Synagistics Limited - Proxy Solicitation & Information Statement 2007

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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

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

If you have sold or transferred all your shares in Concepta Investments Limited (the “ Company ”), you should at once hand this circular with the accompanying forms of proxy to the purchaser or transferee or to the bank, stockbroker or other agent through whom the sale or transfer was effected for transmission to the purchaser.

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

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CONCEPTA INVESTMENTS LIMITED 正奇投資有限公司[*]

(incorporated in the Cayman Islands with limited liability)

(Stock Code: 1140)

(A) PROPOSED PLACING OF NEW SHARES (A PORTION OF WHICH TO BE PLACED TO CONNECTED PERSON) WHICH INVOLVES THE ISSUE OF UNLISTED WARRANTS

  - **(B) PROPOSED GRANT OF SPECIAL MANDATE**

(C) APPLICATION FOR THE GRANTING OF WHITEWASH WAIVER
(D) PROPOSED INCREASE IN AUTHORISED SHARE CAPITAL

(E) CONTINUING CONNECTED TRANSACTIONS

(F) PROPOSED CHANGE OF COMPANY NAME AND

(G) NOTICES OF FIRST EGM AND SECOND EGM

Placing Agent

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Oriental Patron Asia Limited

Independent Financial Advisers to the Independent Board Committee and the Independent Shareholders

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Asia Investment Management Limited

A letter jointly issued by Ample Capital Limited and Asia Investment Management Limited, containing their advice to the Independent Board Committee and the Independent Shareholders is set out on pages 37 to 73 of this circular.

A notice convening the First EGM to be held at 27th Floor, Two Exchange Square, 8 Connaught Place, Central, Hong Kong at 11:00 a.m. on Wednesday, 7 November 2007 to consider and, if thought fit, approve the First EGM Matters is set out on pages N-1 to N-5 of this circular. A notice convening the Second EGM to be held at 27th Floor, Two Exchange Square, 8 Connaught Place, Central, Hong Kong at 11:00 a.m. on Thursday, 15 November 2007 to consider and, if thought fit, approve the Second EGM Matters is set out on pages N-6 to N-7 of this circular.

Whether or not you intend to attend the First EGM and/or the Second EGM, you are requested to complete and return the accompanying forms of proxy in accordance with the instructions printed thereon and deposit the same with Tricor Abacus Limited at 26th Floor, Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong as soon as possible and in any event not less than 48 hours before the time appointed for holding of such meetings or any adjournment thereof. Completion and return of the forms of proxy shall not preclude you from attending and voting in person at the First EGM and/or the Second EGM or any adjournment thereof should you so wish.

22 October 2007

* For identification purpose only

		Page
Definitions	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from	the Board
1.	Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	9
2.	Proposed Placing of new Shares (which involves the issue
	of unlisted Warrants) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	10
	– Principal terms of the Placing Agreement . . . . . . . . . . . . . . . . . . . . . . . . . .	10
	– Principal terms of the unlisted Warrants . . . . . . . . . . . . . . . . . . . . . . . . . . .	15
	– Reasons for the Placing and use of proceeds . . . . . . . . . . . . . . . . . . . . . . .	18
	– Mandate to issue the Placing Shares and the Warrant Shares . . . . . . . . . .	19
	– Implication under the Listing Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	19
	– Impact on the shareholding structure of the Company . . . . . . . . . . . . . . .	20
	– Basic information and shareholding structure of the Placing Agent,
	Connected Placee and OPFSGL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	22
	– Takeovers Code implication for the Placing Agent and
	the Connected Placee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	23
	– Maintenance of the listing status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	24
3.	Proposed increase in authorised share capital . . . . . . . . . . . . . . . . . . . . . . . . . . . .	25
4.	Continuing Connected Transactions – New Investment
	Management Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	25
	– Principal terms of the New Investment Management Agreement . . . . . .	25
	– Duration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	25
	– Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	25
	– Management and performance fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	26
	– Historical transaction records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	27
	– Historical caps for the fees paid to the Investment Manager
	under the Existing Investment Management Agreement . . . . . . . . . . . .	27
	– Proposed caps for the fees payable to the Investment Manager
	under the New Investment Management Agreement . . . . . . . . . . . . . . .	28
	– Conditions of the New Investment Management Agreement . . . . . . . . . .	28
	– Reasons for entering into the New
	Investment Management Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . .	28
	– Implication under the Listing Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	29
	– Revised 2008 Annual Cap for continuing connected transactions
	under the Existing Investment Management Agreement
	for the year ending 31 March 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	30
5.	Proposed change of Company name . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	31
6.	Fund raising activities by the Company in the past 12 months . . . . . . . . . . . . . .	31
7.	The First EGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	32
8.	The Second EGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	33
9.	Recommendation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	33
10.	Procedures for demanding a poll . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	34
11.	Further information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	34
Letter of Advice from the Independent Board Committee . . . . . . . . . . . . . . . . . . . . . . . . . .		35
Letter of Advice from Independent Financial Advisers. . . . . . . . . . . . . . . . . . . . . . . . . . . . .		37
Appendix I	– Financial Information of the Company. . . . . . . . . . . . . . . . . . . . . . . . . . . . .	I-1
Appendix II	– General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	II-1
Notice of First EGM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		N-1
Notice of Second EGM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		N-6

– i –

DEFINITIONS

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

“acting in concert” has the meaning ascribed to it by the Takeovers Code and the expression “Concert Party(ies)” shall be construed accordingly

“Ample Capital” Ample Capital Limited, a licensed corporation under the SFO to carry on type 4 (advising on securities), type 6 (advising on corporate finance) and type 9 (asset management) regulated activities, and is one of the two joint Independent Financial Advisers
“Announcement” the announcement dated 14 September 2007 made by the Company regarding, among others, the Placing, the grant of the Special Mandate, the Whitewash Waiver, the increase in the authorised share capital of the Company and the Continuing Connected Transactions
“Annual Cap(s)” the expected maximum amount of the fees payable to the Investment Manager under the New Investment Management Agreement for each of the three years ending 31 March 2011
“Articles” the articles of association of the Company, as amended from time to time
“Asia Investment” Asia Investment Management Limited, a licensed corporation under the SFO to carry on type 4 (advising on securities), type 6 (advising on corporate finance) and type 9 (asset management) regulated activities, and is one of the two joint Independent Financial Advisers
“associate(s)” has the meaning ascribed to it by the Listing Rules
“Board” the board of Directors
“Business Day” a day (other than Saturday) on which banks in Hong Kong are generally open for business
“BVI” the British Virgin Islands

– 1 –

DEFINITIONS

“Company”	Concepta Investments Limited, a company incorporated in the
	Cayman Islands with limited liability, the shares of which are
	listed on the main board of the Stock Exchange
“Condition(s) Precedent”	the condition(s) precedent to completion of the Placing Agreement
“connected person(s)”	has the meaning ascribed to it under the Listing Rules
“Connected Placee”	such Placee who is a connected person of the Company (and in
	the case of the Placing, refers to Ottness Investments Limited, an
	investment holding company incorporated in the BVI and whose
	entire issued share capital is beneficially and ultimately owned in
	equal share by Mr Zhang Zhi Ping and Mr Zhang Gaobo, two of
	the Directors)
“Continuing Connected	the continuing connected transactions which are to be constituted
Transactions”	by the provision of investment management and administrative
	services by the Investment Manager to the Company under the
	New Investment Management Agreement for the period from 1
	April 2008 to 31 March 2011
“Director(s)”	the directors, including the independent non-executive directors,
	of the Company
“Executive”	the Executive Director of the Corporate Finance Division of the
	SFC and any delegate of the Executive Director
“Existing Investment	the supplemental investment management agreement entered into
Management Agreement”	between the Company and the Investment Manager dated 16 March
	2006 as disclosed in the announcement of the Company dated 17
	March 2006 and the circular of the Company dated 3 April 2006
“First EGM”	the extraordinary general meeting of the Company to be convened
	and held on 7 November 2007 for the purpose of approving the
	First EGM Matters by the Independent Shareholders, the notice
	of the First EGM is set out on pages N-1 to N-5 of this circular

– 2 –

DEFINITIONS

“First EGM Matters” the Placing Agreement and all transactions contemplated thereunder (including the Warrants Issue), the grant of Special Mandate, the Whitewash Waiver, the increase in the authorised share capital of the Company, the continuing connected transactions constituted by the provision of investment management and administrative services by the Investment Manager to the Company under the Existing Investment Management Agreement for the year ending 31 March 2008 (including the Revised 2008 Annual Cap) and the Continuing Connected Transactions (which are to be constituted by the provision of investment management and administrative services by the Investment Manager to the Company under the New Investment Management Agreement) (including the Annual Caps)

“Greater China” the PRC, and for the purposes of this circular and the investment objectives and policies of the Company as well as for geographical reference shall include Taiwan, Macau and Hong Kong
“Hong Kong” the Hong Kong Special Administrative Region of the PRC “Independent Board the independent board committee of the Company (comprising Committee” Mr Liu Hongru, Mr Kwong Che Keung, Gordon, Professor He Jia and Mr Wang Xiaojun, being all the non-executive Directors) formed by the Company to advise the Independent Shareholders as to whether the First EGM Matters are fair and reasonable and in the interests of the Company
“Independent Financial Ample Capital and Asia Investment, the joint independent financial Advisers” advisers of the Company to advise the Independent Board Committee and the Independent Shareholders in relation to the First EGM Matters
“Independent Placee(s)” such Placee(s) who is not a Connected Placee

– 3 –

DEFINITIONS

“Independent Shareholders” the Shareholders, other than OPFSGL, the Investment Manager and their respective associates and/or any of their respective Concert Parties (including the Placing Agent and the Connected Placee) and those parties who are involved or interested in the Placing Agreement and all transactions contemplated thereunder (including the Warrants Issue), the Whitewash Waiver, the grant of Special Mandate, the increase in the authorised share capital of the Company, the continuing connected transactions constituted by the provision of investment management and administration services under the Existing Investment Management Agreement for the year ending 31 March 2008 (including the Revised 2008 Annual Cap) and the Continuing Connected Transactions (including the Annual Caps)
“Independent Third a party(ies) who is/are independent of and is/are not connected Party(ies)” with any of the directors, chief executives or substantial shareholders of the Company or any of its subsidiaries or any of their respective associates
“Investment Manager” or Oriental Patron Asia Limited, trading in the name of “Oriental “Oriental Patron” Patron Fund Management” in fund management activities for the purposes of the Existing Investment Management Agreement and the New Investment Management Agreement
“Last Trading Day” 5 September 2007, being the last trading day on which Shares were traded on the Stock Exchange pending the publication of the Announcement
“Latest Practicable Date” 18 October 2007, being the latest practicable date prior to the printing of this circular for the purpose of ascertaining certain information for inclusion in this circular
“Listing Date” the date on which dealings in the Shares first commence on the Stock Exchange (that is, 20 March 2003)
“Listing Rules” the Rules Governing the Listing of Securities on the Stock Exchange
“Longstop Date” 30 November 2007

“Macau” the Macau Special Administrative Region of the PRC

– 4 –

DEFINITIONS

“Net Asset Value”	the net asset value of the Company calculated in accordance with
	the provisions of the Articles
“New Investment	the new investment management agreement proposed to be entered
Management Agreement”	into between the Company and the Investment Manager following
	the expiry of the Existing Investment Management Agreement in
	respect of the provision of investment management and
	administrative services by the Investment Manager to the Company
	for the period from 1 April 2008 to 31 March 2011
“OPFSGL”	Oriental Patron Financial Services Group Limited, a substantial
	Shareholder
“Original 2008 Annual Cap”	the maximum amount of the fees of HK$5,700,000 originally
	expected to be payable to the Investment Manager under the
	Existing Investment Management Agreement for the year ending
	31 March 2008 and approved at the 2006 EGM by the then
	Independent Shareholders
“Percentage Ratio”	the applicable percentage ratio (other than the profit ratio and
	equity capital ratio) under Rule 14.07 of the Listing Rules
“Performance Fee	the last Business Day of each financial year of the Company,
Valuation Day”	being the period of 12 calendar months from 1 April of each year
	to 31 March of the following year
“Placee(s)”	the subscriber(s) of the Placing Shares which the Placing Agent
	will procure pursuant to and in accordance with the terms of the
	Placing Agreement
“Placing”	the placing of the Placing Shares subject to and upon the terms of
	the Placing Agreement
“Placing Agent”	Oriental Patron Asia Limited, a licensed corporation to carry out
	type 1 (dealing in securities), type 6 (advising on corporate finance)
	and type 9 (asset management) regulated activities under the SFO
	Please refer to the section headed “Basic Information and
	Shareholding Structure of the Placing Agent, Connected Placee
	and OPFSGL” in the “Letter from the Board” of this circular for
	the information regarding the ultimate shareholders and directors
	of the Placing Agent.

– 5 –

DEFINITIONS

“Placing Agreement”	the conditional placing agreement dated 7 September 2007 entered
	into between the Company and the Placing Agent
“Placing Price”	HK$1.20 per Placing Share
“Placing Shares”	600,000,000 new Shares (attached with Warrants) to be placed by
	and on behalf of the Placing Agent as agent of the Company
	pursuant to the Placing Agreement
“PRC”	the People’s Republic of China which, for the purposes of this
	circular, excludes Hong Kong, Macau and Taiwan
“Relevant Performance	the period commencing on 1 April of each year to 31 March of
Period”	the following year (both dates inclusive)
“Revised 2008 Annual Cap”	the revised maximum amount of the fees of HK$32,000,000
	expected to be payable to the Investment Manager under the
	Existing Investment Management Agreement for the year ending
	31 March 2008 following completion of the Placing
“SAFE”	State Administration of Foreign Exchange of the PRC
“Second EGM”	the extraordinary general meeting of the Company to be convened
	and held on 15 November 2007 for the purpose of approving the
	Second EGM Matter by the Shareholders, the notice of the Second
	EGM is set out on pages N-6 to N-7 of this circular
“Second EGM Matter”	the change of the name of the Company from “Concepta
	Investments Limited” to “OP Financial Investments Limited” and
	the adoption of “東英金融投資有限公司” as the new Chinese
	name of the Company for identification purpose only
“SFO”	the Securities and Futures Ordinance (Chapter 571 of the Laws of
	Hong Kong)
“Share(s)”	share(s) of HK$0.10 each in the share capital of the Company
“Shareholder(s)”	the holder(s) of the issued Shares

– 6 –

DEFINITIONS

“Special Mandate”	a special mandate to allot and issue new Shares to be sought from
	the Independent Shareholders at the First EGM to satisfy the
	allotment and issue of the Placing Shares and the Warrants Shares
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“Subscription Price”	the initial price of HK$1.20 (subject to adjustment) payable by
	holder(s) of Warrant(s) for subscription of each Share upon exercise
	of the subscription right attaching to the Warrant(s)
“substantial shareholder”	has the meaning ascribed to it under the Listing Rules
“Takeovers Code”	the Hong Kong Codes on Takeovers and Mergers
“Trial Scheme”	《國家外匯管理局批准開展境內個人直接對外証券投資試點》
	(Trial scheme approved by the SAFE which allows PRC nationals
	to make direct foreign securities investment) promulgated by the
	SAFE on 20 August 2007
“Valuation Date”	the last dealing day of the Stock Exchange in each calendar month
	or such other dealing day as considered appropriate by the Board
	for the purpose of calculating the Net Asset Value
“Warrants”	unlisted warrants to be issued by the Company on the basis of one
	Warrant for every five Placing Shares held by the Placees in
	registered form, the holders of which are entitled to subscribe for
	up to a maximum of 120,000,000 new Shares at an initial
	Subscription Price of HK$1.20 per Share, subject to adjustment at
	any time within a period of 12 months from the date of completion
	of the Placing subject to the terms and conditions set out in the
	Warrants Instrument
“Warrant Shares”	a maximum of 120,000,000 new Shares which may fall to be
	allotted and issued upon exercise of the subscription rights
	attaching to the Warrants
“Warrants Instrument”	the instrument to be executed by the Company by way of deed
	poll governing the terms and conditions for the Warrants

– 7 –

DEFINITIONS

“Warrants Issue”	issue of Warrants on the terms set out in the Warrants Instrument
“Whitewash Waiver”	a waiver of the obligation of the Placing Agent and its Concert
	Parties (including OPFSGL and, if applicable, the Connected
	Placee) to make a mandatory general offer for all the securities of
	the Company not already owned or acquired by the Placing Agent
	and its Concert Parties as a result of the issue of the Placing
	Shares under Note 1 to Dispensations from Rule 26 of the
	Takeovers Code
“2006 EGM”	the extraordinary general meeting of the Company held on 18
	April 2006 at which the continuing connected transactions
	contemplated under the Existing Investment Management
	Agreement and the expected maximum amount of the fees payable
	to the Investment Manager thereunder for each of the three years
	ending 31 March 2008 were approved by the then Independent
	Shareholders
“HK$”	Hong Kong dollars, the lawful currency of Hong Kong
“RMB”	Renminbi , the lawful currency of the PRC
“%”	per cent.

– 8 –

LETTER FROM THE BOARD

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CONCEPTA INVESTMENTS LIMITED 正奇投資有限公司[*]

(incorporated in the Cayman Islands with limited liability)

(Stock Code: 1140)

Executive Directors: Zhang Zhi Ping (Chairman) Zhang Gaobo

Non-executive Director:

Liu Hongru

Registered Office: P.O. Box 309 GT Ugland House South Church Street George Town Grand Cayman Cayman Islands

Independent Non-executive Directors:

Kwong Che Keung, Gordon He Jia Wang Xiaojun

Head office and principal place of business in Hong Kong: 27th Floor, Two Exchange Square 8 Connaught Place Central, Hong Kong

22 October 2007

To the Shareholders

Dear Sir/Madam,

(A) PROPOSED PLACING OF NEW SHARES (A PORTION OF WHICH TO BE PLACED TO CONNECTED PERSON) WHICH INVOLVES THE ISSUE OF UNLISTED WARRANTS

(B) PROPOSED GRANT OF SPECIAL MANDATE

(C) APPLICATION FOR THE GRANTING OF WHITEWASH WAIVER

(D) PROPOSED INCREASE IN AUTHORISED SHARE CAPITAL

(E) CONTINUING CONNECTED TRANSACTIONS

(F) PROPOSED CHANGE OF COMPANY NAME AND

(G) NOTICES OF FIRST EGM AND SECOND EGM

1. INTRODUCTION

Reference is made to the Announcement.

The purpose of this circular is to provide you with information or further details regarding (i) the proposed Placing together with the transactions contemplated thereunder (including the issue of unlisted Warrants), the proposed grant of the Special Mandate, the application for the

* For identification purpose only

– 9 –

LETTER FROM THE BOARD

granting of the Whitewash Waiver, the proposed increase in the Company’s authorised share capital, the continuing connected transactions constituted by the provision of investment management and administrative services by the Investment Manager to the Company under the Existing Investment Management Agreement for the year ending 31 March 2008 (including the Revised 2008 Annual Cap), the Continuing Connected Transactions (which are to be constituted by the provision of investment management and administrative services by the Investment Manager to the Company under the New Investment Management Agreement) (including the Annual Caps) and the proposed change of the name of the Company; (ii) to set out the advice of the Independent Financial Advisers to the Independent Board Committee and the Independent Shareholders in relation of the First EGM Matters; and (iii) to give you notice of (a) the First EGM at which ordinary resolutions will be proposed to consider and, if thought fit, the First EGM Matters; and (b) the Second EGM at which special resolution will be proposed to consider and, if thought fit, the Second EGM Matter.

2. PROPOSED PLACING OF NEW SHARES (WHICH INVOLVES THE ISSUE OF UNLISTED WARRANTS)

Principal terms of the Placing Agreement

Date : 7 September 2007 Parties involved : (1) The Company

(2) Oriental Patron Asia Limited (the Placing Agent)

Number of Placing Shares : 600,000,000 new Shares (attached with Warrants), which will be placed by the Placing Agent on a fully-underwritten basis.

The Placing Shares represent approximately (i) 600% of the Company’s existing issued share capital; (ii) 85.71% of the Company’s issued share capital as enlarged by the Placing Shares; and (iii) 73.17% of the Company’s issued share capital as enlarged by the Placing Shares and the Warrant Shares.

The aggregate nominal value of the Placing Shares (with a par value of HK$0.10 each) is HK$60,000,000.

– 10 –

LETTER FROM THE BOARD

Placees : The Placing Shares will be placed as to:

(a) 330,000,000 Placing Shares to the Connected Placee

The Connected Placee is Ottness Investments Limited, an investment holding company incorporated in the BVI and its entire issued share capital is beneficially and ultimately owned in equal share by Mr Zhang Zhi Ping and Mr Zhang Gaobo, two of the Directors.

To the best of the Directors’ knowledge, information and belief, after having made all reasonable enquiry, the Connected Placee and the existing Shareholders (other than OPFSGL) are Independent Third Parties and are not Concert Parties to each other.

(b) 270,000,000 Placing Shares to not less than six Placees (other than the Connected Placee).

Under the Placing Agreement, the Placing Agent will ensure that the Placees (other than the Connected Placee) and their respective ultimate beneficial owners will be Independent Third Parties and none of the Placees (other than the Connected Placee) will become substantial Shareholder immediately following completion of the Placing or is a Concert Party of the Company in the obtaining or consolidation of control (as defined in the Takeovers Code) of the Company or with one another.

Entitlement : The Placees will be entitled to the Warrant Issue.

The principal terms of the Warrant Issue are set out under the paragraph headed “Principal Terms of the Unlisted Warrants” in this circular.

Ranking : Except for the right of entitlement to the Warrant Issue attaching to the Placing Shares only, the Placing Shares will rank pari passu in all respects with the existing issued Shares

– 11 –

LETTER FROM THE BOARD

Lock-up restriction	:	The	Placing Shares are not subject to any lock-up restriction.
Placing Price per	:	HK$1.20, which represents:
Placing Share
		(i)	a discount of approximately 14.29% to the closing
			price of HK$1.40 per Share as quoted on the Stock
			Exchange on the Last Trading Day;
		(ii)	a premium of approximately 4.90% over the average
			closing price of approximately HK$1.144 per Share
			as quoted on the Stock Exchange for the last five
			consecutive trading days up to and including the Last
			Trading Day;
		(iii)	a premium of approximately 9.29% over the average
			closing price of approximately HK$1.098 per Share
			as quoted on the Stock Exchange for the last ten
			consecutive trading days up to and including the Last
			Trading Day;
		(iv)	a premium of approximately 96.72% over the audited
			net asset value per Share of approximately HK$0.61
			as at 31 March 2007; and
		(v)	a discount of approximately 52.00% to the closing
			price of HK$2.50 per Share as quoted on the Stock
			Exchange on the Latest Practicable Date.
Conditions Precedent	:	(1)	the Listing Committee granting the listing of, and
to completion of			permission to deal, in (i) the Placing Shares; and (ii)
the Placing Agreement			the Warrant Shares which may fall to be allotted and
			issued upon exercise of the subscription rights
			attaching to the Warrants;
		(2)	the despatch of the circular containing, among other
			thing, further details of the Placing Agreement and
			the transactions contemplated thereunder to the
			Shareholders;

– 12 –

LETTER FROM THE BOARD

(3) the Executive granting the Whitewash Waiver to the Placing Agent and its Concert Parties (including OPFSGL and, if applicable, the Connected Placee) and the satisfaction of any condition(s) (if any) attached to the Whitewash Waiver;
(4) the passing by the Shareholders (who are not required, under the Takeovers Code and the Listing Rules or by the SFC or the Stock Exchange to abstain from voting on the ordinary resolutions) at the First EGM by way of poll of ordinary resolutions to approve the Placing and the transactions contemplated thereunder (including the Warrants Issue, the issue of Warrant Shares and the grant of Special Mandate) and the Whitewash Waiver by no later than the Longstop Date;
(5) the increase of the authorised share capital of the Company from HK$20 million to HK$200 million; and
(6) all requisite consents or confirmations of no objection (if necessary) or filings at, any governmental or competent authority (including without limitation to the SFC) for the Placing having been obtained by the Company from any third parties or effected by the Company.

None of the Conditions Precedent (including Condition Precedent No. (3)) can be waived by either party to the Placing Agreement. If the Conditions Precedents are not fulfilled by the Longstop Date, the Placing Agreement shall lapse and none of the parties to the Placing Agreement shall have any claim against any of the other of them.

As at the Latest Practicable Date, none of the Conditions Precedent was fulfilled.

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LETTER FROM THE BOARD

Completion of the Placing (including the Warrants Issue) is subject to the resolution in respect of the proposed increase in the Company’s authorised share capital being passed. The placing of the Placing Shares to the Connected Placee and the Independent Placees are not inter-conditional upon each other as the Placing is fully underwritten by the Placing Agent.

Longstop Date : 30 November 2007.

Completion

: Completion of the Placing Agreement (which will take place within five Business Days next following the day on which the last unfulfilled Condition Precedent is satisfied).

Placing commission

: 2.5% of the aggregate Placing Price

Application for listing

: An application will be made by the Company to the Stock Exchange for the listing of, and permission to deal in, the Placing Shares

Proceeds

: Assuming that the Placing Agreement has been completed whereby all the Placing Shares will have been placed, the gross and net proceeds (net of any expenses, which are estimated to be approximately HK$20 million, to be borne by the Company) from the Placing will be approximately HK$720 million and approximately HK$700 million respectively.

The net proceeds from the Placing will be approximately HK$700 million which will be utilized by the Company as general working capital. Given that there has been continuous exploration of investment opportunities by the Company, the proceeds or part of the proceeds may be used to finance investments should suitable opportunities arise in the future. The Company intends to use the proceeds from the Placing for investments in institutions or companies which would directly or indirectly benefit from the Trial Scheme. As at the Latest Practicable Date, the Company had not yet identified any definite investment targets or plans that may require the use of such proceeds.

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LETTER FROM THE BOARD

The terms of the Placing were arrived at after arm’s length negotiation between, and are the respective commercial decisions of, the Company and the Placing Agent (having regard to the size of the Placing and the general market conditions). The Directors (including all the independent non-executive Directors) consider those terms of the Placing to the Connected Placee and the Independent Placees to be fair and reasonable and in the interests of the Company and the Shareholders as a whole.

Principal terms of the unlisted Warrants

Basis of the Warrants Issue : The Warrant Issue will be made on the basis of one Warrant for every five Placing Shares
Subscription Price : The Warrants will entitle the holders to subscribe for in cash new Shares at a price of HK$1.20 per Warrant Share (subject to adjustment provisions which are standard terms of convertible securities of similar type. Adjustment (if any) will arise as a result of certain change in the share capital of the Company including capital reduction, consolidation or sub-division of Shares, rights issue, bonus issue, capitalization of profits and reserves and capital distribution in cash or specie.)

The initial Subscription Price of HK$1.20 per Warrant Share represents:

(i) a discount of approximately 14.29% to the closing price of HK$1.40 per Share as quoted on the Stock Exchange on the Last Trading Day;
(ii) a premium of approximately 4.90% over the average closing price of HK$1.144 per Share as quoted on the Stock Exchange for the last five trading days prior to and including the Last Trading Day;
(iii) a premium of approximately 9.29% over the average closing price per Share of HK$1.098 as quoted on the Stock Exchange for the last ten trading days prior to and including the Last Trading Day;
(iv) a premium of approximately 96.72% over the audited net asset value per Share of approximately HK$0.61 as at 31 March 2007; and

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LETTER FROM THE BOARD

(v) a discount of approximately 52.00% to the closing price of HK$2.50 per Share as quoted on the Stock Exchange on the Latest Practicable Date.

The Directors considers that the initial Subscription Price, having taking into account the recent trading prices of the Shares and the exercise period, is fair and reasonable.

The Subscription Price is subject to adjustments upon the occurrence of subdivision or consolidation or reclassification of Shares, capitalization issues, capital distribution, rights issues and grant of options and warrants.

Maximum number of Warrant Shares to be issued
: Based on 600,000,000 Placing Shares to be issued under the Placing Agreement and on the assumption that no Shares would be issued (other than the Placing Shares and the Warrant Shares) or repurchased by the Company, the exercise in full of the Warrants will result in the issue of a maximum of 120,000,000 Warrant Shares, representing approximately:
(i) 120.00% of the existing issued share capital of the Company;
(ii) 17.14% of the issued share capital of the Company as enlarged by the Placing Shares; and
(iii) 14.63% of the issued share capital of the Company as enlarged by the Placing Shares and the Warrant Shares.

Exercise Period

Transferability

: 12 months commencing from the date of issue of the Warrants (which is the date of completion of the Placing Agreement and the last exercise date of the Warrants will accordingly fall upon the expiry of 12 months from the date of the Placing Agreement)
: The Warrants are transferable in integral multiples of 100,000 Warrants subject to the consent of the Company whose consent shall not be unreasonably refused or withheld.

The Company will notify the Stock Exchange upon becoming aware of any dealings in the Warrants by any connected persons of the Company.

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LETTER FROM THE BOARD

Rights for the holder : A holder of the Warrants will not have the right to (i) of the Warrants attend or vote at any meeting of the Company; and (ii) participate in any distributions and/or offers of further securities made by the Company by virtue of it being the holder of the Warrants.

Subscription for the Warrant Shares must be for a minimum of 100,000 Shares or in integral multiples thereof. In the event that the balance of the Warrants is less than 100,000, the holder of the Warrant may exercise the subscription rights attaching to such balance of the Warrants to subscribe for less than 100,000 Shares.

Ranking : The Warrant Shares will rank pari passu in all respects with all other Shares in issue at the date on which the conversion rights attached to the Warrants are exercised.
Lock-up restriction : The Warrant Shares are not subject to any lock-up restriction.
Application for Listing : No application will be made for the listing of the Warrants on the Stock Exchange or any other stock exchange.

An application will be made by the Company for the listing of, and permission to deal in, the Warrant Shares.

Proceeds : Assuming the full exercise of the subscription rights attaching to the Warrants, it is expected that further funds of approximately HK$144 million will be raised which will be utilized by the Company as additional general working capital.

Given that there has been continuous exploration of investment opportunities by the Company, the proceeds or part of the proceeds may be used to finance investments should suitable opportunities arise in the future. The Company intends to use the proceeds from the issue of Warrant Shares for investments in institutions or companies which would directly or indirectly benefit from the Trial Scheme. As at the Latest Practicable Date, the Company had not yet identified any definite investment targets or plans that may require the use of such proceeds.

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LETTER FROM THE BOARD

Reasons for the Placing and use of proceeds

Due to the continuous rapid development of the PRC economy in recent years, the income level of PRC nationals increases significantly and accordingly resulting in increasing demand for different choice of investment by the PRC nationals. The significant level of foreign exchange reserve of PRC also provided a background for making investments outside PRC for its nationals.

According to the Trial Scheme promulgated by the SAFE on 20 August 2007, PRC nationals are allowed to make direct investment in Hong Kong listed securities with their self-owned foreign currencies or RMB at a designated city on a trial basis. The Trial Scheme would facilitate PRC nationals to invest outside PRC in an orderly fashion and gain experience in risk prevention and management. The relaxation of foreign exchange control over direct investment by PRC national outside PRC also facilitates PRC nationals to make use of the international financial market to diversify their investment risk, enhance its portfolio mix and its risk-adjusted return.

In view of the above, the Directors envisaged the Trial Scheme will gradually be implemented on a nation wide basis and a variety of institutions and companies will directly or indirectly benefit from the Trial Scheme accordingly. With the recent highly liquid and buoyant markets, the Directors are of the view that the Company should raise additional fund from the equity market to capture such investment opportunities.

The Directors also consider that the Placing represents a good opportunity to raise capital as compared with a rights issue or open offer for the Company, as the Placing can broaden its shareholder base and to enhance the marketability of the Shares, and a rights issue or open offer would take too long (as far as the legal and regulatory (including registration) requirements are concerned) to arrange when compared with the Placing (which could, subject to Shareholder’s approval at the First EGM (if necessary), take place as soon as the Placees (as the case may be) are procured pursuant to the respective terms of the Placing Agreement) and would be much more expensive, which is beneficial to the Company’s business development as funding requirement or appropriate investment opportunities may arise at any time and such funding or investment decisions have to be required or made within a short period of time.

The Placing will also put the Company in a better position to meet the challenges of the market and take advantage of investment opportunities to broaden its earnings base so as to enhance Shareholders’ value.

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LETTER FROM THE BOARD

Mandate to issue the Placing Shares and the Warrant Shares

The Placing Shares and the Warrant Shares will be allotted and issued under the Special Mandate to be sought at the First EGM.

Implication under the Listing Rules

Placing commission

The monetary value of the placing commission under the Placing Agreement is HK$18 million. The placing services provided by the Placing Agent under the Placing Agreement constitute a connected transaction for the Company, on the basis that the Placing Agent is a wholly-owned subsidiary of OPFSGL, which is a substantial Shareholder. Hence, the Placing Agent is an associate of a connected person of the Company. As the applicable Percentage Ratio in respect of the placing commission payable in respect of the placing services under the Placing Agreement is more than 25%, the placing services provided by the Placing Agent under the Placing Agreement are subject to the reporting, announcement and independent shareholders’ approval requirements set out in Chapter 14A of the Listing Rules.

Warrant Issue

Pursuant to Rule 15.02(1) of the Listing Rules, the Warrant Shares to be issued upon exercise of the Warrants must not, when aggregated with all other equity securities which remain to be issued on exercise of any other subscription rights, if all such rights were immediately exercised, whether or not such exercise is permissible, exceed 20% of the issued equity capital of the Company at the time the Warrants are issued. Options granted under employee or executive share schemes which comply with Chapter 17 of the Listing Rules are excluded for the purpose of such limit.

As at the Latest Practicable Date, the Company did not have other securities with subscription rights outstanding and not yet exercised. Assuming completion of the Placing and there is no other change in the issued share capital of the Company, the total number of Shares in issue will be 700,000,000 Shares. Upon full exercise of the subscription rights attaching to the Warrants, a maximum of 120,000,000 Warrant Shares (representing approximately 17.14% of the existing issued share capital as enlarged by the allotment and issue of the Placing Shares) will be issued. The Warrants Issue will only occur upon the allotment and issue of the Placing Shares. Accordingly, the issue of the Warrants (which may result in a maximum of 120,000,000 Warrant Shares being issued upon exercise of the subscription rights attaching to the Warrants and the aggregate number of Shares then in issue will be enlarged by the Placing Shares will be increased to 700,000,000 Shares) will be in compliance with Rule 15.02(1) of the Listing Rules.

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LETTER FROM THE BOARD

Impact on the shareholding structure of the Company

As at the date of the Announcement and the Latest Practicable Date, the Company had 100,000,000 Shares in issue. The shareholding structure of the Company (i) as at the date of the Announcement and the Latest Practicable Date; (ii) immediately after completion of the Placing upon which the Placing Shares were fully subscribed for by the Placees; (iii) immediately upon the full exercise of the subscription rights attaching to the Warrants by the Placees (assuming no other change to the issued share capital of the Company) after completion of the Placing upon which the Placing Shares were fully subscribed for by the Placees; (iv) assuming the public float of the Company will be at least 25% of the issued share capital of the Company immediately following completion of the Placing Agreement; (v) immediately after completion of the Placing upon which the Placing Shares were fully taken up by the Placing Agent; and (vi) immediately upon the full exercise of the subscription rights attaching to the Warrants (assuming no other change to the issued share capital of the Company) after completion of the Placing upon which the Placing Shares were fully subscribed for by the Placing Agent are as follows:

Name of Shareholders Placing Agent OPFSGL_(Note 1) Connected Placee (Notes 2 & 3) Sub-total(Placing Agent and its Concert Parties) Xiao Wei(Note 5) Wang Wencang(Note 6) Total of non-public Shareholders Other (Public) Shareholders Xiao Wei(Note 5) Wang Wencang(Note 6) Independent Placees (Notes 2 & 4)_ Other public Shareholders Total of other (public) Shareholders Total:	Existing shareholding as at the date of the Announcement and the Latest Practicable Date Shares % Nil 0 29,800,000 29.80 (Note 1) Nil 0 29,800,000 29.80 16,796,000 16.80 14,096,000 14.10 60,692,000 60.70 Nil 0 Nil 0 Nil 0 39,308,000 39.30 39,308,000 39.30 100,000,000 100	Assuming completion of the Placing Agreement and all the Placing Shares were fully subscribed for by the Placees Shares % Nil 0 29,800,000 4.26 (Note 1) 330,000,000 47.14 359,800,000 51.40 – – – – 359,800,000 51.40 16,796,000 2.40 14,096,000 2.01 270,000,000 38.57 39,308,000 5.62 340,200,000 48.60 700,000,000 100	Assuming completion of the Placing Agreement and the Warrants have been exercised in full by the Placees Shares % Nil 0 29,800,000 3.64 (Note 1) 396,000,000 48.29 425,800,000 51.93 – – – – 425,800,000 51.93 16,796,000 2.05 14,096,000 1.72 324,000,000 39.51 39,308,000 4.79 394,200,000 48.07 820,000,000 100	Assuming the public float of the Company will be at least 25% of the issued share capital of the Company immediately following completion of the Placing Agreement Share % 495,200,000 70.74 29,800,000 4.26 (Note 1) Nil 0 525,000,000 75.00 – – – – 525,000,000 75.00 16,796,000 2.40 14,096,000 2.01 104,800,000 14.97 39,308,000 5.62 175,000,000 25.00 700,000,000 100	Assuming completion of the Placing Agreement and all the Placing Shares were taken up by the Placing Agent (Note: The scenario shown in this column is merely for illustrative purposes and will not happen (Note 7)) Share % 600,000,000 85.71 29,800,000 4.26 (Note 1) Nil 0 629,800,000 89.97 – – – – 629,800,000 89.97 16,796,000 2.40 14,096,000 2.01 Nil 0 39,308,000 5.62 70,200,000 10.03 700,000,000 100	Assuming completion of the Placing Agreement and the Warrants have been exercised in full by the Placing Agent (Note: The scenario shown in this column is merely for illustrative purposes and will not happen (Note 7)) Share % 720,000,000 87.80 29,800,000 3.64 (Note 1) Nil 0 749,800,000 91.44 – – – – 749,800,000 91.44 16,796,000 2.05 14,096,000 1.72 Nil 0 39,308,000 4.79 70,200,000 8.56 820,000,000 100

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LETTER FROM THE BOARD

Notes:

(1) These Shares are held by OPFSGL, the entire issued share capital of which is beneficially owned as to 95% by Oriental Patron Holdings Limited and 5% by Eldridge International Limited. The entire issued share capital of Oriental Patron Holdings Limited is beneficially owned by Million West Limited and Best Future International Limited in equal share. The entire issued share capital of Million West Limited is ultimately and beneficially owned as to 90% by Mr Zhang Gaobo (a Director) and 10% by Mr Zhang Zhi Ping (a Director). The entire issued share capital of Best Future International Limited is ultimately and beneficially owned as to 89% by Mr Zhang Zhi Ping (a Director) and 11% by an Independent Third Party.
(2) Under the terms of the Placing Agreement, the Placing Shares are to be placed as to 330,000,000 Placing Shares to the Connected Placee and 270,000,000 Placing Shares to Independent Placees under the Placing Agreement.
(3) The Connected Placee is Ottness Investments Limited, an investment holding company incorporated in the BVI and its entire issued share capital is ultimately and beneficially owned in equal share by Mr Zhang Zhi Ping and Mr Zhang Gaobo, two of the Directors.
(4) Under the Placing Agreement, the Placing Agent will ensure that the Placees (other than the Connected Placee) and their respective ultimate beneficial owners will be Independent Third Parties and none of the Placees (other than the Connected Placee) will become substantial Shareholder immediately following completion of the Placing or is a Concert Party with any Shareholder in the obtaining or consolidation of control (as defined in the Takeovers Code) of the Company or with one another. The Independent Placees are therefore regarded as public Shareholders immediately following completion of the Placing.
(5) Mr Xiao Wei is an Independent Third Party and does not hold any position with or play any role in the Company. As at the Latest Practicable Date, Mr Xiao Wen is a substantial Shareholder and will not be considered as public Shareholder. Nevertheless, assuming completion of the Placing, the shareholding of Mr Xiao in the Company will be diluted to less than 10% and he will cease to be a substantial Shareholder.
(6) Mr Wang Wencang is an Independent Third Party and does not hold any position with or play any role in the Company. As at the Latest Practicable Date, Mr Wang is a substantial Shareholder and will not be considered a public Shareholder. Nevertheless, assuming completion of the Placing, the shareholding of Mr Wang in the Company will be diluted to less than 10% and he will cease to be a substantial Shareholder.
(7) The Directors believe that the two scenarios as set out in the last two columns under the above table will not happen, on the ground that it is the intention of the Directors to ensure that upon completion of the Placing, at least 25% of the issued share capital of the Company will be in the hands of the public, though under Rule 21.04 of the Listing Rules it is not subject to the public float requirements.

The Connected Placee has no intention to, nor have they entered into any agreement, arrangement or understanding with any other person to, transfer, charge or pledge any of the Placing Shares to be allotted and issued to them under the Placing. The Placing Agent has not entered into any agreement, arrangement or understanding with any other person to, transfer, charge or pledge any of the Placing Shares which the Placing Agent has underwritten under the Placing Agreement or to allot or issue any Placing Shares to OPFSGL.

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LETTER FROM THE BOARD

The Placing Agent, the Connected Placee and OPFSGL have indicated that, as a result of completion of the Placing, it does not have any intention to introduce any material change to the existing businesses, operations or assets of the Company (including any deployment of the fixed assets of the Company), nor does it intend to terminate the continued employment of the employees of the Company.

Upon completion of the Placing Agreement and the Placing Shares are fully subscribed by the Placees, the aggregate holding of voting rights of the Placing Agent and its Concert Parties (including the Connected Placee and OPFGSL) will exceed 50% of the voting rights of the Company. For so long as the Placing Agent and its Concert Parties (including the Connected Placee and OPFGSL) hold an aggregate of more than 50% of the voting rights of the Company, the Placing Agent and its Concert Parties (including the Connected Placee and OPFGSL) may increase their aggregate holdings of voting rights of the Company without incurring any further obligation under Rule 26 of the Takeovers Code to make general offer.

Basic information and shareholding structure of the Placing Agent, Connected Placee and OPFSGL

The Placing Agent is a limited company incorporated on 25 April 1991 in Hong Kong. Its registered office is at Suites 2701-2703 and 2705-2708, 27/F., Two Exchange Square, 8 Connaught Place, Central, Hong Kong. It is a licensed corporation to carry out type 1 (dealing in securities), type 6 (advising on corporate finance) and type 9 (asset management) regulated activities under the SFO. Its principal activities include providing investment management and advisory services to companies. The Placing Agent is a whollyowned subsidiary of OPFSGL. Its directors are Chan Lap Tak Jeffrey and Chan Nap Kee Joseph.

OPFSGL is a limited company incorporated on 25 April 1996 in the Cayman Islands. Its registered office is at the offices of Offshore Incorporations (Cayman) Limited, Scoita Centre, 4th Floor, P.O. Box 2804 George Town, Grand Cayman, Cayman Islands, British West Indies and its correspondence address is at 27th Floor, Two Exchange Square, 8 Connaught Place, Central, Hong Kong. It is an investment holding company. OPFSGL is owned as to 95% by Oriental Patron Holdings Limited and as to 5% by Eldridge International Limited, a corporate entity owned by Chan Lap Tak Jeffrey, Chan Nap Kee Joseph and Leung Chin Sing (a former director of the Placing Agent). Its directors are Messrs Zhang Gaobo, Zhang Zhi Ping and Chan Lap Tak Jeffrey.

Oriental Patron Holdings Limited is a limited company incorporated on 1 June 1993 in the Cayman Islands. Its registered office is at the offices of Offshore Incorporations (Cayman) Limited, Scoita Centre, 4th Floor, P.O. Box 2804 George Town, Grand Cayman, Cayman Islands, British West Indies and its correspondence address is at 27th Floor, Two Exchange Square, 8 Connaught Place, Central, Hong Kong. It is an investment holding company. Oriental Patron Holdings Limited is owned as to 50% by Million West Limited and as to the remaining 50% by Best Future International Limited. Its directors are Messrs Zhang Gaobo and Zhang Zhi Ping.

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LETTER FROM THE BOARD

Million West Limited is a limited company incorporated on 18 August 1999 in the BVI. It is an investment holding company. Million West Limited is currently ultimately and beneficially owned as to 90% by Mr Zhang Gaobo and as to the remaining 10% by Mr Zhang Zhi Ping. Its directors are Mr Zhang Gaobo and Mr Zhang Zhi Ping.

Best Future International Limited is a limited company incorporated on 18 August 1999 in the BVI. It is an investment holding company. Best Future International Limited is currently ultimately and beneficially owned as to 89% by Mr Zhang Zhi Ping and as to the remaining 11% by an Independent Third Party. Its directors are Mr Zhang Zhi Ping and Mr Zhang Gaobo.

The Connected Placee is a limited company incorporated on 22 August 2007 in the BVI. It is an investment holding company. The Connected Placee is currently ultimately and beneficially owned as to 50% by Mr Zhang Zhi Ping and as to the remaining 50% by Mr Zhang Gaobo. Its directors are Mr Zhang Zhi Ping and Mr Zhang Gaobo.

Takeovers Code implication for the Placing Agent and the Connected Placee

The Placing is fully-underwritten by the Placing Agent. The Placing Agent is a wholly-owned subsidiary of OPFSGL, which is a substantial Shareholder. As at the Latest Practicable Date, OPFSGL was interested in 29,800,000 Shares, representing about 29.8% of the issued share capital of the Company. In addition, the Connected Placee (namely, Ottness Investments Limited) and the Placing Agent are Concert Parties in respect of the Company.

As at the Latest Practicable Date, save for the 29,800,000 Shares beneficially owned by OPFSGL, none of the Placing Agent and its Concert Parties had any interest in the securities of the Company.

As set out in the shareholding table in the section headed “Impact on the shareholding structure of the Company” above, if the Connected Placee takes up 330 million Placing Shares under the Placing Agreement or the Placing Agent is obliged to take up any Placing Shares in performance of its obligation under the Placing Agreement, the Placing Agent and its Concert Parties (including the Connected Placee and OPFSGL) will hold 30% or more of the voting rights of the Company. In either case, unless the Whitewash Waiver is granted, the Placing Agent and its Concert Parties (including OPFSGL and, if applicable, the Connected Placee) would incur an obligation, upon completion of the Placing Agreement, to make a mandatory general offer for all the securities of the Company not already owned or acquired by the Placing Agent and its Concert Parties as a result of the issue of the Placing Shares under Note 1 to Dispensations from Rule 26 of the Takeovers Code.

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LETTER FROM THE BOARD

Completion of the Placing Agreement is conditional upon, inter alia, the granting of the Whitewash Waiver by the Executive (which cannot be waived by any of the parties to the Placing Agreement). If the Whitewash Waiver is not obtained or if it is not approved by Independent Shareholders, the Placing Agreement will lapse.

The Executive has indicated that it will agree, subject to the approval by the Independent Shareholders at the First EGM by way of a poll, to waive the Placing Agent, the Connected Placee and their Concert Parties (including OPFSGL) from any obligation to make a general offer for all the Shares under Rule 26 of the Takeovers Code as a result of the completion of the Placing Agreement in the manner as mentioned above.

The Placing Agent is a wholly-owned subsidiary of OPFSGL, which is a substantial Shareholder and a connected person of the Company. OPFSGL, its associates and Concert Parties (including the Connected Placee and the Placing Agent) and those who are interested or involved in the Placing and all transactions contemplated thereunder (including the Whitewash Waiver) will abstain from voting on all resolutions to be proposed at the First EGM to approve, among others, the Placing and all transactions contemplated thereunder (including the Whitewash Waiver). Save as aforesaid, as at the Latest Practicable Date, none of the Directors intended, in respect of their own shareholdings, if any, to vote for or against the Placing and all transactions contemplated thereunder (including the Whitewash Waiver). The Placing Agent and its Concert Parties (including OPFSGL and the Connected Placee) have confirmed that they have not acquired any voting rights in the Company in the sixmonth period prior to the date of the Placing Agreement and up to and including the Latest Practicable Date.

Maintenance of the listing status

It is the intention of the Company to maintain the listing status of the Company after completion of the Placing. Pursuant to Rule 21.04 of the Listing Rules, the Company is not subject to the 25% public float requirement of the Listing Rules. The Company has undertaken to the Stock Exchange that it will comply with the applicable minimum public float requirement of the Listing Rules at all times.

The Stock Exchange has stated that, if the issued Shares in public hands is less than the applicable minimum public float requirement of the Listing Rules, or if the Stock Exchange believes that a false market exists or may exist in the trading of the Shares or there are insufficient Shares in public hands to maintain an orderly market, it will consider exercising its discretion to suspend dealing in the Shares.

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LETTER FROM THE BOARD

3. PROPOSED INCREASE IN AUTHORISED SHARE CAPITAL

In order to facilitate the issue of Placing Shares and the Warrant Shares and to provide further flexibility and accommodate future expansion and growth of the Company, the Company proposes to increase its existing authorised share capital from HK$20,000,000 divided into 200,000,000 Shares to HK$200,000,000 divided into 2,000,000,000 Shares by the creation of an additional 1,800,000,000 new Shares.

4. CONTINUING CONNECTED TRANSACTIONS – NEW INVESTMENT MANAGEMENT AGREEMENT

Reference is made to the announcement of the Company dated 17 March 2006 and the circular of the Company dated 3 April 2006 regarding the entering into the Existing Investment Management Agreement by the Company with the Investment Manager for the provision of investment management and administration services for the period commencing from the date of the 2006 EGM and ending 31 March 2008.

The Board wishes to announce that the Company proposes, subject to the Independent Shareholders’ approval at the First EGM, to enter into the New Investment Management Agreement with the Investment Manager in relation to the appointment of the Investment Manager immediately following the expiration of the term of the Existing Investment Management Agreement on 31 March 2008 to ensure continuity in the provision of the investment management and administrative services to the Company.

Principal terms of the New Investment Management Agreement

Except for the time period covered, the terms of the Existing Investment Management Agreement and the New Investment Management Agreement are substantially the same in all material respects.

The proposed principal terms of the New Investment Management Agreement, among others, include:

Duration

From 1 April 2008 to 31 March 2011

Services

The Investment Manager shall provide investment management and administrative services to the Company under the New Investment Management Agreement.

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LETTER FROM THE BOARD

Management and performance fees

Under the New Investment Management Agreement, the Investment Manager will be entitled to:

(a) a monthly investment management fee at 1.5% per annum (based on a 360-day year) of the Net Asset Value as at the immediately preceding Valuation Date, calculated and accrued daily and payable in Hong Kong dollars in arrears on or before the seventh Business Day of the immediately following month; and
(b) a performance fee calculated by reference to the increase in the Net Asset Value per Share (as defined below) as at the relevant Performance Fee Valuation Day.

A performance fee will be payable to the Investment Manager if the Net Asset Value per Share (as defined below), calculated on the relevant Performance Fee Valuation Day, is greater than the Base Net Asset Value per Share (as defined below). Under the New Investment Management Agreement, such performance fee is payable as soon as practicable after the end of each Relevant Performance Period. The fee payable shall be 10% of the appreciation in the Net Asset Value per Share (as defined below), calculated as at the relevant Performance Fee Valuation Day over the Base Net Asset Value per Share (as defined below) for each Share then in issue, calculated as follows:

==> picture [82 x 25] intentionally omitted <==

where:

“A” is the Net Asset Value per Share, calculated on the relevant Performance Fee Valuation Day, before the deduction of any provision for the performance fee and the underwriting fee and provided that for the purpose of this calculation only the Net Asset Value shall be calculated by including any distribution which has been declared or paid during the Relevant Performance Period.

“B” is the Base Net Asset Value per Share which shall be the greater of the Net Asset Value per Share on the Listing Date and the value for “A” as at the immediately preceding Relevant Performance Period in relation to which a performance fee was calculated and paid (after deduction of all fees including any performance fee in respect of such preceding Relevant Performance Period).

“C” is the aggregate number of Shares in issue during the Relevant Performance Period, calculated by adding the total number of Shares in issue on each Business Day of the Relevant Performance Period.

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LETTER FROM THE BOARD

“D” is 10% or, subject to the approval of the Shareholders by ordinary resolution in general meeting (which approval shall, for the avoidance of doubt, only be required in connection with a proposal to increase such rate), such other percentage figure agreed from time to time between the Investment Manager and the Directors.

“E” is the number of Business Days in the Relevant Performance Period.

The amount of fees (being management fees and performance fees) payable under the New Investment Management Agreement will be determined in accordance with the provisions and formula as set out above.

Historical transaction records

Set out below is a summary of the aggregate amount of fees paid by the Company to the Investment Manager under the Existing Investment Management Agreement for the financial period from 1 April 2005 to 31 March 2007:

Investment management fees Performance fees Total	Year ended 31 March 2006 HK$ 757,594 308,710 1,066,304	Year ended 31 March 2007 HK$ 864,821 1,050,465
		1,915,286

Historical caps for the fees paid to the Investment Manager under the Existing Investment Management Agreement

The capped amount of the fees payable to the Investment Manager under the Existing Investment Management Agreement for the three years ending 31 March 2008 as approved by the then Independent Shareholders at the 2006 EGM are set out below:

Year	ending 31 March
2006	2007	2008
HK$3,000,000	HK$4,500,000	HK$5,700,000

– 27 –

LETTER FROM THE BOARD

Proposed caps for the fees payable to the Investment Manager under the New Investment Management Agreement

The following table sets out the proposed capped amounts of the fees payable to the Investment Manager under the New Investment Management Agreement for each of the three years ending 31 March 2011:

Year ending 31 March 2009 2010 2011 HK$60,000,000 HK$83,000,000 HK$115,000,000

The basis of the Annual Caps is determined by reference to the audited Net Asset Value of HK$61,240,413 as at 31 March 2007 and an expected annual growth rate of the Net Asset Value of approximately 40% (having regard to, among other factors, the performance of the stock markets of the Greater China region, historical growth trend of the gross domestic product of the PRC, the potential appreciation of RMB and the investment policy of the Company).

The expected annual growth rate of 40% of the Net Asset Value is arrived at by reference to the 5-year changes in the Hang Seng China Enterprises Index of 488.30% (quoted from the January 2007 edition of “Hang Seng Indexes Monthly”), which represented an annual growth rate of approximately 37.35%. Shareholders and potential investors of the Company should note that the amounts of the Annual Caps do not represent estimates of the actual growth of the Net Asset Value and have not been reviewed by the financial advisers or the auditors of the Company, and are therefore advised to exercise caution when dealing in the securities of the Company. On the above basis, the Directors consider that the Annual Caps are fair and reasonable.

Conditions of the New Investment Management Agreement

The New Investment Management Agreement is conditional upon (i) the approval by the Independent Shareholders at the First EGM; and (ii) completion of the Placing Agreement.

Reasons for entering into the New Investment Management Agreement

The Company is an investment company under Chapter 21 of the Listing Rules. The investment objective of the Company is to achieve earnings in the form of medium to longterm (i.e. one to five years) capital appreciation mainly through investments in listed and unlisted companies in the Greater China.

– 28 –

LETTER FROM THE BOARD

The Investment Manager is a licensed corporation to carry out type 1 (dealings in securities), type 6 (advising on corporate finance) and type 9 (asset management) regulated activities under the SFO. The Investment Manager has been appointed to act as the Investment Manager since the Listing Date. The transactions contemplated under the New Investment Management Agreement will continue to be conducted in the ordinary and usual course of business of the Company.

The Directors (including the independent non-executive Directors) consider that:

(a) the terms and conditions of the New Investment Management Agreement were negotiated between the parties to it on an arm’s length basis and are normal commercial terms that are fair and reasonable;
(b) the Annual Caps are fair and reasonable; and
(c) the transactions contemplated under the New Investment Management Agreement are in the ordinary and usual course of business of the Company and in the interest of the Company and the Shareholders.

Accordingly, they recommend the Independent Shareholders to vote in favour of the ordinary resolutions to be proposed at the First EGM to approve these transactions.

Implication under the Listing Rules

The Investment Manager is regarded as a connected person of the Company by virtue of Rule 21.13 of the Listing Rules. In addition and as disclosed above, the Investment Manager is a wholly-owned subsidiary of OPFSGL, which is a substantial Shareholder. The transactions contemplated under the New Investment Management Agreement constitute continuing connected transactions for the Company.

As the relevant Percentage Ratio for the transactions contemplated under the New Investment Management Agreement is more than 25%, the Continuing Connected Transactions are non-exempt continuing connected transactions under Rule14A.14 of the Listing Rules and are subject to the reporting, announcement and Independent Shareholders’ approval as well as the annual review requirements.

The entering into of the New Investment Management Agreement and the Continuing Connected Transactions (including the proposed Annual Caps) are conditional upon the approval by the Independent Shareholders at the First EGM by ordinary resolution.

– 29 –

LETTER FROM THE BOARD

Revised 2008 Annual Cap for continuing connected transactions under the Existing Investment Management Agreement for the year ending 31 March 2008

The Original 2008 Annual Cap of HK$5,700,000 approved at the 2006 EGM by the then Independent Shareholders has not been exceeded as of the date of the Announcement and the Latest Practicable Date.

Nevertheless, given that the transactions contemplated under the Placing will invariably and substantially increase the Net Asset Value (on which the calculation of the investment management fee and the performance fee chargeable by the Investment Manager is based), the annual value of the continuing connected transactions contemplated under the Existing Investment Management Agreement for the year ending 31 March 2008 is expected to increase and exceed the Original 2008 Annual Cap.

Assuming completion of the Placing, the Directors estimate that the maximum amount of the revised maximum aggregate annual value for the continuing connected transactions under the Existing Investment Management Agreement for the year ending 31 March 2008 could be capped at the Revised 2008 Annual Cap of HK$32,000,000.

As the relevant Percentage Ratio for the continuing connected transactions contemplated under the Existing Investment Management Agreement for the year ending 31 March 2008 is more than 25%, they are subject to the reporting, announcement, Independent Shareholders’ approval and annual review requirements. Assuming completion of the Placing Agreement, the Company is required to and will re-comply with the applicable Listing Rules which will include seeking the Independent Shareholders’ approval of the continuing connected transactions constituted by the provision of investment management and administration services under the Existing Investment Management Agreement for the year ending 31 March 2008 (including the Revised 2008 Annual Cap) at the First EGM.

The Directors (including the independent non-executive Directors) consider that the transactions constituted by the provision of investment management and administration services by the Investment Manager to the Company under the Existing Investment Management Agreement for the year ended 31 March 2008 (as well as the Revised 2008 Annual Cap on the assumption or in contemplation of the Placing Agreement) are on normal commercial terms, in the ordinary and usual course of business, fair and reasonable and in the interest of the Company and the Shareholders as a whole. Accordingly, they recommend the Independent Shareholders to vote in favour of the ordinary resolutions to be proposed at the First EGM to approve these transactions.

– 30 –

LETTER FROM THE BOARD

5. PROPOSED CHANGE OF COMPANY NAME

To reflect the close relationship between the Company and OPFSGL and its subsidiaries and its associated companies (“OP Group”) in terms of ownership or investment management, a special resolution will be proposed to the Shareholders at the Second EGM to change the name of the Company to OP Financial Investments Limited.

The proposed change of name shall take effect from the date on which the resolution adopting the new name of the Company is passed. After the proposed change of name has become effective, the Company will carry out the necessary filing procedures with the Registrar of Companies in Hong Kong.

A new Chinese name of 東英金融投資有限公司 will also be adopted by the Company to replace the existing Chinese name of 正奇投資有限公司 for identification purposes only.

The existing share certificates of the Company shall, after the proposed change of name has become effective, continue to be evidence of title to the Shares and will be valid for trading, settlement and delivery for the same number of Shares in the new name of the Company. Accordingly, no arrangement will be made for the exchange of the existing share certificates of the Company as a result of the proposed change of name of the Company.

Further announcement will be made by the Company when the proposed change of name has become effective.

The Directors (including the independent non-executive Directors) consider the proposed new name of the Company will reflect its close relation and accreditation with OP Group. Accordingly, the Directors recommend the Shareholders to vote in favour of the special resolution to be proposed at the Second EGM to approve the change of name of the Company.

6. FUND RAISING ACTIVITIES OF THE COMPANY IN THE PAST 12 MONTHS

The Company has not undertaken any fund raising activities within the 12 months immediately prior to the date of the Announcement and the Latest Practicable Date.

– 31 –

LETTER FROM THE BOARD

7. THE FIRST EGM

Set out on pages N-1 to N-5 of this circular is a notice convening the First EGM to be held at 11:00 a.m. on Wednesday, 7 November 2007 at 27th Floor, Two Exchange Square, 8 Connaught Place, Central, Hong Kong, at which ordinary resolutions will be proposed to the Independent Shareholders to consider and, if thought fit, approve by way of a poll each of the First EGM Matters stated below:

(1) the terms and conditions of the Placing Agreement together with all transactions contemplated thereunder (including the Warrants Issue, the issue of the Placing Shares and the Warrant Shares upon exercise of the subscription rights attaching to the Warrants, the provision of the placing services by the Placing Agent and the grant of the Special Mandate);
(2) the Whitewash Waiver;
(3) the increase in the authorised share capital of the Company from HK$20,000,000 divided into 200,000,000 Shares to HK$200,000,000 divided into 2,000,000,000 Shares by the creation of an additional 1,800,000,000 new Shares; and
(4) (i) the continuing connected transactions constituted by the provision of investment management and administration services by the Investment Manager to the Company for the year ending 31 March 2008 (together with the Revised 2008 Annual Cap) under the Existing Investment Management Agreement; and (ii) the Continuing Connected Transactions (together with the Annual Caps) to be constituted under the New Investment Management Agreement.

OPFSGL and its Concert Parties will be required and/or will voluntarily abstain from voting of all the ordinary resolutions for approving the First EGM Matters at the First EGM. To the best of the Directors’ knowledge, information and belief after having made all reasonable enquiries, none of the Shareholders (other than OPFSGL, the Investment Manager and their respective associates and/or any of their respective Concert Parties (including the Placing Agent and the Connected Placee) and those parties who are involved, or interested in the First EGM Matters) will be required to abstain from voting at the First EGM to approve the First EGM Matters.

A form of proxy for use at the First EGM is enclosed. Whether or not you are able to attend the First EGM, you are requested to complete and return the enclosed form of proxy in accordance with the instructions printed thereon as soon as possible and in any event by no later than 48 hours before the time appointed for the holding of the First EGM. Completion and return of the form of proxy shall not preclude you from attending and voting at the First EGM should you so wish.

An announcement on the results of the First EGM will be made by the Company following the First EGM in accordance with the Takeovers Code and the Listing Rules.

– 32 –

LETTER FROM THE BOARD

8. THE SECOND EGM

Set out on pages N-6 to N-7 of this circular is a notice convening the Second EGM to be held at 11:00 a.m. on Thursday, 15 November 2007 at 27th Floor, Two Exchange Square, 8 Connaught Place, Central, Hong Kong, at which a special resolution will be proposed to consider and, if thought fit, the proposed change of name of the Company to be passed by the Shareholders of the Company.

A form of proxy for use at the Second EGM is enclosed. Whether or not you are able to attend the Second EGM, you are requested to complete and return the enclosed form of proxy in accordance with the instructions printed thereon as soon as possible and in any event by no later than 48 hours before the time appointed for the holding of the Second EGM. Completion and return of the form of proxy shall not preclude you from attending and voting at the Second EGM should you so wish.

9. RECOMMENDATION

Ample Capital and Asia Investment have been jointly appointed as the independent financial advisers of the Company to advise the Independent Board Committee and the Independent Shareholders regarding the First EGM Matters, including without limitation, the Placing together with the transactions contemplated thereunder (including the placing services to be provided by the Placing Agent), the Warrants Issue, the Whitewash Waiver, the continuing connected transactions contemplated under the Existing Investment Management Agreement for the year ending 31 March 2008 (together with the Revised 2008 Annual Cap) and the Continuing Connected Transactions to be contemplated under the New Investment Management Agreement for the three years ending 31 March 2011 (together with the Annual Caps).

The Independent Financial Advisers consider that the First EGM Matters are fair and reasonable so far as the Independent Shareholders and the Company as a whole are concerned. The text of the letter of advice from the Independent Financial Advisers to the Independent Board Committee and the Independent Shareholders containing its recommendations and the principal factors and reasons which they have taken into account in arriving at their recommendations are set out on pages 37 to 73 of this circular.

– 33 –

LETTER FROM THE BOARD

10. PROCEDURES FOR DEMANDING A POLL

Pursuant to Articles 87 of the Articles, a resolution put to the vote at any general meeting shall be decided on a show of hands unless (before or on the declaration of the result of the show of hands or on the withdrawal of any other demand for a poll) a poll is duly demanded:

(i) by the chairman of the meeting; or
(ii) by at least five Shareholders present in person or, in the case of a corporation, by its duly authorised representative or by proxy and entitled to vote who represent in the aggregate of not less than one-tenth of the total voting rights of all shareholders having the right to attend or vote at the meeting; or
(iii) by any shareholder or shareholders of the Company present in person or by a duly authorised corporate representative or by proxy and representing not less than onetenth of the total voting rights of all the shareholders having the right to vote at the meeting; or
(iv) by any shareholder or shareholders present in person or, in the case of a corporation, by its duly authorised representative or by proxy and holding shares in the Company conferring a right to attend and vote at the meeting on which there have been paid up sums in the aggregate equal to not less than one-tenth of the total sum paid up on all shares conferring that right.

11. FURTHER INFORMATION

Your attention is also drawn to the letter of advice from the Independent Financial Advisers to the Independent Board Committee and the Independent Shareholders as disclosed on pages 37 to 73 of this circular and the additional information set out in the appendice to this circular.

Yours faithfully, For and on behalf of

Concepta Investments Limited

Zhang Zhi Ping

Chairman

– 34 –

LETTER OF ADVICE FROM THE INDEPENDENT BOARD COMMITTEE

==> picture [52 x 51] intentionally omitted <==

CONCEPTA INVESTMENTS LIMITED 正奇投資有限公司[*]

(incorporated in the Cayman Islands with limited liability)

(Stock Code: 1140)

22 October 2007

To the Independent Shareholders

Dear Sir/Madam

(1) PROPOSED PLACING OF NEW SHARES (A PORTION OF WHICH TO BE PLACED TO CONNECTED PERSON) WHICH INVOLVES THE ISSUE OF UNLISTED WARRANTS

(2) PROPOSED GRANT OF SPECIAL MANDATE

(3) APPLICATION FOR THE GRANTING OF WHITEWASH WAIVER (4) CONTINUING CONNECTED TRANSACTIONS

We refer to the circular (the “ Circular ”) issued by the Company to the Shareholders dated 22 October 2007 of which this letter forms part.

Unless the context otherwise requires, terms and expressions defined in the Circular have the same meanings when used in this letter.

We have been appointed by the Board to consider the Placing Agreement together with the transactions contemplated thereunder (including the Warrants Issue), the grant of the Special Mandate, the Whitewash Waiver, the continuing connected transactions as constituted by the provision of investment management and administration services under the Existing Investment Management Agreement for the year ending 31 March 2008 (together with the Revised 2008 Annual Cap) and the Continuing Connected Transactions to be contemplated under the New Investment Management Agreement (together with the Annual Caps) (collectively, the “ Proposed Transactions ”) and to advise the Independent Shareholders as to whether, in our opinion, the Proposed Transactions are fair and reasonable so far as the Independent Shareholders are concerned. Ample Capital and Asia Investment have been jointly appointed as the independent financial advisers to advise us and the Independent Shareholders in this respect.

* For identification purpose only

– 35 –

LETTER OF ADVICE FROM THE INDEPENDENT BOARD COMMITTEE

We wish to draw your attention to the letter from the Board and the letter from the Independent Financial Advisers as set out in the Circular. Having considered the principal factors and reasons and the advice of the Independent Financial Advisers as set out in its letter of advice, we consider that the terms of the Proposed Transactions are on normal commercial terms, and in the best interest of the Company and the Shareholders as a whole.

We also consider that the Proposed Transactions are fair and reasonable so far as the Independent Shareholders are concerned. Accordingly, we recommend the Independent Shareholders to vote in favour of the ordinary resolutions to approve, ratify and/or confirm the Proposed Transactions at the First EGM.

Yours faithfully

For and on behalf of Independent Board Committee Liu Hongru Kwong Che Keung, Gordon He Jia Wang Xiaojun

– 36 –

LETTER OF ADVICE FROM INDEPENDENT FINANCIAL ADVISERS

==> picture [119 x 45] intentionally omitted <==

Ample Capital Limited Unit A, 14th Floor Two Chinachem Plaza

135 Des Voeux Road Central Hong Kong

Asia Investment Management Limited Unit B, 14/F Vulcan House

21 – 23 Leighton Road, Causeway Bay Hong Kong

22 October 2007

To the Independent Board Committee and

the Independent Shareholders of Concepta Investments Limited

Dear Sirs,

(A) PROPOSED PLACING OF NEW SHARES (A PORTION OF WHICH TO BE PLACED TO CONNECTED PERSON) WHICH INVOLVES THE ISSUE OF UNLISTED WARRANTS (B) APPLICATION FOR THE GRANTING OF THE WHITEWASH WAIVER AND (C) CONTINUING CONNECTED TRANSACTIONS

INTRODUCTION

We refer to our engagement by the Company to advise the Independent Board Committee and the Independent Shareholders in respect of (i) the proposed Placing of new Shares to the Connected Placee (the “Connected Placing”); (ii) the issue of the Warrants to the Connected Placee (the “Connected Warrant Issue”); (iii) the Placing Agreement entered into with the Placing Agent which is a connected party; (iv) the Whitewash Waiver; (v) the Continuing Connected Transactions with the Investment Manager under the New Investment Management Agreement; and (vi) the Revised 2008 Annual Cap (collectively, the “Transactions”), the particulars of which have been set out in a circular to the Shareholders dated 22 October 2007 (the “Circular”) and in which this letter is reproduced. Unless the context requires otherwise, terms used in this letter shall have the same meanings as given to them under the definitions section of the Circular.

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LETTER OF ADVICE FROM INDEPENDENT FINANCIAL ADVISERS

Ample Capital Limited and Asia Investment Management Limited have been appointed as the independent financial advisers to the Independent Board Committee and the Independent Shareholders to give our recommendation as to whether the terms of the Transactions are fair and reasonable so far as the Independent Shareholders are concerned. Details of the reasons for the proposed Transactions are set out in the section headed “Letter from the Board” in the Circular (the “Board Letter”).

On 7 September 2007, the Company entered into the Placing Agreement with the Placing Agent under which 600,000,000 Placing Shares will be placed by the Placing Agent on a fullywritten basis. The Placing Shares represent approximately (i) 600% of the Company’s existing issued share capital; (ii) 85.71% of the Company’s issued share capital as enlarged by the Placing Shares; and (iii) 73.17% of the Company’s issued share capital as enlarged by the Placing Shares and the Warrant Shares. In addition, the Company will issue the Warrants to the Placees on the basis of one Warrant for every five Placing Shares under the Warrant Issue. Based on 600,000,000 Placing Shares to be issued under the Placing Agreement and on the assumption that no Shares would be issued (other than the Placing Shares and the Warrant Shares) or repurchased by the Company, the exercise in full of the Warrants will result in the issue of a maximum of 120,000,000 Warrant Shares. The Warrant Shares represent approximately (i) 120.00% of the existing issued share capital of the Company; (ii) 17.14% of the issued share capital of the Company as enlarged by the Placing Shares; and (iii) 14.63% of the issued share capital of the Company as enlarged by the Placing Shares and the Warrants Shares.

If the Connected Placee takes up 330 million Placing Shares under the Placing Agreement or the Placing Agent is obligated to take up any Placing Shares in performance of its obligation under the Placing Agreement, the Connected Placee and its Concert Parties (including OPFSGL and the Placing Agent) will hold 30% or more of the voting rights of the Company. In either case, unless the Whitewash Waiver is granted, the Placing Agent and its Concert Parties (including OPFSGL and, if applicable, the Connected Placee) would incur an obligation, upon completion of the Placing Agreement, to make a mandatory general offer for all the securities of the Company not already owned or acquired by the Placing Agent and its Concert Parties as a result of the issue of the Placing Shares under Note 1 to Dispensations from Rule 26 of the Takeovers Code.

An application has been made by the Placing Agent (for itself and its Concert Parties) to the Executive for the granting of the Whitewash Waiver. The Whitewash Waiver, if granted by the Executive, would be subject to the approval of the Independent Shareholders who are not interested in or involved in the Placing and the transactions contemplated thereunder at the First EGM by way of poll. Completion of the Placing Agreement is conditional upon, inter alia, the granting of the Whitewash Waiver by the Executive (which cannot be waived by any of the parties to the Placing Agreement). If the Whitewash Waiver is not obtained or if it is not approved by the Independent Shareholders, the Placing Agreement will lapse.

– 38 –

LETTER OF ADVICE FROM INDEPENDENT FINANCIAL ADVISERS

The Company proposes, subject to the Independent Shareholders’ approval at the First EGM, to enter into the New Investment Management Agreement with the Investment Manager in relation to the appointment of the Investment Manager immediately following the expiration of the term of the Existing Investment Management Agreement to ensure continuity in the provision of the investment management and administrative services to the Company. Except for the time period covered, the terms of the Existing Investment Management Agreement and the New Investment Management Agreement are substantially the same in all material respects.

In formulating our opinion, we have relied on the accuracy of the information and representations contained in the Circular and the information and representations provided to us by the Directors and management of the Company and have assumed that all information and representations made by the Company and the Directors were true, accurate and complete at the time they were made and continue to be so as at the date of the Circular. We consider that we have obtained from the Company all of the necessary information on which to form a reasonable basis for our opinion. We have also assumed that all statements of belief, opinion and intention made by the Directors in the Circular were reasonably made after due enquiry. We have no reason to suspect that any material facts have been omitted or withheld from the information contained or opinions expressed in the Circular nor to doubt the truth, accuracy and completeness of the information and representations provided to us by the Directors. We have not, however, conducted an independent in-depth investigation into the affairs of the Company nor have we carried out any independent verification of the information supplied.

PRINCIPAL FACTORS CONSIDERED

In arriving at our opinion in relation to the Transactions, we have taken into consideration the following factors:

1. Background information

The Company is an investment company with the principal investment objective to achieve earnings for the Company in the form of medium to long term capital appreciation through investing in a diversified portfolio of investments in listed and unlisted enterprises in the Greater China region. An inspection of the Company’s annual report for the year ended 31 March 2007 (the “Annual Report”) reveals that the Company recorded an audited turnover of approximately HK$48,156,000, representing an approximately 4.41% decrease from the audited turnover of around HK$50,380,000 recorded during the year ended 31 March 2006. However, the Company experienced an approximately 2.23% increase in its net profit from around HK$7,875,000 recorded in the year ended 31 March 2006 to approximately HK$8,051,000 for the year ended 31 March 2007. As at 31 March 2007, the Company had audited total assets, total liabilities, net assets and net asset value per Share of around HK$63,019,000, HK$1,778,000, HK$61,240,000 and HK$0.61 respectively.

– 39 –

LETTER OF ADVICE FROM INDEPENDENT FINANCIAL ADVISERS

2. The Placing and the Warrants Issue

2.1 Reasons for the Placing

As mentioned in the Board Letter, due to the continuous rapid development of the PRC economy in recent years, the income level of PRC nationals increases significantly and accordingly resulting in increasing demand for different choice of investment by the PRC nationals. The significant level of foreign exchange reserve of PRC also provided a background for making investments outside of PRC for its nationals.

According to the Trial Scheme promulgated by the SAFE on 20 August 2007, PRC nationals are allowed to make direct investment in Hong Kong listed securities with their self-owned foreign currencies or RMB at a designated city on a trial basis. The Directors envisaged the Trial Scheme will gradually be implemented on a nation wide basis and a variety of institutions and companies will directly or indirectly benefit from the Trial Scheme accordingly. With the recent highly liquid and buoyant markets, the Directors are of the view that the Company should raise additional fund from the equity market to capture such investment opportunities, at the same time take advantage of investment opportunities to broaden its earnings base so as to enhance Shareholders’ value.

As to the method of fund raising, the Directors consider that the Placing is a better method to raise capital as compared with a rights issue or open offer for the Company, as the Placing can broaden its shareholder base and to enhance the marketability of the Shares, and a rights issue or open offer would take too long (as far as the legal and regulatory (including registration) requirements are concerned) to arrange when compared with the Placing (which could, subject to Shareholder’s approval at the First EGM (if necessary), take place as soon as the Placees (as the case may be) are procured pursuant to the respective terms of the Placing Agreement) and would be much more expensive, which is beneficial to the Company’s business development as funding requirement or appropriate investment opportunities may arise at any time and such funding or investment decisions have to be required or made within a short period of time.

The Company intends to use the proceeds from the Placing for investments in institutions or companies which would directly or indirectly benefit from the Trial Scheme. As at the Latest Practicable Date, the Company had not yet identified any definite investment targets or plans that may require the use of such proceeds.

– 40 –

LETTER OF ADVICE FROM INDEPENDENT FINANCIAL ADVISERS

2.2 Alternative modes of fund raising

In formulating our opinion in this letter, we have considered the advantages and disadvantages of other methods of fund raising which is set out below.

2.2.1 Debt financing alternative

In general, it is cost-wise better for a company to attempt to minimize the use of debts to finance its operations since any debts will inevitably incur interest expenses. When such interest expenses are aggregated over the entire term of the debt, it is expected to be significantly higher than the placing commission of 2.5% payable under the Placing. For instance, according to HSBC’s published information, the best lending rate which became effective on 20 September 2007 is 7.50%. Based on the above, it is expected that the interest expense in the first year alone would already be significantly higher than the placing commission payable under the Placing which is a one-off fee. In addition, the Company will be required to repay any such loan obtained from its financier(s) upon the maturity of the debt. With the Placing, the Company is able to raise interest free capital (subject to a placing commission of 2.5%) which does not require any repayment in the future. In our discussion with management of the Company, we were advised that the Company adopts a prudent financing strategy for its investment activities. The Company is of the view that raising HK$720 million by way of debt financing would result in a gearing ratio which is considered to be unacceptable. We also note from the listing document of the Company that pursuant to and in accordance with the Articles of Association of the Company, the Company can borrow only up to an aggregate principal amount representing not more than 50% of the latest available Net Asset Value at the time the borrowing is made unless shareholders’ approval at general meeting is obtained. This borrowing power restriction imposes further inflexibility on the Company to raise fund by way of debt financing.

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LETTER OF ADVICE FROM INDEPENDENT FINANCIAL ADVISERS

2.2.2 Other forms of equity fund raising

As stated in the Board Letter, a rights issue or open offer would take too long to arrange when compared with the Placing. Same as the Placing, a typical rights issue or open offer is underwritten by one or a syndicate of securities houses. Given that the Company’s issued share capital is currently at 100,000,000 Shares, the Company would likely be required to conduct a rights issue or open offer on the basis of 6 rights/offer Shares for every 1 existing Share held at a subscription price which is at the level of the Placing Price of HK$1.20 per Placing Share in order to raise the net proceeds HK$700 million under the proposed Placing. Faced with a 6 for 1 rights issue or open offer, the existing Shareholders can maintain their respective pro rata shareholding in the Company by subscribing the rights/offer shares and bear the ensuing financial burden to finance the Company’s proposed investments, or face the same level of dilution to their existing pro rata shareholding in the Company as the Placing when they elect not to participate in any such rights issue/open offer.

2.2.3 Fund raising by issue of convertible notes

In an issue of convertible notes, it combines the elements of interest expenses and possible dilution to Shareholders’ pro rata shareholding in the Company in one single package. Like bank loans, convertible notes would likely involve interest expenses to be borne by the Company. If the convertible notes are not converted into equity by maturity, the Company would be required to repay the outstanding principal. As there is no certainty as to whether the convertible notes will be converted or not (and hence whether the outstanding principal requires repayment or not), undue financial burden may be placed on the Company to meet its financial obligations. Also, convertible securities often carry a floating conversion price which is linked to the prevailing market price of the underlying asset at the time of conversion. In the event that the market price of the underlying asset, i.e. the Shares, falls to a low level, the holder(s) of the convertible notes will be able to convert the notes with the floating conversion price into a large number of Shares, possibly resulting in a significant dilution to the existing shareholding of the Shareholders.

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LETTER OF ADVICE FROM INDEPENDENT FINANCIAL ADVISERS

2.2.4 Conclusion regarding other financing alternatives

Having discussed with the Directors, we concur with their view that the Placing, out of all of the financing alternatives mentioned above, offers the optimal balance in terms of (i) amount of net proceeds raised; (ii) timing; (iii) expenses borne by the Company; (iv) requirement for the repayment of outstanding principal; (v) certainty as to the outcome; and (vi) financial burden on the Independent Shareholders.

2.3 The Placing

Pursuant to the Placing Agreement, 600,000,000 new Shares will be placed by the Placing Agent on a fully-underwritten basis. The Placing Shares represent approximately (i) 600% of the Company’s existing issued share capital; (ii) 85.71% of the Company’s issued share capital as enlarged by the Placing Shares; and (iii) 73.17% of the Company’s issued share capital as enlarged by the Placing Shares and the Warrant Shares.

The Placing Shares will be placed as to: (i) 330,000,000 Placing Shares to the Connected Placee (Ottness Investments Limited whose entire issued share capital is owned in equal share by Mr. Zhang Zhi Ping and Mr. Zhang Gaobo, two executive Directors) and (ii) 270,000,000 Placing Shares to not less than six Placees (other than the Connected Placee). Under the Placing Agreement, the Placing Agent will ensure that the Placees (other than the Connected Placee) and their respective ultimate beneficial owners will be Independent Third Parties and none of the Placees (other than the Connected Placee) will become substantial Shareholder immediately following completion of the Placing or is a Concert Party of the Company in the obtaining or consolidation of control (as defined in the Takeovers Code) of the Company or with one another.

2.3.1 The Placing Price and the placing commission

The Placing Price per Placing Share of HK$1.20 represents:

(i) a discount of approximately 14.29% to the closing price of HK$1.40 per Share as quoted on the Stock Exchange on the Last Trading Day;
(ii) a premium of approximately 4.90% to the average closing price of approximately HK$1.144 per Share as quoted on the Stock Exchange for the last five consecutive trading days up to and including the Last Trading Day;

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LETTER OF ADVICE FROM INDEPENDENT FINANCIAL ADVISERS

(iii) a premium of approximately 9.29% to the average closing price of approximately HK$1.098 per Share as quoted on the Stock Exchange for the last ten consecutive trading days up to and including the Last Trading Day;
(iv) a discount of approximately 52.00% to the closing price of HK$2.50 per Share as quoted on the Stock Exchange on the Latest Practicable Date; and
(v) a premium of approximately 96.72% to the audited net asset value per Share of approximately HK$0.61 as at 31 March 2007.

Under the terms of the Placing Agreement, the Placing Agent shall be entitled to receive a placing commission of 2.5% of the aggregate Placing Price. As stated in the Board Letter, the monetary value of the placing commission under the Placing Agreement is HK$18 million. The placing services provided by the Placing Agent under the Placing Agreement constitute a connected transaction for the Company, on the basis that the Placing Agent is a wholly-owned subsidiary of OPFSGL, which is a substantial Shareholder. Hence, the Placing Agent is an associate of a connected person of the Company. As the applicable Percentage Ratio in respect of the placing commission payable in respect of the placing services under the Placing Agreement is more than 25%, the placing services provided by the Placing Agent under the Placing Agreement are subject to the reporting, announcement and independent shareholders’ approval requirements set out in Chapter 14A of the Listing Rules.

The Board Letter further states that the terms of the Placing were arrived at after arm’s length negotiation between, and are the respective commercial decisions of, the Company and the Placing Agent (having regards the size of the Placing and the general market conditions). The Directors (including all the independent non-executive Directors) consider those terms of the Placing to the Independent Placees to be fair and reasonable and in the interests of the Company and the Shareholders as a whole. Furthermore, the Directors consider those terms of the Placing to the Connected Placee to be fair and reasonable and in the interests of the Company and the Shareholders as a whole.

– 44 –

LETTER OF ADVICE FROM INDEPENDENT FINANCIAL ADVISERS

We set out below the historical closing price per Share and the daily turnover of the Shares on the Stock Exchange during the 12-month period up to and including 16 October 2007, being the latest date for which information was available on the source as at the Latest Practicable Date.

Closing price per Share on the Stock Exchange

==> picture [295 x 182] intentionally omitted <==

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

3.00
2.50
2.00
Placing Price of HK$1.20 per Share
1.50
1.00 Average closing price of HK$0.65 per Share
0.50
0.00
Date
31/10/200630/11/200629/12/2006 31/01/200728/02/2007 30/03/200730/04/200731/05/200729/06/200731/07/2007 31/08/200728/09/2007
Closing price per Share (HK$)
----- End of picture text -----

Source: http://finance.yahoo.com/

Daily turnover of the Shares on the Stock Exchange

==> picture [304 x 184] intentionally omitted <==

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

4,500,000
4,000,000
3,500,000
3,000,000
2,500,000
2,000,000
1,500,000
1,000,000
Average daily turnover of 182,786 Shares
500,000
0
Date
31/10/200630/11/200629/12/2006 31/01/200728/02/2007 30/03/200730/04/200731/05/200729/06/200731/07/2007 31/08/200728/09/2007
Number of Shares
----- End of picture text -----

Source: http://finance.yahoo.com/

– 45 –

LETTER OF ADVICE FROM INDEPENDENT FINANCIAL ADVISERS

As demonstrated in the charts above, the Shares closed on the Stock Exchange within a range from a low of HK$0.25 per Share to a high of HK$2.80 per Share reached on 12 and 15 October 2007. The average closing price per Share during the year ended 16 October 2007 was approximately HK$0.65 per Share. We note that except for (i) in respect of the period prior to the date of the Placing Agreement, 3 trading days on 31 July 2007, 1 August 2007 and the Last Trading Day and (ii) in respect of the period after the date of the Placing Agreement, 20 trading days immediately following the resumption of trading in the Shares on 17 September 2007, the Shares have always closed on the Stock Exchange at prices that were below the Placing Price of HK$1.20 per Share during the year ended 16 October 2007. We believe that this is an indication that the Placing and the Warrants Issue are well received by the investing public and is a demonstration of the public’s confidence in the Company’s future prospects. Furthermore, we note that the average daily turnover of the Shares on the Stock Exchange during the 12-month period prior to 16 October 2007 was approximately 182,786 Shares, representing approximately 0.18% of the Company’s issued share capital as at the Latest Practicable Date. Having considered the information presented above, we believe that the Placing Price is favorable to the Company and in the interest of the Shareholders as the Company can take advantage of the relatively high price of the Shares on the Stock Exchange on the date of the Placing Agreement (when compared with the then historic closing prices).

For the purpose of comparison, we set out below selected key figures from 29 placing/subscription of new shares announced by listed issuers in Hong Kong (the “Placing Comparables”) during the one month period ended on 7 September 2007 (being the date of the Placing Agreement). The Placing Comparables were identified through a search on the website of the Stock Exchange and the Placing Comparables include all of the placing/subscription of new shares identified by us in the aforementioned search.

– 46 –

LETTER OF ADVICE FROM INDEPENDENT FINANCIAL ADVISERS

						Issue fully	underwritten	by relevant	placing	agent		yes	yes							yes			no				yes					yes			n/a	(note 3)
								Underwriting/	placing	commission	%	2.50	1.50							2.50			3.00				3.00					2.50			2.00
				Approximate	premium/	(discount) of	placing price	to net assets	per share	(note 5)	%	96.72	255.81							(16.00 )			566.67				277.77					214.29			370.59
Approximate	premium/	Approximate (discount) of	discount of placing price	placing price per share to	per share to average closing	closing price price per share	per share in the 5 trading	prior to the days prior to the	release of the release of the	announcement announcement	% %	(14.29 ) 4.90	(14.53 ) (19.90 )							(14.29 ) (18.92 )			(10.26 ) (2.78 )				(5.56 ) (2.30 )					(13.73 ) (9.09 )			(11.44 ) (9.23 )
						Approximate	price to	earning	ratio	(note 2)	times	14.81	n/a							3.50			40.19				n/a	(note 6)				n/a			8.33
									Placing price	per share	HK$	1.20	1.53							0.21			4.20				1.70					0.22			2.40
								Market	capitalization	(note 1)	HK$ ’million	120.00	940.81							589.28			1,295.10				2,093.35					967.17			12,301.70
										Principal business		Investment	Power generation,	trading of goods,	provision of finance,	property investment	and management and	brokerage and	securities investment	Distribution of film,	television, drama	series and video	Provision of securities	brokerage, commodities	trading and	corporate finance	Design, manufacture and	sale of petroleum	extraction machinery	and related accessory		Strategic investing holding			Manufacture and sale of	garment and	tree planting and	management,	manufacture and	distribution of forest	products as timber and	bark materials
									Date of	announcement		14 September 2007	7 September 2007							7 September 2007			6 September 2007				5 September 2007					3 September 2007			3 September 2007
								Name of listed	company	(stock code)		The Company	Poly Investments	Holdings Limited	(263)					China Star	Entertainment	Limited (326)	Value Convergence	Holdings Limited	(8101)		Shandong Molong	Petroleum	Machinery	Company	Limited (568)	China Sci-Tech	Holdings Limited	(985)	China Grand Forestry	Resources Group	Limited (910)

– 47 –

LETTER OF ADVICE FROM INDEPENDENT FINANCIAL ADVISERS

						Issue fully	underwritten	by relevant	placing	agent		yes					no					yes					yes				no				n/a	(note 3)
								Underwriting/	placing	commission	%	2.50					3.00					2.00					2.50				2.00				n/a	(note 3)
				Approximate	premium/	(discount) of	placing price	to net assets	per share	(note 5)	%	35.21					220.00					(30.30 )					(2.94 )				288.89				450.00
Approximate	premium/	Approximate (discount) of	discount of placing price	placing price per share to	per share to average closing	closing price price per share	per share in the 5 trading	prior to the days prior to the	release of the release of the	announcement announcement	% %	(19.33 ) (5.88 )					(12.10 ) (14.90 )					(14.81 ) (14.81 )					(13.16 ) (11.53 )				(4.00 ) (11.00 )				(14.06 ) (11.29 )
						Approximate	price to	earning	ratio	(note 2)	times	7.03					6.78					5.90					n/a				n/a				n/a
									Placing price	per share	HK$	0.96					0.16					0.23					0.33				0.70				0.55
								Market	capitalization	(note 1)	HK$ ’million	675.01					2,402.92					217.30					145.46				314.05				342.58
										Principal business		Manufacture and trading of	copper rods, life-like	plants and production,	distribution and	licensing television	Television advertising	business, films and TV	drama business and	provision of IP telephony	and related services	Construction, repair,	maintenance, renovation	and fitting out work,	property investment and	development	Manufacture and trading of	battery products and	related accessories, and	investment in securities	Manufacture and	distribution of	power tools and	hand tools	Operation of department	store in Urumqui, the PRC
									Date of	announcement		31 August 2007					31 August 2007					30 August 2007					30 August 2007				30 August 2007				28 August 2007
								Name of listed	company	(stock code)		Hua Yi Copper	Holdings Limited	(559)			Asian Union New	Media (Group)	Limited (419)			Vantage International	(Holdings) Limited	(15)			China Strategic	Holdings Limited	(235)		Wang Sing	International	Holdings Group	Limited (2389)	China Golden	Development	Holdings Limited	(162)

– 48 –

LETTER OF ADVICE FROM INDEPENDENT FINANCIAL ADVISERS

						Issue fully	underwritten	by relevant	placing	agent		no					yes								yes				yes							yes
								Underwriting/	placing	commission	%	2.50					2.50								2.50				2.50							2.50
				Approximate	premium/	(discount) of	placing price	to net assets	per share	(note 5)	%	(56.25 )					1,800.00								(9.09 )				95.40							(47.67 )
Approximate	premium/	Approximate (discount) of	discount of placing price	placing price per share to	per share to average closing	closing price price per share	per share in the 5 trading	prior to the days prior to the	release of the release of the	announcement announcement	% %	(7.89 ) (1.69 )					(9.95 ) (7.23 )								(13.79 ) (7.92 )				(10.05 ) (7.15 )							(15.09 ) (19.64 )
						Approximate	price to	earning	ratio	(note 2)	times	1.81					n/a								n/a				21.25							8.65
									Placing price	per share	HK$	0.35					0.19								0.10				3.40							0.90
								Market	capitalization	Principal business (note 1)	HK$ ’million	Trading of securities, 1,402.01	property investment and	trading, holding of	vessel for sand mining and	other strategic investments	Provision of services to 632.59	facilitate the trading of	precious metals on	existing international	markets through	a proprietary real-time	electronic trading system,	TRASY	Property investment, 740.28	investments in securities,	money lending, and	investment holding	Design and manufacture 680.00	quality paper-based	packaging containers and	materials, including	corrugated paperboard and	printed cartons for customers	in Mainland China	Printing of labels, 299.05	plastic cards and	advertising materials
									Date of	announcement		27 August 2007					27 August 2007								27 August 2007				24 August 2007							24 August 2007
								Name of listed	company	(stock code)		Hanny Holdings	Limited (275)				Trasy Gold Ex	Limited (8063)							Heritage International	Holdings Limited	(412)		Huali Holdings	(Group) Limited	(3366)					Chung Tai Printing	Holdings Limited	(55)

– 49 –

LETTER OF ADVICE FROM INDEPENDENT FINANCIAL ADVISERS

						Issue fully	underwritten	by relevant	placing	agent		yes				yes					n/a	(note 3)			yes			no
								Underwriting/	placing	commission	%	2.00				2.00					n/a	(note 3)			n/a	(note 3)		n/a	(note 3)
				Approximate	premium/	(discount) of	placing price	to net assets	per share	(note 5)	%	34.00				125.00					450.00				(14.29 )			5,878.26
Approximate	premium/	Approximate (discount) of	discount of placing price	placing price per share to	per share to average closing	closing price price per share	per share in the 5 trading	prior to the days prior to the	release of the release of the	announcement announcement	% %	(17.28 ) (19.47 )				(18.18 ) (18.18 )					(9.84 ) (12.14 )				(36.84 ) (40.84 )			(1.79 ) (19.59 )
						Approximate	price to	earning	ratio	(note 2)	times	1.73				3.00					n/a				n/a			n/a
									Placing price	per share	HK$	0.067				0.18					0.55				0.30			0.275
								Market	capitalization	Principal business (note 1)	HK$ ’million	Retails of beauty products and 109.16	provision of beauty services	in Hong Kong, Macau and	China	Investment in a diversified 184.92	portfolio of listed and	unlisted companies	in Hong Kong and	the PRC	Operation of department 342.58	store in Urumqui,	the PRC		Investments in listed 138.27	securities in Hong Kong		Providing business 321.72	consultancy services	to assist clients	on various business or	management issues and	funeral services	on various funeral	custom and activities
									Date of	announcement		24 August 2007				23 August 2007					22 August 2007				21 August 2007			20 August 2007
								Name of listed	company	(stock code)		B.A.L. Holdings	Limited (8079)			Sino Katalytics	Investment	Corporation (2324)			China Golden	Development	Holdings	Limited (162)	Radford Capital	Investment Limited	(901)	Galileo Holdings	Limited (8029)

– 50 –

LETTER OF ADVICE FROM INDEPENDENT FINANCIAL ADVISERS

						Issue fully	underwritten	by relevant	placing	agent		no				no				no						yes			n/a	(note 3)
								Underwriting/	placing	commission	%	n/a	(note 3)			0.50				n/a	(note 4)					2.50			n/a	(note 3)
				Approximate	premium/	(discount) of	placing price	to net assets	per share	(note 5)	%	1,363.64				n/a				509.09						156.00			3.19
Approximate	premium/	Approximate (discount) of	discount of placing price	placing price per share to	per share to average closing	closing price price per share	per share in the 5 trading	prior to the days prior to the	release of the release of the	announcement announcement	% %	(8.52 ) (17.00 )				(16.67 ) (19.87 )				(19.30 ) (19.10 )						(4.48 ) (14.44 )			(8.49 ) (9.35 )
						Approximate	price to	earning	ratio	(note 2)	times	575.00				8.47				2,680.00						n/a			4.62
									Placing price	per share	HK$	1.61				0.25				0.67						0.128			0.97
								Market	capitalization	(note 1)	HK$ ’million	11,070.33				150.00				293.46						168.70			449.98
										Principal business		Property investment,	management and	wholesale of household	building materials	Investment holding and	the manufacturing and	sales of medicines		Manufacturing and sales of	smart cards and	plastic cards,	and the provision of	customised smart card	application systems	Trading and manufacturing of	toys products and trading	and investments securities	Manufacture, sale, research	and development of	injection solution	pharmaceutical products	under the Nan Shaolin	brandname in the PRC
									Date of	announcement		15 August 2007				15 August 2007				14 August 2007						14 August 2007			13 August 2007
								Name of listed	company	(stock code)		Orient Resources	Group Limited	(467)		Everpride	Biopharmaceutical	Company Limited	(8019)	Cardlink Technology	Group Limited	(8066)				GFT Holdings	Limited (1003)		Broad Intelligence	International	Pharmaceutical	Holdings Limited	(1149)

– 51 –

LETTER OF ADVICE FROM INDEPENDENT FINANCIAL ADVISERS

Approximate	premium/	Approximate (discount) of	discount of placing price	placing price per share to Approximate	per share to average closing premium/	Approximate closing price price per share (discount) of Issue fully	price to per share in the 5 trading placing price underwritten	Name of listed Market earning prior to the days prior to the to net assets Underwriting/ by relevant	company Date of capitalization Placing price ratio release of the release of the per share placing placing	(stock code) announcement Principal business (note 1) per share (note 2) announcement announcement (note 5) commission agent	HK$ ’million HK$ times % % % %	Solartech International 13 August 2007 Manufacture of and trading 398.58 0.68 3.49 (17.07 ) (17.27 ) (65.48 ) 2.50 yes	Holdings Limited in cables and wires,	(1166) copper rods and	connectors and terminals	China National 9 August 2007 Production of cement, 16,057.08 17.80 n/a (1.98 ) (2.00 ) 172.59 n/a n/a	Building Material lightweight building (note 6) (note 3) (note 3)	Company Limited materials, glass fiber,	(3323) fiberglass reinforced	plastics products and	engineering services	Mean of the	Placing	Comparables: 211.23 (12.57 ) (13.26 ) 465.16 2.31	Source: http://www.hkex.com.hk/	Notes: 1. The market capitalization was calculated based on the placing price per share and the issued share capital of the Placing	Comparable.	2. The historic price to earning ratio was calculated based on the Placing Comparable’s place price per share and the basic	earnings per share as stated in the latest annual report. Where n/a is stated, the Placing Comparable has made a net loss in the	latest financial year reported on. For illustrative purposes only, where the basic earnings per share is expressed in RMB, an	exchange rate of HK$1 = RMB0.97 has been adopted.	3. The relevant information cannot be located in the relevant announcement.

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LETTER OF ADVICE FROM INDEPENDENT FINANCIAL ADVISERS

The relevant placing agent was entitled to a fixed placing commission of HK$150,000.
The net asset value per share was calculated based on figures derived from the financial statements for the prior financial year. Where n/a is stated, the Placing Comparable has a net liability. For illustrative purposes only, where the net asset is expressed in RMB, an exchange rate of HK$1 = RMB0.97 has been adopted.
The price to earning ratio is not calculated as this Placing Comparable is an H share company with domestic shares in issue.

As demonstrated in the table above, the Placing Comparables had price to earning ratio that ranged from around 1.73 times to 2,680.00 times with an average price to earning ratio of around 211.23 times. Due to (i) the large variance in the sample data (for instance, the largest sample is around 1,549 times larger than the smallest sample) and (ii) 13 out of the 29 Placing Comparables (i) made a loss or (ii) is a H share company (with domestic shares in issue) and are therefore not comparable, we consider that a meaningful comparison cannot be made as the Placing Comparables cannot be reliably used to depict a picture of the “market norm” price to earning ratio. In addition, the Placing Comparables had discount of placing price per share to closing price per share prior to the release of the announcement that ranged from around 1.79% to 36.84%, with the average figure being a discount of around 12.57%. Furthermore, the placing price per share of the Placing Comparables ranged from a discount of around 1.69% to 40.84% to the average closing price per share in the 5 trading days prior to the release of the announcement, with the average being a discount of around 13.26%. We also note that the underwriting/placing commission of the Placing Comparables ranged from 0.50% to 3.00% with an average figure of around 2.35%. Lastly, the placing price per share of the Placing Comparables ranged from a discount of around 65.48% to a premium of 5,878.76% to the net assets per share of the Placing Comparables, and the average figure is a premium of around 465.16%. As the sample data has an extremely high degree of inconsistency (for instance, the largest premium is around 1,843 times higher than the smallest premium), we consider that a “market norm” variance of the placing price to net asset value cannot be established. As such, we are unable to conduct a meaningful comparison in this respect. In any event, we believe that the high variance of the placing price per share from the base figure, i.e. the net asset value per share, of many of the Placing Comparables is an indication that the net asset value is not a commonly adopted point of reference in the determination of the placing price.

– 53 –

LETTER OF ADVICE FROM INDEPENDENT FINANCIAL ADVISERS

2.4 The Warrant Issue

As stated in the Board Letter, the Warrant Issue will be made on the basis of one Warrant for every five Placing Shares. The Warrants will entitle the holders to subscribe for in cash new Shares at a price of HK$1.20 per Share (same as the Placing Price). Based on 600,000,000 Placing Shares to be issued under the Placing Agreement and on the assumption that no Shares would be issued (other than the Placing Shares and the Warrant Shares) or repurchased by the Company, the exercise in full of the Warrants will result in the issue of a maximum of 120,000,000 Warrant Shares, representing approximately (i) 120.00% of the existing issued share capital of the Company; (ii) 17.14% of the issued share capital of the Company as enlarged by the Placing Shares; and (iii) 14.63% of the issued share capital of the Company as enlarged by the Placing Shares and the Warrant Shares. The exercise period of the Warrants is 12 months commencing from the date of issue of the Warrants.

The initial Subscription Price of HK$1.20 per Warrant Share represents:

(i) a discount of approximately 14.29% to the closing price of HK$1.40 per Share as quoted on the Stock Exchange on the Last Trading Day;
(ii) a premium of approximately 4.90% to the average closing price of approximately HK$1.144 per Share as quoted on the Stock Exchange for the last five consecutive trading days up to and including the Last Trading Day;
(iii) a premium of approximately 9.29% to the average closing price of approximately HK$1.098 per Share as quoted on the Stock Exchange for the last ten consecutive trading days up to and including the Last Trading Day; and
(iv) a discount of approximately 52.00% to the closing price of HK$2.50 per Share as quoted on the Stock Exchange on the Latest Practicable Date.

For the purpose of comparison, we set out below selected key figures from 8 warrant issues announced by listed issuers in Hong Kong (the “Warrant Comparables”) during the one month period ended on 7 September 2007 (being the date of the Placing Agreement). The Warrant Comparables were identified through a search on the website of the Stock Exchange and the Warrant Comparables include all of the warrant issues identified by us in the search.

– 54 –

LETTER OF ADVICE FROM INDEPENDENT FINANCIAL ADVISERS

			Approximate
			premium/(discount)	Approximate
			of aggregate	premium/(discount)
			issue price and	of aggregate
		Approximate	subscription price	issue price
		price	to closing price per	and subscription
Name of		to earning	share prior to	price to net	Length of
listed company	Date of	ratio	the release of the	assets per share	subscription
(stock code)	announcement	(note 1)	announcement	(note 2)	period
		times	%	%	Year
The Company	14 September 2007	14.81	(14.29)	96.72	1
South China Financial	4 September 2007	32.94	1.20	128.73	1
Holdings Limited (619)
China Solar Energy	3 September 2007	n/a	2.59	559.52	2
Holdings Limited (155)
HKC (Holdings) Limited	29 August 2007	9.53	(19.90)	188.73	2
(190)
Union Bridge Holdings	27 August 2007	n/a	11.11	562.65	2.5
Limited (now Palmpay
China (Holdings)
Limited) (8047)
China Agrotech	20 August 2007	7.05	7.29	18.39	2
Holdings Limited
(1073)
Garron International	17 August 2007	n/a	14.29	280.95	3
Limited (1226)
Hua Lien International	14 August 2007	n/a	6.78	(19.23)	4
(Holding) Company
Limited (969)
New Smart Energy	9 August 2007	n/a	45.16	525.00	5
Group Limited (91)
	Mean of the Warrant
	Comparables:	16.51	8.57	280.59	2.69

Source: http://www.hkex.com.hk/

Notes: 1. The historic price to earning ratio was calculated based on the Warrant Comparable’s aggregate issue price and subscription price per share and the basic earnings per share as stated in the latest annual report. Where n/a is stated, the Warrant Comparable has made a net loss in the latest financial year reported on.

The net asset value per share was calculated based on figures derived from the financial statements for the prior financial year.

– 55 –

LETTER OF ADVICE FROM INDEPENDENT FINANCIAL ADVISERS

As demonstrated in the table above, the price to earning ratio of the Warrant Comparables ranged from a low of 7.05 times to a high of 32.94 times with the average being 16.51 times. Furthermore, the variance of the aggregate issue price and subscription price of the Warrant Comparables to the closing price per share prior to the release of the announcement ranged from a discount of around 19.90% to premium of around 45.16%, with the average being a premium of around 8.57%. In addition, the variance of the aggregate issue price and subscription price of the Warrant Comparables ranged from a discount of around 19.23% to a premium of 562.65% with the average figure being a premium of 280.59%. We also note that the length of subscription period of the Warrant Comparables range from 1 year to 5 years. Generally speaking, the issue price of a warrant should be somewhat linked to the length of subscription period of that particular warrant. However, there is no generally accepted rule for the determination of the subscription period of a warrant and it is normally determined through negotiations between the parties involved. We note that subscription period of the Warrants of 1 year is within the range of the Warrant Comparables demonstrated above. We have not based our conclusion as to the fairness and reasonableness of the Warrant Issue on the price to earning ratio and variance of the aggregate issue price and subscription price to the net asset value per share of the Warrant Comparables because of (i) the lack in the number of meaningful Warrant Comparables for the price to earning ratio and (ii) the high degree of inconsistency amongst the sample data for the variance of the aggregate issue price and subscription price to the net asset value per share of the Warrant Comparables (for instance, the highest premium is around 30 times larger than the smallest premium in the sample).

– 56 –

LETTER OF ADVICE FROM INDEPENDENT FINANCIAL ADVISERS

2.5 Dilution on shareholding of the existing Independent Shareholders

We set out below a table depicting the Company’s shareholding structure (i) as at the Latest Practicable Date; (ii) immediately after completion of the Placing upon which the Placing Shares were fully subscribed for by the Placees; and (iii) immediately upon the full exercise of the subscription rights attaching to the Warrants by the Placees (assuming no other change to the issued share capital of the Company):

Name of Shareholder Concert Parties Placing Agent OPFSGL Connected Placees Sub-total of Placing agent and its Concert Parties) Existing Independent Shareholders Xiao Wei Wang Wencang Other public Shareholders Sub-total of existing Independent Shareholders Independent Placees Grand total	Existing shareholding as at the Latest Practicable Date Shares % – – 29,800,000 29.80 – – 29,800,000 29.80 16,796,000 16.80 14,096,000 14.10 39,308,000 39.30 70,200,000 70.20 – – 100,000,000 100.00	Assuming completion of the Placing Agreement and the Placing Shares were fully subscribed for by the Placees Shares % – – 29,800,000 4.26 330,000,000 47.14 359,800,000 51.40 16,796,000 2.40 14,096,000 2.01 39,308,000 5.62 70,200,000 10.03 270,000,000 38.57 700,000,000 100.00	Assuming completion of the Placing Agreement and the Warrants have been exercised in full by the Placees Shares % – – 29,800,000 3.64 396,000,000 48.29 425,800,000 51.93 16,796,000 2.05 14,096,000 1.72 39,308,000 4.79 70,200,000 8.56 324,000,000 39.51 820,000,000 100.00	Assuming completion of the Placing Agreement and the Warrants have been exercised in full by the Placees Shares % – – 29,800,000 3.64 396,000,000 48.29 425,800,000 51.93 16,796,000 2.05 14,096,000 1.72 39,308,000 4.79 70,200,000 8.56 324,000,000 39.51 820,000,000 100.00
				51.93 2.05 1.72 4.79
				8.56 39.51
				100.00

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LETTER OF ADVICE FROM INDEPENDENT FINANCIAL ADVISERS

The shareholding information presented above is extracted from the shareholding structure of the Company as set out in the sub-section headed “Impact on the shareholding structure of the Company” in the Board Letter. We note the dilution effect of the Placing and the Warrant Issue on the shareholding of the existing Independent Shareholders and have therefore rearranged the figures to demonstrate that effect and have excluded certain scenarios that may or may not materialize. Please refer to the relevant subsection in the Board Letter for further information on the impact on the shareholding structure of the Company.

The existing Independent Shareholders held an aggregate of 70,200,000 Shares, representing approximately 70.20% of the Company’s issued share capital as at the Latest Practicable Date. As demonstrated above, the shareholding of the existing Independent Shareholders would decrease to approximately 10.03% upon the completion of the Placing Agreement, representing a dilution of roughly 85.71%. In the event that the Warrants have been fully exercised by the Placees, the shareholding of the existing Independent Shareholders would further decrease to approximately 8.56%, representing a dilution of around 87.81%.

Based on the Company’s audited net assets of around HK$61,240,000 as at 31 March 2007 and 100,000,000 Shares in issue as at the Latest Practicable Date, the net assets per Share is approximately HK$0.61. Based on information provided by the Company, the Company’s net assets per Share is expected to increase to around HK$1.09 after taking into account the estimated net proceeds of around HK$700 million, representing an approximately 78.69% increase. If the net proceeds of around HK$144 million from the full exercise of the Warrants is taken into account, the Company’s net assets per Share is expected to further increase to around HK$1.10 according to information provided by the Company. We consider the significant increase in the net assets per Share following the completion of the Placing to be favorable to the existing Independent Shareholders as their respective entitlement to the Company’s net assets would increase without having to make any financial contribution to the Company at all. With a much higher net asset per Share, earnings per Share is expected to increase on the assumption that the Company can maintain the rate of return it makes from its investments.

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LETTER OF ADVICE FROM INDEPENDENT FINANCIAL ADVISERS

The Company is an investment company listed on the Stock Exchange pursuant to Chapter 21 of the Listing Rules. It has great similarities to mutual funds where investors invest with a view to attain (i) income in terms of dividend paid and (ii) capital gain which is tied to their entitlement to the net asset value per share/unit of the investment fund held. Accordingly, investors in a mutual fund are generally not concerned with their percentage shareholding in that particular mutual fund. For instance, in an open-end mutual fund, additional units of the fund are created and sold at the prevailing net assets per unit as investors wish to buy more units. Under such a scenario, the number of shares/units held by existing investors as a percentage of all units in issue would be diluted but their interests will not be affected at all as the net assets per unit is maintained. Based on the aforesaid, we believe that a dilution in the percentage shareholding of an investment fund should not necessarily jeopardize the investment interests of the investors as long as (i) the fund can maintain its ability to generate return for its investors and (ii) the net assets per unit is maintained at or above the level before the event leading to the dilution. By the same token and having taken into account the significant increase in the net asset value per Share following the Placing and where applicable, full exercise of the Warrants, we consider that the significant dilution of the shareholding of the existing Independent Shareholders as a result of the Placing and the Warrant Issue does not carry any detrimental disadvantage to the Independent Shareholders.

2.6 Conclusion with regard to the Placing and Warrant Issue

Having considered the above principal factors and in particular:

(i) the reasons for the Placing as discussed in section 2.1 of this letter;
(ii) the Placing, out of all of the financing alternatives discussed in section 2.2 of this letter, offers the optimal balance in terms of (i) amount of net proceeds raised; (ii) timing; (iii) expenses borne by the Company; (iv) requirement for the repayment of outstanding principal; (v) certainty as to the outcome; and (vi) financial burden on the Independent Shareholders;
(iii) as stated in section 2.3.1 of this letter, the closing price of the Shares have always been at prices that were below the Placing Price of HK$1.20 per Share during the year ended 16 October 2007 except for (i) in respect of the period prior to the date of the Placing Agreement, 3 trading days on 31 July 2007, 1 August 2007 and the Last Trading Day and (ii) in respect of the period after the date of the Placing Agreement, 20 trading days immediately following the resumption of trading in the Shares on 17 September 2007;

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LETTER OF ADVICE FROM INDEPENDENT FINANCIAL ADVISERS

(iv) the discount of the Placing Price to the closing price per Share on the Last Trading Day of around 14.29% is (i) within the range of the corresponding discount of the Placing Comparables which ranged from 1.79% to 36.84%, indicating the terms of the Placing Agreement are within the market norm; and (ii) approximately 13.68% higher than the corresponding average discount of around 12.57% of the Placing Comparables;
(v) the premium of the Placing Price to the average closing price per Share during the 5 trading days up to and including the Last Trading Day of around 4.90% compares favorably with the corresponding discount of the Placing Comparables which ranged from around 1.69% to 40.84%, indicating the terms of the Placing Agreement are no worse than the market norm, with the corresponding average discount being around 13.26%;
(vi) the placing commission under the Placing Agreement of 2.5% is (i) within the range of the underwriting/placing commission of the Placing Comparables which ranged from 0.5% to 3.0%, indicating the terms of the Placing Agreement are within the market norm; and (ii) around 6.38% higher than the average underwriting/placing commission of around 2.35% of the Placing Comparables;
(vii) the discount of the initial Subscription Price of the Warrants to the closing price per Share on the Last Trading Day of around 14.29% does not comparable favorably to the corresponding variance of the Warrant Comparables which ranged from a discount of around 19.90% to a premium of around 45.16%, with the average being a premium of around 8.57%;
(viii) the principal terms of the Placing and Warrant Issue available to the Connected Placee (except the number of Placing Shares and Warrants) are the identical to those available to the other Placees (which are expected to be Independent Third Parties), indicating that the terms available to the Connected Placee are no more favorable than those available to Independent Third Parties;
(ix) upon the completion of the Placing Agreement, the Company’s net assets per Share is expected to increase to HK$1.09, representing increase of around 78.69%; and

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LETTER OF ADVICE FROM INDEPENDENT FINANCIAL ADVISERS

(x) the dilution of the shareholding of the existing Independent Shareholders as a result of the Placing and the Warrant Issue will not necessarily jeopardize the interests of the Independent Shareholders as a whole as discussed in section 2.5 of this letter,

we consider that, as a whole, the terms of the Placing and the Warrant Issue and in particular (i) the Placing Price of HK$1.20 per Placing Share payable by the Connected Placee to the Company, (ii) the placing commission of 2.5% payable by the Company to the Placing Agent and (iii) initial Subscription Price of HK$1.20 per Warrant Share payable by the Connected Placee to the Company upon the exercise of the Warrants held by it, to be fair and reasonable. Furthermore, we consider that the terms of the Placing and the Warrants are under normal commercial terms and the Placing and the Warrants are in the interest of the Shareholders.

3. The Whitewash Waiver

As stated in the Board Letter, the Placing is fully-underwritten by the Placing Agent. The Placing Agent is a wholly-owned subsidiary of OPFSGL, which is a substantial Shareholder. As at the Latest Practicable Date, OPFSGL was interested in 29,800,000 Shares, representing about 29.8% of the issued share capital of the Company. In addition, the Connected Placee and the Placing Agent are Concert Parties in respect of the Company.

As at the Latest Practicable Date, save for the 29,800,000 Shares beneficially owned by OPFSGL, none of the Placing Agent and its Concert Parties has any interest in the securities of the Company.

As stated in the sub-section headed “Impact on the shareholding structure of the Company” in the Board Letter, if the Connected Placee takes up 330 million Shares under the Placing Agreement or the Placing Agent is obliged to take up any Shares in performance of its obligation under the Placing Agreement, the Connected Placee and its Concert Parties (including OPFSGL and the Placing Agent) will hold 30% or more of the voting rights of the Company. In either case, unless the Whitewash Waiver is granted, the Placing Agent and its Concert Parties (including OPFSGL and, if applicable, the Connected Placee) would incur an obligation, upon completion of the Placing Agreement to make a mandatory general offer for all the securities of the Company not already owned or acquired by the Placing Agent and its Concert Parties as a result of the issue of the Placing Shares under Note 1 to Dispensations from Rule 26 of the Takeovers Code.

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LETTER OF ADVICE FROM INDEPENDENT FINANCIAL ADVISERS

The Executive has indicated that it will agree, subject to the approval by the Independent Shareholders at the First EGM by way of poll, to waive the Connected Placee, the Placing Agent and their Concert Parties (including OPFSGL) from any obligation to make a general offer for all the Shares under Rule 26 of the Takeovers Code as a result of the completion of the Placing Agreement.

The Placing Agent is a wholly-owned subsidiary of OPFSGL, which is a substantial Shareholder and a connected person of the Company. OPFSGL, its associates and Concert Parties (including the Connected Placee and the Placing Agent) and those who are interested or involved in the Placing and all transactions contemplated thereunder (including the Whitewash Waiver) will abstain from voting on the resolutions to be proposed at the First EGM to approve, among others, the Placing and all transactions contemplated thereunder (including the Whitewash Waiver). The Placing Agent and its Concert Parties (including OPFSGL and the Connected Placees) have confirmed that they have not acquired any voting rights in the Company in the six-month period prior to the date of the Placing Agreement.

In recommending the Whitewash Waiver, we have considered:

(i) on the basis of the factors discussed in section 2.2 of this letter, the Placing is the best means to raise funds under the current market condition;
(ii) as discussed in section 2.2.1 of this letter, the Company has gearing restriction whereby it can only borrow up to an aggregate principal amount representing not more than 50% of Company’s net asset value at the time the borrowing is made unless shareholders’ approval at general meeting is obtained and the Placing is the most usual and acceptable means to raise further capital which is necessary for future growth of the Company;

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LETTER OF ADVICE FROM INDEPENDENT FINANCIAL ADVISERS

(iii) in our discussion with the representatives of OPFSGL, it has indicated that it currently does not have the intention to implement any material change to the management of the Company say, by instituting a material change in the composition of the board of Directors, and/or replacing the existing investment manager by a new one. We also note that the Company has proposed, subject to the Independent Shareholders’ approval at the First EGM, to enter into a new investment management agreement with the existing investment manager for the period from 1 April 2008 to 31 March 2011 as a continuation of the existing investment agreement to be expired on 31 March 2008;
(iv) investors/unit holders of funds look to enhancement of net asset value for their investments; and
(v) the potential positive financial effects (on net asset value, earnings per Share, gearing and liquidity) as discussed in section 5 of this letter) of the Placing.

Having considered the above and in conjunction with the principal features of the Placing as discussed in section 2 of this letter and in particular the significant increase of the net assets per Share following the Placing by around 78.69%, we consider that the terms of the Placing are fair and reasonable to the Independent Shareholders. Accordingly, we consider that the approval of the Whitewash Waiver by the Independent Shareholders, which is a condition precedent to the Placing Agreement, is in the interest of the Company and the Shareholders as a whole as it would allow the Placing and Warrant Issue to proceed as proposed.

Upon completion of the Placing Agreement and the Placing Shares are fully subscribed by the Placees, the aggregate holding of voting rights of the Connected Placee, OPFGSL and their Concert Parties (including the Placing Agent) will exceed 50% of the voting rights of the Company. For so long as the Connected Placee, OPFGSL and their Concert Parties (including the Placing Agent) hold an aggregate of more than 50% of the voting rights of the Company, the Connected Placee, OPFGSL and their Concert Parties (including the Placing Agent) may increase their aggregate holdings of voting rights of the Company without incurring any further obligation under Rule 26 of the Takeovers Code to make general offer.

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LETTER OF ADVICE FROM INDEPENDENT FINANCIAL ADVISERS

4. The New Investment Management Agreement

4.1 Background information

The Company proposed, subject to the Independent Shareholders’ approval at the First EGM, to enter into the New Investment Management Agreement with the Investment Manager in relation to the appointment of the Investment Manager immediately following the expiration of the terms of the Existing Investment Management Agreement to ensure continuity in the provision of the investment management and administrative services to the Company.

The Investment Manager is regarded as a connected person of the Company by virtue of Rule 21.13 of the Listing Rules. In addition, the Investment Manager is a wholly owned subsidiary of OPFSGL, which is a substantial Shareholder. The transactions contemplated under the New Investment Management Agreement constitute continuing connected transactions for the Company.

The relevant Percentage Ratio for the transactions contemplated under the New Investment Management Agreement is more than 25%. The Continuing Connected Transactions are non-exempt continuing connected transactions under Rule 14A.14 of the Listing Rules and are subject to the reporting, announcement and Independent Shareholder’s approval as well as the annual review requirements.

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LETTER OF ADVICE FROM INDEPENDENT FINANCIAL ADVISERS

4.2 Reasons for entering into the New Investment Management Agreement

The Investment Manager is a licensed corporation to carry out regulated activities of dealings in securities, advising on corporate finance and asset management under the SFO. The Investment Manager has been appointed to act as the investment manager of the Company since the Listing Date. The transactions contemplated under the New Investment Management Agreement will continue to be conducted in the ordinary and usual course of business of the Company.

It is stated in the Board Letter that the Directors consider that:

(a) the terms and conditions of the New Investment Management Agreement were negotiated between the parties to it on an arm’s length basis and are normal commercial terms that are fair and reasonable;
(b) the Annual Caps are fair and reasonable; and
(c) the transactions contemplated under the New Investment Management Agreement are in the ordinary and usual course of business of the Company and in the interest of the Company and the Shareholders.

4.3 Terms of the New Investment Management Agreement

The terms of the Existing Investment Management Agreement and the New Investment Management Agreement are substantially the same in all material respects except for the time period covered.

Duration

From 1 April 2008 to 31 March 2011

Services

The Investment Manager shall provide investment management and administrative services to the Company under the New Investment Management Agreement

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LETTER OF ADVICE FROM INDEPENDENT FINANCIAL ADVISERS

Management and performance fees

Under the New Investment Management Agreement, the Investment manager will be entitled to:

(a) a monthly investment management fee at 1.5% per annum of the Net Asset Value; and
(b) a performance fee which shall be 10% of the appreciation of the Net Asset Value per Share.

Please refer to the sub-section headed “Continuing connected transactions – New Investment Management Agreement” for further details regarding the calculation of the management and performance fees.

For the purpose of comparison, we have identified 10 companies listed on the Stock Exchange (the “IM Comparables”) which, according to our best knowledge and belief, appear to be companies listed pursuant to Chapter 21 of the Listing Rules whose investment management fees (and where applicable, performance fee) are calculated based on a fixed percentage to the net asset value of the IM Comparables. In our research, we have also identified 11 other companies (the “Excluded Companies”) which, according to our best knowledge and belief, appear to be companies listed pursuant to Chapter 21 of the Listing Rules. The investment management fees of the Excluded Companies are either (i) in a fixed monetary amount or (ii) unknown to us following our research. The Excluded Companies are excluded from the comparative analysis as the basis of calculation for the investment management fee with the Excluded Companies are not directly comparable with those under the New Investment Management Agreement or unknown to us.

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LETTER OF ADVICE FROM INDEPENDENT FINANCIAL ADVISERS

			Investment	Performance fee
Name of listed			management	as percentage to
company		fee as percentage		increase in net
(stock code)	Source of information	to net asset value		asset value
			%	%
The Company	Board Letter		1.50	10
Garron International	Announcement dated		2.00	10
Limited (1226)	16 June 2005
Golden 21 Investment	Annual report for		2.50	15
Holdings Limited	the year ended
(2312)	31 December 2006
Apex Capital Limited,	Announcement dated		1.50	n/a
formerly Haywood	24 May 2005
Investments Limited
(905)
Incutech Investments	Announcement dated		1.50	n/a
Limited (356)	3 June 2005
Prime Investments	Annual Report		2.50	n/a
Holdings Limited	for the year ended			(note 1)
(721)	30 June 2006
Prosperity Investment	Announcement dated		0.75	n/a
Holdings Limited	27 April 2006
(310)
Shanghai International	Announcement dated		2.00	n/a
Shanghai Growth	11 April 2005			(note 2)
Investment Limited
(770)
Sino Technology	Announcement dated		0.25	n/a
Investments	23 June 2003			(note 3)
Company Limited
(1217)
UBA Investments	Announcement dated		1.50	n/a
Limited (768)	31 March 2003
Yu Ming Investments	Annual report		1.50	n/a
Limited (666)	for the year ended			(note 4)
	31 December 2006
	Mean of the IM Comparables:		1.60	12.50

Source: http://www.hkex.com.hk/

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LETTER OF ADVICE FROM INDEPENDENT FINANCIAL ADVISERS

Notes: 1.

The performance fee for this company is based on 10% of the surplus in net asset value which the surplus in the net asset value should be greater than HK$30,000,000, and is considered to be not directly comparable to the performance fee under the New Investment Management Agreement.

The performance fee for this company is based on 15% of the amount by which the net asset at the end of each accounting period which exceeds 115% of the net asset value for the immediately preceding accounting period, and is considered to be not directly comparable to the performance fee under the New Investment Management Agreement.
The performance fee for this company is based on 10% of the audited profit before tax of each financial year, and is considered to be not directly comparable to the performance fee under the New Investment Management Agreement.
The performance fee for this company is based on 20% of the audited consolidated profit before tax for each financial year which exceeds 6% of the average monthly net asset value for the financial year, and is considered to be not directly comparable to the performance fee under the New Investment Management Agreement.

As demonstrated above, the investment management fee of the IM Comparables ranged from 0.25% to 2.50% of the net asset value with an average figure of around 1.60%. The performance fee of the IM Comparables ranged from 10% to 15% with the average being around 12.50%. We note that investment management fee under the New Investment Management Agreement of 1.5% of the Net Asset Value is (i) within the range of the IM Comparables and (ii) below the average figure of around 1.60% of the IM Comparables. Furthermore, we note that the performance fee of 10% on the appreciation in the Net Asset Value is (i) within the range of the IM Comparables and (ii) below the average figure of around 12.50% of the IM Comparables.

On the above basis, we consider that the investment management fee and performance fee under the New Investment Management Agreement to be fair and reasonable to the Independent Shareholders.

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LETTER OF ADVICE FROM INDEPENDENT FINANCIAL ADVISERS

4.4 The proposed caps for the fees payable under the New Investment Management Agreement for the three years ending 31 March 2011

As illustrated in the Board Letter, the expected capped amounts of the fees payable to the Investment Manager under the New Investment Management Agreement for each of the three years ending 31 March 2011 are:

Year ending 31 March 2009 2010 2011 HK$60,000,000 HK$83,000,000 HK$115,000,000

We would like to draw the attention of the Independent Shareholders to the fact that the investment management fee and performance fee payable under the New Investment Management Agreement are calculated as a fixed percentage to, as the case may be, the Company’s net asset value or increase in net asset value. Because of that, neither the Company nor Investment Manager can directly predict precisely the amount of fees payable under the New Investment Management Agreement in any given year as the fees depend on the Company’s net asset value as at the relevant valuation dates.

It is stated in the Board Letter that the Annual Caps is determined by reference to the net asset value of the Company of HK$61,240,413 as at 31 March 2007 and an expected annual growth rate of the net asset value of the Company of approximately 40% (having regard to, among other factors, the performance of the stock markets of the Greater China region, historical growth trend of the gross domestic product of the PRC, the potential appreciation of RMB and the investment policy of the Company).

The Board Letter further states that the expected annual growth rate of 40% of the net asset value of the Company is arrived at by reference to the 5-year changes in the Hang Seng China Enterprises Index (“^HSCE”) of 488.30% (quoted from the January 2007 edition of “Hang Seng Indexes Monthly”, which represented an annual growth rate of approximately 37.35%.

Upon an inspection of the Company’s investment portfolio as at 20 September 2007, we note around 90.00% of the Company’s investee companies in terms of value appear to be either H-shares companies or red-chips traded on the Stock Exchange. As a substantial portion of the Company’s investments are in Hong Kong listed China related stocks, we consider the use of the historic growth of ^HSCE as an indicator of the Company’s growth in net asset value to be fair and reasonable.

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LETTER OF ADVICE FROM INDEPENDENT FINANCIAL ADVISERS

We set out the historical closing value of the ^HSCE from 30 November 2006 (being the oldest date for which relevant information is available on the source) to 17 October 2007 (being the date for which latest information is available on the source as at the Latest Practicable Date) below.

Hang Seng China Enterprise Index (^HSCE) – daily close

==> picture [296 x 181] intentionally omitted <==

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

25,000
20,000
15,000
10,000
5,000
0
Date
29/12/2006 31/01/200728/02/2007 30/03//200730/04/2007 31/05/200729/06/2007 31/07/2007 31/08/200728/09/2007
Index
----- End of picture text -----

Source: http://finance.yahoo.com/

As illustrated above, ^HSCE closed at 8,547 and 19,536 on 30 November 2006 and 17 October 2007 respectively. During the period within the aforesaid dates which is less than 1 calendar year, the ^HSCE has already increased by around 128.57%, indicating the ^HSCE had experienced growth at a fast pace in the recent past. As mentioned earlier, the Company has made reference to the average annual growth rate of ^HSCE of approximately 37.35% derived over a 5-year period when determining the expected annual growth rate of the net asset value of the Company of approximately 40%. Having considered the above, we consider that the adoption of the expected annual growth rate of the net asset value of the Company of approximately 40% to be prudent and fair and reasonable to the Independent Shareholders.

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LETTER OF ADVICE FROM INDEPENDENT FINANCIAL ADVISERS

In our review of the calculations provided by the management of the Company, we have learnt that the Annual Caps of HK$60,000,000, HK$83,000,000 and HK$115,000,000 were calculated based on the following facts/assumptions: (i) the Company’s audited net assets of around HK$61,240,000 as at 31 March 2007; (ii) the proceeds to be raised under the Placing and full exercise of the Warrants; (iii) the expected annual growth rate of the net asset value of the Company of approximately 40% mentioned above and (iv) the investment management fee and performance fee under the New Investment Management Agreement. Having reviewed the calculations provided by the Company, we find the calculations to determine the Annual Caps are mathematically correct.

Having taken the factors discussed in this section of the letter into consideration, we are of the opinion that the proposed Annual Caps for each of the three years ending 31 March 2009, 2010 and 2011 of HK$60,000,000, HK$83,000,000 and HK$115,000,000 respectively, which were calculated on the basis of the facts/ assumptions as stated in the preceding paragraph, to be fair and reasonable to the Independent Shareholders.

4.5 Revised annual cap for the year ending 31 March 2008 under the Existing Investment Management Agreement

It is stated in the Board Letter that the Original 2008 Annual Cap of HK$5,700,000 was approved at the 2006 EGM by the then Independent Shareholders. Nevertheless, given that the transactions contemplated under the Placing will invariably and substantially increase the Net Asset Value (on which the calculation of the investment management fee and the performance fee chargeable by the Investment Manager is based), the annual value of the continuing connected transactions contemplated under the Existing Investment Management Agreement for the year ending 31 March 2008 is expected to be increased and exceed the Original 2008 Annual Cap.

Assuming completion of the Placing, the Directors estimate that the revised maximum aggregate annual value for the continuing connected transactions under the Existing Investment Management Agreement for the year ending 31 March 2008 will not exceed the Revised 2008 Annual Cap of HK$32,000,000.

In our review of the calculations provided by the management of the Company, we note that the facts/assumptions adopted in the calculations in arriving the Revised 2008 Annual Cap of HK$32,000,000 are consistent with those adopted in the calculations for the Annual Caps. Accordingly, we consider the Revised 2008 Annual Cap of HK$32,000,000 to be fair and reasonable to the Independent Shareholders.

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LETTER OF ADVICE FROM INDEPENDENT FINANCIAL ADVISERS

5. Financial effects of the Transactions

5.1 Earnings

In the audited financial statements obtained from the Annual Report, the Company recorded an audited net profit of around HK$8,051,000 during the year ended 31 March 2007. As discussed in section 2.5 of this letter, the Company’s net assets per Share is expected to increase to HK$1.09 following the Placing, representing an approximately 78.69% increase. As the asset base of the Company is expected to experience a healthy growth as a result of the Placing, the Company’s earnings, on an aggregate basis or per Share basis, are expected to be enhanced on the assumption that the Company can maintain the same rate of return derived from investments made.

5.2 Net asset value

As stated in the Annual Report, the Company had audited net assets of around HK$61,240,000 as at 31 March 2007. As the Company is expected to raise net proceeds of around HK$700 million from the issue of the Placing Shares, its net asset value is expected to see a material upward adjustment.

5.3 Gearing

As per the Annual Report, the Company’s audited total equity was approximately HK$61,240,000 as at 31 March 2007. Furthermore, the Annual Report shows nil total debts, translating to a debt-to-equity ratio (total debts/total equity x 100%) of nil. Having considered that: (i) the Placing is expected to have a significant positive effect to the Company’s total equity; (ii) the Placing is not expected to have any material effect on the Company’s debt position; and (iii) the Company’s debt was nil as at 31 March 2007, the Placing is not expected to have any immediate material effect on the Company’s gearing position as it is expected to remain at nil following the completion of the Placing Agreement (save for any changes to the Company’s debt position outside of the scope of the Placing).

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LETTER OF ADVICE FROM INDEPENDENT FINANCIAL ADVISERS

5.4 Liquidity

As per the Annual Report, the Company had audited current assets and audited current liabilities of approximately HK$62,240,000 and HK$1,778,000 respectively as at 31 March 2007, translating into a current ratio (current assets/current liabilities) of approximately 35.01. We consider that a current ratio of 1 or above generally indicates that the company in question is in healthy financial condition as it indicates that the company’s current assets is supposed to be able to cover the obligations arising out of the current liabilities as they become due. With the inclusion of the estimated net proceeds of around HK$700 million into the Company’s current assets, the Placing is expected to significantly improve the Company’s liquidity further.

CONCLUSION

Having considered the above principal factors, we are of the opinion that the Transactions are on normal commercial terms, in the ordinary and usual course of business, fair and reasonable and in the interest of the Company and the Shareholders as a whole. Accordingly, we would recommend (1) the Independent Board Committee to advise the Independent Shareholders and (2) the Independent Shareholders, to vote in favor of the ordinary resolutions to approve the (i) the Placing; (ii) the Warrant Issue; (iii) the Whitewash Waiver; and (iv) the Continuing Connected Transaction at the First EGM.

Yours faithfully, Yours faithfully, For and on behalf of For and on behalf of Ample Capital Limited Asia Investment Management Limited H. W. Tang Alice Kan President Managing Director

– 73 –

APPENDIX I

FINANCIAL INFORMATION ON THE COMPANY

1. FINANCIAL SUMMARY

A summary of the audited financial results of the Company for each of the three financial years ended 31 March 2007 (the “ Relevant Periods ”), as extracted from the audited financial statements set out in the annual reports of the Company for each of the two years ended 31 March 2007, is set out below.

Turnover Profit/(Loss) before tax Income tax Profit/(Loss) for the year Final dividend proposed Basic earnings/(loss) per Share	Year ended 31 March 2007 2006 2005 HK$ HK$ HK$ 48,155,829 50,380,185 127,627,534 9,454,185 8,182,257 (5,438,724) (1,403,099) (307,090) 1,226 8,051,086 7,875,167 (5,437,498) 5,000,000 – – 8.1 cents 7.9 cents (5.4) cents

Notes:

The reports of the auditors in respect of the Company’s audited financial statements for the three years ended 31 March 2005, 2006 and 2007 did not contain any qualification.
The following is extracted from a note to the audited financial statements of the Company for the year ended 31 March 2006;

“In year 2006, the Company has adopted all the new and revised Hong Kong Financial Reporting Standards (“HKFRSs”) issued by the Hong Kong Institute of Certified Public Accountants (“HKICPA”) that are relevant to its operations and effective for accounting periods beginning on or after 1 January 2005. The adoption of these new and revised HKFRSs did not result in substantial changes to the Company’s accounting policies and amounts reported for the current year and prior years excepted as stated below.

Financial instruments

The adoption of Hong Kong Accounting Standard (“HKAS”) 32 “Financial Instruments: Disclosure and Presentation” and HKAS 39 “Financial Instruments: Recognition and Measurement” has resulted in a change in the accounting policy relating to the classification of financial assets at fair value through profit or loss and available-for-sale financial assets. HKAS 39 does not permit to recognise, derecognise and measure financial assets and liabilities in accordance with this standard on a retrospective basis.

– I-1 –

APPENDIX I

FINANCIAL INFORMATION ON THE COMPANY

The Company applied the benchmark treatment of the previous Statement of Standard Accounting Practice 24 “Accounting for Investments in Securities” to investments in equity securities for the 2005 comparative information. The Company’s investments in equity securities are classified as investment securities or other investments. Investment securities are carried at cost less any impairment losses while other investments are measured at fair value, with unrealised gains or losses included in the income statement.

From 1 April 2005 onwards, the Company classifies and measures its investments in equity securities in accordance with HKAS 39. Investments in equity securities are classified as either financial assets at fair value through profit or loss or available-for-sale financial assets and are measured at subsequent reporting dates at fair value, except for certain investments in unlisted equity securities which are carried at cost less any impairment losses when there are absence of quoted market prices in an active market and whose fair value cannot be reliably measured. The Company has applied the transitional rules in HKAS 39. At 1 April 2005, the Company reclassified its investment securities with a carrying amount of HK$778,000 to available-for-sale financial assets and its other investments with a carrying amount of HK$18,087,200 to financial assets at fair value through profit or loss. The adoption of the requirements of HKAS 39 in respect of equity investments has had no material effect on the Company’s results for the current or prior accounting periods.

The Company has not applied the new HKFRSs that have been issued but are not yet effective. The Company is in the process of making an assessment of what the impact of the new HKFRSs is expected to be in the period of initial application but it is not yet in a position to ascertain how the new HKFRSs may affect the preparation and presentation of the results of operations and financial position of the Company.”

The calculation of basic earnings per share is based on the Company’s profit/(loss) for each of the three years ended 31 March 2005, 2006 and 2007 of HK$(5,437,498), HK$7,875,167 and HK$8,051,086 respectively and the weighted average number of ordinary shares of 100,000,000 in issue during the Relevant Periods.

There were no dilutive potential shares during the Relevant Periods. Accordingly, no diluted earnings per share has been presented.

There was no exceptional or extraordinary items during the Relevant Periods.
There was no minority interest during the Relevant Periods.
The Company paid a final dividend of HK$ 0.05 per Share for the year ended 31 March 2007. No dividend was paid or declared by the Company for each of the two years ended 31 March 2005 and 2006.

– I-2 –

FINANCIAL INFORMATION ON THE COMPANY

APPENDIX I

3. AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2007

Set out below are the unqualified audited financial statements of the Company for the year ended 31 March 2007, which are extracted from the annual report of the Company for the year ended 31 March 2007.

INCOME STATEMENT

For the year ended 31 March 2007

Note Turnover 6 Cost of financial assets at fair value through profit or loss Gross profit Other income – interest income Net unrealised gain on financial assets at fair value through profit or loss 15 Administrative expenses Profit before tax Income tax 8 Profit for the year 9 Final dividend proposed 10 Basic earnings per share 11	2007 HK$ 48,155,829 (42,603,063) 5,552,766 1,019,556 6,764,348 (3,882,485) 9,454,185 (1,403,099) 8,051,086 5,000,000 8.1 cents	2006 HK$ 50,380,185 (40,159,889) 10,220,296 430,828 786,463 (3,255,330) 8,182,257 (307,090) 7,875,167 – 7.9 cents

– I-3 –

FINANCIAL INFORMATION ON THE COMPANY

APPENDIX I

BALANCE SHEET

At 31 March 2007

Note Non-current assets Property, plant and equipment 13 Available-for-sale financial assets 14 Current assets Financial assets at fair value through profit or loss 15 Prepayments and other receivables Bank balances Current liabilities Accrued charges Tax payable Net current assets Total assets less current liabilities Non-current liabilities Deferred tax 16 NET ASSETS Capital and reserves Share capital 17 Reserves 19 Final dividend proposed Others TOTAL EQUITY Net asset value per share 20	2007 HK$ – 778,000 778,000 31,524,670 138,498 30,577,667 62,240,835 1,345,353 433,069 1,778,422 60,462,413 61,240,413 – 61,240,413 10,000,000 5,000,000 46,240,413 61,240,413 0.61	2006 HK$ 7,077 778,000
		785,077
		18,579,025 114,382 34,768,451
		53,461,858
		748,433 308,340
		1,056,773
		52,405,085
		53,190,162 835
		53,189,327

		10,000,000 – 43,189,327
		53,189,327

		0.53

– I-4 –

FINANCIAL INFORMATION ON THE COMPANY

APPENDIX I

STATEMENT OF CHANGES IN EQUITY

For the year ended 31 March 2007

Note At 1 April 2005 Profit for the year At 31 March 2006 Profit for the year 2007 final dividend proposed 10 At 31 March 2007	Share capital HK$ 10,000,000 – 10,000,000 – – 10,000,000		Reserves	Final dividend proposed HK$ – – – – 5,000,000 5,000,000	Total HK$ 45,314,160 7,875,167
			(Accumulated losses)/ Share Retained premium profits HK$ HK$ 36,593,108 (1,278,948) – 7,875,167 36,593,108 6,596,219 – 8,051,086 – (5,000,000) 36,593,108 9,647,305
					53,189,327 8,051,086 –
					61,240,413

– I-5 –

APPENDIX I FINANCIAL INFORMATION ON THE COMPANY

CASH FLOW STATEMENT

For the year ended 31 March 2007

CASH FLOWS FROM OPERATING ACTIVITIES Profit before tax Adjustments for: Interest income Depreciation Net unrealised gain on financial assets at fair value through profit or loss Operating profit before working capital changes (Increase)/Decrease in financial assets at fair value through profit or loss (Increase)/Decrease in prepayments and other receivables Increase in accrued charges Decrease in amount due to a broker Cash (used in)/generated from operations Income tax paid Net cash (used in)/generated from operating activities CASH FLOWS FROM INVESTING ACTIVITIES Interest received Net cash generated from investing activities NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS AT BEGINNING OF THE YEAR CASH AND CASH EQUIVALENTS AT END OF THE YEAR ANALYSIS OF THE BALANCES OF CASH AND CASH EQUIVALENTS Bank balances	2007 HK$ 9,454,185 (1,019,556) 7,077 (6,764,348) 1,677,358 (6,181,297) (3,140) 596,920 – (3,910,159) (1,279,205) (5,189,364) 998,580 998,580 (4,190,784) 34,768,451 30,577,667 30,577,667	2006 HK$ 8,182,257 (430,828) 7,720 (786,463) 6,972,686 294,638 11,785 514,212 (1,894,930) 5,898,391 (598,321) 5,300,070 430,828 430,828 5,730,898 29,037,553 34,768,451 34,768,451

– I-6 –

APPENDIX I FINANCIAL INFORMATION ON THE COMPANY

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 31 March 2007

1 General information

The Company was incorporated in the Cayman Islands as an exempted company with limited liability under the Companies Law of the Cayman Islands. The address of its registered office is P.O. Box 309GT, Ugland House, South Church Street, George Town, Grand Cayman, Cayman Islands. The address of its principal place of business is 27/F, Two Exchange Square, 8 Connaught Place, Central, Hong Kong. The Company’s shares are listed on the Main Board of The Stock Exchange of Hong Kong Limited (the “Stock Exchange”).

The Company is an investment company and the investment objective of the Company is to achieve earnings in the form of medium to long-term (i.e. one to five years) capital appreciation mainly through investments in listed and unlisted companies in the Greater China.

2 Adoption of new and revised Hong Kong Financial Reporting Standards

In the current year, the Company has adopted all of the new and revised Hong Kong Financial Reporting Standards (“HKFRSs”) issued by the Hong Kong Institute of Certified Public Accountants that are relevant to its operations and effective for accounting periods beginning on or after 1 January 2006. HKFRSs comprise all applicable individual Hong Kong Financial Reporting Standards; Hong Kong Accounting Standards; and Interpretations. The adoption of these new and revised HKFRSs did not result in substantial changes to the Company’s accounting policies and amounts reported for the current year and prior years.

The Company has not applied the new HKFRSs that have been issued but are not yet effective. The application of these new HKFRSs will not have material impact on the financial statements of the Company.

3 Significant Accounting Policies

The financial statements have been prepared in accordance with HKFRSs, accounting principles generally accepted in Hong Kong and the applicable disclosures required by the Rules Governing the Listing of Securities on the Stock Exchange and by the Hong Kong Companies Ordinance.

The financial statements have been prepared under the historical cost convention, as modified by the revaluation of certain investments which are carried at their fair values.

– I-7 –

FINANCIAL INFORMATION ON THE COMPANY

APPENDIX I

The preparation of financial statements in conformity with HKFRSs requires the use of certain key assumptions and estimates. It also requires management to exercise its judgements in the process of applying the accounting policies. The areas involving critical judgements and areas where assumptions and estimates are significant to the financial statements are disclosed in note 4 to the financial statements.

The significant accounting policies applied in the preparation of the financial statements are set out below.

(a) Foreign currency translation

(i) Functional and presentation currency

Items included in the financial statements are measured using the currency of the primary economic environment in which the Company operates (the “functional currency”). The financial statements are presented in Hong Kong dollars, which is the Company’s functional and presentation currency.

(ii) Transactions and balances in financial statements

Transactions in foreign currencies are translated into the functional currency using the exchange rates prevailing on the transaction dates. Monetary assets and liabilities in foreign currencies are translated at the rates ruling on the balance sheet date. Profits and losses resulting from this translation policy are included in the income statement.

Translation differences on non-monetary items, such as equity instruments classified as financial assets at fair value through profit or loss, are reported as part of the fair value gain or loss. Translation differences on non-monetary items, such as equity instruments classified as available-for-sale financial assets, are included in the investment revaluation reserve in equity.

(b) Property, plant and equipment

Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses.

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. All other repairs and maintenance are expensed in the income statement during the period in which they are incurred.

– I-8 –

FINANCIAL INFORMATION ON THE COMPANY

APPENDIX I

Depreciation of property, plant and equipment is calculated at a rate sufficient to write off their cost over their estimated useful lives on a straight-line basis, as follows:

Computer equipment 25%

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

The gain or loss on disposal of property, plant and equipment is the difference between the net sales proceeds and the carrying amount of the relevant asset, and is recognised in the income statement.

(c) Operating leases

Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Lease payments (net of any incentive received from the lessor) are expensed in the income statement on a straightline basis over the period of the lease term.

(d) Investments

Investments are recognised and derecognised on a trade date basis where the purchase or sale of an investment is under a contract whose terms require delivery of the investment within the timeframe established by the market concerned, and are initially measured at fair value, plus directly attributable transaction costs except in the case of financial assets at fair value through profit or loss.

Investments are classified as either financial assets at fair value through profit or loss or available-for-sale financial assets.

(i) Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss are either investments held for trading or designated as at fair value through profit or loss upon initial recognition. These investments are subsequently measured at fair value. Gains or losses arising from changes in fair value of these investments are recognised in the income statement.

– I-9 –

FINANCIAL INFORMATION ON THE COMPANY

APPENDIX I

(ii) Available-for-sale financial assets

Available-for-sale financial assets are investments not classified as heldto-maturity investments or financial assets at fair value through profit or loss. Available-for-sale financial assets are subsequently measured at fair value. Gains or losses arising from changes in fair value of these investments are recognised directly in equity until the investments are disposed of or are determined to be impaired, at which time the cumulative gains or losses previously recognised in equity are recognised in the income statement. For available-for-sale equity investments that do not have quoted market price in an active market and whose fair value cannot be reliably measured are measured at cost less any impairment losses at each balance sheet date subsequent to initial recognition. Impairment losses recognised in the income statement for equity investments classified as available-for-sale financial assets are not subsequently reversed through the income statement.

(e) Cash and cash equivalents

For the purpose of the cash flow statement, cash and cash equivalents represent cash at bank and on hand, demand deposits with banks and other financial institutions, and short-term highly liquid investments which are readily convertible into known amounts of cash and subject to an insignificant risk of change in value. Bank overdrafts which are repayable on demand and form an integral part of the Company’s cash management are also included as a component of cash and cash equivalents.

(f) Financial liabilities and equity instruments

Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability and an equity instrument under HKFRSs. An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all of its liabilities. Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs.

– I-10 –

APPENDIX I

FINANCIAL INFORMATION ON THE COMPANY

(g) Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable and is recognised when it is probable that the economic benefits will flow to the Company and the amount of revenue can be measured reliably, on the following bases:

(i) Sale of financial assets at fair value through profit or loss is recognised on a trade date basis when a sale and purchase contract is entered into;
(ii) Dividend income is recognised when the shareholder’s right to receive payment is established; and
(iii) Interest income is recognised on a time-proportion basis using the effective interest method.

(h) Employee benefits

(i) Employee leave entitlements

Employee entitlements to annual leave and long service leave are recognised when they accrue to employees.

Employee entitlements to sick leave and maternity leave are not recognised until the time of leave.

(ii) Pension obligations

The Company contributes to a defined contribution retirement scheme which is available to all employees. Contributions to the scheme by the Company and employees are calculated as a percentage of employees’ basic salaries. The retirement benefit scheme cost charged to the income statement represents contributions payable by the Company to the funds.

(iii) Termination benefits

Termination benefits are recognised when, and only when, the Company demonstrably commits itself to terminate employment or to provide benefits as a result of voluntary redundancy by having a detailed formal plan which is without realistic possibility of withdrawal.

– I-11 –

APPENDIX I FINANCIAL INFORMATION ON THE COMPANY

(i) Taxation

Income tax represents the sum of the current tax and deferred tax.

The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as reported in the 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 Company’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 financial statements 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, unused tax losses or unused tax credits 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.

The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable 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 period when the liability is settled or the asset is realised, based on tax rates that have been enacted or substantively enacted by the balance sheet date. Deferred tax is charged or credited to the 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-12 –

APPENDIX I FINANCIAL INFORMATION ON THE COMPANY

(j) Related parties

A party is related to the Company if:

(i) directly or indirectly through one or more intermediaries, the party controls, is controlled by, or is under common control with, the Company; has an interest in the Company that gives it significant influence over the Company; or has joint control over the Company;
(ii) the party is an associate;
(iii) the party is a joint venture;
(iv) the party is a member of the key management personnel of the Company or its parent;
(v) the party is a close member of the family of any individual referred to in (i) or (iv);
(vi) the party is an entity that is controlled, jointly controlled or significantly influenced by or for which significant voting power in such entity resides with, directly or indirectly, any individual referred to in (iv) or (v); or
(vii) the party is a post-employment benefit plan for the benefit of employees of the Company, or of any entity that is a related party of the Company.

(k) Provisions and contingent liabilities

Provisions are recognised for liabilities of uncertain timing or amount when the Company has a present legal or constructive obligation arising as a result of a past event, it is probable that an outflow of economic benefits will be required to settle the obligation and a reliable estimate can be made. Where the time value of money is material, provisions are stated at the present value of the expenditures expected to settle the obligation.

Where it is not probable that an outflow of economic benefits will be required, or the amount cannot be estimated reliably, the obligation is disclosed as a contingent liability, unless the probability of outflow is remote. Possible obligations, whose existence will only be confirmed by the occurrence or non-occurrence of one or more future events, are also disclosed as contingent liabilities unless the probability of outflow is remote.

– I-13 –

APPENDIX I FINANCIAL INFORMATION ON THE COMPANY

4 Critical judgements and key estimates

Judgements and estimates are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The key assumptions concerning the future, and other key sources of estimation uncertainty at the balance sheet date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are discussed below.

Estimation of fair value of financial assets at fair value through profit or loss

In the absence of quoted market price in an active market, the directors estimate the fair value of the Company’s investment in China Data Broadcasting Holdings Limited (“CHINA DATA”), details of which are set out in note 15 to the financial statements, by considering information from a variety of sources, including the latest published financial information, the historical data on market volatility as well as the price and industry and sector performance of CHINA DATA.

5 Financial risk management

The Company’s activities expose it to a variety of financial risks: market risk, credit risk and liquidity risk. The board of directors (the “Board”) meets periodically to analyse and formulate strategies to manage the Company’s exposure to market risk. The Company’s exposure to market risk is kept to a minimum. The Company has not used any derivatives or other instruments for hedging purpose.

The significant financial risks to which the Company is exposed to are described below.

(a) Market risk

(i) Foreign currency risk

The Company has no significant foreign currency risk due to limited foreign currency transactions.

– I-14 –

FINANCIAL INFORMATION ON THE COMPANY

APPENDIX I

(ii) Interest rate risk

The Company is exposed to cash flow interest rate risk through the impact of rate changes on interest bearing financial assets which are mainly short term bank deposits. Since the bank deposits are all short term in nature, any future variations in interest rates will not have a significant impact on the results of the Company.

(iii) Price risk

The Company is exposed to equity security price risk through its investments in equity securities. The Board manages this exposure by maintaining a portfolio of investments with different risk profiles.

(b) Credit risk

The Company’s maximum exposure to credit risk in the event of the counterparties failure to perform their obligations at the balance sheet date in relation to each class of recognised financial assets is the carrying amount of these assets as stated in the balance sheet. The Company’s credit risk is limited because the counterparties are banks with high credit-ratings assigned by international creditrating agencies.

(c) Liquidity risk

Liquidity risk is the risk that the Company cannot meet its current obligations as they fall due. The Company’s liquidity risk is minimal and is managed by matching the settlement of trading in securities. For the management of the Company’s liquidity risk, the Company monitors and maintains a sufficient level of cash and cash equivalents adequate to finance the Company’s operations and mitigate the effects of fluctuation in cash flows. The directors review and monitor its working capital requirements regularly.

– I-15 –

FINANCIAL INFORMATION ON THE COMPANY

APPENDIX I

(d) Fair values

The fair values of the Company’s financial assets and liabilities are not materially different from their carrying amounts.

The fair values of financial assets traded in active markets such as listed equity investments, included in financial assets at fair value through profit or loss, are based on quoted market prices at the balance sheet date. The quoted market price for financial assets held by the Company usually is the current bid price.

At 31 March 2007, unlisted equity investments included in available-for-sale financial assets, are stated at cost less any impairment losses. The directors considered that the carrying amount of such assets would not materially different from their fair values.

6 Turnover

The Company is principally engaged in medium to long-term investments in listed and unlisted securities in the Greater China. An analysis of the Company’s turnover is as follows:

Proceeds from sale of financial assets at fair value through profit or loss Dividend income from listed investments	2007 HK$ 47,737,069 418,760 48,155,829	2006 HK$ 50,018,690 361,495
		50,380,185

7 Segment information

No segment information is presented as all of the turnover, contribution to operating results, assets and liabilities of the Company are attributable to investment activities which are carried out or originated principally in Hong Kong.

– I-16 –

APPENDIX I

FINANCIAL INFORMATION ON THE COMPANY

8 Income tax

Current – Hong Kong Profits Tax Provision for the year Over-provision in previous year Deferred tax_(Note 16)_ Income tax	2007 HK$ 1,403,935 (1) (835) 1,403,099	2006 HK$ 308,340 – (1,250) 307,090

Hong Kong Profits Tax has been provided at a rate of 17.5% (2006: 17.5%) on the estimated assessable profit for the year.

The reconciliation between the income tax and the product of profit before tax multiplied by Hong Kong Profits Tax rate is as follows:

Profit before tax Tax at Hong Kong Profits Tax rate of 17.5% (2006: 17.5%) Tax effect of income that is not taxable Tax effect of temporary differences not recognised Tax effect of utilisation of deferred tax asset not previously recognised Income tax	2007 HK$ 9,454,185 1,654,482 (251,705) 322 – 1,403,099	2006 HK$ 8,182,257 1,431,895 (138,656) – (986,149) 307,090

– I-17 –

FINANCIAL INFORMATION ON THE COMPANY

APPENDIX I

9 Profit for the year

The Company’s profit for the year is stated after charging the following:

	2007	2006
	HK$	HK$
Auditor’s remuneration	180,000	165,000
Depreciation	7,077	7,720
Investment management fee	864,821	757,594
Performance fee	1,050,465	308,710
Operating lease payments in respect of
office premises	108,000	108,000
Staff costs (including directors’ emoluments,
Note 12(a))
Salaries and other benefits	912,000	912,000
Retirement benefits scheme contributions	25,000	25,000
	937,000	937,000

10 Final dividend proposed

	2007	2006
	HK$	HK$
Final dividend proposed of HK$0.05
(2006: Nil) per ordinary share	5,000,000	–

At a meeting of the Board held on 24 July 2007, the Board proposed a final dividend of HK$0.05 (2006: Nil) per ordinary share which is subject to approval by the shareholders at the forthcoming annual general meeting. This proposed dividend is not reflected as a dividend payable in these financial statements but it will be reflected as an appropriation of retained profits for the year ending 31 March 2008.

11 Basic earnings per share

The calculation of basic earnings per share is based on the Company’s profit for the year of HK$8,051,086 (2006: HK$7,875,167) and the weighted average number of ordinary shares of 100,000,000 (2006: 100,000,000) in issue during the year.

– I-18 –

APPENDIX I FINANCIAL INFORMATION ON THE COMPANY

There were no dilutive potential shares during the years ended 31 March 2007 and 2006. Accordingly, no diluted earnings per share has been presented.

12 Directors’ and senior management’s emoluments

(a) Directors’ emoluments

The emoluments paid or payable to directors of the Company during the year are as follows:

Directors’ fees: Non-executive director LIU Hongru Independent non-executive directors KWONG Che Keung Gordon HE Jia WANG Xiaojun Other emoluments: Salaries and other benefits: Executive directors ZHANG Zhi Ping ZHANG Gaobo Retirement benefits scheme contributions: Executive directors ZHANG Zhi Ping ZHANG Gaobo	2007 HK$ 100,000 100,000 100,000 100,000 400,000 130,000 130,000 6,500 6,500 273,000 673,000	2006 HK$ 100,000 100,000 100,000 100,000
		400,000
		130,000 130,000 6,500 6,500
		273,000
		673,000

– I-19 –

APPENDIX I

FINANCIAL INFORMATION ON THE COMPANY

The emoluments of the directors fell within the following band:

	2007	2006
	Number of	Number of
	directors	directors
Emolument band:
HK$Nil – HK$1,000,000	6	6

(b) Senior management’s emoluments

Of the five individuals whose emoluments were the highest in the Company for the year, 4 (2006: 4) were directors whose emoluments are reflected in the analysis presented above. The emoluments of the remaining individual (2006: 1) are as follows:

Salaries and other benefits Retirement benefits scheme contributions The emoluments fell within the following band: HK$Nil – HK$1,000,000	2007 HK$ 252,000 12,000 264,000 2007 Number of individual 1	2006 HK$ 252,000 12,000
		264,000

		2006 Number of individual 1

– I-20 –

FINANCIAL INFORMATION ON THE COMPANY

APPENDIX I

13 Property, plant and equipment

Cost At 1 April 2005, 31 March 2006 and 31 March 2007 Accumulated depreciation At 1 April 2005 Charge for the year At 31 March 2006 Charge for the year At 31 March 2007 Carrying amount At 31 March 2007 At 31 March 2006 14 Available-for-sale financial assets Unlisted equity securities, at cost _Less:_Impairment losses	2007 HK$ 853,000 (75,000) 778,000	Computer equipment HK$ 30,880 16,083 7,720 23,803 7,077 30,880 – 7,077 2006 HK$ 853,000 (75,000) 778,000

At 31 March 2007, the available-for-sale financial assets are investments in unlisted equity securities. They are measured at cost less any impairment losses at each balance sheet date as the range of reasonable fair value estimates is so significant that the directors of the Company are of the opinion that the fair values cannot be measured reliably.

– I-21 –

FINANCIAL INFORMATION ON THE COMPANY

APPENDIX I

Details of the Company’s investments in unlisted equity securities at 31 March 2007 are as follows:

Particular
Proportion of
Name of
Place of
of issued
investee’s
investee
incorporation
shares held
capital owned
(a) Creative Energy
Hong Kong
75,000
15.00%
(Asia) Limited
ordinary shares
(2006: 15.00%)
of HK$1.00 each
(2006: 75,000
ordinary shares
of HK$1.00 each)
(b) Pacific Life Science
Cayman Islands
1,000,000
7.40%
Holdings Limited
ordinary shares
(2006: 8.70%)
of USD0.10 each
(2006: 1,000,000
ordinary shares
of USD0.10 each)

Investment value
Percentage
Net assets
of total
attributable
assets
to the
Carrying
of the
Company
Cost
amount
Company
(Note)
HK$
HK$
HK$
75,000
Nil
Nil
Nil
(2006: 75,000)
(2006: Nil)
(2006: Nil)
(2006: Nil)
778,000
778,000
1.23%
742,220
(2006: 778,000) (2006: 778,000)
(2006: 1.43%) (2006: 772,212)

Note:

The calculation of net assets attributable to the Company is based on the latest management accounts of respective investees.

A brief description of the business and financial information of the unlisted investees, is as follows:

(a) Creative Energy (Asia) Limited is principally engaged in the provision of services for environmental energy saving including design, implementation of energy efficiency management solutions system and retrofit projects with energy performance contract mechanism. No dividend was received during the year.
(b) Pacific Life Science Holdings Limited (“PACIFIC LIFE SCIENCE”) is a holding company for private ventures in the life sciences industry in Asia. PACIFIC LIFE SCIENCE seeks to bring selected high potential North American life sciences projects to the Asian market in a form of joint venture with North American parent company. No dividend was received during the year. The unaudited loss attributable to shareholders of PACIFIC LIFE SCIENCE for the year ended 31 March 2007 was approximately HK$402,000 (2006: profit of HK$963,000) and the unaudited net asset value attributable to shareholders of PACIFIC LIFE SCIENCE at 31 March 2007 was approximately HK$10,030,000 (2006: HK$8,876,000).

– I-22 –

APPENDIX I FINANCIAL INFORMATION ON THE COMPANY

15 Financial assets at fair value through profit or loss

	2007	2006
	HK$	HK$
Equity securities listed in Hong Kong, at fair value	31,524,670	18,579,025

The above investments in listed equity securities are classified as held for trading. The fair values of these listed equity securities are based on quoted market prices.

Details of the Company’s investments in listed equity securities at 31 March 2007 are as follows:

Equity securities listed on the Stock Exchange

At 31 March 2007

Particular of Proportion o Name of Place of issued shares investee’ investee incorporation held capital owne (a) Air China Limited The People’s 400,000 H shares 0.003% Republic of of RMB1.00 each China (b) China The People’s 2,996,000 0.065% BlueChemical Republic of H shares of Ltd. China RMB1.00 each (c) CHINA DATA Bermuda 5,000,000 ordinary 1.57% shares of HK$0.025 each (d) China Southern The People’s 950,000 H shares 0.022% Airlines Company Republic of of RMB1.00 each Limited China (e) Guangdong Hong Kong 2,780,000 ordinary 0.046% Investment shares of Limited HK$0.50 each (f) Man Yue Bermuda 300,000 ordinary 0.063% International shares of Holdings HK$0.10 each Limited (g) MTR Corporation Hong Kong 95,000 shares of 0.002% Limited HK$1.00 each (h) The Link Real Hong Kong 43,500 units 0.002% Estate Investment Trust (i) Tianjin Capital The People’s 250,000 0.019% Environmental Republic of H shares of Protection China RMB1.00 each Company Limited			Investment	value Percentage of Net assets total attributable to Unrealised assets of the Company gain/(loss) the Company (Note 1) HK$ HK$ 747,906 3.43% RMB891,728 3,069,945 16.26% RMB4,360,764 Nil Nil 71,843 700,428 5.34% RMB2,241,360 2,001,600 18.40% 5,806,390 (Note 2) 48,000 1.12% 381,971 (Note 2) (82,926) 2.95% 1,535,340 84,825 1.29% 535,780 (Note 2) 194,570 1.25% RMB453,503 6,764,348
	f s d	Cost HK$ 1,412,094 7,176,375 9,534,875 2,662,572 7,749,936 204,743 1,939,226 429,835 590,430 31,700,086	Market value HK$ 2,160,000 10,246,320 Nil 3,363,000 11,592,600 708,000 1,856,300 813,450 785,000 31,524,670

– I-23 –

APPENDIX I

FINANCIAL INFORMATION ON THE COMPANY

At 31 March 2006

Particular of Proportion o Name of Place of issued shares investee’ investee incorporation held capital owne CHINA DATA Bermuda 5,000,000 ordinary 1.57% shares of HK$0.025 each Golden Eagle Retail Cayman Islands 100,000 shares of 0.01% Group Limited HK$0.10 each Guangdong Hong Kong 2,780,000 ordinary 0.05% Investment Limited shares of HK$0.50 each Hopson Development Bermuda 432,000 ordinary 0.04% Holdings Limited shares of HK$0.10 each Man Yue Bermuda 300,000 ordinary 0.07% International shares of Holdings Limited HK$0.10 each The Link Real Estate Hong Kong 43,500 units 0.002% Investment Trust			Investment	value Percentage Net assets of total attributable to Unrealised assets of the Company gain/(loss) the Company (Note 1) HK$ HK$ (7,200,000) Nil 229,800 (Note 2) 66,818 0.71% RMB37,311 1,841,064 17.68% 5,739,145 5,324,534 13.30% 2,185,483 455,257 1.21% 311,109 298,790 1.34% 474,300 786,463
	f s d	Cost HK$ 9,534,875 318,182 7,749,936 1,889,866 204,743 429,835 20,127,437	Market value HK$ Nil 385,000 9,591,000 7,214,400 660,000 728,625 18,579,025

Notes:

(1) The calculation of net assets attributable to the Company is based on the latest published interim reports or annual reports of respective investees at the balance sheet date.
(2) The unrealised gain/loss represented the changes in market value of the respective investees.

A brief description of the business and financial information of the listed investees, based on their latest published interim reports or annual reports, is as follows:

(a) Air China Limited (“AIR CHINA”) is principally engaged in providing air passenger, air cargo and airline-related services. No dividend was received during the year. The audited profit attributable to shareholders of AIR CHINA for the year ended 31 December 2006 was approximately RMB2,687,841,000 and the audited net asset value attributable to shareholders of AIR CHINA at 31 December 2006 was approximately RMB29,724,258,000.
(b) China BlueChemical Ltd. (“CHINA BLUECHEM”) is principally engaged in the production of nitrogenous fertilizer and methanol. No dividend was received during the year. The audited profit attributable to shareholders of CHINA BLUECHEM for the year ended 31 December 2006 was approximately RMB1,645,819,000 and the audited net asset value attributable to shareholders of CHINA BLUECHEM at 31 December 2006 was approximately RMB6,708,867,000.

– I-24 –

APPENDIX I

FINANCIAL INFORMATION ON THE COMPANY

(c) CHINA DATA is principally engaged in the trading of consumer electronic products and the related parts and components. No dividend was received during the year. The unaudited loss attributable to shareholders of CHINA DATA for the six months ended 30 June 2006 was approximately HK$2,410,000 and the unaudited net asset value attributable to shareholders of CHINA DATA at 30 June 2006 was approximately HK$4,576,000. Due to the trading in shares of CHINA DATA on the Stock Exchange has been suspended for more than 2 years since 28 December 2004 and based on the latest published financial information of CHINA DATA, the directors are of opinion that the fair value of the Company’s investment in CHINA DATA was nil at 31 March 2007.
(d) China Southern Airlines Company Limited (“CHINA SOUTH AIR”) is principally engaged in airline operations, aircraft maintenance and air catering operations. No dividend was received during the year. The audited profit attributable to shareholders of CHINA SOUTH AIR for the year ended 31 December 2006 was approximately RMB188,000,000 and the audited net asset value attributable to shareholders of CHINA SOUTH AIR at 31 December 2006 was approximately RMB10,188,000,000.
(e) Guangdong Investment Limited (“GUANGDONG INVESTMENT”) is principally engaged in investment holding and operations on core businesses, including water distribution, electric power generation, toll roads and bridges, property investment and development, hotel operations and management and retail. The Company received dividend income of HK$278,000 during the year. The audited profit attributable to shareholders of GUANGDONG INVESTMENT for the year ended 31 December 2006 was approximately HK$1,506,903,000 and the audited net asset value attributable to shareholders of GUANGDONG INVESTMENT at 31 December 2006 was approximately HK$12,622,587,000.
(f) Man Yue International Holdings Limited (“MAN YUE”) is principally engaged in manufacturing and trading of electronic components and trading of raw materials. The Company received dividend income of HK$12,000 during the year. The audited profit attributable to shareholders of MAN YUE for the year ended 31 December 2006 was approximately HK$121,657,000 and the audited net asset value attributable to shareholders of MAN YUE at 31 December 2006 was approximately HK$606,303,000.

– I-25 –

FINANCIAL INFORMATION ON THE COMPANY

APPENDIX I

(g) MTR Corporation Limited (“MTR”) is principally engaged in owning and operating the Mass Transit Railway and Octopus smart card system in Hong Kong; properties development and sale; leasing of commercial facilities and provision of other services within the Mass Transit Railway. No dividend was received during the year. The audited profit attributable to shareholders of MTR for the year ended 31 December 2006 was approximately HK$7,759,000,000 and the audited net asset value attributable to shareholders of MTR at 31 December 2006 was approximately HK$76,767,000,000.
(h) The Link Real Estate Investment Trust (“THE LINK”) is a collective investment scheme constituted as a unit trust that invests in retail and carpark real estate in Hong Kong. The Company received dividend income of HK$23,760 during the year. The audited profit attributable to unitholders of THE LINK for the year ended 31 March 2007 was approximately HK$4,354,000,000 and the audited net asset value attributable to unitholders of THE LINK at 31 March 2007 was approximately HK$26,789,000,000.
(i) Tianjin Capital Environmental Protection Company Limited (“TIANJIN CAPITAL”) is principally engaged in environment protection and urban infrastructure construction. No dividend was received during the year. The audited profit attributable to shareholders of TIANJIN CAPITAL for the year ended 31 December 2006 was approximately RMB158,689,000 and the audited net asset value attributable to shareholders of TIANJIN CAPITAL at 31 December 2006 was approximately RMB2,386,858,000.

16 Deferred tax

The movement on the deferred tax liability in respect of accelerated tax depreciation is as follows:

Deferred tax liability at beginning of the year Credited to the income statement for the year Deferred tax liability at end of the year	2007 HK$ 835 (835) –	2006 HK$ 2,085 (1,250) 835

– I-26 –

FINANCIAL INFORMATION ON THE COMPANY

APPENDIX I

17 Share capital

Authorised: 200,000,000 ordinary shares of HK$0.10 each Issued and fully paid: 100,000,000 ordinary shares of HK$0.10 each	2007 HK$ 20,000,000 10,000,000	2006 HK$ 20,000,000

		10,000,000

18 Share options

Under the Company’s share option scheme adopted on 19 March 2003, the Board may at any time following the date of adoption and before the tenth anniversary thereof, offer to grant to certain selected classes of participants (including, among others, full-time employees) of the Company, an option to subscribe for shares as incentives or rewards for their contribution to the Company. The subscription price will be determined by the Board (subject to adjustment), and will not be less than the highest of (a) the closing price of the shares of the Company as stated in the Stock Exchange’s daily quotations sheet on the date of grant, which must be a business day; (b) the average closing price of the shares of the Company as stated in the Stock Exchange’s daily quotations sheet for the five trading days immediately preceding the date of grant; and (c) the nominal value of the shares of the Company. A nominal consideration of HK$1 is payable on acceptance of the grant of an option. The maximum number of shares which may be issued upon exercise of all outstanding options granted and yet to be exercised under this scheme and any other share option schemes adopted by the Company may not exceed 30% of the share capital of the Company in issue from time to time. An option may be accepted by a participant within 21 days from the date of the offer of grant of the option. An option may be exercised in accordance with the terms of the share option scheme at any time not later than 10 years from the date on which the offer for grant of the option is made.

No option has been granted or agreed to be granted under the share option scheme since its adoption.

– I-27 –

FINANCIAL INFORMATION ON THE COMPANY

APPENDIX I

19 Reserves

The amounts of the Company’s reserves and the movements therein are presented in the statement of changes in equity.

Under the Companies Law of the Cayman Islands, share premium of the Company is distributable to the shareholders of the Company subject to the provisions of the Memorandum and Articles of Association and provided that the Company is able to pay its debts as they fall due in the ordinary course of business immediately following the distribution of dividends.

The Company’s reserves available for distribution comprise the share premium and retained profits/accumulated losses. In the opinion of the directors, the Company’s reserves available for distribution to the shareholders at 31 March 2007 were HK$51,240,413 (2006: HK$43,189,327).

20 Net asset value per share

The net asset value per share is calculated by dividing the net asset value of the Company at 31 March 2007 of HK$61,240,413 (2006: HK$53,189,327) by the number of ordinary shares in issue at that date, being 100,000,000 (2006: 100,000,000).

21 Lease commitments

At 31 March 2007 the total future minimum lease payments under non-cancellable operating lease for office premises are payable as follows:

Within one year In the second to fifth years inclusive	2007 HK$ 108,000 9,000 117,000	2006 HK$ 94,500 –
		94,500

– I-28 –

FINANCIAL INFORMATION ON THE COMPANY

APPENDIX I

22 Related party transactions

During the year, the Company had entered into the following significant related party transactions:

Transactions and balances with related parties

	Nature of transactions	2007	2006
Name of related party	and balances	HK$	HK$
Oriental Patron	Investment management fee	864,821	757,594
Asia Limited (“OPAL”)	paid/payable (of which
(Note a)	HK$81,711 (2006: HK$70,253)
	was included in accrued
	charges)(Note d)
OPAL	Accrued performance fee	1,050,465	308,710
	(Note d)
OPAL	Accrued advisory fee	–	50,000
	(Note e)
Oriental Patron Securities	Commission paid_(Note f)_	39,824	27,471
Limited (“OPSL”)(Note b)
Oriental Patron Finance	Rental paid_(Note g)_	108,000	108,000
Limited (“OPFL”)(Note c)

Notes:

(a) OPAL (trading as Oriental Patron Fund Management for its fund management activities) is the investment manager of the Company and is a wholly owned subsidiary of Oriental Patron Financial Services Group Limited (“OPFSGL”). OPFSGL is a substantial shareholder of the Company which had an interest of 29.80% in the share capital of the Company at 31 March 2007 (2006: 29.80%). The directors, Mr. ZHANG Zhi Ping and Mr. ZHANG Gaobo have significant influence in OPFSGL.
(b) OPSL is a wholly owned subsidiary of OPFSGL.
(c) OPFL is a fellow subsidiary of OPFSGL.

– I-29 –

FINANCIAL INFORMATION ON THE COMPANY

APPENDIX I

(d) Investment management fee and performance fee are charged in accordance with the agreement with OPAL for investment management services. The investment management fee was calculated at 1.5% per annum on the Net Asset Value of the Company at each preceding month end as defined in the agreement. Performance fee represented 10% of the net increase in the Net Asset Value per share at the Performance Fee Valuation Day as defined in the agreement.
(e) Advisory fee for the prior year was charged at a mutually agreed fee.
(f) The commission fee was charged on the sale and purchase transactions of listed securities through OPSL.
(g) The Company entered into a licence agreement with OPFL on 1 February 2006 in respect of the provision of the principal place of business of the Company for a term of one year for a monthly rental of HK$9,000 with effect from 16 February 2006. Such licence agreement has been renewed under the same terms and conditions for the period from 16 February 2007 to 30 April 2008.

Compensation of key management personnel

The key management personnel of the Company comprises all directors, details of their remuneration are disclosed in Note 12(a) to the financial statements.

23 Retirement benefits scheme

The Company makes contributions to a defined contribution Mandatory Provident Fund Scheme (the “Scheme”) under the Mandatory Provident Fund Schemes Ordinance which is available for all eligible employees in Hong Kong. The assets of the Scheme are held separately from those of the Company, in funds under the control of trustee. The Company contributes 5% of relevant payroll costs to the Scheme, which contribution is matched by employees.

During the year, the Company’s contributions charged to the income statement amounted to HK$25,000 (2006: HK$25,000).

24 Approval of the financial statements

The financial statements were approved and authorised for issue by the Board on 24 July 2007.

2. INDEBTEDNESS STATEMENT

There were no bank overdrafts or loans, or other similar indebtness, mortgages, charges, or guarantees or other material contingent liabilities of Company (which has no subsidiaries) as of the Latest Practicable Date and as of the date 3 months preceding the Latest Practicable Date.

– I-30 –

GENERAL INFORMATION

APPENDIX II

1. RESPONSIBILITY STATEMENT

This circular includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Company. The Directors jointly and severally accept full responsibility for the accuracy of the information contained in this circular and confirm, having made all reasonable enquiries, that to the best of their knowledge, opinions expressed in this circular have been arrived at after due and careful consideration and there are no other facts not contained in this circular the omission of which would make any statement contained in this circular misleading.

2. SHARE CAPITAL AND MARKET PRICES

(a) Share capital

The authorized and issued share capital of the Company (i) as at the Latest Practicable Date, (ii) immediately following the completion of the Placing Agreement but before any of the Warrants are exercised after increase in the authorized share capital of the Company; and (iii) immediately following the completion of the Placing Agreement and the Warrants are exercised in full after increase in the authorized share capital of the Company were as follows:

(i) As at the Latest Practicable Date

Authorised share capital: 200,000,000 ordinary shares of HK$0.10 each Issued and fully paid share capital: 100,000,000 ordinary shares of HK$0.10 each	HK$ 20,000,000.00

	HK$ 10,000,000.00

– II-1 –

GENERAL INFORMATION

APPENDIX II

(ii) Immediately following the completion of the Placing Agreement but before any of the Warrants are exercised after increase in the authorized share capital of the Company

*(iii)*	Authorised share capital: HK$ 2,000,000,000 ordinary shares of HK$0.10 each 200,000,000.00 Issued and fully paid share capital: HK$ 700,000,000 ordinary shares of HK$0.10 each 70,000,000.00 *Immediately following the completion of the Placing Agreement and the* *Warrants are exercised in full after increase in the authorized share capital* *of the Company* Authorised share capital: HK$ 2,000,000,000 ordinary shares of HK$0.10 each 200,000,000.00 Issued and fully paid share capital: HK$ 820,000,000 ordinary shares of HK$0.10 each 82,000,000.00	HK$ 200,000,000.00

		HK$ 70,000,000.00


		HK$ 82,000,000.00

All the existing Shares rank pari passu in all respects with each other including rights to dividends, voting and return of capital.

When issued and fully paid, the Placing Shares and the Warrant Shares will rank pari passu in all respects with the Shares then in issue. Holders of fully-paid Placing Shares and the Warrant Shares will be entitled to receive all dividends and distributions which are declared, made or paid after the date of allotment of the Placing Shares and Warrant Shares in their fully-paid form.

Since 31 March 2007 (the date to which the latest published audited financial statements of the Company were made up), the Company has not issued any new Shares nor agreed to issue any new Shares (otherwise than under the Placing Agreement).

– II-2 –

GENERAL INFORMATION

APPENDIX II

(b) Share options and convertible securities

Save and except as disclosed under sub-paragraph (a) of this paragraph 2 in this circular, as at the Latest Practicable Date, the Company has not granted any options, warrants or other rights to call for the issue of or agreed to issue any share or loan capital or any instrument convertible into or exchangeable for shares of such capital, and the Company is not a party to or otherwise bound by any agreement for the purchase or repurchase of Shares.

(c) Market prices

The table below shows the closing prices per Share as quoted by the Stock Exchange (i) at the end of each of the six calendar months immediately preceding the Last Trading Day and ending on the Latest Practicable Date; (ii) on 5 September 2007, being the Last Trading Day; and (iii) as at the Latest Practicable Date:

Date	Closing price per Share
	HK$
30 March 2007	0.370
30 April 2007	0.300
31 May 2007	0.510
29 June 2007	0.830
31 July 2007	1.250
31 August 2007	1.050
28 September 2007	1.900
Last Trading Day	1.400
Latest Practicable Date	2.500

The highest and lowest closing prices per Share as quoted by the Stock Exchange during the period between 14 March 2007 (being the date falling six months prior to 14 September 2007, the date of the Announcement) and ending on the Latest Practicable Date (both date inclusive) are HK$2.8 on 12 and 15 October 2007 and HK$0.29 on 11 April 2007 respectively.

– II-3 –

GENERAL INFORMATION

APPENDIX II

3. INTERESTS OF DIRECTORS AND CHIEF EXECUTIVES

Interests of Directors and chief executives of the Company

As at the Latest Practicable Date, the interests and short positions of the Directors and the chief executives of the Company and their respective associates in the Shares, underlying Shares and debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO), which (a) were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which the director is taken or deemed to have under such provisions of the SFO), (b) the Model Code or (c) which were required to be entered into the register pursuant to section 352 of the SFO were as follows:

Long positions in the Shares

				Percentage of
				the enlarged
				issued share
				capital of the
			Percentage of the	Company
		Number of	existing issued	assuming
		issued	share capital	completion of
Name of director	Capacity	Shares held	of the Company	the Placing
			(Note 2)	(Note 2)
Zhang Zhi Ping	Interest of controlled	629,800,000	629.8%	89.97%
	corporation_(Note 1)_	(Note 1)
Zhang Gaobo	Interest of controlled	629,800,000	629.8%	89.97%
	corporation_(Note 1)_	(Note 1)

Notes:

29.8 million Shares are held by OPFSGL, the entire issued share capital of which is beneficially owned as to 95% by Oriental Patron Holdings Limited and 5% by Eldridge International Limited. The entire issued share capital of Oriental Patron Holdings Limited is beneficially owned by Million West Limited and Best Future International Limited in equal share. The entire issued share capital of Million West Limited is beneficially owned as to 90% by Mr Zhang Gaobo and 10% by Mr Zhang Zhi Ping. The entire issued share capital of Best Future International Limited is beneficially owned as to 89% by Mr Zhang Zhi Ping and 11% by an Independent Third Party.

– II-4 –

GENERAL INFORMATION

APPENDIX II

600 million Shares are attributable to the Placing Shares agreed to be underwritten by the Placing Agent under the Placing Agreement. In addition, it has been agreed that of the 600 million Placing Shares, 330 million Placing Shares will be placed to the Connected Placee. For the interests of Messrs Zhang Zhi Ping and Zhang Gaobo in the Placing Agent and the Connected Placee, please refer to the paragraph headed “Basic information and shareholding structure of the Placing Agent, Connected Placee and OPFSGL” in the section headed “Letter from the Board” of this circular.

Saved as disclosed above, as at the Latest Practicable Date, none of the Directors or the chief executives of the Company and their respective associates had any interests and short positions in the Shares, underlying Shares and debentures of the Company or any associated corporation (within the meaning of Part XV of the SFO) which were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which they were taken or deemed to have under such provisions of the SFO), the Model Code and where were required to be entered into the register required to be kept under section 352 of the SFO.

The extent of interest is based on the maximum number of 600,000,000 Placing Shares which the Placing Agent is obliged to take up in performance of its obligation under the Placing Agreement and is based on the substantial shareholder notice filed on 20 September 2007.

The percentage shareholdings in the 3rd column are calculated on the basis of 100,000,000 Shares in issue as at the Latest Practicable Date.

The percentage shareholdings in the 4th column are calculated on the basis of 700,000,000 Shares, comprising the 100,000,000 Shares in issue as at the Latest Practicable Date and 600,000,000 Placing Shares.

– II-5 –

GENERAL INFORMATION

APPENDIX II

4. INTERESTS OF SUBSTANTIAL SHAREHOLDER

Interests and short positions in Shares of substantial Shareholder

As at the Latest Practicable Date, so far as is known to the Directors and the chief executives of the Company, the following persons (other than a director or chief executive of the Company) had an interest or short position in the Shares and underlying Shares which fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO, or recorded in the register kept by the Company pursuant to Section 336 of the SFO, or who were, directly or indirectly interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of the Company.

Long position in the Shares and underlying Shares

			Percentage of
			the enlarged
			issued share
		Percentage of	capital of the
		the existing	Company
	Number of	issued share	assuming
	issued	capital of	completion of
Name of Shareholder	Shares held	the Company	the Placing
		(Note 2)	(Note 2)
OPFSGL_(Note 1)_	629,800,000	629.8%	89.97%
Oriental Patron Holdings
Limited_(Note 1)_	629,800,000	629.8%	89.97%
Best Future International
Limited_(Note 1)_	629,800,000	629.8%	89.97%
Million West Limited_(Note 1)_	629,800,000	629.8%	89.97%
Mr Xiao Wei	16,796,000	16.8%	2.40%
Mr Wang Wencang	14,096,000	14.1%	2.01%
Ms Li Luo Dan	9,000,000	9.0%	1.29%
Mr Poon Tak Chun, Paul	9,000,000	9.0%	1.29%
The Placing Agent	600,000,000	600.0%	85.71%

– II-6 –

GENERAL INFORMATION

APPENDIX II

Notes:

(1) OPFSGL is a company incorporated in the Cayman Islands, the entire issued share capital of which is beneficially owned as to 95% by Oriental Patron Holdings Limited and 5% by Eldridge International Limited. The entire issued share capital of Oriental Patron Holdings Limited is beneficially owned by Million West Limited and Best Future International Limited in equal share. The entire issued share capital of Million West Limited is ultimately and beneficially owned as to 90% by Mr Zhang Gaobo and 10% by Mr Zhang Zhi Ping. The entire issued share capital of Best Future International Limited is ultimately and beneficially owned as to 89% by Mr Zhang Zhi Ping and 11% by an Independent Third Party.

By virtue of the SFO, Oriental Patron Holdings Limited, Best Future International Limited and Million West Limited are deemed to be interested in the same 629,800,000 Shares held by OPFSGL.

(2) The percentage shareholdings in the 3rd column are calculated on the basis of 100,000,000 Shares in issue as at the Latest Practicable Date.

The percentage shareholdings in the 4th column are calculated on the basis of 700,000,000 Shares, comprising 100,000,000 Shares in issue as at the Latest Practicable Date and the 600,000,000 Placing Shares.

Save as disclosed under paragraph 4 of this Appendix II, there is no person known to the Directors, who, as at the Latest Practicable Date, had an interest or short position in the Shares and underlying Shares which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO, or recorded in the register kept by the Company pursuant to section 336 of the SFO or who was directly or indirectly interested in 10% or more of the normal value of any class of Shares carrying rights to vote in all circumstances at general meetings of the Company.

5. OTHER DISCLOSURE OF INTERESTS AND DEALINGS IN SECURITIES OF THE COMPANY

(a) As at the Latest Practicable Date, none of the Directors had any interest, direct or indirect, in any asset which have been since 31 March 2007, the date to which the latest published audited financial statements of the Company were made up, acquired or disposed of by or leased to the Company or are proposed to be acquired or disposed of by or leased to the Company.

– II-7 –

GENERAL INFORMATION

APPENDIX II

(b) As at the Latest Practicable Date and save as disclosed in this circular, none of the Directors was materially interested in any contract or arrangement entered into by the Company since 31 March 2007, being the date to which the latest published audited financial statements of the Company were made up, and which was significant in relation to the business of the Company.
(c) Save for (i) that OPFSGL owns 29.8 million Shares, and (ii) the Placing Agreement, the effect on the shareholding of the Company is disclosed under the section headed “Impact on the shareholding structure of the Company” in the “Letter from the Board” of, and in paragraph 3 of this Appendix 2 to, this circular, none of the Placing Agent, the Connected Placee, OPFSGL and their respective Concert Parties; their respective directors and the Directors and their respective associates, owned or controlled any shares, convertible securities, warrants, options or derivatives in respect of the Shares as at the Latest Practicable Date. Save as disclosed above in this paragraph 5(c), none of said persons has dealt for value in any such securities of the Company during the period between 14 March 2007, being six months prior to the date of the Announcement, and ending on the Latest Practicable Date.
(d) None of the advisers of the Company as specified in class (2) of the definition of “associate” under the Takeovers Code had any interest in the securities of the Company as at the Latest Practicable Date.
(e) Save for (i) Messrs Zhang Gaobo and Zhang Zhiping are the shareholders of the Connected Placee; and (ii) Messrs Zhang Gaobo and Zhang Zhiping have interests in the Placing Agent and OPFSGL (details of which are disclosed in the paragraph headed “Basic Information and Shareholding Structure of the Placing Agent, Connected Placee and OPFSGL” under the section headed “Letter from the Board”), none of the Directors and the Company owned or controlled any shares, convertible securities, warrants, options or derivatives of the Placing Agent and the Concert Parties (including Connected Placee and OPFSGL) as at the Latest Practicable Date, and none of them has dealt for value in any such securities of the Placing Agent and the Concert Parties (including Connected Placee and OPFSGL) during the period between 14 March 2007, being six months prior to the date of the Announcement, and ending on the Latest Practicable Date.

– II-8 –

GENERAL INFORMATION

APPENDIX II

(f) As at the Latest Practicable Date, save for (i) the Placing Agreement, and (ii) the Existing Investment Management Agreement and the New Investment Management Agreement proposed to be entered into as set out in this circular in the section headed “Continuing Connected Transactions” in the “Letter from the Board” in this circular, there was no agreement, arrangement or understanding (including any compensation agreement) existing between the Placing Agent, the Connected Placee, OPFSGL or any of their Concert Parties and any Director, recent Director, Shareholder or recent Shareholder of the Company having any connection with or dependence upon the Placing and the transactions contemplated thereunder or the Whitewash Waiver.
(g) As at the Latest Practicable Date, there was no benefit given or agreed to be given to any Director as compensation for loss of office or otherwise in connection with the Placing and the transactions contemplated thereunder or the Whitewash Waiver.
(h) As at the Latest Practicable Date, there was no agreement, arrangement or understanding between any Director and any other person which is conditional on/or dependent upon the outcome of the Placing and the transactions contemplated thereunder or the Whitewash Waiver.
(i) As at the Latest Practicable Date, save (i) that Messrs Zhang Gaobo and Zhang Zhiping are shareholders of the Connected Placee, (ii) that Messrs Zhang Gaobo and Zhang Zhiping have interests in the Placing Agent, and (iii) for the Placing Agreement. None of the Directors had a material personal interest in any material contract entered into by the Placing Agent and the Connected Placee.
(j) None of the advisers to the Company as specified in class (2) of the definition of associate (excluding exempt principal traders) in the Takeovers Code owned or controlled or had any interest in any Shares or other securities of the Company as at the Latest Practicable Date nor had any of them dealt for value in any Shares or other securities of the Company during the period beginning six months prior to 14 September 2007 (being the date of the Announcement) and ending on the Latest Practicable Date.

– II-9 –

GENERAL INFORMATION

APPENDIX II

(k) None of the subsidiaries (if any) of the Company and pension funds of the Company or of a subsidiary (if any) of the Company owned or controlled any Shares or other securities of the Company as at the Latest Practicable Date nor had any of them dealt for value in any Shares or other securities of the Company during the period beginning six months prior to 14 September 2007 (being the date of the Announcement) and ending on the Latest Practicable Date.
(l) No fund managed on a discretionary basis by fund managers (other than exempt fund managers) connected with the Company had any interest in any Shares or other securities of the Company as at the Latest Practicable Date nor had any of them dealt for value in any Shares or other securities of the Company during the period beginning six months prior to 14 September 2007 (being the date of the Announcement) and ending on the Latest Practicable Date.
(m) As at the Latest Practicable Date, no person had any arrangement of the kind referred to in Note 8 to Rule 22 of the Takeovers Code with (aa) the Company; or (bb) any person who is associate of the Company by virtue of classes (1), (2) (3) and (4) of the definition of associate in the Takeovers Code; or (cc) the Placing Agent or its Concert Parties (including OPFSGL and the Connected Placee).
(n) None of the Directors intended, in respect of his own shareholdings, if any, to vote for or against the Placing and all transactions contemplated thereunder (including the Whitewash Waiver).
(o) None of the Shareholders, prior to the Latest Practicable Date, had irrevocably committed themselves to vote for or against the Placing and all transactions contemplated thereunder including the Whitewash Waiver.

6. DIRECTORS’ SERVICE AGREEMENT

As at the Latest Practicable Date, none of the Directors had any existing or proposed service contracts with the Company which (i) (including both continuous and fixed term contracts) have been entered into or amended within 6 months before the date of the Announcement dated 14 September 2007; (ii) are continuous contracts with a notice period of 12 months or more; (iii) are fixed term contracts with more than 12 months to run irrespective of the notice period; or (iv) are not determinable by the Company within one year without payment of compensation (other than statutory compensation).

– II-10 –

GENERAL INFORMATION

APPENDIX II

7. EXPERTS AND CONSENTS

The following are the qualifications of the experts who have been named in this circular or have given opinions, letters or advice which are contained in this circular:

		Nature of
		opinion/
Name	Qualification	letter/advice
Ample Capital	a licensed corporation under	Letter of advice to
	the SFO to carry on type 4	the Independent
	(advising on securities),	Board Committee
	type 6 (advising on corporate	and the Independent
	finance) and type 9	Shareholders
	(asset management)
	regulated activities
Asia Investment	a licensed corporation under	Letter of advice to
	the SFO to carry on type 4	the Independent
	(advising on securities),	Board Committee
	type 6 (advising on corporate	and the Independent
	finance) and type 9	Shareholders
	(asset management)
	regulated activities

As at the Latest Practicable Date, neither Ample Capital nor Asia Investment had any beneficial interest in the share capital of the Company or had any right, whether legally enforceable or not, to subscribe for or to nominate persons to subscribe for Shares and has any interest, either directly or indirectly, in any assets which have been, since 31 March 2007, being the date to which the latest published audited accounts of the Company were made up, acquired or disposed of by or leased to or are proposed to be acquired or disposed of by or leased to the Company.

Each of Ample Capital and Asia Investment has given and has not withdrawn its written consent to the issue of this circular with the inclusion herein of its opinion/letter/advice and/or references to its name, in the form and context in which it respectively appears.

8. LITIGATION

As at the Latest Practicable Date, the Company was not engaged in any litigation or arbitration or claims of material importance which is known to the Directors to be pending or threatened by or against either the Company.

– II-11 –

GENERAL INFORMATION

APPENDIX II

9. MATERIAL CHANGE

The Directors confirm that there has been no material change in the financial or trading position or outlook of the Company since 31 March 2007, being the date to which the latest audited financial statements of the Company were made up.

10. MATERIAL CONTRACTS

Save as the Placing Agreement, there is no other material contract (not being contract entered into in the ordinary course of business) entered into by the Company within the two years immediately preceding the date of the Announcement and up to the Latest Practicable Date and is or may be material.

11. COMPETING INTEREST

As at the Latest Practicable Date, none of the Directors and their respective associates was interested in any business apart from the business of the Company, which competed or was likely to compete, either directly or indirectly, with that of the Company.

12. CORPORATE INFORMATION

Registered office P. O. Box 309 GT Ugland House South Church Street George Town Grand Cayman Cayman Islands Head office and Principal place of 27th Floor business in Hong Kong Two Exchange Square 8 Connaught Place, Central Hong Kong Company secretary Ms Wong Hiu Ling, ACS ACIS AHKICPA AICPA Qualified accountant Ms Wong Hiu Ling, ACS ACIS AHKICPA AICPA

Authorised representatives Mr Zhang Gaobo Ms Wong Hiu Ling, ACS ACIS AHKICPA AICPA

– II-12 –

GENERAL INFORMATION

APPENDIX II

Auditors	RSM Nelson Wheeler
	7th Floor
	Allied Kajima Building
	138 Gloucester Road
	Wanchai, Hong Kong
Legal adviser to the Company	Chiu & Partners
as to Hong Kong law	41st Floor, Jardine House
	1 Connaught Place
	Hong Kong
Hong Kong branch share registrar and	Tricor Abacus Limited
transfer office	26/F, Tesbury Centre
	28 Queen’s Road East
	Hong Kong
Principal Bankers	Standard Chartered Bank
The Placing Agent	Oriental Patron Asia Limited
	27th Floor, Two Exchange Square
	8 Connaught Place, Central
	Hong Kong
OPFSGL	Oriental Patron Financial
	Services Group Limited
	Registered Office
	The offices of Offshore
	Incorporations (Cayman) Limited
	Scoita Centre, 4th Floor
	P.O. Box 2804
	George Town, Grand Cayman
	Cayman Islands
	British West Indies
	Correspondence Address in Hong Kong
	27th Floor, Two Exchange Square
	8 Connaught Place, Central
	Hong Kong

– II-13 –

APPENDIX II

GENERAL INFORMATION

Connected Placee

Ottness Investments Limited Registered Office P.O. Box 957 Offshore Incorporations Centre Road Town, Tortola British Virgin Islands Correspondence Address in Hong Kong 27th Floor, Two Exchange Square 8 Connaught Place, Central Hong Kong

13. MISCELLANEOUS

(a) Save as disclosed in this circular, none of the Directors, neither Ample Capital nor Asia Investment has, or had any direct or indirect in any assets which have been acquired, disposed of or leased to or which are proposed to be acquired, disposed of or leased to the Company since 31 March 2007, being the date to which the latest published audited accounts of the Company were made up.
(b) As at the Latest Practicable Date, save and except for the Placing Agreement under which the Placing Agent will place the Placing Shares to Placees, no agreement, arrangement or understanding existed whereby any securities to be acquired in pursuance of the Placing will be transferred to any other persons.
(c) The English text of this circular shall prevail over the Chinese text in the case of any inconsistency.

14. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents are available for inspection during normal business hours from 10:00 a.m. to 5:00 p.m. (except Saturdays and public holidays) at the principal place of business of the Company in Hong Kong at 27th Floor, Two Exchange Square, 8 Connaught Place, Central, Hong Kong from the date of this circular up to and including the date of the First EGM:

(a) this circular;
(b) the memorandum of association of the Company and the Articles;
(c) the annual report of the Company for each of the two financial years ended 31 March 2007;

– II-14 –

GENERAL INFORMATION

APPENDIX II

(d) the material contract referred to under the paragraph headed “Material Contracts” in this Appendix;
(e) the Existing Investment Management Agreement;
(f) the letter from the Independent Board Committee, the texts of which are set out on pages 35 to 36 of this circular:
(g) the letter of advice from the Independent Financial Advisers to the Independent Board Committee and the Independent Shareholders, the text of which are set out in on pages 37 to 73 of this circular; and
(h) the written consents referred to under the section headed “Experts and Consents” in this Appendix.

The above documents (except this circular) will be uploaded at the website of the Securities and Futures Commission of Hong Kong at www.sfc.hk and the Company’s website at www.concepta.com.hk from the date of this circular up to (and including) the date of the First EGM in accordance with Notes 1 and 2 to Rule 8 of the Takeovers Code.

– II-15 –

NOTICE OF FIRST EGM

==> picture [52 x 51] intentionally omitted <==

CONCEPTA INVESTMENTS LIMITED 正奇投資有限公司[*]

(incorporated in the Cayman Islands with limited liability)

(Stock Code: 1140)

NOTICE IS HEREBY GIVEN that an extraordinary general meeting of Concepta Investments Limited (the “ Company ”) will be held at 27th Floor, Two Exchange Square, 8 Connaught Place, Central, Hong Kong on Wednesday, 7 November 2007 at 11:00 a.m. for the purpose of considering and, if thought fit, passing, with or without modifications, the following resolutions as ordinary resolutions:

ORDINARY RESOLUTIONS

(1) “ THAT subject to the passing of this resolution numbered (1), the authorised share capital of the Company be and is hereby increased from HK$20,000,000 divided into 200,000,000 ordinary shares of par value HK$0.10 each to HK$200,000,000 divided into 2,000,000,000 ordinary shares of par value HK$0.10 each by the creation of an additional 1,800,000,000 ordinary shares of par value HK$0.10 each in the capital of the Company.”
(2) “ THAT :
(a) the conditional placing agreement dated 7 September 2007 (“ Placing Agreement (a copy of which has been produced to this meeting marked “A” and initialled by the chairman of this meeting for the purpose of identification) made between the Company as issuer and Oriental Patron Asia Limited (“ Placing Agent ”) as placing agent to procure placees (“ Placees ”) for an aggregate of 600,000,000 new ordinary shares (each a “ Placing Share ”) of par value of HK$0.10 each in the capital of the Company together with all the transactions contemplated thereunder and all other matters thereof and incidental thereto or in connection therewith including (without limitation):
- (i) (subject to and conditional upon the Listing Committee of The Stock Exchange of Hong Kong Limited (“ Stock Exchange ”) granting the listing of and permission to deal in the Placing Shares) the allotment and issue by the Company to the Placees of an aggregate of 600,000,000 Placing Shares at the issue price of HK$1.20 per Placing Share (as to 330,000,000

* For identification purpose only

– N-1 –

NOTICE OF FIRST EGM

Placing Shares to Ottness Investments Limited (“ Connected Placee ”), who is a connected person (as defined in the Rules Governing the Listing of Securities (“ Listing Rules ”) on the Stock Exchange) of the Company and as to 270,000,000 Placing Shares to not less than six Placees, who are independent of and not connected with any of the directors, chief executive or substantial shareholders of the Company or any of its subsidiaries or any of their respective associates (as defined in the Listing Rules));

(ii) the creation and issue of unlisted warrants (“ Warrants ”) by the Company to the Placees (on the basis of one Warrant for every five Placing Shares) conferring rights to subscribe for new ordinary shares (each a “ Share ”) of par value of HK$0.10 each in the capital of the Company exercisable at any time within 12 months commencing from the date of issue of the Warrants (that is, the date of completion of the Placing Agreement) at an initial subscription price of HK$1.20 per Share, subject to adjustment and subject to the terms and conditions set out in the warrant instrument (“ Warrants Instrument ”) (a draft of which marked “B” and initialled by the chairman of this meeting for the purpose of identification) and to allot an issue such Warrant Shares upon the exercise of subscription rights attaching to the Warrants;

be and they are hereby generally and unconditionally approved in all respects and that the Placing Shares and the Warrants Shares shall, when allotted, issued and fully paid, rank pari passu in all respects with all other Shares in issue at the date of such allotment and issue;

(b) the directors (“ Directors ”) of the Company (or a duly authorised committee thereof) be and they are hereby generally and specifically authorised to allot and issue such number of Shares (“ Special Mandate ”) as may be required to be allotted and issued to cover (i) the Placing Shares and (ii) the Warrant Shares upon the exercise of subscription rights attaching to the Warrants upon and subject to the terms and conditions set out in the Warrants Instrument. The Special Mandate is in addition to, and shall not prejudice nor revoke any general or special mandate(s) which has/have been granted or may from time to time be granted to the Directors by the shareholders of the Company prior to passing of this resolution numbered (2);

– N-2 –

NOTICE OF FIRST EGM

(c) the Directors (or a duly authorised committee thereof) be and they are hereby generally and unconditionally authorised to do all such further acts and things and to sign and execute all such other or further documents and to take all such steps which, in the opinion of the Directors (or a duly authorised committee thereof), may be necessary, appropriate, desirable or expedient to implement and/or give effect to the terms of, or the transactions contemplated by, the Placing Agreement and to agree to such variation, amendments or waiver of matters relating thereto as are, in the opinion of the Directors (or a duly authorised committee thereof), in the interests of the Company.”
(3) “ THAT subject to the passing of resolution numbered (2) above and the Executive (as defined in the circular of the Company dated 22 October 2007 (“ Circular ”) (a copy of which has been produced to this meeting marked “C” and initialed by the chairman of this meeting for the purpose of identification)) granting to Oriental Patron Asia Limited (“ Placing Agent ”) and parties acting in concert with it (including Oriental Patron Financial Services Group Limited (“ OPFSGL ”) and Ottness Investments Limited, the Connected Placee referred to in resolution numbered (2) above) the Whitewash Waiver (as defined in the Circular) and the satisfaction of any condition(s) attached to the Whitewash Waiver imposed by the Executive, the waiver pursuant to Note 1 to the Notes on dispensations from Rule 26 of the Hong Kong Code on Takeovers and Mergers (“ Takeovers Code ”) waiving any obligation on the part of the Placing Agent and parties acting in concert with it (including OPFSGL and the Connected Placee) to make a mandatory general offer to the shareholders of the Company to acquire shares in the Company other than those already owned by the Placing Agent and parties acting in concert with it (including OPFSGL and the Connected Placee) which would otherwise arise under Rule 26.1 of the Takeovers Code as a result of any allotment and issue pursuant to application(s) made by the Placing Agent and parties acting in concert with it (including OPFSGL and the Connected Placee) under the Placing (the terms of which are set out in the Circular) be and is hereby approved.”
(4) “ THAT subject to the passing of resolution numbered (2) above, the terms and conditions of the New Investment Management Agreement (as defined in the Circular referred to in resolution numbered (3) above) (a copy of which has been produced to this meeting marked “D” and initialled by the chairman of this meeting for the purpose of identification) and the Annual Caps (as defined in the Circular) in relation to the provision of investment management and administration services by Oriental Patron Asia Limited to the Company for the period from 1 April 2008 to 31 March 2011 (“ Continuing Connected Transactions ”) be and are hereby approved and the directors (“ Directors ”) of the Company (or a duly authorised committee thereof) authorized for and on behalf of the Company (among other matters) to sign, execute,

– N-3 –

NOTICE OF FIRST EGM

perfect, deliver or to authorize signing, executing, perfecting and delivering all such documents and deeds to put into effect the Continuing Connected Transactions as to be regulated by the New Investment Management Agreement be and are hereby approved, ratified and confirmed, and the Directors (or a duly authorised committee thereof) be and are hereby authorized to do all such acts, matters and things as they may in their discretion consider necessary, expedient or desirable to give effect to and implement the Continuing Connected Transactions and the Annual Caps pursuant to the New Investment Management Agreement, to waive compliance from or make and agree such variations of a non-material nature to any of the terms of the New Investment Management Agreement as they may in their discretion consider to be desirable and in the interest of the Company and its shareholders as a whole.”

(5) “ THAT subject to the passing of resolution numbered (2) above, the continuing connected transactions constituted or to be constituted by the provision of investment management and administration services by Oriental Patron Asia Limited to the Company for the year ending 31 March 2008 under the terms and conditions of the Existing Investment Management Agreement (as defined in the Circular referred to in this resolution numbered (5) (a copy of which has been produced to this meeting marked “E” and initialled by the chairman of this meeting for the purpose of identification) and the Revised 2008 Annual Cap (as defined in the Circular) be and are hereby approved, ratified and confirmed and the directors (“ Directors ”) of the Company authorized for and on behalf of the Company (among other matters) to sign, execute, perfect, deliver or to authorize signing, executing, perfecting and delivering all such documents and deeds to put into effect the continuing connected transactions regulated by the Existing Investment Management Agreement for the year ending 31 March 2008 be and hereby approved, ratified and confirmed, and the Directors be and are hereby authorized to do all such acts, matters and things as they may in their discretion consider necessary, expedient or desirable to give effect to and implement the continuing connected transactions, to waive compliance from or make and agree such variations of a non-material nature to any of the terms of the Existing Investment Management Agreement as they may in their discretion consider to be desirable and in the interest of the Company and its shareholders as a whole.”

By Order of the Board Concepta Investments Limited Wong Hiu Ling

Company Secretary

Hong Kong, 22 October 2007

– N-4 –

NOTICE OF FIRST EGM

Registered office: P.O. Box 309 GT Ugland House South Church Street George Town Grand Cayman Cayman Islands

Head office and principal place of business in Hong Kong: 27th Floor, Two Exchange Square 8 Connaught Place Central Hong Kong

Notes:

A member of the Company entitled to attend and vote at the meeting convened by the above notice is entitled to appoint one or more proxy to attend and, subject to the provisions of the articles of association of the Company, vote in his/her stead. A proxy need not be a member of the Company.
In order to be valid, the form of proxy must be completed and signed in accordance with the instructions printed thereon and deposited together with a power of attorney or other authority, if any, under which it is signed or a certified copy of that power of authority, at the offices of the Company’s Hong Kong branch registrar, Tricor Abacus Limited, at 26/F., Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong no less than 48 hours before the time for holding the meeting or adjourned meeting.
Delivery of an instrument appointment a proxy should not preclude a member from attending and voting in person at the above meeting or any adjournment thereof and in such event, the instrument appointment a proxy shall be deemed to be revoked.
In the case of a joint registered holders of a share, any one of such persons may vote at the meeting, either personally or by proxy, in respect of such share as if he/she/it were solely entitled thereto; but if more than one of such joint holders are present at the above meeting personally or by proxy, that one of the said persons so present being the most or, as the case may be, the more senior shall also be entitled to vote in respect of the relevant joint holding and, for this purpose, seniority shall be determined by the order in which the names of the joint holders stand on the register of members of the Company in respect of the relevant joint holding.

As at the date of this notice, the Board comprises two executive Directors, namely Mr Zhang Zhi Ping and Mr Zhang Gaobo, a non-executive Director, namely Mr Liu Hongru; and three independent non-executive Directors, namely Mr Kwong Che Keung, Gordon, Professor He Jia and Mr Wang Xiaojun.

– N-5 –

NOTICE OF SECOND EGM

==> picture [52 x 51] intentionally omitted <==

CONCEPTA INVESTMENTS LIMITED 正奇投資有限公司[*]

(incorporated in the Cayman Islands with limited liability)

(Stock Code: 1140)

NOTICE IS HEREBY GIVEN that an extraordinary general meeting of Concepta Investments Limited (the “ Company ”) will be held at 27th Floor, Two Exchange Square, 8 Connaught Place, Central, Hong Kong on Thursday, 15 November 2007 at 11:00 a.m. for the purpose of considering and, if thought fit, passing the following resolution as special resolution:

SPECIAL RESOLUTION

“ THAT subject to the approval by the Registrar of Companies on Bermuda being obtained, the name of the Company be changed with immediate effect to “OP Financial Investments Limited” and the Chinese name “東英金融投資有限公司 ” be adopted as the new Chinese name of the Company for identification purpose only.”

By Order of the Board

Concepta Investments Limited Wong Hiu Ling Company Secretary

Hong Kong, 22 October 2007

Registered office:

P.O. Box 309 GT Ugland House South Church Street George Town Grand Cayman Cayman Islands

Head office and principal place of business in Hong Kong: 27th Floor, Two Exchange Square 8 Connaught Place Central Hong Kong

* For identification purpose only

– N-6 –

NOTICE OF SECOND EGM

Notes:

A member of the Company entitled to attend and vote at the meeting convened by the above notice is entitled to appoint one or more proxy to attend and, subject to the provisions of the articles of association of the Company, vote in his/her stead. A proxy need not be a member of the Company.
In order to be valid, the form of proxy must be completed and signed in accordance with the instructions printed thereon and deposited together with a power of attorney or other authority, if any, under which it is signed or a certified copy of that power of authority, at the offices of the Company’s Hong Kong branch registrar, Tricor Abacus Limited, at 26/F., Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong no less than 48 hours before the time for holding the meeting or adjourned meeting.
Delivery of an instrument appointment a proxy should not preclude a member from attending and voting in person at the above meeting or any adjournment thereof and in such event, the instrument appointment a proxy shall be deemed to be revoked.
In the case of a joint registered holders of a share, any one of such persons may vote at the meeting, either personally or by proxy, in respect of such share as if he/she/it were solely entitled thereto; but if more than one of such joint holders are present at the above meeting personally or by proxy, that one of the said persons so present being the most or, as the case may be, the more senior shall also be entitled to vote in respect of the relevant joint holding and, for this purpose, seniority shall be determined by the order in which the names of the joint holders stand on the register of members of the Company in respect of the relevant joint holding.

– N-7 –

AI assistant

Synagistics Limited — Proxy Solicitation & Information Statement 2007

50674_rns_2007-10-21_e222e500-1457-4b0e-a2e5-17bd93370689.pdf

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

CONCEPTA INVESTMENTS LIMITED 正奇投資有限公司[*]

Independent Financial Advisers to the Independent Board Committee and the Independent Shareholders

CONTENTS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

LETTER FROM THE BOARD

CONCEPTA INVESTMENTS LIMITED 正奇投資有限公司[*]

(G) NOTICES OF FIRST EGM AND SECOND EGM

1. INTRODUCTION

LETTER FROM THE BOARD

2. PROPOSED PLACING OF NEW SHARES (WHICH INVOLVES THE ISSUE OF UNLISTED WARRANTS)

Principal terms of the Placing Agreement

LETTER FROM THE BOARD

LETTER FROM THE BOARD

LETTER FROM THE BOARD

LETTER FROM THE BOARD

LETTER FROM THE BOARD

Principal terms of the unlisted Warrants

LETTER FROM THE BOARD

LETTER FROM THE BOARD

LETTER FROM THE BOARD

Reasons for the Placing and use of proceeds

LETTER FROM THE BOARD

Mandate to issue the Placing Shares and the Warrant Shares

Implication under the Listing Rules

Placing commission

Warrant Issue

LETTER FROM THE BOARD

Impact on the shareholding structure of the Company

LETTER FROM THE BOARD

LETTER FROM THE BOARD

Basic information and shareholding structure of the Placing Agent, Connected Placee and OPFSGL

LETTER FROM THE BOARD

Takeovers Code implication for the Placing Agent and the Connected Placee

LETTER FROM THE BOARD

Maintenance of the listing status

LETTER FROM THE BOARD

3. PROPOSED INCREASE IN AUTHORISED SHARE CAPITAL

4. CONTINUING CONNECTED TRANSACTIONS – NEW INVESTMENT MANAGEMENT AGREEMENT

Principal terms of the New Investment Management Agreement

Duration

Services

LETTER FROM THE BOARD

Management and performance fees

LETTER FROM THE BOARD

Historical transaction records

Historical caps for the fees paid to the Investment Manager under the Existing Investment Management Agreement

LETTER FROM THE BOARD

Proposed caps for the fees payable to the Investment Manager under the New Investment Management Agreement

Conditions of the New Investment Management Agreement

Reasons for entering into the New Investment Management Agreement

LETTER FROM THE BOARD

Implication under the Listing Rules

LETTER FROM THE BOARD

Revised 2008 Annual Cap for continuing connected transactions under the Existing Investment Management Agreement for the year ending 31 March 2008

LETTER FROM THE BOARD

5. PROPOSED CHANGE OF COMPANY NAME

6. FUND RAISING ACTIVITIES OF THE COMPANY IN THE PAST 12 MONTHS

LETTER FROM THE BOARD

7. THE FIRST EGM

LETTER FROM THE BOARD

8. THE SECOND EGM

9. RECOMMENDATION

LETTER FROM THE BOARD

10. PROCEDURES FOR DEMANDING A POLL

11. FURTHER INFORMATION

Concepta Investments Limited

Zhang Zhi Ping

CONCEPTA INVESTMENTS LIMITED 正奇投資有限公司[*]

(1) PROPOSED PLACING OF NEW SHARES (A PORTION OF WHICH TO BE PLACED TO CONNECTED PERSON) WHICH INVOLVES THE ISSUE OF UNLISTED WARRANTS

Synagistics Limited Proxy Solicitation & Information Statement 2007