Smart-Core Holdings Limited — Capital/Financing Update 2003

Nov 17, 2003

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

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UNITY INVESTMENTS HOLDINGS LIMITED

(Incorporated in the Cayman Islands with limited liability)

PROFIT WARNING, CLARIFICATION AND ADDITIONAL DISCLOSURE AND RESUMPTION OF TRADING

PROFIT WARNING

In response to numerous telephone inquiries from local investors and the fax from an overseas institutional investor dated 11th November 2003 regarding the concerns of the investors in the significant plunge of net asset value per share of the Company by approximately 25.76% from approximately HK$0.66 as at 30th September 2003 to approximately HK$0.49 as at 31st October 2003, the Board would like to inform the shareholders and the public that such decline in net asset value per share is mainly due to the recent drop in the market value of the shares of Radford, which are held by the Company as trading security . The share price of Radford has continued to retreat after 31st October 2003, and the Board considers that its volatility is at an extremely high level. The Board considers the net asset value of the Company as at the end of November 2003 will be adversely affected. The financial result as well as the net asset value of the Company for the financial year ending 31st December 2003 will also be affected seriously. Hence, the Board would like to remind investors to exercise extreme caution and restraint when dealing in the shares of the Company.

CLARIFICATION AND ADDITIONAL DISCLOSURE

As stated in the Press Article, Ms. Lo held 6.3% interest in Heritage. However, according to the DI Notice, the equity interest of Ms. Lo in Heritage was only 5.25% with additional derivative interest in 23,557,792 shares of Heritage.

The Press Article has also made reference to the composition of the investment portfolio of the Company with that of Radford. The Board would like to make additional disclosure to improve transparency and enhance public understanding on the Company. Please refer to the information under the section headed “clarification and additional disclosure” below for details.

Trading in the shares of the Company has been suspended at the request of the Company with effect from 9:30 a.m. on Thursday, 13th November 2003 pending the release of this announcement. An application has been made to the Stock Exchange for resumption in trading of the shares of the Company with effect from 9:30 a.m. on Monday, 17th November 2003.

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PROFIT WARNING

As disclosed in the Annual Report of the Company for the financial year ended 31st December 2002, the Company has invested in the shares of Radford Capital Investment Limited (“Radford”), which is in line with the investment objective of the Company, at the average investment cost of approximately HK$0.431 per share and such investment was classified as trading security. As at 31st December 2002, the Company held 40,000,000 shares of Radford, which accounted for approximately 15.90% of the consolidated net asset value of the Company and its subsidiaries. As at 30th September 2003, the Company has recorded an unrealized unaudited profit of approximately HK$23.4 million on its holding of shares of Radford, the closing price per share of which is HK$1.08 as quoted on the Stock Exchange, and the unaudited consolidated net asset value per share of the Company was approximately HK$0.66 as at that date.

As stated in the announcements of Radford dated 22nd October 2003 and 29th October 2003, the shares of Radford was suspended from trading by the Stock Exchange at the direction of the Securities and Futures Commission (“SFC”), which had expressed concerns that there was no orderly and fair market in the shares of Radford and that the interest of the investing public might be prejudiced if trading were to continue, on 17th October 2003 and resumed for trading by the Stock Exchange at the direction of the SFC on 30th October 2003. The closing price per share of Radford as quoted on the Stock Exchange had plunged approximately 67.91% from HK$1.34 on 16th October 2003 to HK$0.43 on 31st October 2003, the second trading day after the resumption of trading in the shares of Radford. As a result, the Company recorded an unrealized unaudited loss of approximately HK$26 million on its holding of shares of Radford and the unaudited consolidated net asset value per share of the Company declined by 25.76% from approximately HK$0.66 as at 30th September 2003 to approximately HK$0.49 as at 31st October 2003.

The closing price per share of Radford as quoted on the Stock Exchange had plunged approximately 64.19% further from HK$0.43 on 31st October 2003 to HK$0.154 on 14th November 2003, which results in an unrealized unaudited loss of approximately HK$11 million to the Company for holding of 39,920,000 Shares of Radford (the existing shareholding of the Company in Radford) for that period. The board of directors of the company (the “Board”) notices the plunge in the market price of shares of Radford within the past month has affected and will continue to materially affect the financial results and the net asset value of the Company for the coming month and will adversely affect the financial results for the financial year ending 31st December 2003.

Hence, the Board would like to inform shareholders and investors about the situation and remind them to exercise extreme caution and restraint when dealing in the shares of the Company.

CLARIFICATION AND ADDITIONAL DISCLOSURE

As stated in the press article in Hong Kong Economic Times on 3rd November 2003 (the “Press Article”), Ms. Lo Ki Yin (“Ms. Lo”) held 6.3% interest in Heritage International Holdings Limited (“Heritage”). However, according to the disclosure of interests notices available on www.hkex.com.hk as at 14th November 2003 (the “DI Notice(s)”), the equity interest of Ms. Lo in Heritage was only 5.25% with additional derivative interest in 23,557,792 shares of Heritage.

The Press Article has also made reference to the composition of the investment portfolio of the Company with that of Radford. The Board would like to make the following additional disclosure to improve transparency and enhance public understanding on the Company.

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1. According to the DI Notice, Collier Assets Limited, which is beneficially owned by Ms. Lo, is a substantial shareholder of the Company and currently holds 51,450,000 ordinary shares, representing approximately 25.72% of the entire issued shares of the Company as at 13th November 2003. At all times, Ms. Lo is a passive investor in the Company and has not participated in the daily operation as well as any investment decision of the Company. The Company is not aware of Ms. Lo’s intention in relation to shares in the Company. Apart from informing the Company that she has became the substantial shareholder of the Company on 30th July 2003, Ms. Lo has neither visited the Company nor has discussed with the Board regarding any investment decision of the Company.

2. The Company’s investment decisions were recommended by its investment manager and approved by the Board pursuant to the investment objectives and policies adopted by the Company. The Board will review the performance of the portfolio at least once a month. The latest investment portfolio of the Company was established by Alpha Assets Investments Limited (“Alpha”), the ex-investment manager of the Company during the period from 6th October 1999 to 26th April 2003. Such investment portfolio includes several companies listed on the Stock Exchange that Ms. Lo has equity interests in, including Heritage (approximately 5.25% as checked from DI Notice) and China Sci-Tech Holdings Limited (approximately 10.06% as checked from DI Notice), and is a director of, 139 Holdings Limited. However, the Board considers that (i) Alpha, its directors and Ms. Lo are independent of each other and do not know each other; (ii) such investments were made prior to Ms. Lo’s becoming the substantial shareholder of the Company; and (iii) such investments are of high appreciation potential. Hence, the Board would like to clarify the situation and shall keep such investments in the portfolio with the exception of Radford pending for the discussion with the Company’s investment manager. Since 26th April 2003, the composition of the investment portfolio remains more or less the same except there are changes to the number of shares held in the investee companies and addition of bonus warrants allotted from both Heritage and China United International Holdings Limited (“CUIH”).

3. The Company appointed Mr. Wong Ying Seung, Asiong (“Mr. Wong”) as the independent director of the Company on 11th November 2003. Mr. Wong is also an executive director of CUIH, whose shares are listed on the Stock Exchange. The Company is currently holding 18,423,600 shares in CUIH , which accounts for approximately 4.998% of the issued share capital of CUIH. Given Mr. Wong is independent of the Company and the investment in CUIH shares was made without the knowledge of and prior to the appointment of Mr. Wong. The Board would like to inform all the shareholders and the public of this situation so as to avoid misunderstanding and misinterpretation. The offices of CUIH and the Company are located on the same commercial building. Hence, the Board inevitably has maintained its contact and will meet the directors of CUIH.

As a matter of fact, the Company has appointed CU Investment Management Limited, the indirect non-wholly owned subsidiary of CUIH and the investment manager of Radford, as the investment manager to the Company. The Board considers that such business dealings are on arm’s length negotiations, under the normal course of business of the Company and the terms are to the best interests of the shareholders and the Company as a whole.

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1. In order to improve transparency and enhance the public understanding, the Company would like to make the following voluntary disclosure regarding the details of its investment portfolio as at 13th November 2003:

Trading Securites

Number of Shares % of investee’s issued capital as at 13th November Code Stock 30-Jun-03 30-Sep-03 31-Oct-03 13-Nov-03 2003 139 139 Holdings Limited 430,000,000 408,656,000 408,656,000 408,656,000 4.741% 412 Heritage International Holdings Limited 75,000,000 75,000,000 75,000,000 75,000,000 3.342% 651 Wonson International Holdings Limited 341,500,000 341,500,000 341,500,000 341,500,000 4.995% 901 Radford Capital Investment Limited 40,000,000 40,000,000 40,000,000 39,920,000 3.914% 923 Heritage International – Warrants 15,000,000 7,220,000 985 China Sci-Tech Holdings Limited 280,000,000 283,500,000 283,500,000 272,500,000 4.693% 1144 China United International – Warrants 2,456,480 Long Term Investment 30-Jun-03 30-Sep-03 31-Oct-03 13-Nov-03 129 Asia Standard International Group Limited 58,522,000 58,522,000 58,522,000 58,522,000 1.423% 263 Poly Investments Holdings Limited 42,136,000 42,136,000 42,136,000 42,136,000 3.471% 273 China United International Holdings Limited 12,282,400 12,282,400 12,282,400 18,423,600 4.998% 613 Yugang International Limited 305,462,000 306,462,000 306,462,000 305,462,000 3.614% 1224 Qualipak International Holdings Limited 60,710,000 60,710,000 60,710,000 60,710,000 2.554% Portfolio Total	30-Jun-03 4,300,000 15,825,000 7,854,500 16,000,000 5,600,000 49,579,500 30-Jun-03 13,460,060 5,561,952 15,353,000 11,032,632 8,377,980 53,785,624 103,365,124	Market Value (HK$) 30-Sep-03 31-Oct-03 13-Nov-03 6,129,840 4,903,872 5,312,528 12,975,000 9,675,000 9,975,000 8,879,000 6,830,000 7,171,500 43,200,000 17,200,000 6,387,000 510,000 129,960 6,520,500 5,670,000 4,632,500 – 77,704,340 44,788,872 33,608,688 30-Sep-03 31-Oct-03 13-Nov-03 18,434,430 17,849,210 17,556,600 7,373,800 7,163,120 7,163,120 14,738,880 15,844,296 20,818,668 18,387,720 19,000,644 18,938,644 9,835,020 8,802,950 8,802,950 68,769,850 68,660,220 73,279,982 146,474,190 113,449,092 106,888,670	% of investment portfolio 4.97% 9.33% 6.71% 5.98% 0.12% 4.33% 0.00%
			31.44%
			16.43% 6.70% 19.48% 17.72% 8.24%
			68.56%
			100.00%

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The investment objective of the Company is to seek undervalued investment opportunities for medium and long-term capital appreciation. In view of the captioned investment portfolio, the Board considers that the share prices and fundamentals of those companies in the Company’s portfolio are substantially below the net asset value of those companies and should have significant upside potential.

The Board considers that Radford has adopted a similar investment strategy as that of the Company in picking the undervalued opportunities and the investment portfolio of Radford comprises of shares that are trading below their net asset value and may have significant upside potential. Hence, the Company had invested in the 40,000,000 shares of Radford as trading security in September to October 2002 and had targeted to realise the profit from investment in shares of Radford in late October 2003. The trading of the share of Radford was suspended for the period from 17th October 2003 to 29th October 2003 and then the share price plunged dramatically after the resumption of trading, resulting in an unrealized unaudited loss of the Company of approximately HK$26 million as at 31st October 2003.

GENERAL

The Company is an investment company whose shares are listed on the Stock Exchange. The Company and its subsidiaries are principally engaged in investments in listed and unlisted companies in Hong Kong and Mainland China. As at the date of the announcement, the existing investment portfolio of the Company consists of only listed companies in Hong Kong.

The Company has appointed CU Investment Management Limited to replace Sinox Fund Management Limited as the new investment manger of the Company effective 5th November 2003, details of which are included in the announcement of the Company dated 7th November 2003.

Trading in the shares of the Company has been suspended at the request of the Company with effect from 9:30 a.m. on Thursday, 13th November 2003 pending the release of this announcement. An application has been made to the Stock Exchange for resumption in trading of the shares of the Company with effect from 9:30 a.m. on Monday, 17th November 2003.

By Order of the Board Pang Shuen Wai, Nichols Executive Director

Hong Kong, 14th November 2003

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

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