Samsonite Group S.A. — Interim / Quarterly Report 2002

Apr 28, 2003

RICHE MULTI-MEDIA HOLDINGS LIMITED
(Incorporated in Bermuda with limited liability)
ANNOUNCEMENT OF RESULTS
FOR THE YEAR ENDED 31ST DECEMBER 2002

RESULTS

The Board of Directors ("the Board") of Riche Multi-Media Holdings Limited ("the Company") is pleased to present the audited consolidated results of the Company and its subsidiaries ("the Group") for the year ended 31st December 2002 together with the comparative figures for 2001 as follows:

| | Notes | 2002
HK$'000 | 2001
HK$'000 |
| --- | --- | --- | --- |
| Turnover | 2 | 89,443 | 28,007 |
| Cost of sales | | (39,608) | (21,579) |
| Gross profit | | 49,835 | 6,428 |
| Other operating income | 4 | 1,218 | 6,697 |
| Administrative expenses | | (28,738) | (29,771) |
| Selling expenses | | (272) | (956) |
| Impairment loss recognised in respect of film rights | | (7,579) | (24,175) |
| Impairment loss recognised in respect of other asset | | (25,087) | (56,864) |
| Loss on disposal of property, plant and equipment | | (14,508) | (1,900) |
| Loss from operations | 5 | (25,131) | (100,541) |
| Finance costs | | (240) | (190) |
| Loss on disposal of a subsidiary | | (1,100) | — |
| Profit (loss) before taxation | | (26,471) | (100,731) |
| Taxation credit | 6 | 1,186 | 2,234 |
| Net loss for the year attributable to shareholders | | (25,285) | (98,497) |
| Loss per share | 7 | | |
| Basic and diluted | | (5.32 cents) | (26.56 cents) |

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Notes :

1. ADOPTION OF STATEMENTS OF STANDARD ACCOUNTING PRACTICE

In the current year, the Group has adopted, for the first time, a number of new and revised Statements of Standard Accounting Practice ("SSAPs") issued by the Hong Kong Society of Accountants. The adoption of these new and revised SSAPs has resulted in a change in the format of presentation of the cash flow statement and the statement of changes in equity, but has no effect on the results for the current or prior accounting years. Accordingly, no prior year adjustment has been required.

Cash flow statements

Under SSAP 15 (Revised) "Cash Flow Statements", cash flows are classified under three headings, namely, operating, investing and financing, rather than the previous five headings. Interest received and paid, which were previously presented under a separate heading, are classified as investing and financing cash flows respectively. Cash flows arising from taxes on income are classified as operating activities unless they can be separately identified with investing or financing activities.

Employee benefits

In the current year, the Group has adopted SSAP 34 "Employee Benefits", which introduces measurement rules for employee benefits, including retirement benefits plans. Because the Group participates only in a defined contribution retirement benefits scheme, the adoption of SSAP 34 has not had any impact on the financial statements.

1. TURNOVER

| | 2002
HK$'000 | 2001
HK$'000 |
| --- | --- | --- |
| Distribution of programmes | 34,320 | 18,469 |
| Sub-licensing of programme rights | 43,523 | 9,104 |
| Sales of advertising rights | 11,600 | — |
| Film exhibition income | — | 128 |
| Video conversion fee income | — | 306 |
| | 89,443 | 28,007 |

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3. SEGMENT INFORMATION

Business segments

Income statement for the year ended 31st December, 2002

| | Distribution
HK$'000 | Sub-licensing
HK$'000 | Sales of advertising rights
HK$'000 | Consolidated
HK$'000 |
| --- | --- | --- | --- | --- |
| Turnover | 34,320 | 43,523 | 11,600 | 89,443 |
| Segment profit before amortisation and impairment loss of other asset and loss on disposal of property, plant and equipment | 5,231 | 15,737 | 9,332 | 30,300 |
| Amortisation of other asset | — | (9,520) | — | (9,520) |
| Impairment loss in respect of other asset | — | (25,087) | — | (25,087) |
| Loss on disposal of property, plant and equipment | (13,574) | — | — | (13,574) |
| Segment (loss) profit | (8,343) | (18,870) | 9,332 | (17,881) |
| Unallocated corporate income | | | | 1,217 |
| Unallocated corporate expenses | | | | (8,467) |
| Loss from operations | | | | (25,131) |
| Finance costs | | | | (240) |
| Loss on disposal of a subsidiary | | | | (1,100) |
| Loss before taxation | | | | (26,471) |
| Taxation credit | | | | 1,186 |
| Net loss for the year | | | | (25,285) |

Income statement for the year ended 31st December, 2001

| | Distribution
HK$'000 | Sub-licensing
HK$'000 | Other
HK$'000 | Consolidated
HK$'000 |
| --- | --- | --- | --- | --- |
| Turnover | 18,469 | 9,104 | 434 | 28,007 |
| Segment (loss) profit before amortisation and impairment loss of other asset and loss on disposal of property, plant and equipment | (33,193) | (8,225) | 434 | (40,984) |
| Amortisation of other asset | — | (793) | — | (793) |
| Impairment loss in respect of other asset | — | (56,864) | — | (56,864) |
| Loss on disposal of property, plant and equipment | (1,900) | — | — | (1,900) |
| Segment (loss) profit | (35,093) | (65,882) | 434 | (100,541) |
| Finance costs | | | | (190) |
| Loss before taxation | | | | (100,731) |
| Taxation credit | | | | 2,234 |
| Net loss for the year | | | | (98,497) |

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Geographical segments

All the Group’s operations are located in Hong Kong and Macau. Thus, no geographical analysis for the carrying amount of segment assets and additions to property, plant and equipment and intangible assets is presented.

The following table provides an analysis of the Group’s sales by location of markets, irrespective of the origin of the goods/services:

	Turnover
	2002
HK$’000	2001
HK$’000
Hong Kong and Macau	14,375	19,079
The People’s Republic of China excluding Hong Kong, Macau and Taiwan (the “PRC”)	75,068	—
North America	—	8,928
	89,443	28,007
4. OTHER OPERATING INCOME
	2002
HK$’000	2001
HK$’000
Interest income on bank deposits	78	317
Interest income on convertible notes	1,135	—
Sundry income	5	808
Rental income in respect of plant and machinery	—	3,038
Rental income in respect of studio and lighting equipment	—	2,534
	1,218	6,697
5. LOSS FROM OPERATIONS
	2002
HK$’000	2001
HK$’000
Loss from operations has been arrived at after charging:
Allowance for bad and doubtful debts (included in administrative expenses)	1,044	4,314
Allowance for inventory obsolescence (included in cost of sales)	1,757	1,034
Amortisation of film rights (included in cost of sales)	24,069	5,516
Amortisation of other asset (included in administrative expenses)	9,520	793
Auditors’ remuneration	723	400
Cost of inventories (included in cost of sales)	3,197	15,029
Depreciation of property, plant and equipment:
— owned assets	2,222	5,264
— leased assets	16	20
	2,238	5,284
Operating lease rental in respect of rented premises	815	815
Staff costs including directors’ emoluments:
— salaries, allowances and benefits in kind	6,373	12,638
— contributions to retirement benefits scheme	177	392
	6,550	13,030

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6. TAXATION CREDIT

Transfer from deferred taxation

1,186	2,234

No provision for Hong Kong Profits Tax has been made as the Company and its subsidiaries either have no estimated assessable profits or their estimated assessable profits are wholly absorbed by estimated tax losses brought forward.

No tax is payable for the year ended 31st December, 2001 since the Group had no estimated assessable profits.

7. LOSS PER SHARE

The calculation of the basic and diluted loss per share is based on the following data:

	2002	2001
	HK$'000	HK$'000
Loss for the purposes of basic and diluted loss per share	(25,285)	(98,497)
	'000	'000
Weighted average number of ordinary shares for the purpose of basis and diluted loss per share	475,200	370,828

The computation of diluted loss per share in the current year does not assume the exercise of the Company's warrants, convertible notes and share options because the effect of exercising a warrant, a convertible note and an option would result in a decrease of net loss per share.

The computation of diluted loss per share for the year ended 31st December, 2001 does not assume the exercise of the Company's share options because the effect of exercising an option to subscribe for an additional share of the Company would result in a decrease of net loss per share.

DIVIDEND

The directors do not recommend the payment of any dividend for the year ended 31st December 2002 (2001: Nil).

MANAGEMENT DISCUSSION AND ANALYSIS

Performance

Riche Multi-Media's performance in 2002 was more than satisfactory. The Group recorded a turnover of HK$89,443,000, representing a increase of 219% as compared to the corresponding period in 2001. Loss from operations amounted to HK$25,131,000 (2001: loss of HK$100,541,000). The net loss attributable to shareholders of HK$25,285,000 was recorded due to impairment in value of the Group's film rights of HK$7,579,000 (2001: HK$24,175,000) and other asset of HK$25,087,000 (2001: HK$56,864,000) being recognized. Due to restructuring the core business, the one-off loss on disposal of fixed asset including plant, machinery, studio and lighting equipment in Hong Kong of HK$14,508,000 and the entire interest in the subsidiary of HK$1,100,000 were taken into account and brought a negative impact on the financial statements. The loss per share for the year was 5.32 cents (2001: loss 26.56 cents).

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Change of Name

The Group had diverted its business in developing the media business. Advertising placing on the Group’s products is another new business and the Group will expertly use the marketing strategy to assess new business in a prudent manner. Accordingly, the name of Company was changed to Riche Multi-Media Holdings Limited in June 2002 to reflect its future directions and market positioning.

Business Review

The Operating Review

Operating Results for the Year

As envisaged, our PRC businesses had become more significant and now represent 84% of the contribution of all businesses compared with nil in 2001. The Group’s three core businesses, namely, distribution of programmes, sub-licensing of programme rights and sales of advertising rights accounted for 38%, 49% and 13% of the Group’s total turnover respectively.

• Distribution of Programmes

For the year ended 31st December, 2002, turnover of distribution of programmes derived from Hong Kong and PRC amounted to HK$34,320,000, representing a increase of 86% compared with the last year. During the year under review, Hong Kong’s economy was adversely affected by the slowdown in global economy and the decline was further aggravated by the 911 events. The effects of high unemployment and the poor property market indicate that consumers are likely to continue to exercise caution in their spending. All these depressing factors in turn led to consumers’ reluctance to spend. In spite of these adverse circumstances, the Group succeeded in exploration of new revenue stream and recording a rise in turnover from distribution of programmes in PRC. In line with increasing demand in PRC, the Group expanded its sales network rapidly. Distribution of home video products in PRC contributed the satisfying result at the current year. The acquisition of company in November 2001 enabled the Group to enjoy existing yield.

• Sub-licensing of Programme Rights

For the year ended 31st December, 2002, turnover of sub-licensing of programme rights amounted to HK$43,523,000, representing an increase of 378% compared with the same period last year. The positive impact was mainly derived from the increase of demand from hotel industry in PRC.

• Sales of Advertising Rights

Diversification also brought the Group situating at the new spunky market. Advertisement placing on Group’s products created new revenue stream. Turnover amounted to HK$11,600,000 at the current year. The performance was excellent. The Group supports this change of marketing strategy that is appropriate to the future development of the Group.

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Human Resources

As at 31st December, 2002, the Group employed 15 full time marketing, management, administrative and production staffs. The Group offers a competitive remuneration package to its employees, including insurance and medical benefits. In addition, discretionary bonus and share options may be granted to eligible employees based on the Group's performance and individual performance. Staff costs were HK$6,550,000 in 2002 (2001: HK$13,030,000).

The Financial Review

Capital Structure and Treasury Policy

The Group maintains a strong and stable financial position. As at 31st December, 2002, the Group had total assets of approximately HK$331,492,000, comprising non-current assets of approximately HK$284,717,000 and current assets of approximately HK$46,775,000, which were financed by current liabilities, non-current liabilities and shareholders' funds of approximately HK$76,070,000, HK$35,318,000 and HK$220,104,000 respectively. The current ratio deteriorated from last year's 3.07 to 0.61 while the quick ratio declined from last year's 2.91 to 0.61. The debt to equity ratio was 0.51 while it was 0.11 last year. The ratio was calculated by dividing the total liabilities of HK$111,388,000 (2001: HK$26,589,000) by the total shareholders' equity of HK$220,104,000 (2001: HK$246,263,000).

The Group disposed of its entire interest in Ocean Shores Licensing Limited to Gainful Fortune at a consideration of HK$80 million. Gainful Fortune Limited ("Gainful Fortune") issued convertible notes in an aggregate amount HK$160 million for the purchase of the hotel and intranet distribution rights in respect of an aggregate of up to 300 motion pictures in the PRC and the entire issued share capital of Ocean Shores Licensing Limited from the Group. The notes bear interest at 1% per annum which is payable yearly in arrears and will mature on 17th April, 2005. On completion of the disposal of Ocean Shores Licensing Limited on 17th April, 2002, the Group subscribed 40 issued shares of HK$1 each in the share capital of Gainful Fortune at a par value of HK$1, which represent 40% of the enlarged issued share capital of Gainful Fortune.

During the period, the Group and China Star Group entered into a licensing agreement pursuant to which China Star Group conditionally agreed to grant to the Group the licensing rights in the PRC (except Hong Kong, Macau and Taiwan) and Mongolia in respect of 116 movies for a term of 10 years from the date of completion of the licensing agreement at a total consideration of HK$33.8 million. The consideration would be settled by the issue of convertible notes with principal amount of HK$33.8 million by the Company.

The convertible notes bear interest at 1% per annum which will be payable semi-annually in arrears. The convertible notes will mature on three years from the date of the issue of the convertible notes and are redeemable only on the maturity date. The convertible notes carry the right at any time between the issue date and maturity to convert the whole or any part of the outstanding principal amount of the convertible notes into the Company's share at a conversion price of HK$4 per share.

Borrowings and Banking facilities

During the year, the Group generally financed its operations with internally generated cash flows. As at 31st December, 2002 the Group had no any banking facilities. (2001: Nil)

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The Group had a net cash balance of HK$7,384,000 (2001: HK$27,770,000) being total cash on hand of HK$7,598,000 minus bank overdraft in our books of HK$214,000.

The Group services its debts primarily through cash generated by operations. As at 31st December, 2002, the Group had bank balances and cash of approximately HK$7,598,000 and taking into consideration the Group's internally generated funds, the directors believes that sufficient funds are available to pursue its planned business development opportunities.

Contingent Liabilities

The Group had no material contingent liabilities as at 31st December, 2002.

Foreign Exchange Exposure

As the assets of the Group comprised substantially of bank deposits denominated in Hong Kong dollar, exchange risk of the Group is minimal as long as the Hong Kong government's policy to link the Hong Kong dollar to the US dollar remains in effect.

Pledge and Charge of Group Assets

Neither the Company nor any of its subsidiaries had any pledge or charge of the assets as at 31st December, 2002. (2001: Nil)

Prospects

"To introduce the sound quality films to Chinese audiences" has always been the mission of the Group. During the year, the group had released a number of movie hits, especially in PRC, including the sci-fi genre "The Wesley's Mysterious File", starring Andy Lau, Rosamund Kwan and Shu Qi, "Mightly Baby", starring Lau Ching-Wan, Louis Koo, Gigi Leung, Cecilia Cheung and Rosamund Kwan, "The Lion Roars" starring Louis Koo and Cecilia Cheung and famous Korea film "My Sassy Girl", starring Jeon Ji-hyun and Cha Tae-hyun. The Group's distribution performance in 2002 was more than satisfactory and will continue to source additional stock titles in content library and provide a more varied and wider choice for our audiences.

In 2002, the Group's films contents was successfully realized to revenue and exploited the new revenue streams as advertisement placing on Group's products and 35mm film and video products distribution channel in PRC. All these revenue streams brought the positive financial impact to the Group.

Ambition to Become Main Contents Provider in PRC

In 2003 we expect the economy of Mainland China to continue its steady growth and offer the rising demand for audio-visual products. The Group plans to enhance the market share in the key cities through our organic growth and strategic acquisitions and establish branches in Beijing, Shanghai and Guangzhou. Also, we will focus on three parts as follows.

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• Cinema Business: Films Distribution

Within the five-year grace under WTO rules, China should accelerate development of its film production and market. For this purpose, China had made efforts to break up the regional monopoly of movie distribution, to build digital cinemas and introduce computerized ticket sales. Overall, going to the cinema remains a relatively inexpensive out-of-home entertainment experience. All the symptoms are in favor of the Group’s business on films distribution. The demand from audiences and distributor will continually increase. In 2003, the group will strive to sustain its leading market position, provide more sound quality films in PRC and maximize the revenue by optimizing yield throughout our network.

• Video Business: VCDs and DVDs Distribution

Last year, China had resorted to laws and regulations to crack down on the production and marketing of pirated audio-visual products and software, in order to better protect intellectual property rights. It is the first time to stipulate that those people who are engaged in the production and marketing of pirated products will be prosecuted. The hard strike provided a positive market signals to the distributor and directly led to a remarkable record - one film’s video and audio distribution rights in the PRC territory had been sold for 17.8 million yuan at an auction in Beijing. It indicated the real market value of video and audio distribution rights.

In our library, we hold most popular Chinese language programmes and are non-release in PRC. China Star Entertainment Limited, as one of the largest film producer in Hong Kong, will continually provide their latest released films pursuant to our supply agreement. In the future, the Group also sources additional label from different countries into our library and consolidates our position in the video products and films distribution in the PRC.

In 2003, the group will increase brand recognition and customer loyalty by different strategies. Firstly, we will expand our network in PRC by installing hundred of point-of-sales displays into supermarkets and build up our self-operated outlets for selling VCDs, DVDs and other post-films products. Loyal customers will sustain the group’s long-term profits.

• Advertising: Sales of advertising rights

With an annual GDP of over US$1 trillion, advertising spending is still comparatively low at 0.4%. More foreign brands move into China and more domestic brands appear in competition. They will be spending more money to build their names and establish their brands for brand loyalty. Based on total advertising revenues, our products as advertising media is one of fast-growing segments of the advertising sector. Brands from around the world are targeting the China market and advertising spend of foreign brands is expected to soar. While the advertising revenue from the Group’s products is far from significant at the beginning stage, the management considers that this business segment is probably the major driving force for the Group’s business growth in the coming year.

Going forward, the Group will expand its existing business in PRC systematically and assess new market potential in a prudent manner, so as to broaden its scope of operation on the mainland within its realm of specialties. It will also strive to increase its market share in such cities it has already established presence to surpass its original target set early. At the same time, the Group will continue to adopt stringent cost control policies and improve operational efficiency in order to maximize returns and enhance shareholders’ value in the coming year.

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PURCHASE, SALE AND REDEMPTION OF THE COMPANY'S LISTED SECURITIES

Neither the Company nor any of its subsidiaries purchased, sold or redeemed any of the Company's listed securities during the year.

CORPORATE GOVERNANCE

In the opinion of the directors, the Company has complied throughout the year ended 31st December, 2002 with the Code of Best Practice as set out in Appendix 14 of the Rules Governing the Listing of Securities on the Stock Exchange.

AUDIT COMMITTEE

The audit committee of the Company as at 31st December, 2002 comprised Messrs. Lai Hok Lim and Tang Chak Lam, Gilbert, the independent non-executive directors. The principal duties of the audit committee are to review with management the accounting principles and practices adopted by Group and discussed internal controls and financial reporting matters including reviews of interim and annual financial statements.

POST BALANCE SHEET EVENT

On 22nd November, 2002, the Group entered into a conditional sale and purchase agreement with a third party pursuant to which the Group agreed to purchase 100% of the entire issued share capital and debt of Legend Rich Limited at a total consideration of HK$26 million. The principal activities of Legend Rich Limited and its subsidiary are provision of marketing services to a distributor in the distribution of video compact disc and digital compact disc in Tienjian and distribution and retailing of audio-visual materials. At 31st December, 2002, the Group paid a deposit of HK$23 million pursuant to the terms of agreement. This acquisition was completed subsequent to the balance sheet date.

DISCLOSURE OF INFORMATION ON THE STOCK EXCHANGE'S WEBSITE

Information that is required by paragraphs 45(1) to 45(3) of Appendix 16 of the Listing Rules will be published on the Stock Exchange of Hong Kong Limited's website in due course.

By order of the Board
Heung Wah Keung
Chairman

Hong Kong, 25th April 2003

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NOTICE OF ANNUAL GENERAL MEETING

NOTICE IS HEREBY GIVEN that the annual general meeting of the shareholders of Riche Multi-Media Holdings Limited (the “Company”) will be held at Unit 609, 6/F, Miramar Tower, 132 Nathan Road, Tsimshatsui, Kowloon, Hong Kong on 27 May 2003 at 11:00 a.m., for the following purposes-

1. To receive and consider the audited financial statements and the reports of the Directors and auditors of the Company for the year ended 31 December 2002.
2. To re-elect the retiring Directors and authorise the board of Directors to fix the Directors’ remuneration.
3. To re-appoint auditors and to authorise the board of Directors to fix their remuneration.
4. To consider by way of special business and, if thought fit, passing the following resolutions as ordinary resolutions’ —

ORDINARY RESOLUTIONS

A. “THAT:—

(a) subject to paragraph (c) below, the exercise by the Directors of the Company during the Relevant Period (as hereinafter defined) of all the powers of the Company to allot, issue and deal with additional shares in the share capital of the Company and to make or grant offers, agreements and options which would or might require the exercise of such power be and is hereby generally and unconditionally approved;

(b) the approval in paragraph (a) above shall authorise the Directors of the Company during the Relevant Period (as hereinafter defined) to make or grant offers, agreements and options which would or might require the exercise of such power after the end of the Relevant Period;

(c) the aggregate nominal amount of share capital allotted or agreed conditionally or unconditionally to be allotted (whether pursuant to an option or otherwise) and issued by the Directors of the Company pursuant to the approval in paragraph (a) above, otherwise than pursuant to (i) a Rights Issue (as hereinafter defined) (ii) any share option scheme or similar arrangement for the time being adopted for the grant or issue to eligible persons of shares or rights to acquire shares of the Company or (iii) an issue of shares as scrip dividends or similar arrangement providing for the allotment of shares in lieu of the whole or part of a dividend on shares of the Company in accordance with the bye-laws of the Company, shall not in total exceed 20% of the aggregate nominal amount of the share capital of the Company in issue as at the date of this resolution, and the said approval shall be limited accordingly; and

(d) for the purposes of this resolution:

“Relevant Period” means the period from the passing of this resolution until whichever is the earlier of:

(i) the conclusion of the next annual general meeting of the Company;

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(ii) the passing of an ordinary resolution by the shareholders of the Company in general meeting revoking or varying the authority given to the Directors of the Company under this resolution; and

(iii) the expiration of the period within which the next annual general meeting of the Company is required by the bye-laws of the Company, the Companies Act of the Bermuda or any applicable laws of Bermuda to be held.";

"Rights Issue" means where shares in the Company or warrant, options or other securities giving rights to subscribe for shares are offered, allotted and issued open for a period fixed by the Directors of the Company to shareholders of the Company or any class thereof on the register on a fixed record date in proportion to their then holdings of such shares of the Company or any class thereof (subject to such exclusions or other arrangements as the Directors may deem necessary or expedient in relation to fractional entitlements or having regard to any restrictions or obligations under the laws of, or the requirements of any recognised regulatory body or any stock exchange in any territory outside Hong Kong).

B. “THAT:—

(a) the exercise by the Directors of the Company during the Relevant Period (as hereinafter defined) of all the powers of the Company to purchase its shares, subject to paragraph (b) below and in accordance with all applicable laws and regulations, be and is hereby generally and unconditionally approved;

(b) the total number of shares in the Company to be purchased by the Company pursuant to the approval in paragraph (a) above during the Relevant Period shall not exceed 10% of the aggregate nominal amount of the share capital of the Company in issue as at the date of this resolution, and the said approval shall be limited accordingly; and

(c) for the purposes of this resolution

"Relevant Period" means the period from the passing of this resolution until whichever is the earlier of:

(i) the conclusion of the next annual general meeting of the Company;

(ii) the passing of an ordinary resolution by the shareholders of the Company in general meeting revoking or varying the authority given to the Directors of the Company under this resolution; and

(iii) the expiration of the period within which the next annual general meeting of the Company is required by the bye-laws of the Company, the Companies Act of the Bermuda or any applicable laws of Bermuda to be held.";

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C "THAT the general mandate granted to the Directors of the Company pursuant to the approval granted under resolution 4(A) above and for the time being in force to exercise the power of the Company to allot shares be and is hereby extended by the addition to the aggregate nominal amount of the share capital of the Company which may be allotted or agreed conditionally or unconditionally to be allotted by the directors of the Company pursuant to such general mandate an amount representing the aggregate nominal amount of shares in the capital of the Company which has been purchased by the Company since the granting of such general mandate pursuant to the exercise by the Directors of the powers of the Company to purchase such shares pursuant to the approval granted under resolution 4(B) above, provided that such amount shall not exceed 10% of the aggregate nominal amount of the share capital of the Company in issue as at the date of this resolution."

By Order of the Board
Lei Hong Wai
Executive Director

Hong Kong, 30 April 2003

Notes:

(1) A member entitled to attend and vote at the Meeting is entitled to appoint more than one proxy to attend and, in the event of a poll, vote on his behalf. A proxy need not be a member of the Company. If more than one proxy is so appointed, the appointment shall specify the number and class of shares in respect of which each such proxy is so appointed.

(2) The instrument appointing a proxy and the power of attorney or other authority, if any, under which it is signed, or a certified copy of such power or authority, must be lodged with the head office of the Company at Unit 609, 6/F, Miramar Tower, 132 Nathan Road, Tsimshatsui, Kowloon, Hong Kong not less than 48 hours before the time fixed for holding the Meeting.

(3) Only those members whose names are registered on the register of members of the Company on 22 May, 2003, being the record date determined by the board of Directors of the Company, are entitled to vote or to appoint proxies to vote in their stead at the Annual General Meeting.

(4) In relation to the resolution 4(A) set out in the notice convening the Annual General Meeting, approval is being sought from the members as a general mandate under the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited ("Listing Rules") The Directors wish to state that they have no immediate plans to issue any new shares of the Company.

(5) In relation to the resolution 4(B) set out in the notice concerning the Annual General Meeting, the Directors wish to state that they will exercise the powers conferred thereby to repurchase shares of the Company in the circumstances which they deem appropriate for the benefit of the shareholders. The explanatory statement containing the information necessary to enable the shareholders to make an informed decision on whether to vote for or against the resolution as required by the listing Rules, will be set out in a separate document to be enclosed with the 2002 annual report.

Please also refer to the published version of this announcement in The Standard.