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APPENDIX V SUMMARY OF THE CONSTITUTION OF THE COMPANY AND CAYMAN ISLANDS COMPANY LAW

In the case of a members’ voluntary winding up of a company, the company in general meeting must appoint one or more liquidators for the purpose of winding up the affairs of the company and distributing its assets. A declaration of solvency must be signed by all the directors of a company being voluntarily wound up within twenty-eight (28) days of the commencement of the liquidation, failing which, its liquidator must apply to Court for an order that the liquidation continue under the supervision of the Court.

Upon the appointment of a liquidator, the responsibility for the company’s affairs rests entirely in his hands and no future executive action may be carried out without his approval. A liquidator’s duties are to collect the assets of the company (including the amount (if any) due from the contributories), settle the list of creditors and, subject to the rights of preferred and secured creditors and to any subordination agreements or rights of set-off or netting of claims, discharge the company’s liability to them (pari passu if insufficient assets exist to discharge the liabilities in full) and to settle the list of contributories (shareholders) and divide the surplus assets (if any) among them in accordance with the rights attaching to the shares.

As soon as the affairs of the company are fully wound up, the liquidator must make up an account of the winding up, showing how the winding up has been conducted and the property of the company has been disposed of, and thereupon call a general meeting of the company for the purposes of laying before it the account and giving an explanation thereof. At least twenty-one (21) days before the final meeting, the liquidator shall send a notice specifying the time, place and object of the meeting to each contributory in any manner authorised by the company’s articles of association and published in the Gazette in the Cayman Islands.

(o) Reconstructions

There are statutory provisions which facilitate reconstructions and amalgamations approved by a majority in number representing seventy-five (75) per cent. in value of shareholders or class of shareholders or creditors, as the case may be, as are present at a meeting called for such purpose and thereafter sanctioned by the Court. Whilst a dissenting shareholder would have the right to express to the Court his view that the transaction for which approval is sought would not provide the shareholders with a fair value for their shares, the Court is unlikely to disapprove the transaction on that ground alone in the absence of evidence of fraud or bad faith on behalf of management.

(p) Compulsory acquisition

Where an offer is made by a company for the shares of another company and, within four months of the offer, the holders of not less than ninety (90) per cent. of the shares which are the subject of the offer accept, the offeror may at any time within two months after the expiration of the said four months, by notice in the prescribed manner require the dissenting shareholders to transfer their shares on the terms of the offer. A dissenting shareholder may apply to the Court within one month of the notice objecting

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APPENDIX V SUMMARY OF THE CONSTITUTION OF THE COMPANY AND CAYMAN ISLANDS COMPANY LAW

to the transfer. The burden is on the dissenting shareholder to show that the Court should exercise its discretion, which it will be unlikely to do unless there is evidence of fraud or bad faith or collusion as between the offeror and the holders of the shares who have accepted the offer as a means of unfairly forcing out minority shareholders.

(q) Indemnification

Cayman Islands law does not limit the extent to which a company’s articles of association may provide for indemnification of officers and directors, except to the extent any such provision may be held by the court to be contrary to public policy (e.g. for purporting to provide indemnification against the consequences of committing a crime).

4. GENERAL

Conyers Dill & Pearman, the legal advisers to the Company as to Cayman Islands law, have sent to the Company a letter of advice summarising certain aspects of Cayman Islands company law. This letter, together with a copy of the Companies Law, is available for inspection as referred to in the section headed “Documents available for inspection” in Appendix VII to this document. Any person wishing to have a detailed summary of Cayman Islands company law or advice on the differences between it and the laws of any jurisdiction with which he is more familiar is recommended to seek independent legal advice.

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APPENDIX VI

STATUTORY AND GENERAL INFORMATION

A. FURTHER INFORMATION ABOUT OUR COMPANY

1. Incorporation of our Company

Our Company was incorporated in the Cayman Islands under the Companies Law as an exempted company with limited liability on 27 April 2009. Our Company has established its principal place of business in Hong Kong at 7/F, Millennium City 3, 370 Kwun Tong Road, Kowloon, Hong Kong and has been registered as a non-Hong Kong company under Part XI of the Companies Ordinance since 8 June 2009. In connection with such registration, our Company has appointed Mr. Wong of Flat C, 4/F, Block 16, Provident Centre, 51 Wharf Road, North Point, Hong Kong and Mr. Yip of Flat H, 28/F, Tien Shan Mansion, Kao Shan Terrace, Taikoo Shing, Hong Kong as the authorised representatives of our Company for the acceptance of service of process and notices on behalf of our Company in Hong Kong.

As our Company is incorporated in the Cayman Islands, it operates subject to the Companies Law and to its constitution comprising the Memorandum and the Articles. A summary of various provisions of our Company’s constitution and certain relevant aspects of the Companies Law is set out in Appendix V to this document.

2. Changes in the share capital of our Company

As at the date of incorporation of our Company, its authorised share capital was HK$390,000 divided into 39,000,000 Shares of HK$0.01 each.

On 27 April 2009, one subscriber’s Share was transferred to Mr. Wong. On the same day, our Company issued and allotted for cash at par, 5,780 Shares to Golden Tiger, 2,500 Shares to Mr. Ng, 1,020 Shares to Mr. Leung and 699 Shares to Mr. Wong.

Pursuant to the written resolutions of all the Shareholders referred to under the section headed “Further information about our Company – Written resolutions of all the Shareholders passed on 3 August 2009” below, the authorised share capital of our Company was increased from HK$390,000 to HK$10,000,000 by the creation of an additional 961,000,000 Shares.

On 3 August 2009, our Company issued and allotted 20,227,110 Shares, 20,227,110 Shares, 17,497,500 Shares, 7,138,980 Shares and 4,899,300 Shares, all credited as fully paid, to Tiger Crown, Scenemay Holdings, Mr. Ng, Mr. Leung and Mr. Wong respectively in consideration of Tiger Crown, Scenemay Holdings, Mr. Ng, Mr. Leung and Mr. Wong transferring 1,474 shares, 1,474 shares, 1,275 shares, 520 shares and 357 shares of US$1.00 each in the share capital of Sundart Holdings to our Company pursuant to the deed for sale and purchase dated 3 August 2009 entered into between Tiger Crown, Scenemay Holdings, Mr. Ng, Mr. Leung and Mr. Wong as vendors and warrantors, Mr. Chan as warrantor and our Company as purchaser.

Assuming that the [�] becomes unconditional and the issues of the Shares pursuant to the [�] and the Capitalisation Issue mentioned herein are made, but taking no account of any Shares which may be issued upon the exercise of the [�], the issued share capital of our Company will be HK$4,800,000 divided into 480,000,000 Shares fully paid or credited as

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STATUTORY AND GENERAL INFORMATION

fully paid. Other than pursuant to any options which may be granted under the Share Option Scheme, the exercise of the [�] or the exercise of the general mandate to issue shares referred to in the section headed “Further information about our Company – Written resolutions of all the Shareholders passed on 3 August 2009” in this Appendix VI, there is no present intention to issue any part of the authorised but unissued share capital of our Company and, without prior approval of the Shareholders in general meeting, no issue of Shares will be made which would effectively alter the control of our Company.

Save as disclosed herein and under the section headed “Further information about our Company – Corporate reorganisation” in this Appendix VI, there has been no alteration in the share capital of our Company since its incorporation.

3. Written resolutions of all the Shareholders passed on 3 August 2009

On 3 August 2009, written resolutions of all the Shareholders were passed pursuant to which, among others:

(a) the authorised share capital of our Company was increased from HK$390,000 to HK$10,000,000 by the creation of an additional 961,000,000 Shares;
(b) the deed for sale and purchase dated 3 August 2009 entered into by (i) Tiger Crown, Scenemay Holdings, Mr. Ng, Mr Leung and Mr. Wong as vendors and warrantors, (ii) Mr. Chan as warrantor, and (iii) our Company as purchaser was approved and the allotment of a total of 69,990,000 Shares as to 20,227,110 Shares, 20,227,110 Shares, 17,497,500 Shares, 7,138,980 Shares and 4,899,300 Shares to Tiger Crown, Scenemay Holdings, Mr. Ng, Mr. Leung and Mr. Wong respectively in consideration of Tiger Crown, Scenemay Holdings, Mr. Ng, Mr. Leung and Mr. Wong transferring 1,474 shares, 1,474 shares, 1,275 shares, 520 shares and 357 shares of US$1.00 each in the share capital of Sundart Holdings respectively to our Company was approved;
(c) our Company approved and adopted the Articles;
(d) conditional on (A) the Listing Committee granting the listing of, and permission to deal in, the Shares in issue and the Shares to be issued as mentioned herein (including any Shares which may be issued pursuant to the [�], the [�] and the Share Option Scheme); and (B) the entering into of the agreement on the [�] between the Global Coordinator and our Company; and (C) the obligations of the [�] under the [�] becoming unconditional (including, if relevant, as a result of the waiver of any condition(s) by the Global Coordinator and not being terminated in accordance with the terms of such agreements or otherwise, in each case on or before the date determined in accordance with the terms of the [�]:
(i) the [�] was approved and our Directors were authorised to effect the same and to allot and issue the [�];
(ii) the [�] was approved and our Directors were authorised to allot and issue any Shares which may be required to be issued if the [�] is exercised;

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STATUTORY AND GENERAL INFORMATION

(iii) the rules of the Share Option Scheme were approved and adopted and our Directors were authorised, at their absolute discretion, to grant options to subscribe for Shares under the Share Option Scheme and to allot, issue and deal with Shares issued pursuant thereunder and to take all such steps as they consider necessary or desirable to implement the Share Option Scheme and to vote on any matter connected therewith notwithstanding that they or any of them may be interested in the same; and
(iv) conditional upon the share premium amount of our Company being credited as a result of the [�], our Directors were authorised to capitalise the amount of HK$2,900,000 from the amount standing to the credit of the share premium account of our Company to pay up in full at par 290,000,000 Shares for allotment and issue to the person(s) whose name(s) appears on the register of members of our Company at the close of business on [3] August 2009, pro-rata to its/their then existing shareholdings in our Company;
(e) a general unconditional mandate was given to our Directors to exercise all the powers of our Company to allot, issue and deal with (otherwise than by way of rights issue or an issue of shares upon the exercise of any subscription or conversion rights attached to any warrants or any securities which are convertible into Shares or pursuant to the exercise of any options which may be granted under the Share Option Scheme, any other option scheme or similar arrangement for the time being adopted for the grant or issue to officers and/or employees of our Company and/or any of its subsidiaries or any other person of share or rights to acquire Shares or any scrip dividend schemes or similar arrangements providing for the allotment and issue of Shares in lieu of the whole or part of a dividend on Shares in accordance with the Articles or a specific authority granted by the Shareholders in general meeting) any unissued Shares with a total nominal value not exceeding 20% of the aggregate of the total nominal value of the share capital of our Company in issue immediately following completion of the [�] and the Capitalisation Issue (excluding any Shares that may be issued upon exercise of the [�]) and to make or grant offers, agreements and options (including but not limited to warrants, bonds or debentures convertible into Shares) which might require the exercise of such power to issue Shares during or after the end of the Relevant Period (as defined below), such mandate to remain in effect during the period (the “Relevant Period”) from 3 August 2009 to whichever is the earliest of:
(i) the conclusion of the next annual general meeting of our Company;
(ii) the expiration of the period within which the next annual general meeting of our Company is required by the Articles or any applicable laws of the Cayman Islands to be held; or
(iii) the passing of an ordinary resolution of the Shareholders in general meeting revoking, varying or renewing such mandate;

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(f) a general unconditional mandate was given to our Directors authorising them to exercise all powers of our Company to repurchase on the Stock Exchange or on any other stock exchange on which the Shares may be listed and which is recognised by the SFC and the Stock Exchange for this purpose such number of Shares with a total nominal value not exceeding 10% of the aggregate of the total nominal value of the share capital of our Company in issue immediately following completion of the [�] and the Capitalisation Issue (excluding any Shares that may be issued upon exercise of the [�]), such mandate to remain in effect until whichever is the earliest of:
(i) the conclusion of the next annual general meeting of our Company;
(ii) the expiration of the period within which the next annual general meeting of our Company is required by the Articles or applicable laws of the Cayman Islands to be held; or
(iii) the passing of an ordinary resolution of the Shareholders in general meeting revoking, varying or renewing such mandate;
(g) the general unconditional mandate mentioned in paragraph (e) above was extended by the addition to the aggregate nominal value of the share capital of our Company which may be allotted or agreed conditionally or unconditionally to be allotted by our Directors pursuant to such general mandate of an amount representing the aggregate nominal value of the share capital of our Company repurchased by our Company pursuant to the mandate to repurchase Shares referred to in paragraph (f) above provided that such extended amount shall not exceed 10% of the aggregate of the total nominal value of the share capital of our Company in issue immediately following completion of the [�].

4. Corporate reorganisation

The companies comprising our Group underwent the Reorganisation to rationalise our Group’s structure in preparation for the Listing. The Reorganisation involved the following:

(a) On 11 November 2008, Sundart Products was incorporated in the BVI and 1 share of US$1.00 each in its share capital was issued and allotted to Sundart Holdings for cash at par.
(b) On 1 December 2008, Sundart Investments transferred the entire issued share capital of Sundart International to Sundart Products at a consideration of HK$10,000.
(c) On 1 December 2008, Sundart Investments transferred the entire issued share capital of Sundart (Middle East) to Sundart Development at a consideration of HK$1.00. On 2 January 2009, Sundart (Middle East) issued and allotted, for cash at par, 1,400 shares of HK$1.00 each to each of Jubin Kodinjyil Thomas and Anastasia Chistyakova and 4,200 shares of HK$1.00 each to Sundart Development. On 16 March 2009, each of Jubin Kodinjyil Thomas and Anastasia

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STATUTORY AND GENERAL INFORMATION

Chistyakova transferred 1,400 shares of HK$1.00 each in Sundart (Middle East) to Sundart Development at a cash consideration of HK$1,400, such consideration was determined after arm’s length negotiation between the relevant parties based on the nominal value of the shares being sold and purchased having considered that Sundart (Middle East) has not commenced operation yet.

(d) On 1 April 2009, Golden Tiger transferred 520 shares of US$1.00 each in the share capital of Sundart Holdings, representing approximately 10.2% interest in Sundart Holdings to Mr. Leung at a consideration of HK$26,874,710 which was determined based on and represented by approximately 10.2% of the net asset value per share of Sundart Holdings as at 31 March 2009 as shown in its audited balance sheet, such consideration was determined after arm’s length negotiation between the relevant parties with reference to the net asset value of Sundart Holdings as at 31 March 2009.
(e) On 27 April 2009, our Company was incorporated in the Cayman Islands and one subscriber’s Share was transferred to Mr. Wong. On the same day, our Company issued and allotted for cash at par, 5,780 Shares to Golden Tiger, 2,500 Shares to Mr. Ng, 1,020 Shares to Mr. Leung and 699 Shares to Mr. Wong.
(f) On 17 May 2009, Sundart Interior was incorporated in Qatar.
(g) On 17 May 2009, 4,700, 5,100, 100 and 100 shares of QAR1,000 each of Sundart Interior were subscribed by and allotted to Sundart (Middle East), Messrs. Abdullatteef Mohammed A Al-Kuwari, Jubin Kodinjyil Thomas and Anastasia Chistyakova respectively.
(h) On 31 July 2009, Golden Tiger transferred all its 2,948 shares of US$1.00 each in the share capital of Sundart Holdings to each of Tiger Crown and Scenemay Holdings in equal shares at a total cash consideration of HK$152,290,026, which was determined after arm’s length negotiation between the relevant parties with reference to the audited net asset value of Sundart Holdings as at 31 March 2009.
(i) On 31 July 2009, Golden Tiger transferred all its 5,780 Shares to each of Tiger Crown and Scenemay Holdings in equal shares at a total cash consideration of HK$57.80, being the total nominal value of the Shares purchased and sold.
(j) On 3 August 2009, our Company issued and allotted 20,227,110 Shares, 20,227,110 Shares, 17,497,500 Shares, 7,138,980 Shares and 4,899,300 Shares, all credited as fully paid, to Tiger Crown, Scenemay Holdings, Mr. Ng, Mr. Leung and Mr. Wong respectively in consideration of Tiger Crown, Scenemay Holdings, Mr. Ng, Mr. Leung and Mr. Wong transferring 1,474 shares, 1,474 shares, 1,275 shares, 520 shares and 357 shares of US$1.00 each in the share capital of Sundart Holdings to our Company pursuant to a deed for sale and purchase dated 3 August 2009 entered into between Tiger Crown, Scenemay Holdings, Mr. Ng, Mr. Leung and Mr. Wong as vendors and warrantors, Mr. Chan as warrantor and our Company as purchaser.

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5. Changes in the share capital of subsidiaries of our Company

Our Company’s subsidiaries are referred to in the accountants’ report for our Company, the text of which is set out in Appendix I to this document. The following alterations in the share capital of our Company’s subsidiaries have taken place within the two years preceding the date of this document:

(a) Sundart Holdings

On 4 July 2007, Sundart Holdings issued and allotted, for cash at par, 3,400 shares of US$1.00 each to Octopus Network Limited, 1,250 shares of US$1.00 each to Mr. Ng and 350 shares of US$1.00 each to Mr. Wong.

(b) Sundart (Middle East)

On 8 December 2008, Sundart (Middle East) increased its authorised share capital from HK$10,000 to HK$20,000 by the creation of an additional 10,000 shares of HK$1.00 each. On 2 January 2009, Sundart (Middle East) issued and allotted, for cash at par, 4,200 shares of HK$1.00 each to Sundart Development, 1,400 shares of HK$1.00 each to Jubin Kodinjyil Thomas and 1,400 shares of HK$1.00 each to Anastasia Chistyakova.

(c) Sundart Development

Following its incorporation on 21 May 2008, Sundart Development issued and allotted, for cash at par, 1 share of US$1.00 to Sundart Holdings on 20 June 2008.

(d) Sundart Products

Following its incorporation on 11 November 2008, Sundart Products issued and allotted, for cash at par, 1 share of US$1.00 to Sundart Holdings on 11 November 2008.

(e) Sundart Interior

Following the incorporation of Sundart Interior, on 17 May 2009, 4,700, 5,100, 100 and 100 shares of QAR1,000 each of Sundart Interior were subscribed by and allotted to Sundart (Middle East), Messrs. Abdullatteef Mohammed A Al-Kuwari, Jubin Kodinjyil Thomas and Anastasia Chistyakova respectively.

(f) Sundart (Beijing)

On 22 May 2009, the registered capital of Sundart (Beijing) was increased from HK$18 million to HK$28 million.

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STATUTORY AND GENERAL INFORMATION

Save as aforesaid, there has been no alteration in the share capital of the subsidiaries of our Company within the two years preceding the date of this document.

6. Repurchase by our Company of its own securities

This paragraph includes the information required by the Stock Exchange to be included in this document concerning the repurchase by our Company of its own securities.

(a) Regulations of the Listing Rules

The Listing Rules permit companies whose primary listing is on the Stock Exchange to repurchase their securities on the Stock Exchange subject to certain restrictions, the most important of which are summarised below:

(i) Shareholders’ approval

All repurchases of securities on the Stock Exchange by a company with its primary listing on the Stock Exchange must be approved in advance by an ordinary resolution, either by way of general mandate or by specific approval in relation to specific transactions.

Note: Pursuant to the written resolution of all the Shareholders passed on 3 August 2009, the Share Repurchase Mandate was given to the Directors authorising any repurchase by our Company of Shares as described above in the section headed “Further information about our Company – Written resolutions of all the Shareholders passed on 3 August 2009”.

(ii) Source of funds

Any repurchases must be financed out of funds legally available for the purpose in accordance with the Memorandum and the Articles and the applicable laws and regulations of the Cayman Islands.

(b) Exercise of the Share Repurchase Mandate

Exercise in full of the Share Repurchase Mandate, on the basis of 480,000,000 Shares in issue immediately after completion of the [�] (but taking no account of any Shares which may be issued upon the exercise of the [�] and any options which may be granted under the Share Option Scheme), could accordingly result in up to 48,000,000 Shares being repurchased by our Company during the course of the period prior to the earliest of:

(i) the conclusion of the next annual general meeting of our Company;
(ii) the expiration of the period within which the next annual general meeting of our Company is required by the Articles and the applicable laws and regulations of the Cayman Islands to be held; or

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STATUTORY AND GENERAL INFORMATION

APPENDIX VI

(iii) the revocation, variation or renewal of the Share Repurchase Mandate by ordinary resolution of the Shareholders in general meeting.

(c) Reasons for repurchases

Repurchases of Shares will only be made when our Directors believe that such a repurchase will benefit our Company and the Shareholders as a whole. Such repurchases may, depending on market conditions and funding arrangements at that time, lead to an enhancement of the net asset value of our Company and/or its earnings per Share.

(d) Funding of repurchases

In repurchasing securities, our Company may only apply funds legally available for such purpose in accordance with the Memorandum, the Articles and the applicable laws and regulations of the Cayman Islands. Pursuant to the Share Repurchase Mandate, repurchases will be made out of funds of our Company legally permitted to be utilised in this connection, including profits of our Company or out of a fresh issue of Shares made for the purpose of the repurchase or, if authorised by the Articles and subject to the Companies Law, out of capital and, in the case of any premium payable on the repurchase, out of the profits of our Company or from sums standing to the credit of the share premium account of our Company or, if authorised by the Articles and subject to the Companies Law, out of capital of our Company. Our Company may not repurchase securities on the Stock Exchange for a consideration other than cash or for settlement otherwise than in accordance with the trading rules of the Stock Exchange from time to time.

(e) General

There might be a material adverse impact on the working capital or gearing position of our Company (as compared with the position disclosed in this document) in the event that the Share Repurchase Mandate is exercised in full. However, the Directors do not propose to exercise the Share Repurchase Mandate to such extent as would, in the circumstances, have a material adverse effect on the working capital requirements of our Company or on its gearing levels which in the opinion of the Directors are from time to time appropriate for our Company.

The Directors have undertaken to the Stock Exchange that, so far as the same may be applicable, they will exercise the Share Repurchase Mandate in accordance with the Listing Rules, the Memorandum, the Articles and the applicable laws of the Cayman Islands.

None of the Directors nor, to the best of their knowledge having made all reasonable enquiries, any of their respective associates (as defined in the Listing Rules), has any present intention, if the Share Repurchase Mandate is approved by the Shareholders, to sell any Shares to our Company or its subsidiaries.

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APPENDIX VI STATUTORY AND GENERAL INFORMATION

No connected person (as defined in the Listing Rules) of our Company has notified our Company that he has a present intention to sell any Shares to our Company or has undertaken not to do so, if the Share Repurchase Mandate is exercised.

If as a result of a repurchase of Shares, a Shareholder’s proportionate interest in the voting rights of our Company increases, such increase will be treated as an acquisition for the purposes of the Takeovers Code. As a result, a Shareholder, or a group of Shareholders acting in concert (within the meaning under the Takeovers Code), depending on the level of increase in the interest of the Shareholder(s), could obtain or consolidate control of our Company and become(s) obliged to make a mandatory offer in accordance with Rule 26 of the Takeovers Code as a result of a repurchase of Shares made after the Listing. Save as aforesaid, our Directors are not aware of any other consequence under the Takeovers Code as a result of a repurchase of Share made immediately after the Listing.

B. SHARE OPTION SCHEME

Summary of the terms of the Share Option Scheme

The following is a summary of the principal terms of the Share Option Scheme approved and adopted pursuant to the written resolutions of all the Shareholders passed on 3 August 2009. The following summary does not form, nor is intended to be, part of the Share Option Scheme nor should it be taken as affecting the interpretation of the rules of the Share Option Scheme.

1. Purpose of the Share Option Scheme

The purpose of the Share Option Scheme is to provide our Company with a flexible means of giving incentive to, rewarding, remunerating, compensating and/or providing benefits to the Participants (as defined in paragraph (2) below) and for such other purposes as the Board may approve from time to time.

2. Who may join

The Board may, at its discretion, invites:

2.1 any executive or non-executive directors including independent non-executive directors or any employees (whether full-time or part-time) of any member of our Group; and
2.2 any consultants, professional and other advisers to any member of our Group (or persons, firms or companies proposed to be appointed for providing such services),

(together, the “ Participants ” and each a “ Participant ”), to take up options (“ Share Options ”) to subscribe for Shares at a price determined in accordance with paragraph 6 below.

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STATUTORY AND GENERAL INFORMATION

APPENDIX VI

In determining the basis of eligibility of each Participant, the Board would take into account such factors as the Board may at its discretion consider appropriate.

3. Conditions

The Share Option Scheme shall take effect subject to the passing of an ordinary resolution approving the adoption of the Share Option Scheme by the Shareholders and authorising the Directors to grant Share Options to subscribe for Shares thereunder and to allot and issue Shares pursuant to the exercise of any Share Options granted under the Share Option Scheme, and is conditional upon:

3.1 the Listing Committee granting approval of the listing of, and permission to deal in, (i) the Shares in issue and to be issued as mentioned in this document and (ii) any Shares to be issued pursuant to the exercise of Share Options under the Share Option Scheme;
3.2 the agreement on the Offer Price to be determined between ICBCI on behalf of the Underwriters) and our Company pursuant to the Underwriting Agreement;
3.3 the obligations of the Underwriters under the Underwriting Agreements becoming unconditional (including, if relevant, as a result of the waiver of any condition(s) by the Underwriters) and not being terminated in accordance with the terms of the Underwriting Agreements or otherwise; and
3.4 the commencement of dealings in the Shares on the Stock Exchange.

If the above conditions are not satisfied on or before the date which falls on the 30th day after the date of this document, the Share Option Scheme shall forthwith determine and no person shall be entitled to any rights or benefits or be under any obligations under or in respect of the Share Option Scheme.

Application has been made to the Listing Committee for listing of, and permission to deal in, the Shares which may fall to be issued pursuant to the exercise of the Share Options.

As at the date of this document, no Share Option has been granted or agreed to be granted by our Company under the Share Option Scheme.

4. Duration and Administration

4.1 Subject to the fulfilment of the conditions in paragraph 3 above and the termination provisions in paragraph 16, the Share Option Scheme shall be valid and effective for a period of 10 years commencing on 3 August 2009, after which period no further Share Options will be issued but in all other respects the provisions of the Share Option Scheme shall remain in full force and effect, and Share Options which are granted during the life of the Share Option Scheme may continue to be exercisable in accordance with their terms of issue.

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STATUTORY AND GENERAL INFORMATION

4.2 The Share Option Scheme shall be subject to the administration of the Board whose decision (save as otherwise provided in the Share Option Scheme) shall be final and binding on all parties.
4.3 Subject to compliance with the requirements of the Listing Rules and the provisions of the Share Option Scheme, the Board shall have the right (i) to interpret and construe the provisions of the Share Option Scheme; (ii) to determine the persons who will be awarded Share Options under the Share Option Scheme and the number of Shares to be issued under the Share Option; (iii) to determine the price per Share at which a Grantee (as defined below) may subscribe for Shares on the exercise of a Share Option (the “ Subscription Price ”); (iv) to make such appropriate and equitable adjustments to the terms of Share Options granted under the Share Option Scheme as it deems necessary; and (v) to make such other decisions, determinations or regulations as it shall deem appropriate in the administration of the Share Option Scheme.

5. Grant of Share Options

5.1 On and subject to the terms of the Share Option Scheme, the Board shall be entitled at any time, within 10 years after 3 August 2009 to make an offer of the grant of a Share Option by the Board (the “ Offer ”) to any Participant as the Board may in its absolute discretion select to subscribe for such number of Shares as the Board may (subject to paragraphs 9 and 10) determine at the Subscription Price. In determining the basis of eligibility of each Participant, the Board would mainly take into account the experience of the Participant in our Group’s business, the length of service of the Participant has exerted and made towards the success of our Group and/or the amount of potential efforts and contributions the Participant is likely to be able to give or make towards the success of our Group in the future.
5.2 No Offer shall be made after a price sensitive event has occurred or a price sensitive matter has been the subject of a decision, until such price sensitive information has been published pursuant to the requirements of the Listing Rules. In particular, during the period commencing one month immediately preceding the earlier of (i) the date of the meeting of the Board (as such date is first notified by our Company to the Stock Exchange in accordance with the Listing Rules) for the approval of our Company’s results for any year, half-year, quarterly or any other interim period (whether or not required under the Listing Rules); and (ii) the deadline for our Company to publish an announcement of its results for any year or half-year under the Listing Rules, or quarterly or any other interim period (whether or not required under the Listing Rules), and ending on the date of the results announcement, no Share Option may be granted.
5.3 An Offer shall be made to a Participant by letter in such form as the Board may from time to time determine (the “ Offer Letter ”) specifying the number of Shares under the Share Option and the Share Option Period and requiring the Participant to undertake to hold the Share Option on the terms on which it is to be granted and to be bound by the provisions of the Share Option Scheme. An Offer must be

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made on a business day and shall remain open for acceptance by the Participant to whom an Offer is made for a period (the “ Acceptance Period ”) from the date on which an Offer is made (the “ Offer Date ”) to such date as the Board may determine and specify in the offer Letter (both days inclusive), provided that no such Offer shall be open for acceptance after the 10th anniversary from 3 August 2009 or after the Share Option Scheme has been terminated in accordance with the provisions hereof, whichever is earlier.

5.4 A Share Option shall be deemed to have been accepted by any Participant who accepts an Offer in accordance with the terms of the Share Option Scheme or (where the context so permits) the legal personal representative(s) entitled to any such Share Option in consequence of the death of the original Participant (the “ Grantee ”) and the Share Option to which the Offer relates shall be deemed to have been granted and to have taken effect when the duplicate of the Offer Letter (as defined in sub-paragraph 5.3 above) comprising acceptance of the Share Option duly signed by the Grantee together with a remittance in favour of our Company of HK$1.00 by way of consideration for the granting thereof is received by our Company within the period as stipulated in sub-paragraph 5.3 above. Such remittance shall in no circumstances be refundable or be considered as part of the Subscription Price.
5.5 Any Offer may be accepted in respect of less than the number of Shares for which it is offered provided that it is accepted in respect of board lot for dealing in Shares on the Stock Exchange or an integral multiple thereof and the number of Shares in respect of which the Offer is accepted is clearly stated in the duplicate of the Offer Letter received by our Company as mentioned in sub-paragraph 5.4 above. To the extent that the Offer is not accepted within the Acceptance Period, it will be deemed to have been irrevocably declined.
5.6 Subject to the provisions of the Share Option Scheme and the Listing Rules, the Board may when making the Offer impose any conditions, restrictions or limitations in relation to the Share Option as it may at its absolute discretion think fit.

6. Subscription Price

Subject to any adjustments made pursuant to paragraph 11 below, the Subscription Price in respect of each Share issued pursuant to the exercise of the Share Options granted hereunder shall be a price solely determined by the Board and notified to a Participant and shall be at least the highest of:

6.1 the closing price of the Shares as stated in the Stock Exchange’s daily quotations sheet on the Offer Date;

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6.2 a price being the average of the closing prices of the Shares as stated in the Stock Exchange’s daily quotations sheets for the 5 business days immediately preceding the Offer Date (provided that the new issue price shall be used as the closing price for any business day falling within the period before Listing where our Company has been listed for less than 5 business days as at the Offer Date); and
6.3 the nominal value of a Share.

7. Exercise of Share Options

7.1 A Share Option shall be personal to the Grantee and shall not be assignable or transferable. No Grantee shall in any way sell, transfer, charge, mortgage, encumber or create any interests (whether legal or beneficial) in favour of any third party over or in relation to any Share Option or enter into agreement to do so. Any breach of the foregoing of a Grantee shall render all outstanding Share Options of such Grantee be automatically cancelled on the date which the Grantee commits the foregoing breach.
7.2 Unless otherwise determined by the Board and specified in the Offer Letter (as defined in sub-paragraph 5.3 above) at the time of the Offer, there is neither any performance targets that need to be achieved by the Grantee before a Share Option can be exercised nor any minimum period for which a Share Option must be held before the Share Option can be exercised. A Share Option may be exercised in whole or in part in the manner as set out in the Offer Letter, this sub-paragraph and sub-paragraph 7.3 below by the Grantee (or his personal representative(s)) giving notice in writing to our Company stating that the Share Option is thereby exercised and the number of Shares in respect of which it is exercised. Each such notice must be accompanied by a remittance for the full amount of the total Subscription Price for the Shares in respect of which the notice is given. Subject to paragraph 12, within 28 days after receipt of the notice and the remittances and where appropriate, receipt of the certificate of the auditors for the time being of the Company pursuant to paragraph 11 below, our Company shall allot the relevant Shares to the Grantee (or his personal representative(s)) credited as fully paid and issue to the Grantee (or his personal representative(s)) a share certificate in respect of the Shares so allotted.
7.3 Subject to paragraph 3 and as hereinafter provided and subject to the terms and conditions upon which such Share Option was granted, a Share Option may be exercised by the Grantee at any time during a period to be determined by the Board at its absolute discretion and notified by the Board to each Grantee as being the period during which a Share Option may be exercised and in any event, such period shall not be longer than 10 years from the Offer Date (“ Option Period ”) provided that:
- (a) in the event of the Grantee ceases to be a Participant for any reason other than on the Grantee’s death or the termination of the Grantee’s employment, directorship, appointment or engagement on one or more of the grounds specified in sub-paragraph 8.5 below, the Share Option granted to such

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grantee shall lapse on the date of cessation (to the extent which has become exercisable and has not already been exercised) and will not be exercisable unless the Board otherwise determines to grant an extension at the discretion of the Board in which event the Grantee may exercise the Share Option in accordance with the provisions of paragraph 7.2 within such period of extension and up to a maximum entitlement directed at the discretion of the Board on the date of grant of extension (to the extent that it has not already been exercised and subject to other terms and conditions decided at the discretion of the Board). For the avoidance of doubt, such period of extension (if any) shall be granted within and in any event ended before the expiration of the period of one month following the date on which the Grantee ceases to be a Participant, which date shall be the last actual working day with the relevant company whether salary is paid in lieu of notice or not, or the last date of office or appointment as director of, as consultant, professional or other advisers to the relevant company, as the case may be, in the event of which, the date of cessation as determined by a resolution of the board of directors or governing body of the relevant company shall be conclusive;
(b) in the event the Grantee dies before exercising the Share Option in full and none of the events which would be a ground for termination of the Grantee’s employment, directorship, appointment or engagement under sub-paragraph 8.5 below arises, the personal representative(s) of the Grantee shall be entitled within a period of 6 months or such longer period as the Board may determine from the date of death, to exercise the Share Option up to the entitlement of such Grantee at the date of death (to the extent which has become exercisable and has not already been exercised) or, if appropriate, make an election pursuant to sub-paragraphs 7.3(c), (d) or (e) below;
(c) if a general offer by way of take-over (other than by way of scheme of arrangement pursuant to sub-paragraph 7.3(d) below) is made to all the holders of Shares (or all such holders other than the offeror and/or any person controlled by the offeror and/or any person acting in association or concert with the offeror (the “ Dissenting Shareholders ”)) and if such offer becomes or is declared unconditional and the offeror is entitled to and does give notice pursuant to the Companies Law to acquire Shares held by the Dissenting Shareholders prior to the expiry of the relevant Option Period, the Grantee (or his personal representative(s)) may by notice in writing to our Company within 21 days of the notice of the offeror exercise the Share Option (to the extent which has become exercisable on the date of the notice of the offeror and not already exercised) to its full extent or to the extent specified in such notice;
(d) if a general offer by way of scheme of arrangement is made to all the holders of Shares and has been approved by the necessary number of holders of Shares at the requisite meetings, the Grantee (or his personal representative(s)) may thereafter (but only until such time as shall be

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notified by our Company, after which it shall lapse) exercise the Share Option (to the extent which has become exercisable and not already exercised) to its full extent or to the extent specified in such notice;

(e) other than a general offer or a scheme of arrangement contemplated in sub-paragraphs (c) and (d), if a compromise or arrangement between our Company and its members or creditors is proposed for the purposes of or in connection with a scheme for the reconstruction of our Company or its amalgamation with any other company or companies, our Company shall give notice thereof to the Grantee on the same date as it despatches the notice which is sent to each member or creditor of our Company summoning the meeting to consider such a compromise or arrangement, and thereupon the Grantee (or his personal representative(s)) may forthwith and until the expiry of the period commencing with such date and ending with the earlier of 2 months thereafter and the date on which such compromise or arrangement is sanctioned by the Court, exercise any of his Share Options (to the extent which has become exercisable and has not already been exercised) whether in full or in part, but the exercise of a Share Option as aforesaid shall be conditional upon such compromise or arrangement being sanctioned by the Court and becoming effective. Upon such compromise or arrangement becoming effective, all Share Options shall lapse except insofar as previously exercised under the Share Option Scheme. Our Company may require the Grantee (or his personal representative(s)) to transfer or otherwise deal with the Shares issued as a result of the exercise of Share Options in these circumstances so as to place the Grantee in the same position as nearly as would have been the case had such Shares been subject to such compromise or arrangement; and
(f) in the event of a notice is given by our Company to its shareholders to convene a general meeting for the purposes of considering, and if thought fit, approving a resolution to voluntarily wind-up our Company, other than for the purposes of a reconstruction, amalgamation or scheme of arrangement, our Company shall on the same date as or soon after it despatches such notice to convene the shareholders’ meeting, give notice thereof to all Grantees. The Grantees (or their legal personal representative(s)) may subject to the provisions of all applicable laws, by notice in writing to our Company (such notice to be received by our Company not later than 2 business days prior to the proposed general meeting) exercise the Share Option (to the extent that it has become exercisable and has not already been exercised) either to its full extent or to the extent specified in such notice, such notice to be accompanied by a payment for the full amount of the aggregate Subscription Price for the Shares in respect of which the notice is given, whereupon our Company shall as soon as possible and, in any event, no later than the Business Day immediately prior to the date of the proposed general meeting referred to above, allot the relevant Shares to the Grantee credited as fully paid.

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7.4 The Shares to be allotted upon the exercise of a Share Option will be subject to all the provisions of the Memorandum and the Articles for the time being in force and will rank pari passu in all respects with the fully paid Shares in issue on the date of their allotment and issue, and accordingly will entitle the holders to participate in all dividends or other distributions paid or made on or after the date of allotment and issue other than any dividend or other distribution previously declared or recommended or resolved to be paid or made if the record date therefor shall be before the date of allotment and issue.

8. Lapse of Share Options

A Share Option shall lapse automatically and not be exercisable (to the extent that it has not already been exercised) on the earliest of:

8.1 the expiry of the Option Period;
8.2 the expiry of the periods referred to in the above sub-paragraphs 7.3(a), (b) or (c), where applicable;
8.3 subject to the scheme of arrangement as referred to in sub-paragraph 7.3(d) becoming effective, the expiry of the period referred to in the above sub-paragraph 7.3(d);
8.4 subject to the compromise or arrangement referred to in sub-paragraph 7.3(e) becoming effective, the expiry of the period referred to in sub-paragraph 7.3(e),
8.5 subject to the expiry of the period of extension (if any) referred to in sub-paragraph 7.3(a), the date on which the Grantee ceases to be a Participant by reason of the termination of his employment, directorship, appointment or engagement on one or more of the following grounds, namely, that he has been guilty of misconduct or has been in breach of material term of the relevant employment contract or service contract, or has stopped payment to creditors generally or been unable to pay his debts within the meaning of any applicable legislation relating to bankruptcy or insolvency, or has become bankrupt or insolvent, or has been served with a petition for bankruptcy, or has made any arrangements or composition with his creditors generally, or has been convicted of any criminal offence involving his integrity or honesty or (if so determined by the Board or the board of the relevant subsidiary, as the case may be) on any other ground on which any employer or any engaging party would be entitled to terminate his employment, directorship, appointment or engagement at common law or pursuant to any applicable laws or under the Grantee’s employment contract or service contract with our Company or the relevant subsidiary (as the case may be). A resolution of the board of directors or governing body of the relevant company or substantial shareholder of our Company (as the case may be) to the effect that the employment, directorship, appointment or engagement of a Grantee has or has not been terminated on one or more of the grounds specified in this sub-paragraph 8.5 shall be conclusive;

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8.6 the close of 2 business days prior to the general meeting of our Company held for the purpose of approving the voluntary winding-up of our Company or the date of the commencement of the winding-up of our Company;
8.7 the date on which the Grantee commits a breach of sub-paragraph 7.1 above;
8.8 the date on which the Share Option is cancelled by the Board as provided in paragraph 15 below; or
8.9 the non-fulfilment of any condition referred to in paragraph 3 on or before the date stated therein.

Our Company shall owe no liability to any Grantee for the lapse of any Share Option under this paragraph 8.

9. Maximum number of shares available for subscription

9.1 Subject to sub-paragraph 9.2 below:
- (a) The total number of Shares, which may be issued upon exercise of all options to be granted under the Share Option Scheme and any other share option scheme of our Company shall not in aggregate exceed 48,000,000 Shares, being 10% of the total number of Shares on the Listing Date, unless our Company obtains an approval from its shareholders pursuant to sub-paragraph 9.1(b) below. The Share Options lapsed in accordance with the terms of the Share Option Scheme will not be counted for the purpose of calculating such 10% limit.
- (b) Our Company may seek approval of its shareholders in general meeting for refreshing the 10% limit set out in sub-paragraph 9.1(a) above such that the total number of Shares which may be issued upon exercise of all options to be granted under the Share Option Scheme and any other share option schemes of our Company under the limit as refreshed shall not exceed 10% of the total number of Shares in issue as at the date of approval to refresh such limit. Options previously granted under the Share Option Scheme and any other share option schemes (including those outstanding, cancelled, lapsed in accordance with the Share Option Scheme or any other share option schemes or exercised options) will not be counted for the purpose of calculating such limit as refreshed. In such a case, our Company shall send a circular to its shareholders containing the information and disclaimer as required under the Listing Rules.
- (c) Our Company may seek separate approval by its shareholders in general meeting for granting Share Options beyond the 10% limit provided the Share Options in excess of such limit are granted only to Participants specifically identified by our Company before such approval is sought. In such a case, our Company shall send a circular to its shareholders containing, among other terms, a generic description of the specified Participant(s) who may be

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granted such Share Options, the number of Shares subject to the Share Options to be granted, the terms of the Share Options to be granted, the purpose of granting Share Options to the specified Participant(s), an explanation as to how these Share Options serve such purpose and such other information as required under the Listing Rules.

9.2 Notwithstanding any provision in paragraph 9.1 above and subject to paragraph 11, the limit on the number of Shares which may be issued upon exercise of all outstanding options granted and yet to be exercised under the Share Option Scheme and any other share option schemes of our Company must not exceed 30% of the Shares in issue from time to time. No options may be granted under the Share Option Scheme and any other share option schemes of our Company if this will result in such limit being exceeded.

10. Maximum entitlement of Shares of each Participant

10.1 (a) Subject to sub-paragraphs 10.1(b) below, the total number of Shares issued and to be issued upon exercise of the Share Options granted to each Participant (including both exercised and outstanding Share Options) in any 12-month period shall not exceed 1% of the total number of Shares in issue.
- (b) Notwithstanding sub-paragraph 10.1(a), where any further grant of Share Options to a Participant would result in the Shares issued and to be issued upon exercise of all options granted and to be granted to such Participant under the Share Option Scheme and any other share option schemes of our Company (including exercised, cancelled and outstanding Share Options) in the 12-month period up to and including the date of such further grant representing in aggregate over 1% of the Shares in issue, such further grant must be separately approved by the shareholders of our Company in general meeting with such Participant and his associates abstaining from voting. The number and terms of the Share Options to be granted to such Participant shall be fixed before shareholders’ approval and the date of Board meeting for proposing such further grant should be taken as the date of grant for the purpose of calculating the Subscription Price. In such a case, our Company shall send a circular to its shareholders containing, among other terms, the identity of such Participant, the number and the terms of the Share Options to be granted (and options previously granted to such Participant) and such other information as required under the Listing Rules.
- (c) In addition to the above paragraph 9 and sub-paragraphs 10.1(a) and 10.1(b), any grant of Share Options to a Participant who is a director, chief executive or substantial shareholder of our Company or their respective associates must be approved by the independent non-executive directors of our Company (excluding independent non-executive director who is a Grantee).
- (d) In addition to the above paragraph 9 and sub-paragraphs 10.1(a) and 10.1(b), where the Board proposes to grant any Share Option to a Participant who is a substantial shareholder or an independent non-executive director of our

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Company, or any of their respective associates, would result in the Shares issued and to be issued upon exercise of all options already granted and to be granted under the Share Option Scheme and any other share option schemes of our Company (including options exercised, cancelled and outstanding) to him in the 12-month period up to and including the proposed Offer Date of such grant (the “ Relevant Date ”):

(i) representing in aggregate more than 0.1% of the total number of Shares in issue on the Relevant Date; and
(ii) having an aggregate value, based on the closing price of the Shares as stated in the Stock Exchange’s daily quotations sheet on the Relevant Date in excess of HK$5,000,000,

such proposed grant of Share Options must be approved by the shareholders of our Company in general meeting. In such a case, our Company shall send a circular to its shareholders containing all those terms as required under the Listing Rules. The Participants concerned and all connected persons of our Company must abstain from voting in favour of the resolution at such general meeting. Any vote taken at the meeting to approve the grant of such Share Options must be taken on a poll.

The Participant and all other connected persons of our Company may vote against the resolution at the general meeting provided that such intention to do so has been stated in the circular. Any such party may change his mind as to whether to abstain or vote against the resolution, in which case our Company shall, if it becomes aware of the change before the date of the general meeting, immediately despatch a circular to the shareholders of our Company or publish an announcement notifying the shareholders of our Company of the change and, if known, the reason for such change. Where the circular is despatched or the announcement is published less than 14 days before the date originally scheduled for the general meeting, the meeting shall be adjourned before considering the relevant meeting, the meeting shall be adjourned before considering the relevant resolution to a date that is at least 14 days from the date of despatch of the circular or publication of the announcement by the chairman.

10.2 Subject to the above sub-paragraphs 9.1, 9.2 and 10.1, in the event of any alteration in the capital structure of our Company whether by way of capitalisation issue, rights issue, consolidation, subdivision or reduction of the share capital of our Company or otherwise howsoever (other than as a result of an issue of Shares as consideration in a transaction), the maximum number of Shares referred to in the above sub-paragraphs 9.1, 9.2 and 10.1 will be adjusted in such manner as an independent financial adviser or the auditors for the time being of our Company (acting as experts and not as arbitrators) shall confirm to the directors of our Company in writing to be fair and reasonable.

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11. Reorganisation of capital structure

In the event of any alteration in the capital structure of our Company whilst any Share Option remains exercisable, whether by way of capitalisation issue, rights issue, subdivision, consolidation, or reduction of the share capital of our Company in accordance with legal requirements and requirements of the Stock Exchange excluding any alteration in the capital structure of our Company as a result of an issue of Shares as consideration in respect of a transaction to which our Company is a party at any time after the date on which dealings in the Shares first commence on the Stock Exchange, such corresponding alterations (if any) shall be made to:

(i) the number or nominal amount of Shares subject to the Share Option so far as unexercised; and/or
(ii) the Subscription Price;

as an independent financial adviser or the auditors for the time being of our Company shall at the request of the Board certify in writing to the directors of our Company, either generally or as regards any particular Grantee, to be in their opinion fair and reasonable and that any such alterations shall satisfy the requirements set out in the note to Rule 17.03(13) of the Listing Rules and the notes thereto and any interpretation and/or guidance on that Rule and the notes issued by the Stock Exchange from time to time and shall give a Grantee as nearly as possible the same proportion of the issued share capital of our Company as that to which the Grantee was previously entitled, provided that no such alterations shall be made the effect of which would be to enable a Share to be issued at less than its nominal value and/or to the advantage in respect of the Grantee without specific prior shareholders’ approval. The capacity of the independent financial adviser or the auditors for the time being of our Company in this paragraph is that of experts and not of arbitrators and their certification shall, in the absence of manifest error, be final and binding on our Company and the Grantees. The costs of the independent financial adviser or the auditors for the time being of our Company shall be given to the Grantee by our Company.

12. Share Capital

The exercise of any Share Option shall be subject to the shareholders of our Company in a general meeting approving any necessary increase in the authorised share capital of our Company. Subject thereto, the Board shall make available sufficient authorised but unissued share capital of our Company to meet subsisting requirements on the exercise of Share Options.

13. Disputes

Any dispute arising in connection with the Share Option Scheme (whether as to the number of Shares the subject of a Share Option, the amount of the Subscription Price or otherwise) shall be referred to the decision of the auditors of our Company or an independent financial adviser appointed by our Company who shall act as experts and not as arbitrators and whose decision shall be final and binding.

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14. Alteration of the Share Option Scheme

14.1 The provisions of the Share Option Scheme may be altered in any respect by resolution of the Board except that the provisions of the Share Option Scheme as to:
- (a) the definitions of “Grantee”, “Option Period” and “Participant” in sub-paragraphs 2.6, 5.4 and 7.3;
- (b) the provisions of the above paragraphs and sub-paragraphs 4.1, 5.1, 5.2, 5.3, 6, 7, 8, 9, 10, 11 and this paragraph 14; and
- (c) all such other matters set out in Rule 17.03 of the Listing Rules,

shall not be altered to the advantage of the Participants except with the prior approval of the shareholders of our Company in general meeting, provided that no such alteration shall operate to affect adversely the terms of issue of any Share Option granted or agreed to be granted prior to such alteration except with the consent or sanction of such majority of the affected Grantees as would be required of the shareholders of our Company under the Articles for the time being for a variation of the rights attached to the Shares.

14.2 Any alterations to the terms and conditions of the Share Option Scheme which are of a material nature or any change to the terms of the Share Options granted must be approved by the shareholders of our Company in general meeting, except where the alterations take effect automatically under the existing terms of the Share Option Scheme.
14.3 The amended terms of the Share Option Scheme or the Share Options must still comply with the relevant requirements of Chapter 17 of the Listing Rules.
14.4 Any change to the authority of the directors of our Company or scheme administrators in relation to any alteration to the terms of the Share Option Scheme must be approved by the shareholders of our Company in general meeting.

15. Cancellation of the Share Options granted

The Board may, with the consent of the relevant Grantee, at any time at its absolute discretion cancel any Share Option granted but not exercised. Where our Company cancels Share Options and makes an Offer of the grant of new Share Options to the same Share Option holder, the Offer of the grant of such new Share Options may only be made, under the Share Option Scheme with available Share Options (to the extent not yet granted and excluding the cancelled Share Options) within the limit approved by the shareholders of our Company as mentioned in the above paragraph 9.

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16. Termination of the Share Option Scheme

Our Company by resolution in general meeting or the Board may at any time terminate the operation of the Share Option Scheme and in such event no further Share Options will be offered but in all other respects the provisions of the Share Option Scheme shall remain in full force and effect.

C. FURTHER INFORMATION ABOUT OUR BUSINESS

1. Summary of material contracts

The following contracts (not being contracts in the ordinary course of business of our Group) have been entered into by members of our Group within the two years preceding the date of this document and are or may be material:

(a) the instrument of transfer and the bought and sold notes, all dated 28 March 2008 executed by Sundart Timber and Mr. Leung Chung Lim pursuant to which Sundart Timber transferred the entire issued share capital of Sundart Engineering to Mr. Leung Chung Lim at a consideration of HK$2.00;
(b) the deed of indemnity dated 20 March 2008 executed by Mr. Ng and Mr. Wong, in favour of Golden Tiger and Sundart Holdings under which Mr. Ng and Mr. Wong have given indemnities in respect of certain tax liabilities in favour of Golden Tiger and Sundart Holdings (in each case, both for itself and as agent or trustee for and on behalf of each of Sundart Holdings and its then subsidiaries);
(c) the assignment dated 14 March 2009 entered into between DSTP (as assignor) and Sundart Products (as assignee) pursuant to which DSTP assigned, among others, certain patents registered in the PRC, South Korea, Malaysia, Indonesia, Vietnam and Taiwan as set out in the section headed “Further information about our business – Intellectual property rights” in this Appendix VI to Sundart Products at a consideration of HK$9.00;
(d) the instrument of transfer and the bought and sold notes, all dated 16 March 2009 executed by Anastasia Chistyakova and Sundart Development pursuant to which Anastasia Chistyakova transferred 1,400 shares of HK$1.00 each in Sundart (Middle East) to Sundart Development at a cash consideration of HK$1,400;
(e) the instrument of transfer and the bought and sold notes, all dated 16 March 2009 executed by Jubin Kodinjyil Thomas and Sundart Development pursuant to which Jubin Kodinjyil Thomas transferred 1,400 shares of HK$1.00 each in Sundart (Middle East) to Sundart Development at a cash consideration of HK$1,400;
(f) the SI-JV Agreement dated 14 May 2009 entered into between Sundart (Middle East) and the JV Partners relating to the establishment and operation of Sundart Interior;

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(g) the re-assignment dated 20 May 2009 entered into between Sundart Products (as re-assignor) and DSTP (as re-assignee) pursuant to which Sundart Products reassigned the patents registered in the PRC as set out in the section headed “Further information about our business – Intellectual property rights” in this Appendix VI to DSTP at a consideration of HK$2.00;
(h) two assignments all dated 20 May 2009 and entered into between DSTP (as assignor) and Sundart (Beijing) (as assignee) pursuant to which DSTP assigned the patents registered in the PRC as set out in the section headed “Further information about our business – Intellectual property rights” in this Appendix VI to Sundart (Beijing) for a total consideration of HK$2.00;
(i) the licence agreement dated 20 May 2009 entered into between DSTP (as licensor) and Sundart (Beijing) (as licensee) pursuant to which DSTP granted a licence to Sundart (Beijing), any of its holding companies, subsidiaries and associated companies, any subsidiaries and associated companies of its holding companies and any other persons or entities designated by Sundart (Beijing), to use the patents registered in the PRC as set out in the section headed “Further information about our business – Intellectual property rights” in this Appendix VI free of royalty until the occurrence of any of the following events, namely, the recordal of assignment of such patents is completed in the PRC, the revocation or termination of such patents or the parties agree to terminate the agreement;
(j) the amendment agreement dated 15 July 2009 entered into between Sundart (Middle East) and the JV Partners pursuant to which the number of directors of Sundart Interior has been reduced from 5 to 4 and the number of directors which Sundart (Middle East) is entitled to nominate and appoint has been correspondingly reduced from 3 to 2;
(k) the memorandum dated 3 August 2009 setting out particulars of an oral agreement made on 14 March 2009 between SPG, DSTP and Sundart Products pursuant to which (i) each of SPG and DSTP agreed to transfer, and SPG agreed to procure DSTP to transfer the certificates, authorisations and approvals granted to SPG and DSTP by UL, Intertek Testing Services NA, Inc., CERTIFIRE and FM Approvals and (ii) DSTP agreed to transfer, among others, certain patents registered in the PRC, South Korea, Malaysia, Indonesia, Vietnam and Taiwan as set out in the section headed “Further information about our business – Intellectual property rights” in this Appendix VI to Sundart Products, at a total consideration of HK$1,800,000;
(l) the memorandum dated 3 August 2009 setting out particulars of an oral agreement made on 26 May 2009 between SPG, DSTP and Sundart Products pursuant to which each of SPG, DSTP and Sundart Products agreed to amend the oral agreement made on 14 March 2009 between them as mentioned in paragraph (k) above to the effect that (i) the certificate, authorisation and approval granted by FM Approvals to DSTP bearing the registration number of 3032230 and (ii) the patent registered in the European Community and the patent in respect of which DSTP has submitted application for registration in Thailand as set out in the

– VI-23 –

APPENDIX VI

STATUTORY AND GENERAL INFORMATION

section headed “Further information about our business – Intellectual property rights” in this Appendix VI, which were intended to be covered but were omitted from the said oral agreement made on 14 March 2009, should also be transferred by DSTP to Sundart Products;

(m) the deed for sale and purchase dated 3 August 2009 entered into between Tiger Crown and Scenemay Holdings, Mr. Ng, Mr. Leung and Mr. Wong (as vendors and warrantors), Mr. Chan (as warrantor) and our Company (as purchaser) pursuant to which Tiger Crown, Scenemay Holdings, Mr. Ng, Mr. Leung and Mr. Wong agreed to transfer 1,474 shares, 1,474 shares, 1,275 shares, 520 shares and 357 shares of US$1.00 each in Sundart Holdings to our Company in consideration of our Company issuing and allotting credited as fully paid 20,227,110 Shares, 20,227,110 Shares, 17,497,500 Shares, 7,138,980 Shares and 4,899,300 Shares to Tiger Crown, Scenemay Holdings, Mr. Ng, Mr. Leung and Mr. Wong respectively;
(n) the Deed of Non-competition dated 3 August 2009 and executed by the Controlling Shareholders and Mr. Ng, Mr. Leung and Mr. Wong in favour of our Company, particulars of which are set out in the section headed “Relationships with the Controlling Shareholders – Deed of Non-competition” in this document; and
(o) the Deed of Indemnity dated [�] 2009 and executed by the Controlling Shareholders, Mr. Ng, Mr. Leung and Mr. Wong in favour of our Group, under which the Controlling Shareholders, Mr. Ng, Mr. Leung and Mr. Wong have given certain indemnities in favour of our Group containing the indemnities referred to in the section headed “Other Information – Estate duty, tax and other indemnity” in this Appendix VI.

– VI-24 –

APPENDIX VI

STATUTORY AND GENERAL INFORMATION

2. Intellectual property rights

(a) As at the Latest Practicable Date, we had registered the following trademarks:

		Place of	Trade Mark	Name of	Registration
Trademark	Class	registration	No.	registrant	date	Expiry date
	19, 20	Hong Kong	200212997AA	Sundart	15 May 2002	15 May 2019
				Holdings
A	19, 20,	Hong Kong	300125685	Sundart	11 December	10 December
	37, 42			Holdings	2003	2013
B	42	PRC	3903264	Sundart	7 October	6 October
				Holdings	2006	2016
	37	PRC	3903265	Sundart	7 October	6 October
				Holdings	2006	2016
	20	PRC	3192551	Sundart	7 January	6 January
				Timber	2006	2016
	19	PRC	3192552	Sundart	28 August	27 August
				Timber	2003	2013
	20	PRC	3192553	Sundart	21 March	20 March
				Timber	2004	2014
	19	PRC	3192554	Sundart	28 August	27 August
				Timber	2003	2013

– VI-25 –

APPENDIX VI

STATUTORY AND GENERAL INFORMATION

(b) As at the Latest Practicable Date, we had applied for registration of the following trademarks:

		Place of	Filing	Name of
Trademark	Class	application	Number	applicant	Filing Date
	19	United Arab	130800	Sundart	23 June 2009
		Emirates		Holding
	20	United Arab	130801	Sundart	23 June 2009
		Emirates		Holding
	37	United Arab	130802	Sundart	23 June 2009
		Emirates		Holding
	42	United Arab	130803	Sundart	23 June 2009
		Emirates		Holding
	19	Qatar	57613	Sundart	14 June 2009
				Holding
	20	Qatar	57614	Sundart	14 June 2009
				Holding
	37	Qatar	57615	Sundart	14 June 2009
				Holding
	42	Qatar	57616	Sundart	14 June 2009
				Holding
	19	Bahrain	77012	Sundart	29 June 2009
				Holding
	20	Bahrain	77013	Sundart	29 June 2009
				Holding
	37	Bahrain	77014	Sundart	29 June 2009
				Holding
	42	Bahrain	77015	Sundart	29 June 2009
				Holding

– VI-26 –

APPENDIX VI

STATUTORY AND GENERAL INFORMATION

==> picture [376 x 292] intentionally omitted <==

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

||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|Place|of|
|Title|Registration|Type|Registration|Number|Period|of|Validity|
|Outlook|of|3-D|Wavy|Profile|Taiwan|Design|D|109068|1|February|2006|to|
|Moulding|12|August|2016|
|(|
|)|
|Outlook|of|3-D|Wavy|Profile|European|Design|000203633|15|July|2004|to|
|Moulding|Community|14|July|2014|
|Outlook|of|3-D|Wavy|Profile|Malaysia|Design|MY|04-00461|[18|January|2004|to|
|Moulding|17|January|2014]|
|Outlook|of|3-D|Wavy|Profile|Indonesia|Design|ID|0|008|081-D|15|June|2004|to|
|Moulding|14|June|2014|
|3-D|Wavy|Profile|Moulding|Hong|Kong|Short-term|HK1060480|14|January|2004|to|
|Manufacturing|Process|Patent|14|January|2012|
|I-Section|Composite|Lamel|Hong|Kong|Short-term|HK1057455|22|November|2003|
|and|Plywood|Door|Core|Patent|to|22|November|
|Assembly|2011|
|Extendible|and|Contractible|Hong|Kong|Short-term|HK1055541|13|September|2003|
|Door|Frame|and|Patent|to|13|September|
|Architrave|Assembly|with|2011|
|Concealed|Fixings|

----- End of picture text -----

(d) As at the Latest Practicable Date, we had the following patents and the recordal of assignment of such patents was still pending:

==> picture [374 x 210] intentionally omitted <==

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

|||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|Place|of|
|Title|Registration|Type|Registration|Number|Period|of|Validity|
|Hidden|Fixture|of|Door|PRC|Utility|ZL|2003|2|0100265.6|13|October|2003|to|
|Frame|Adjustable|Seal|model|12|October|2013|
|Line|Composite|
|(|
|)|(Note)|
|Manufacturing|Process|of|PRC|Invention|ZL|2004|1|0000416.X|18|January|2004|to|
|3-D|Wavy|Profile|17|January|2024|
|Moulding|
|(|
|)|(Note)|
|Outlook|of|3-D|Wavy|Profile|South|Korea|Design|0381032|2|May|2005|to|
|Moulding|1|May|2020|
|Outlook|of|3-D|Wavy|Profile|Vietnam|Design|8738|6|July|2004|to|5|
|Moulding|July|2014|

----- End of picture text -----

Note: Pending the recordal of assignment of such patents being completed in the PRC, DSTP (as licensor) and Sundart (Beijing) (as licensee) entered into a licence agreement ( ) as detailed in the section headed “Connected transactions – Exempt continuing connected transaction – Licence to use patents” in this document.

– VI-27 –

APPENDIX VI STATUTORY AND GENERAL INFORMATION

(e) As at the Latest Practicable Date, the Group had the following pending patent application in Thailand and the recordal of assignment of such patent was still pending:

Place of Application Title Registration Type Number [Outlook of 3-D Wavy Thailand Design 0402001388 Profile Moulding]

(f) As at the Latest Practicable Date, we had registered the following domain name:

Registrant	Domain Name	Expiry Date
Sundart Timber	www.sundart.com	[8 July] 2011

D. FURTHER INFORMATION ABOUT OUR DIRECTORS AND SUBSTANTIAL SHAREHOLDERS

1. Directors

(a) Interest in Shares

Immediately following completion of the [�] (taking no account of Shares which may be issued pursuant to the exercise of the [�] and options which may be granted under the Share Option Scheme), the interests or short positions of each of the Directors and the chief executives in the share capital, underlying shares and debentures of our Company and its associated corporations (within the meaning of Part XV of the SFO) which, once the Shares are listed, will have to be notified to our Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which he is taken or deemed to have taken under such provisions of the SFO) or which will be required, pursuant to section 352 of the SFO, to be entered in the register required to be kept therein or which, once the

– VI-28 –

APPENDIX VI STATUTORY AND GENERAL INFORMATION

Shares are listed, will be required pursuant to the Model Code for Securities Transactions by Directors of Listed Companies contained in the Listing Rules to be notified to our Company and the Stock Exchange are set out as follows:

				Approximate
				percentage of
				shareholding in
			Number of Shares	our Company
			(immediately after	(immediately after
			completion of the	completion of the
			[�] but without	[�] but without
			taking into	taking into
	Long/Short		account the	account the
Name	position	Type of interest	exercise of the [�])	exercise of the [�])
Mr. Chan	Long position	Interest in a	[�]	[�]
		controlled
		corporation(1)
	Long position	Other(2)	[�]	[�]
Mr. Ng	Long position	Beneficial owner	[�]	[�]
Mr. Leung	Long position	Beneficial owner	[�]	[�]
Mr. Wong	Long position	Beneficial owner	[�]	[�]

Note:

As Mr. Chan controls more than one-third of the voting power in general meetings of Tiger Crown, he is deemed to be interested in the [�] Shares which will be beneficially owned by Tiger Crown upon Listing.
Since Tiger Crown, Scenemay Holdings, Mr. Chan, Mr. Li and Ms. Li are regarded as a group of controlling shareholders acting in concert to exercise their voting right in our Company, pursuant to the provisions of the SFO, each of them is deemed to be interested in the [�] Shares beneficially or deemed to be owned by each other. Tiger Crown, Scenemay Holdings, Mr. Chan, Mr. Li and Ms. Li together are therefore interested in a total of 40.46% of the issued share capital of our Company upon completion of the [�] (assuming the [�] is not exercised).

(b) Particulars of service agreements

Each of the executive Directors has entered into a service agreement with our Company for a term of three years commencing from the Listing Date. Particulars of the service agreements of the Directors are in all material respects the same. The salary of the executive Directors is subject to review each year.

Pursuant to the service agreements between our Company and each of Mr. Chan, Mr. Ng, Mr. Leung, Mr. Wong and Mr. Yip (all of whom are executive Directors), their salaries are HK$960,000, HK$1,200,000, HK$1,200,000, HK$840,000 and HK$1,200,000 per annum respectively.

– VI-29 –

APPENDIX VI

STATUTORY AND GENERAL INFORMATION

None of the non-executive Directors (including the independent non-executive Directors) has entered into any service agreement with our Group. Pursuant to the letters of appointment between our Company and each of Mr. Wong Kwok Wai, Albert, Mr. Wong Hoi Ki and Mr. To King Yan, Adam (all of whom are independent non-executive Directors), each of them is entitled to receive remuneration of HK$120,000 per annum.

Pursuant to the relevant service agreements or the relevant letters of appointment, the term of appointment of each of Directors is 3 years commencing from the Listing Date which may be terminated by either party by giving 6 months’ written notice. The appointments are subject to removal provisions and provisions on retirement by rotation of Directors set out in the Articles.

Save as disclosed above, none of the Directors has entered or has proposed to enter into any service agreements with our Company or any members of our Group (other than contracts expiring or determinable by the employer within one year without payment of compensation other than statutory compensation).

(c) Directors’ remuneration

(i) Approximately HK$4.0 million was paid to the Directors by our Group as remuneration [(including housing allowances, other allowances and benefits in kind)] in respect of the financial year ended 31 March 2009.
(ii) Approximately HK$5.8 million (excluding any management bonus, if any) as remuneration is estimated to be paid to our Directors by our Group in respect of the financial year ending 31 March 2010 pursuant to the present arrangement.
(iii) Save as disclosed in this document, no Director received any remuneration or benefits in kind from our Group for the financial year ended 31 March 2009.

– VI-30 –

APPENDIX VI

STATUTORY AND GENERAL INFORMATION

2. Substantial Shareholders

(a) Interests in our Company

So far as the Directors are aware, immediately following completion of the [�] (but taking no account of Shares which may be issued pursuant to the exercise of the [�] and options which may be granted under the Share Option Scheme), in addition to the interests disclosed under the section headed “Further information about our Directors and substantial Shareholders – Directors” above, the persons (not being a director or chief executive of our Company) who will have interests or short positions in the Shares and underlying Shares which are required to be disclosed to our Company and the Stock Exchange under the provisions of Divisions 2 and 3 of Part XV of the SFO are as follows:

				Approximate
				percentage of
				shareholding in our
			Number of Shares	Company
			(immediately after	(immediately after
			completion of the [�]	completion of the [�]
			but without taking	but without taking
	Long/Short		into account the	into account the
Name	position	Type of interest	exercise of the [�])	exercise of the [�])
Tiger Crown	Long position	Beneficial owner	[�]	[�]
	Long position	Other(2)	[�]	[�]
Scenemay	Long position	Beneficial owner	[�]	[�]
Holdings
	Long position	Other(2)	[�]	[�]
Mr. Li	Long position	Interest in a	[�]	[�]
		controlled
		corporation(1)
	Long position	Other(2)	[�]	[�]
Ms. Li	Long position	Interest in a	[�]	[�]
		controlled
		corporation(1)
	Long position	Other(2)	[�]	[�]

Notes:

The entire issued share capital of Scenemay Holdings is owned by Mr. Li and Ms. Li in equal shares. As each of Mr. Li and Ms. Li respectively controls more than one-third of the voting power in general meetings of Scenemay Holdings, each of Mr. Li and Ms. Li is deemed to be interested in the [�] Shares which will be beneficially owned by Scenemay Holdings upon Listing.
Since Tiger Crown, Scenemay Holdings, Mr. Chan, Mr. Li and Ms. Li are regarded as a group of controlling shareholders acting in concert to exercise their voting right in our Company, pursuant to the provisions of the SFO, each of them is deemed to be interested in the [�]

– VI-31 –

APPENDIX VI STATUTORY AND GENERAL INFORMATION

Shares beneficially or deemed to be owned by each other. Tiger Crown, Scenemay Holdings, Mr. Chan, Mr. Li and Ms. Li together are therefore interested in a total of [�]% of the issued share capital of our Company upon completion of the [�] (assuming the [�] is not exercised).

(b) Interest in other members of our Group

So far as the Directors are aware, immediately following completion of the [�], the following person will be directly or indirectly interested in 10% or more of the nominal value of any class of shares carrying rights to vote in general meetings of any other member of our Group:

	Name of
	Group		Number	Percentage of
Name of Interested party	member	Capacity	of shares	shareholding
Abdullatteef Mohammed A	Sundart	beneficial	5,100	51%(1)
Al-Kuwari	Interior	owner

Note:

Pursuant to the SI-JV Agreement, Abdullatteef Mohammed A Al-Kuwari is entitled to share 25% of the net profits of Sundart Interior only.

Save as disclosed herein but taking no account of any Shares which may be issued pursuant to the exercise of the [�] and the options which may be granted under the Share Option Scheme, the Directors are not aware of any person (not being a director or chief executive of our Company) who will immediately following completion of the [�] have interests or short positions in the Shares and underlying Shares which would fall to be disclosed to our Company and the Stock Exchange under the provisions of Divisions 2 and 3 of Part XV of the SFO or who will immediately following completion of the [�] be, directly or indirectly, interested in 10% or more of the nominal value of any class of share capital in any member of our Group carrying rights to vote in all circumstances at general meetings of such member of our Group.

3. Interest in suppliers and customers of our Group

As at the Latest Practicable Date, so far as the Directors are aware, the following Director had interest in the five largest suppliers of our Group as follows:

Name	Name of supplier	Type of interest
Mr. Leung	DSTP(1)	100% indirect equity
		interest
Mr. Leung	Win Venture(1)	100% indirect
		shareholding interest
Mr. Leung	SI (Macau)(1)	100% indirect
		shareholding interest

Note:

DSTP, Win Venture and SI (Macau) are wholly-owned subsidiaries of SPG, which in turn is 100% owned by Mr. Leung.

– VI-32 –

APPENDIX VI

STATUTORY AND GENERAL INFORMATION

Save as disclosed herein, as at the Latest Practicable Date, so far as our Directors are aware, no Director or their respective associates‘ or shareholder (which to the knowledge of the Directors owns more than 5% of the issued share capital of our Company had any interest in the five largest suppliers or customers of our Group.

4. Related party transactions

Our Group entered into the related party transactions within the two years immediately preceding the date of this document as mentioned in note 33 of section (A) of the accountants’ report set out in Appendix I to this document.

E. OTHER INFORMATION

1. Estate duty, tax and other indemnity

Indemnity on estate duty and taxation

The Controlling Shareholders, Mr. Ng, Mr. Leung and Mr. Wong (the “ Indemnifiers ”) have pursuant to the Deed of Indemnity, given indemnities on a joint and several basis in favour of our Company (for itself and as trustee as its subsidiaries) in connection with, among others, any taxation which might be payable by any member of our Group in respect of any income, profits or gains earned, accrued or received or alleged to have been earned, accrued or received on or before the date on which the [�] becomes unconditional (the “ Effective Date ”).

The Indemnifiers will however, not be liable under the Deed of Indemnity for taxation where:

(a) to the extent (if any) to which provision or allowance has been made for such taxation liabilities and claims in the audited combined accounts of our Company for the Track Record Period as set out in Appendix I to this document (the “ Accounts ”);
(b) to such taxation liabilities and claims falling on any of the members of our Group in respect of their current accounting periods or any accounting period commencing on or after 1 April 2009 unless liability for such taxation liabilities and claims would not have arisen but for some act or omission of, or transaction voluntarily effected by, any of the members of our Group (whether alone or in conjunction with some other act, omission or transaction, whenever occurring) with the prior written consent or agreement or acquiescence of the Indemnifiers other than any such act, omission or transaction (i) carried out or effected in the ordinary course of business or in the ordinary course of acquiring and disposing of capital assets after 31 March 2009 or (ii) carried out, made or entered into pursuant to a legally binding commitment created on or before 1 April 2009 or pursuant to any statement of intention made in this document; or

– VI-33 –

APPENDIX VI

STATUTORY AND GENERAL INFORMATION

(c) to the extent of any provision or reserve made for such taxation liabilities and claims in the Accounts which is finally established to be an over-provision or an excessive reserve, in which case the Indemnifiers’ liability in respect of such taxation liabilities and claims shall be reduced by an amount not exceeding such provision or reserve, provided that the amount of any such provision or reserve applied pursuant to this paragraph to reduce the Indemnifiers’ liability in respect of such taxation liabilities and claims shall not be available in respect of any such liability arising thereafter and for the avoidance of doubt, such over-provision or excess reserve shall only be applied to reduce the liability of the Indemnifiers under the Deed of Indemnity and none of the members of our Group shall in any circumstances be liable to pay the Indemnifiers any such excess; or
(d) to the extent that any taxation liabilities and claims arises or is incurred as a result of the imposition of such taxation liabilities and claims as a consequence of any retrospective change in the law, rules and regulations or the interpretation or practice thereof by the Hong Kong Inland Revenue Department or the taxation authority of the PRC or any other relevant authority (whether in Hong Kong or the PRC or any other part of the world) coming into force after the Effective Date or to the extent that such taxation liabilities and claims arises and is increased by an increase in rates of such taxation liabilities and claims after the Effective Date with retrospective effect.

Our Directors have been advised that no material liability for estate duty is likely to fall on our Company or any of its subsidiaries under the laws of the Cayman Islands, the BVI, Hong Kong, Macau, Qatar or the PRC, being jurisdictions in which one or more of the companies comprising our Group are incorporated.

Other Indemnities

Pursuant to the Deed of Indemnity, the Indemnifiers have also given indemnities in connection with other matters as more particularly described below.

(a) Property

The Indemnifiers have given indemnities on a joint and several basis in favour of each member of our Group (whether or not such member of our Group is or may be entitled to claim reimbursement from any other person) in connection with all or any Damages howsoever arising from or in connection with any Property Claim to the extent that the events leading to such Damages occurred prior to the Effective Date and any such Damages are not paid by the insurer under any relevant insurance policy (if any).

In the event any of the member of our Group being legally (i) denied of the ownership in; (ii) prohibited from using or occupying; or (iii) evicted from any Property it presently owns, uses or occupies (the “ Affected Premises ”) before the expiration of the current term of the tenancy/lease/licence or in the case of any Property which is owned by any member of our Group in the PRC, before the expiration of the term of the land use right governing the same, whether by the

– VI-34 –

APPENDIX VI

STATUTORY AND GENERAL INFORMATION

landlord or the head landlord or the licensor or any third party whosoever (including without limitation any PRC governmental authorities, or any other competent authorities) on any ground/reason whether or not already disclosed or made known to our Company (including, without limitation to the generality of the foregoing, those disclosed in the legal opinions obtained by our Company in connection with its application for Listing) other than solely due to any breach committed by any member of our Group after the Effective Date, the Indemnifiers covenant with each member of our Group that they will:–

(i) jointly and severally secure, within a period of 3 calendar months, or such longer period as our Company may agree, for the use and occupation by the affected members of our Group of a Property (the “ Substitute Premises ”) which is comparable and no less favourable to those relating to the Affected Premises including those in relation to location, area, layout, lease period, rental, user and facilities, and for a term which is in no way shorter than the original term under which the Affected Premises are being used or occupied by that member of our Group; and
(ii) jointly and severally indemnify and at all times keep each member of the Group effectively indemnified against any Damages which may be reasonably incurred or suffered by it and any other liabilities of whatsoever nature arising therefrom, including without limitation:–
(aa) in the event that the Affected Premises are a leased/licensed premises, any difference in rentals between the Substitute Premises and the Affected Premises for the remaining term of the relevant lease/licence for the Affected Premises;
(bb) any costs or expenses reasonably arising from the relocation of the business or assets of our Group from the Affected Premises to the Substitute Premises;
(cc) all operating and business losses which our Group may suffer arising from a relocation of its business from the Affected Premises to the Substitute Premises; and
(dd) any fines, penalties or charges which may be imposed or levied by any governmental authorities for failure to perform or non-compliance whether on the part of the relevant member of our Group, the landlord, the head landlord, the tenant, the licensor of any law or regulation, covenants or obligations under any property ownership certificate, land use right certificate or land grant contract in connection with the leasing, licensing, use or occupation of the Affected Premises.

– VI-35 –

APPENDIX VI

STATUTORY AND GENERAL INFORMATION

(b) Litigation

The Indemnifiers have given indemnities on a joint and several basis in favour of each member of our Group (whether or not such member of our Group is or may be entitled to claim reimbursement from any other person) in connection with all or any Damages howsoever arising from or in connection with any Litigation Claim to the extent that the events leading to such Damages occurred prior to the Effective Date and any such Damages are not paid by the insurer under any relevant insurance policy (if any) or provision of which has not been made in the Accounts provided that:

(i) each of our Company and the relevant member of our Group shall reimburse each Indemnifier an amount equal to any sum paid by it under the Deed of Indemnity which is subsequently recovered by our Group from any third party less any costs and expenses incurred by our Group for recovering such sum; and
(ii) where any claim has been insured against, none of the members of our Group shall make any claim under the Deed of Indemnity without first procuring the relevant member of our Group to make a claim against the relevant insurer for compensation.

In the event where any Litigation Claim arises, our Company and the relevant member of our Group shall by way of covenant but not as a condition precedent to the liability of the Indemnifiers give or procure that notice thereof is as soon as reasonably practicable given to the Indemnifiers; and, as regards any such Litigation Claim, our Company and the relevant member of our Group Company shall at the request of the Indemnifiers take such action, or procure that such action be taken, as the Indemnifiers may reasonably request to cause the Litigation Claim to be withdrawn, or to dispute, resist, appeal against, compromise or defend the Litigation Claim and any determination in respect thereof but subject to our Company and the relevant member of our Group being indemnified and secured to its or their reasonable satisfaction by the Indemnifiers against all losses, costs, damages and expenses which may be thereby incurred.

The Indemnifiers have also given indemnities on a joint and several basis in favour of the Company (for itself and as trustee of the Relevant Member) in respect of any and all reasonable legal costs which may be incurred by our Company and/or the Relevant Member in disputing, resisting, appealing against any court action commenced against the Relevant Member at any time during which the Relevant Member remains a subsidiary (directly or indirectly) of our Company and the Relevant Member remains as a shareholder of Sundart Interior on the ground that the entitlement of the Relevant Member to share the profits of Sundart Interior as provided under the SI-JV Agreement and the articles of association of Sundart Interior should not be more than the Relevant Member’s shareholding interest in Sundart Interior.

– VI-36 –

APPENDIX VI

STATUTORY AND GENERAL INFORMATION

For the purpose of the Deed of Indemnity:

“ Damages ” means all damages, losses, claims, fines, penalties to be imposed, charges, fees, costs, interests, expenses (including all legal costs and expenses), actions, proceedings, depletion of assets, loss of profit, loss of business, cost of rectification, costs of removal, costs of reinstatement of Property (with reference to the physical state or the legal status of such Property at the time when such Property’s owner or user became a subsidiary or jointly controlled entity of our Company) and any other liability of whatever nature;

“ Litigation Claim ” means any litigation, arbitration and/or legal proceedings, whether of criminal or administrative or contractual or tortuous or otherwise nature, against any member of our Group which was issued and/or accrued and/or arising from any act or non-performance or omission or otherwise of any member of our Group on or before the Effective Date in Hong Kong, Macau, the PRC, Qatar or elsewhere;

“ Property ” means any properties or premises, whether located in Hong Kong, PRC, Macau, Qatar or elsewhere, which are owned, leased, rented, occupied or used by any member of our Group as at the date of this document, including without limitation those properties set out in the property valuation report, the text of which is contained in Appendix IV to this document;

“ Property Claim ” means in relation to any Property (i) any property claims or third party claims or claims by the government of the jurisdictions in which the Property is/are located or mortgagee of the Property or chargee of the Property or claims of similar nature (if any) arising out of any breach or non-compliance of any applicable laws, rules and/or regulations affecting the Property and/or of the occupier of the Property and/or breach or non-compliance of other terms, conditions, covenants, restrictions of the relevant agreement (including but not limited to mortgage, legal charge and tenancy agreement) or of any (if any) land use right sale and purchase agreement or holding of any defective real estate title certificate or any other title documents in respect of the Property with reference to the physical state or the legal status of the Property at the time when such Property’s owner or occupier became a subsidiary or jointly controlled entity of our Company, or (ii) any eviction of any member of our Group from any Property as a result of any claim referred to in paragraph (i) by any government authority or any third party; and

“ Relevant Member ” means (i) Sundart (Middle East) or (ii) if subsequent to the date of the Deed of Indemnity, Sundart (Middle East) shall cease to be, and another member of our Group shall become, a shareholder of Sundart Interior, such other member of our Group which becomes a shareholder of Sundart Interior.

2. Litigation

Save as disclosed in the section headed “Business – Litigation” in this document, no member of our Group is engaged in any litigation or arbitration of material importance and no litigation or claim of material importance is known to the Directors to be pending or threatened against any member of our Group.

– VI-37 –

APPENDIX VI

STATUTORY AND GENERAL INFORMATION

3. Preliminary expenses

The preliminary expenses of our Company are estimated to be approximately HK$29,640 and are payable by our Company.

4. Promoter

The promoter of our Company is Mr. Wong.

Save as disclosed in this document, within the two years preceding the date of this document, no cash, securities or other benefit had been paid, allotted or given, nor are any such cash, securities or other benefit intended to be paid, allotted or given, to the promoter of our Company in connection with the [�] or the related transactions described in this document.

5. Qualifications of experts

The following are the qualifications of the experts who have given opinion or advice which are contained in this document:

Name	Qualification
ICBCI	licensed corporation under the SFO to carry
	out type 1 regulated activity (dealing in
	securities) and type 6 regulated activity
	(advising on corporate finance) under the
	SFO
Jingtian & Gongcheng	PRC lawyers
Rui Afonso Lawyers’ Office	Macau lawyers
Simmons & Simmons	Qatar lawyers
Deloitte Touche Tohmatsu	Certified public accountants
Jones Lang LaSalle Sallmanns Limited	Chartered surveyors
Conyers Dill & Pearman	Cayman Islands attorneys-at-law

6. Binding effect

This document shall have the effect, if an application is made in pursuance hereof, of rendering all persons concerned bound by all of the provisions (other than the penal provisions) of sections 44A and 44B of the Companies Ordinance insofar as applicable.

– VI-38 –

APPENDIX VI

STATUTORY AND GENERAL INFORMATION

7. Disclaimers

Save as disclosed in this document:

(a) none of the Directors nor any of the persons whose names are listed in the section headed “Other information – Consents of experts” in this Appendix VI is interested in the promotion of our Company, or in any assets which have been within the two years immediately preceding the issue of this document, or are proposed to be, acquired or disposed of by or leased to any member of our Group; and
(b) none of the Directors nor any of the persons whose names are listed in the section headed “Other Information – Consents of experts” in this Appendix VI is materially interested in any contract or arrangement subsisting at the date of this document which is significant in relation to the business of our Group.

8. Miscellaneous

(a) Save as disclosed in this document, within the two years immediately preceding the date of this document:
(i) no share or loan capital of our Company or any of its subsidiaries has been issued or agreed to be issued fully or partly paid either for cash or for a consideration other than cash;
(ii) no commissions, discounts, brokerages or other special terms have been granted in connection with the issue or sale of any capital of our Company or any of its subsidiaries;
(iii) no founders, management or deferred shares of our Company or any of its subsidiaries have been issued or agreed to be issued;
(iv) no share or loan capital of our Company or any of its subsidiaries is under option or is agreed conditionally or unconditionally to be put under option.
(b) None of ICBCI, Jingtian & Gongcheng, Rui Afonso Lawyers’ Office, Simmons & Simmons, Deloitte Touche Tohmatsu, Jones Lang LaSalle Sallmanns Limited and Conyers Dill & Pearman:
(i) is interested beneficially or non-beneficially in any shares in any member of our Group; or
(ii) has any right or option (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for any securities in any member of our Group.
(c) No company within our Group is presently listed on any stock exchange or traded on any trading system.

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APPENDIX VI

STATUTORY AND GENERAL INFORMATION

(d) All necessary arrangements have been made to enable the Shares to be admitted into CCASS for clearing and settlement.
(e) There are no arrangements in existence under which future dividends are to be or agreed to be waived.
(f) There has not been any interruption in the business of our Group which may have or have had a significant effect on the financial position of our Group within 12 months preceding the date of this document.

9. Bilingual prospectus

The English language and Chinese language versions of this prospectus are being published separately in reliance upon the exemption provided by Section 4 of the Companies Ordinance (Exemption of Companies and Prospectuses from Compliance with Provisions) Notice (Chapter 32L of the Laws of Hong Kong).

– VI-40 –

AI assistant

Rykadan Capital Limited — Proxy Solicitation & Information Statement 2009

50499_rns_2009-08-11_44ff4a46-c790-492e-8ff6-0c7e054d4b1c.pdf

Web Proof Information Pack of

SUNDART INTERNATIONAL HOLDINGS LIMITED

WARNING

CONTENTS

SUMMARY

OVERVIEW

SUMMARY

SUMMARY

SUMMARY

SUMMARY

SUMMARY

COMPETITIVE STRENGTHS

BUSINESS STRATEGIES

SUMMARY

SUMMARY OF FINANCIAL INFORMATION

I. Combined income statements

SUMMARY

II. Combined balance sheets

SUMMARY

USE OF PROCEEDS

SUMMARY

DIRECTORS

UNAUDITED PROFIT FORECAST FOR THE SIX MONTHS ENDING 30 SEPTEMBER 2009[(1)]

DIVIDEND POLICY

SUMMARY

RISK FACTORS

Risks relating to our business

SUMMARY

Risks relating to our industry

Risks relating to Hong Kong

SUMMARY

Risks relating to Macau

Risks relating to the PRC

Risks relating to the State of Qatar

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

GLOSSARY OF TECHNICAL TERMS

GLOSSARY OF TECHNICAL TERMS

RISK FACTORS

RISKS RELATING TO OUR BUSINESS

RISK FACTORS

Our failure to meet schedule requirements of our contracts could require us to pay liquidated damages.

We depend on key management personnel.

We are exposed to dispute or litigation.

RISK FACTORS

We are subject to other construction risks such as fire, suspension of water and electricity supplies.

We rely on a limited number of major customers.

We may not be able to operate successfully in markets such as Qatar and Abu Dhabi in the Middle East.

Our cash flows may fluctuate.

RISK FACTORS

Our profit may be substantially reduced if there are changes in our subcontracting and materials costs after tendering.

Fitting-out works are highly labour intensive and we rely on a stable supply of labour to carry out our projects.

We engage directly or indirectly labour of different trade who may launch industrial action or strikes to have higher wages and shorter working hours.

RISK FACTORS

Our revenue is mainly derived from short-term projects which are not recurrent in nature and there is no guarantee that our customers will provide us with new business.

The trend of our historical financial information may not necessarily reflect our financial performance in the future.

Our interests may conflict with those of the Controlling Shareholders, who may take actions that are not in, or may conflict with, the best interests of our public Shareholders.

RISK FACTORS

Dividends declared in the past may not be indicative of the dividend policy in the future.

We may be adversely affected by the recent global economic developments and credit crunch.

The global economy may be adversely affected by a recurrence of severe acute respiratory syndrome, or an outbreak of other epidemics such as swine flu and avian flu, thereby affecting our prospects.

RISK FACTORS

RISKS RELATING TO OUR INDUSTRY

Our performance is dependent on market conditions and trends in the fitting-out industry and in the overall economy which may change adversely.

The entrance barrier to fitting-out industry is low and we may face more keen competition if there are new comers.

RISK FACTORS

We depend on our subcontractors to complete our projects and to implement safety measures or procedures during our courses of execution of works.

RISKS RELATING TO HONG KONG

The state of economy in Hong Kong may adversely affect our performance and financial condition.

RISK FACTORS

The state of political environment in Hong Kong may adversely affect our performance and financial condition.

Devaluation of the Hong Kong dollars could affect our financial conditions and results of operations.

RISKS RELATING TO MACAU

Rykadan Capital Limited Proxy Solicitation & Information Statement 2009