Uni-Bio Science Group Limited - M&A Activity 2005

THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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

If you have sold or otherwise transferred all your shares in New Spring Holdings Limited, you should at once hand this document and the accompanying form of acceptance and transfer to the purchaser(s) or transferee(s) or to the bank, licensed securities dealer or other agent through whom the sale or transfer was effected for transmission to the purchaser(s) or transferee(s).

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

Automatic Result Limited

(incorporated in the British Virgin Islands with limited liability)

(incorporated in the Cayman Islands with limited liability) (Stock Code: 690)

Mandatory unconditional cash offer by

KINGSTON SECURITIES LIMITED

on behalf of Automatic Result Limited to acquire all the issued shares in New Spring Holdings Limited (other than those already owned by Automatic Result Limited and parties acting in concert with it)

Financial Adviser to Automatic Result Limited

Independent Financial Adviser to the Independent Board Committee

ASIAVEST INVESTMENT ADVISORY LIMITED

ASIAVEST PARTNERS

AsiaVest Investment Advisory Limited

A letter from the board of directors of New Spring Holdings Limited is set out on pages 6 to 10 of this document.

A letter from Kingston Securities Limited containing, among other things, the details of the terms of the Offer is set out on pages 11 to 18 of this document.

A letter from the Independent Board Committee to the Independent Shareholders containing its recommendations in respect of the Offer is set out on page 19 of this document.

A letter of advice from AsiaVest containing its opinion and advice to the Independent Board Committee in connection with the Offer is set out on pages 20 to 34 of this document.

The procedures for acceptance and settlement of the Offer are set out on pages 35 to 39 in Appendix I to this document and in the accompanying form of acceptance. Acceptances of the Offer should be received by Abacus Share Registrars Limited, G/F, Bank of East Asia Harbour View Centre, 56 Gloucester Road, Wanchai, Hong Kong by no later than 4:00 p.m. on Thursday, 13 October 2005 or such later time and/or date as Automatic Result Limited may determine and announce in accordance with the Takeovers Code.

* For identification purpose only

22 September 2005

	Page
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Expected timetable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
Letter from the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
Letter from Kingston Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	11
Letter from the Independent Board Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	19
Letter from AsiaVest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	20
Appendix I – Further terms of the Offer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	35
Appendix II – Financial information on the Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	40
Appendix III – Statutory and general information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	70

DEFINITIONS

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

“Acquisition”

acquisition of the Sale Shares by the Offeror pursuant to the terms and conditions of the Sale and Purchase Agreement

“Announcement”

the announcement dated 1 September 2005 jointly made by the Company and Automatic Result Limited containing, amongst other things, the Acquisition and the details of the Offer

“AsiaVest” or “IFA” AsiaVest Investment Advisory Limited, a licensed corporation to carry on business in types 4, 6 and 9 (advising on securities, advising on corporate finance and asset management) regulated activities under the SFO and the independent financial adviser to the Independent Board Committee
“associate” as defined in the Listing Rules
“Board” the board of Directors
“CCASS”
the Central Clearing and Settlement System established and operated by Hong Kong Securities Clearing Company Limited
“Closing Date”
13 October 2005 or if the Offer are extended, the closing date of the Offer as extended in accordance with the Takeovers Code
“Companies Ordinance” Companies Ordinance (Chapter 32 of the Laws of Hong Kong)
“Company”
New Spring Holdings Limited, a company incorporated in the Cayman Islands with limited liability, the issued Shares of which are listed on the main board of the Stock Exchange
“Completion” completion of the sale and purchase of the Sale Shares in accordance with the terms and conditions of the Sale and Purchase Agreement
“Composite Offer Document” this document jointly issued by and on behalf of the Offeror and the Company to all Shareholders in accordance with the Takeovers Code containing, among others, terms and conditions of the Offer, the forms of acceptance and transfer in respect of the Offer, the advice of AsiaVest to the Independent Board Committee in respect of the Offer, and the advice of the Independent Board Committee to the Independent Shareholders in relation to the Offer
“Director(s)”

director(s) of the Company

– 1 –

DEFINITIONS

“Executive”
“Form(s) of Acceptance”
“Group”
“HKSCC”
“Hong Kong”
“Independent Board Committee”
“Independent Shareholders”
“Kingston Corporate Finance”
“Kingston Securities”
“Last Trading Day”
“Latest Practicable Date”
“Listing Rules”
“Mr. Liu”
“Mr. Ng”

the Executive Director of the Corporate Finance Division of the SFC or any of his delegates

the accompanying form(s) of acceptance and transfer in respect of the Offer

the Company and its subsidiaries

Hong Kong Securities Clearing Limited

the Hong Kong Special Administrative Region of the PRC

an independent board committee of the Board established to advise the Independent Shareholders in relation to the Offer, which comprises the three independent non-executive Directors being Mr. Lee Man Kwong, Mr. Leung Siu Cheung and Mr. Lam Kin Kau, Mark
Shareholders other than the Offeror, Mr. Tong, Mr. Liu, Mr. Ng and their respective associates and concert parties
Kingston Corporate Finance Limited, a licensed corporation to carry on business in type 6 (advising on corporate finance) regulated activity under the SFO and the financial adviser to the Offeror
Kingston Securities Limited, a licensed corporation to carry on business in type 1 (dealing in securities) regulated activity under the SFO
24 August 2005, being the last trading day prior to the suspension of trading in the Shares on 9:30 a.m. on 25 August 2005, pending the issue of the Announcement
16 September 2005, being the latest practicable date prior to the printing of the Composite Offer Document for the purpose of ascertaining certain information for inclusion in the Composite Offer Document

Rules Governing the Listing of Securities on the Stock Exchange

Mr. Liu Guoyao (alias Lau Kwok Yiu), the sole director of the Offeror
Mr. Ng Man Chan, the chairman and one of the Directors

– 2 –

DEFINITIONS

“Mr. Tong”	Mr. Tong Kit Shing, the sole shareholder of the Offeror
“Offer”	a mandatory unconditional cash offer for all the issued Shares not
	already owned by the Offeror and parties acting in concert with it
	at the Offer Price to be made by Kingston Securities on behalf of
	the Offeror in accordance with the Takeovers Code
“Offeror”	Automatic Result Limited, a company incorporated in the British
	Virgin Islands with limited liability which is wholly and
	beneficially owned by Mr. Tong. Mr. Liu is the sole director of
	the Offeror
“Offer Price”	the offer price HK$0.497 per Share for the Offer
“Overseas Shareholder(s)”	Shareholders whose addresses on the register of members of the
	Company are outside Hong Kong
“PRC”	The People’s Republic of China
“Registrar”	Abacus Share Registrars Limited, G/F, Bank of East Asia Harbour
	View Centre, 56 Gloucester Road, Wanchai, Hong Kong
“Sale and Purchase	the conditional sale and purchase agreement dated 25 August
Agreement”	2005 entered into between the Vendor, the Offeror and Mr. Ng in
	relation to the sale by the Vendor and the purchase by the Offeror
	of the Sale Shares
“Sale Shares”	95,000,000 Shares sold by the Vendor and to be acquired by the
	Offeror pursuant to the Sale and Purchase Agreement
“SFC”	The Securities and Futures Commission of Hong Kong
“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)”	holder(s) of the Share(s)
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“Takeovers Code”	the Hong Kong Code on Takeovers and Mergers
“Vendor”	Fortune Gold Developments Limited, a company incorporated in
	the British Virgin Islands and is wholly and beneficially owned
	by Mr. Ng

– 3 –

DEFINITIONS

“HK$” Hong Kong dollars, the lawful currency of Hong Kong “%” per cent.

– 4 –

EXPECTED TIMETABLE

Offer commences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Thursday, 22 September 2005

Latest time for acceptance of the Offer (Note 1) . . . . . . . . . . . . . 4:00 p.m. on Thursday, 13 October 2005

Closing Date (Note 1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Thursday, 13 October 2005

Announcement of the results of the Offer

to be published in the newspapers (Note 1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Friday, 14 October 2005

Latest date for despatch of remittances

for the amounts due in respect of valid

acceptance received under the Offer (Note 2) . . . . . . . . . . . . . . . . . . . . . . . . . . . Friday, 21 October 2005

Notes:

Under the Takeovers Code, where an offer document and the offeree board circular are combined into a composite offer document, the offer must remain open for acceptance for at least 21 days following the date on which the composite offer document is posted. Accordingly, the Offer will remain open for acceptance until 4:00 p.m. on Thursday, 13 October 2005. If, in the course of an Offer, the Offeror revises its terms, all Shareholders, whether or not they have already accepted the Offer, will be entitled to the revised terms and a revised offer must be kept open for at least 14 days following the date on which a revised offer document is posted. The Offeror will issue a teletext announcement through the Stock Exchange by 7:00 p.m. on the Closing Date if the Offer expires, or is extended or revised, which announcement will state either the next closing date or that the Offer will remain open until further notice. Such announcement will be published in newspapers on the next business day thereafter. If the Offeror decides to extend the Offer and no closing date is specified in the relevant announcement, at least 14 days’ notice in writing will be given, before the Offer are closed, to the Shareholders who have not accepted the Offer.
Remittances in respect of the consideration payable for the Shares tendered under the Offer will be posted to the relevant Shareholders by ordinary post at their own risk as soon as possible but in any event within 10 days of the date of receipt by the Registrar of all the relevant documents to render the relevant acceptances under the Offer complete and valid.

All time references contained in the Composite Offer Document refer to Hong Kong time.

– 5 –

LETTER FROM THE BOARD

(Incorporated in Cayman Islands with limited liability)

(Stock Code: 690)

Executive Directors: Mr. Ng Man Chan Ms. Li Mi Lai

Independent non-executive Directors:

Mr. Lee Man Kwong Mr. Leung Siu Cheung Mr. Lam Kin Kau, Mark

Registered office: P.O. Box 2681 GT Century Yard, Cricket Square Hutchins Drive George Town Grand Cayman British West Indies

Principal place of business in Hong Kong: Room 2302, 23rd Floor Lippo Centre Tower II 89 Queensway, Admiralty Hong Kong

22 September 2005

To the Independent Shareholders

Dear Sir or Madam,

Mandatory unconditional cash offer by Kingston Securities Limited on behalf of Automatic Result Limited

to acquire all the issued shares in New Spring Holdings Limited (other than those already owned by Automatic Result Limited and parties acting in concert with it)

INTRODUCTION

On 1 September 2005, the Board and the Offeror jointly announced that the Offeror entered into the Sale and Purchase Agreement with the Vendor on 25 August 2005, pursuant to which the Offeror agreed to purchase and the Vendor agreed to sell in aggregate 95,000,000 Sale Shares for a total consideration of HK$47,215,000 (equivalent to HK$0.497 per Sale Share). The Sale Shares represent approximately 52.78% of the entire issued share capital of the Company as at the Latest Practicable Date. Completion took place on 13 September 2005.

* For identification purpose only

– 6 –

LETTER FROM THE BOARD

Immediately prior to Completion, the Offeror did not have any shareholding interest in the Company. Immediately following the Completion, the Offeror and parties acting in concert with it own an aggregate 95,000,000 Shares, representing approximately 52.78% of the entire issued share capital of the Company as at the Latest Practicable Date.

Accordingly, the Offeror and its concert parties are required to make a mandatory unconditional cash offer pursuant to the Rule 26.1 of the Takeovers Code.

Kingston Securities will, on behalf of the Offeror, make the Offer for all the issued Shares not already owned by the Offeror and parties acting in concert with it. The principal terms of the Offer are set out under the section headed “The Offer” below.

The Independent Board Committee comprising the three independent non-executive Directors, Mr. Lee Man Kwong, Mr. Leung Siu Cheung and Mr. Lam Kin Kau, Mark, has been formed to consider the terms of the Offer.

As Mr. Ng being the sole shareholder and director of the Vendor and an executive Director, and Ms. Li Mi Lai, being an executive Director and the spouse of Mr. Ng, Mr. Ng and Ms. Li are deemed to be interested in the Offer and we consider that they are not independent in making any recommendation in relation to the Offer and are not eligible to be members of the Independent Board Committee. As a result, Mr. Lee Man Kwong, Mr. Leung Siu Cheung and Mr. Lam Kin Kau, Mark, who are independent of the parties to the Offer, have been appointed as members of the Independent Board Committee to consider the terms of the Offer and advise the Independent Shareholders in relation to the Offer. The independent financial adviser, AsiaVest, has been appointed to advise the Independent Board Committee regarding the terms of the Offer.

The letter from Independent Board Committee containing its recommendation and advice to the Independent Shareholders on the above matters is set out on page 19 of the Composite Offer Document. The letter from AsiaVest containing its advice to the Independent Board Committee on the above matters is set out on pages 20 to 34 of the Composite Offer Document.

The purpose of the Composite Offer Document is to provide you with, amongst other things, the information relating to the Company, the Offeror, the Offer, the letter from the Independent Board Committee containing its recommendation and advice to the Independent Shareholders on the Offer, and the letter from AsiaVest containing its advice to the Independent Board Committee in respect of the Offer.

THE OFFER

Principal terms of the Offer

Kingston Securities, on behalf of the Offeror, is making a mandatory unconditional cash Offer to all the Shareholders to acquire all the Shares, other than those already owned by the Offeror and parties acting in concert with it, upon the terms set out in this Composite Offer Document and in the accompanying Form of Acceptance on the following basis:

For each Share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .HK$0.497 in cash

There are no outstanding options, warrants or securities convertible or exchangeable into Shares as at the Latest Practicable Date.

– 7 –

LETTER FROM THE BOARD

Comparison of value

The Offer Price of HK$0.497 per Share is the same as the price as agreed to be paid by the Offeror to the Vendor for each Sale Share under the Sale and Purchase Agreement, and represents:

(a) a discount of 0.6% to the closing price of HK$0.50 per Share as quoted on the Stock Exchange on 24 August 2005, being the Last Trading Day;
(b) a discount of approximately 0.1% to the average closing price of HK$0.4975 per Share as quoted on the Stock Exchange over the 10 consecutive trading days up to and including the Last Trading Day;
(c) a premium of approximately 18.4% over the audited net asset value per Share of approximately HK$0.4198 as at 31 March 2005, based on the Company’s annual report for the year ended 31 March 2005; and
(d) a discount of approximately 24.7% to the closing price of HK$0.66 as quoted on the Stock Exchange as at the Latest Practicable Date.

Effect of accepting the Offer

Acceptance of the Offer by any person or persons holding Shares will be deemed to constitute a warranty by such person or persons to the Offeror that the Share(s) acquired under the Offer are sold by any such person or persons free from all liens, charges, encumbrances, equities and third party rights and together with all rights attaching thereto, including the right to receive all dividends and distributions declared, made or paid on or after the posting of this document.

Payment

Payment in cash in respect of acceptances of the Offer will be made as soon as possible but in any event within 10 days of the date on which the duly completed acceptances of the Offer and the relevant documents of title of the Shares in respect of such acceptance are received by or for the Offeror.

Stamp duty

The Offeror will bear its own portion of buyer’s ad valorem stamp duty at the rate of 0.1% of the amount payable in respect of the relevant acceptances or if higher, the market value of the Shares, and will be responsible to account to the Stamp Office of Hong Kong for stamp duty payable for the sale and purchase of the Shares.

Further terms of the Offer, including the procedures for acceptance, are set out in the letter from Kingston Securities in the Composite Offer Document, in Appendix I to the Composite Offer Document and in the Form of Acceptance. An expected timetable of the Offer is set out under the heading “Expected Timetable” of the Composite Offer Document.

– 8 –

LETTER FROM THE BOARD

INFORMATION ON THE GROUP

The principal activities of the Group comprise the manufacturing and trading of packaging products, paper gifts items and promotional products and investment holding.

The following table sets out the existing shareholding structure of the Company as at the Latest Practicable Date:

Offeror and parties acting in concert with it Public Total	No. of Shares Approximate % 95,000,000 52.78 85,000,000 47.22 180,000,000 100.00	No. of Shares Approximate % 95,000,000 52.78 85,000,000 47.22 180,000,000 100.00
		100.00

Based on the Group’s comparative audited consolidated financial results for the year ended 31 March 2005, it recorded profit before tax of approximately HK$663,000 and loss attributable to Shareholders of approximately HK$87,000 for the year ended 31 March 2005, and it recorded loss before tax of approximately HK$13,728,000 and loss attributable to Shareholders of approximately HK$18,880,000 for the year ended 31 March 2004. The Group’s audited consolidated net asset value was approximately HK$75,555,000 and HK$76,515,000 respectively as at 31 March 2005 and 31 March 2004 respectively.

MAINTAINING THE LISTING STATUS OF THE COMPANY

The Stock Exchange has stated that if, at the close of the Offer, less than the minimum prescribed percentage applicable to the Company, being 25% of the issued Shares, are held by the public, or if the Stock Exchange believes that:

a false market exists or may exist in the trading of the Shares; or
that there are insufficient Shares in public hands to maintain an orderly market;

it will consider exercising its discretion to suspend dealings in the Shares until the prescribed level of public float is attained.

The Offeror intends to maintain the listing of the Shares on the Stock Exchange. Each of the Offeror, the Company, the existing Directors and the proposed new Directors will undertake to the Stock Exchange to take appropriate steps following the close of the Offer to ensure that sufficient public float exists in the Shares. The Company would also like to draw the attention of the Shareholders that upon close of the Offer, there may be insufficient public float and accordingly trading of the Shares may be suspended until the prescribed level of public float is attained.

– 9 –

LETTER FROM THE BOARD

The Stock Exchange has also stated that, if the Company remains a listed company, any future injections of assets into or disposals of assets of the Company will be subject to the provisions of the Listing Rules. Pursuant to the Listing Rules, the Stock Exchange has discretion to require the Company to issue a circular to its Shareholders where any acquisition or disposal by the Company is proposed, irrespective of the size of such acquisition or disposal and in particular where such acquisition or disposal represents a departure from the principal activities of Company. The Stock Exchange also has the power pursuant to the Listing Rules to aggregate a series of acquisition or disposal by the Company within 24 months and any such acquisition or disposal may, in any event, result in the Company being treated as a new applicant for listing and subject to the requirements for new applicants as set out in the Listing Rules.

GENERAL

Your attention is drawn to the statutory and general information set out in Appendix III to the Composite Offer Document.

RECOMMENDATIONS

Your attention is drawn to the letter from the Independent Board Committee set out on page 19 of the Composite Offer Document and the letter of advice from AsiaVest which contains, among other things, its advice to the Independent Board Committee in respect of the terms of the Offer and the principal factors and reasons considered by them in arriving at such advice. The text of the letter from AsiaVest is set out on pages 20 to 34 of the Composite Offer Document.

FURTHER INFORMATION

In considering what action to take in connection with the Offer, Independent Shareholders should consider their own tax positions and if they are in doubt, they should consult their professional adviser.

Your attention is also drawn to the letter from Kingston Securities on pages 11 to 18, and the terms of the Offer set out in Appendix I to the Composite Offer Document and the accompanying Form of Acceptance setting out the terms, conditions and procedures for acceptance of the Offer; and other appendices to the Composite Offer Document, containing financial information on the Group, and the information required to be given to the Shareholders in relation to the Offer under the Takeovers Code.

Yours faithfully, For and on behalf of

New Spring Holdings Limited Ng Man Chan Director

– 10 –

LETTER FROM KINGSTON SECURITIES

KINGSTON SECURITIES LIMITED

Suite 2801, 28th Floor One International Finance Centre 1 Harbour View Street, Central, Hong Kong

22 September 2005

To the Independent Shareholders

Dear Sir or Madam,

Mandatory unconditional cash offer by Kingston Securities Limited on behalf of Automatic Result Limited to acquire all the issued shares in New Spring Holdings Limited (other than those already owned by Automatic Result Limited and parties acting in concert with it)

INTRODUCTION

On 1 September 2005, the Company and the Offeror jointly announced that the Offeror entered into the Sale and Purchase Agreement with the Vendor on 25 August 2005, pursuant to which the Offeror agreed to purchase and the Vendor agreed to sell in aggregate 95,000,000 Sale Shares for a total consideration of HK$47,215,000 (equivalent to HK$0.497 per Sale Share). The Sale Shares represent approximately 52.78% of the entire issued share capital of the Company as at the Latest Practicable Date. The Completion took place on 13 September 2005.

Immediately before the acquisition of the Sale Shares, the Offeror did not have any shareholding interest in the Company. Immediately following Completion, the Offeror and its parties acting in concert own an aggregate 95,000,000 Shares, representing approximately 52.78% of the entire issued share capital of the Company as at the Latest Practicable Date, and therefore the Offeror and its concert parties are required to make a mandatory unconditional cash offer pursuant to the Rule 26.1 of the Takeovers Code. Kingston Securities, on behalf of the Offeror, is making the Offer for all the issued Shares not already owned by the Offeror and parties acting in concert with it at HK$0.497 per Share. The principal terms of the Offer are set out under the section headed “The Offer” below.

The letter, together with Appendix I to this document and the accompanying Form of Acceptance, set out, among other things, the terms of the Offer, procedures for acceptance of the Offer, information on the Offeror and the intention of the Offeror regarding the future of the Group.

Shareholders are strongly advised to consider carefully the information contained in the letter from the Board, the letter from the Independent Board Committee to the Independent Shareholders as well as the letter from AsiaVest to the Independent Board Committee set out in this document.

– 11 –

LETTER FROM KINGSTON SECURITIES

THE OFFER

Principal terms of the Offer

Kingston Securities, on behalf of the Offeror, is making a mandatory unconditional cash Offer to all the Shareholders to acquire all the Shares, other than those already owned by the Offeror and parties acting in concert with it, upon the terms set out in the Composite Offer Document and in the accompanying Form of Acceptance, on the following basis:

For each Share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .HK$0.497 in cash

There are no outstanding options, warrants or securities convertible or exchangeable into Shares as at the Latest Practicable Date. The Offer does not involve any issue of unlisted securities.

Comparison of value

The Offer Price of HK$0.497 per Share is the same as the price as agreed to be paid by the Offeror to the Vendor for each Sale Share under the Sale and Purchase Agreement, and represents:

(a) a discount of 0.6% to the closing price of HK$0.50 per Share as quoted on the Stock Exchange on 24 August 2005, being the Last Trading Day;
(b) a discount of approximately 0.1% to the average closing price of HK$0.4975 per Share as quoted on the Stock Exchange over the 10 consecutive trading days up to and including the Last Trading Day;
(c) a premium of approximately 18.4% over the audited net asset value per Share of approximately HK$0.4198 as at 31 March 2005, based on the Company’s annual report for the year ended 31 March 2005; and
(d) a discount of approximately 24.7% to the closing price of HK$0.66 as quoted on the Stock Exchange as at the Latest Practicable Date.

Total consideration

As at the Latest Practicable Date, there are 180,000,000 Shares in issue and there are no outstanding options, warrants or securities convertible or exchangeable into Shares.

On the basis of the Offer Price at HK$0.497 per Share, the entire issued share capital of the Company is valued at approximately HK$89,460,000. The 85,000,000 Shares subject to the Offer are valued at approximately HK$42,245,000 based on the Offer Price. Kingston Securities, being independent of and not connected with the Company and its connected persons (as defined under the Listing Rules), has provided the Offeror with a loan facility for the purpose of financing the total consideration payable by the Offeror for the Offer and both Kingston Corporate Finance and Kingston Securities are satisfied that there are sufficient financial resources available to the Offeror for meeting its obligation in case of a full acceptance of the Offer. The Offeror does not intend that the payment of interest on, repayment of the loan granted under such loan facility will depend to any significant extent on the business of the Company.

– 12 –

LETTER FROM KINGSTON SECURITIES

Effect of accepting the Offer

Payment

Settlement of the consideration to which any accepting Shareholders are entitled under the Offer will be implemented in full in accordance with the terms of the Offer, without regard to any lien, right of set-off, counterclaim or other similar right to which the Offeror may otherwise be, or claim to be, entitled against such accepting Shareholders.

Stamp duty

Compulsory acquisition

The Offeror and parties acting in concert with it do not intend to exercise any right which may be available to it to acquire compulsorily any outstanding issued Shares not acquired under the Offer after it is closed.

INFORMATION ON THE OFFEROR, ITS INTENTION REGARDING THE COMPANY AND PROPOSED CHANGE OF BOARD COMPOSITION OF THE COMPANY

The Offeror is an investment holding company incorporated in the British Virgin Islands on 18 May 2000 with limited liability. The Offeror is wholly and beneficially owned by Mr. Tong. Mr. Liu is the sole director of the Offeror. Before the date of the Sale and Purchase Agreement, the Offeror has not conducted any business since its incorporation, and it does not have any material assets as at the date of the Announcement. Before the date of the Sale and Purchase Agreement, neither the Offeror, Mr. Tong nor the parties acting in concert with any of them owned any Shares or any options, warrants or securities convertible into Shares. Mr. Tong and Mr. Liu have already been acquainted with each other for 5 years and, save as aforesaid and save for the respective ownership and directorship in the Offeror, there is no other relationship between Mr. Tong and Mr. Liu.

– 13 –

LETTER FROM KINGSTON SECURITIES

Following the close of the Offer, the Offeror intends to continue the existing business of the Group and will regularly review its business activities and assets. The Offeror has no intention to discontinue the employment of the employees (save for a change in the composition of the Board) or to dispose of or re-deploy the fixed assets of the Group other than those in its ordinary course of business. The Offeror has no plan on any injection of any assets or businesses into the Company as at the Latest Practicable Date. After reviewing the risk and reward circumstances of the Company, the Offeror considers it to be commercially justifiable in the long run to make investment in the Company.

All existing Directors, namely Mr. Ng and Ms. Li Mi Lai, and all existing independent nonexecutive Directors, namely Mr. Lee Man Kwong, Mr. Leung Siu Cheung and Mr. Lam Kin Kau, Mark, will resign and such resignation will take effect on the first closing date of the Offer in compliance with Rule 7 of the Takeovers Code.

The secretary of the Company, Mr. Cheng Yun Ming Matthew, had been resigned from the position of Company’s secretary effective on 13 September 2005. At the same time, the Company appointed Mr. Hong Kin Choy as its company secretary.

Immediately following the despatch of this Composite Offer Document, three executive Directors and three independent non-executive Directors will be additionally appointed to the Board. No service contract or appointment letter has been entered into between the Company and any of these proposed Directors as at the Latest Practicable Date and therefore their respective terms of employment or appointment and emoluments, if any, have not been fixed as at the Latest Practicable Date. Further announcement will be made upon any appointment of new Directors, including the terms of their appointment and emoluments.

Details of the proposed Directors are set out below:

Proposed Executive Directors

Mr. Tong Kit Shing

Mr. Tong Kit Shing, aged 44, was engaged in metal trading business in the PRC since 1997. Mr. Tong also has been investing in a company, named 江都沿江㶅同水處理發展有限公司 , in the PRC which is principally engaged in the development of water treatment system.

Save as disclosed in this document, Mr. Tong does not have any other relationship with any Directors, senior management, substantial shareholders or controlling shareholders of the Company and he did not hold any directorship of any listed companies in the last three years.

As at the Latest Practicable Date, as Mr. Tong owns the entire issued share capital of the Offeror, he is deemed to be interested in the Sale Shares, representing approximately 52.78% of the existing issued share capital of the Company. Save as aforesaid, Mr. Tong does not have any interests in Shares within the meaning of Part XV of the SFO.

– 14 –

LETTER FROM KINGSTON SECURITIES

Mr. Liu Guoyao

Mr. Liu Guoyao, aged 42, is experienced in the management and business administration in the PRC. Mr. Liu owns a hotel in Dongguan, the PRC and has participated in the day-to-day operation and management thereof as a general manager since 1999.

Save as disclosed in this document, Mr. Liu does not have any other relationship with any Directors, senior management, substantial shareholders or controlling shareholders of the Company and he did not hold any directorship of any listed companies in the last three years.

As at the Latest Practicable Date, as Mr. Liu is the sole director of the Offeror and therefore control the Offeror, he is deemed to be interested in the Sale Shares, representing approximately 52.78% of the Company. Save as aforesaid, Mr. Liu does not have any interests in Shares within the meaning of Part XV of the SFO.

Mr. Cheng Wai Man

Mr. Cheng Wai Man, aged 46, has four years of experience in corporate and marketing management in printing industry. Mr. Cheng currently is engaged in trading of bio-chemical products.

Mr. Cheng does not have any relationship with any Directors, senior management, substantial shareholders or controlling shareholders of the Company and he did not hold any directorship of any listed companies in the last three years.

As at the Latest Practicable Date, Mr. Cheng does not have any interest in the securities of the Company within the meaning of Part XV of the SFO.

Proposed Independent non-executive Directors

Mr. Zhou Yaoming

Mr. Zhou Yaoming, aged 70, graduated with the degree of Bachelor of History from the Zhongshan University, the PRC. Mr. Zhou began his career with the Jinan University, the PRC as its Assistant Professor. He has been the Principal of the Jinan University since 1999 and he is responsible for the general administration in of the Jinan University.

Mr. Zhou does not have any relationship with other Directors, senior management, substantial shareholders or controlling shareholders of the Company. Save as Mr. Zhou is an independent director of Bio-Treat Technology Limited listed on the main board of the Singapore Exchange Securities Trading Limited, he did not hold any directorship of any listed companies in the last three years.

As at the Latest Practicable Date, Mr. Zhou does not have any interest in the securities of the Company within the meaning of Part XV of the SFO.

– 15 –

LETTER FROM KINGSTON SECURITIES

Mr. Lin Jian

Mr. Lin Jian, aged 70, working at Jinan University in Guangzhou, the PRC as a professor in Biological Engineering. He had also held various local social offices including Committee Member of the Scientific Technology Consultancy Committee of the Government of the Guangdong Province and the Managing Director of the Biological Engineering Society of the Guangdong Province.

Mr. Lin is also an independent non-executive director of Global Green Tech Group Limited, a company listed on the Stock Exchange. Mr. Lin does not have any relationship with any Directors, senior management, substantial shareholders or controlling shareholders of the Company.

As at the Latest Practicable Date, Mr. Lin does not have any interest in the securities of the Company within the meaning of Part XV of the SFO.

Mr. So Yin Wai

Mr. So Yin Wai, Alex, aged 43, graduated from Hong Kong Polytechnic University in 1986 and has been in the accounting profession for nearly 20 years. He is an associate of the Association of Chartered Certified Accountants in the United Kingdom and a member of the Hong Kong Institute of Certified Public Accountants. He had worked for Peat Marwick & Co. and Kwan Wong Tan & Fong and been involved in the audit of a number of international and local engagements and listed companies. He is currently the sole practitioner of his own firm Alex So & Co (Certified Public Accountants). Apart from auditing, Mr. So also specializes in company secretarial, tax planning and management consultancy matters. Mr. So is currently the Vice-Chairman of China Business Association. He is the Honorary Auditor of a number of voluntary organizations, including HK Parkinson’s Disease Foundation, Life Currents and Caring Centre Foundation Ltd.

Mr. So does not have any relationship with any Directors, senior management, substantial shareholders or controlling shareholders of the Company and he did not hold any directorship of any listed companies in the last three years.

As at the Latest Practicable Date, Mr. So does not have any interest in the securities of the Company within the meaning of Part XV of the SFO.

MAINTAINING THE LISTING STATUS OF THE COMPANY

a false market exists or may exist in the trading of the Shares; or
that there are insufficient Shares in public hands to maintain an orderly market,

it will consider exercising its discretion to suspend dealings in the Shares until the prescribed level of public float is attained.

– 16 –

LETTER FROM KINGSTON SECURITIES

FURTHER TERMS OF THE OFFER

Further terms and conditions of the Offer, including procedures for acceptance and the acceptance period, are set out in Appendix I to the Composite Offer Document and the Form of Acceptance.

TAXATION

Shareholders are recommended to consult their own professional advisers if they are in any doubt as to taxation implications of their accepting the Offer. It is emphasized that none of the Company, the Offeror, Kingston Corporate Finance or Kingston Securities or any of their respective directors or any persons involved in the Offer accepts responsibility for any tax effects on, or liabilities of, any person or persons as a result of their acceptance of the Offer.

GENERAL

To ensure equality of treatment of all Shareholders, those registered Shareholders who hold Shares as nominee for more than one beneficial owner should, as far as practicable, treat the holding of each beneficial owner separately. In order for the beneficial owners of the Shares whose investments are registered in nominee names to accept the Offer, it is essential that they provide instructions to their nominees of their intentions with regard to the Offer.

The attention of Overseas Shareholders is drawn to the section headed “Overseas Shareholders” in Appendix I to the Composite Offer Document.

All documents and remittances sent to Shareholders by ordinary post will be sent to them at their own risk. Such documents and remittances will be sent to Shareholders at their respective addresses as they appear in the register of members of the Company or, in the case of joint Shareholders, to the Shareholder whose name stands first in the register of members of the Company, as applicable. None of

– 17 –

LETTER FROM KINGSTON SECURITIES

the Company, the Offeror, Kingston Corporate Finance or Kingston Securities or any of their respective directors or any other person involved in the Offer will be responsible for any loss or delay in transmission or any other liabilities that may arise as a result thereof.

Independent Shareholders are strongly advised to consider carefully the information contained in the letter from the Board, the letter from the Independent Board Committee and the letter from AsiaVest set out in the Composite Offer Document.

Your attention is drawn to the additional information set out in the Appendices and accompanying Form of Acceptance, which form part of the Composite Offer Document.

Yours faithfully, For and on behalf of

Kingston Securities Limited Nicholas Chu Director

– 18 –

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

(Incorporated in Cayman Islands with limited liability)

(Stock Code: 690)

22 September 2005

To the Independent Shareholders

Dear Sir or Madam,

Mandatory unconditional cash offer by Kingston Securities Limited on behalf of Automatic Result Limited to acquire all the issued shares in New Spring Holdings Limited (other than those already owned by Automatic Result Limited and parties acting in concert with it)

The Independent Board Committee refers to the composite offer document dated 22 September 2005 issued jointly by the Offeror and the Company (the “Composite Offer Document”), of which this letter forms part. Terms defined in the Composite Offer Document shall bear the same meanings when used herein unless the context requires otherwise.

As Directors who are independent of the Offeror or the parties acting in concert with it and have no interest in the Offer, we have been appointed to form the Independent Board Committee to consider the terms of the Offer and AsiaVest has been appointed as the independent financial adviser to advise us as to whether the terms of the Offer are fair and reasonable so far as the Independent Shareholders are concerned and whether the Independent Board Committee should recommend the Independent Shareholders to accept the Offer.

Your attention is drawn to the “Letter from the Board” and the “Letter from Kingston Securities” set out on pages 6 to 19 of the Composite Offer Document and the “Letter from AsiaVest” setting out its advice to us regarding the Offer as set out on pages 20 to 34 of the Composite Offer Document. Having considered the advice given in the letter from AsiaVest, we concur with AsiaVest’s advice and recommend the Independent Shareholders to accept the Offer.

Notwithstanding our recommendation, the Independent Shareholders should consider carefully the terms and conditions of the Offer.

Yours faithfully,

For and on behalf of Independent Board Committee Lee Man Kwong Leung Siu Cheung Lam Kin Kau, Mark Independent Independent Independent non-executive Director non-executive Director non-executive Director

* For identification purpose only

– 19 –

LETTER FROM ASIAVEST

The following is the text of the letter of advice from AsiaVest to the Independent Board Committee in relation to the Offer for the purpose of inclusion in the Composite Offer Document.

ASIAVEST INVESTMENT ADVISORY LIMITED

Suite 3105, Alexandra House 16-20 Chater Road, Central Hong Kong

22 September 2005

To the Independent Board Committee

of New Spring Holdings Limited (“the Company”)

Dear Sir/Madam,

Mandatory unconditional cash offer by Kingston Securities Limited on behalf of Automatic Result Limited

to acquire all the issued shares of New Spring Holdings Limited (other than already owned by Automatic Result Limited and parties acting in concert with it)

INTRODUCTION

We refer to our appointment as the independent financial adviser to advise the Independent Board Committee in respect of the Offer. Details of the Offer are set out in the composite offer and response document dated 22 September 2005 (the “Document”) to the Independent Shareholders, of which this letter forms part. Terms used in this letter shall have the same meanings as defined in the Document unless the context otherwise requires.

The Independent Board Committee has been established to advise the Independent Shareholders in relation to the Offer. We have been appointed to advise the Independent Board Committee as to whether the terms of the Offer are fair and reasonable so far as the Independent Shareholders are concerned, and to give our opinion to the Independent Board Committee in relation to the Offer for their consideration in making recommendation to the Independent Shareholders.

– 20 –

LETTER FROM ASIAVEST

In assessing the eligibility of the Directors to be a member of the Independent Board Committee, we have considered and taken into account the confirmation made by each of the Directors in respect of their interest, if any, in the Company. Mr. Ng is an executive Director and the sole shareholder and director of the Vendor. Ms. Li Mi Lai, an executive Director, is the spouse of Mr. Ng and also a salaried employee of the Company. Therefore, Mr. Ng and Ms. Li are deemed to be interested in the Offers and we consider that they are not sufficiently independent in making any recommendation in relation to the Offer and are not eligible to be members of the Independent Board Committee.

The Board currently comprises three independent non-executive directors, namely, Mr. Lee Man Kwong, Mr. Leung Siu Cheung and Mr. Lam Kin Kau Mark. Accordingly, an independent board committee comprising of the three independent non-executive directors has been formed to advise the Independent Shareholders.

BASIS OF OUR OPINION

In formulating our opinion, we have relied on the information, facts and representations contained or referred to in the Document and the information, facts and representations provided by, and the opinions expressed by the Company and the Directors. We have assumed that all information, facts, opinions and representations made or referred to in the Document were true, accurate and complete at the time they were made and continued to be true, accurate and complete at the date of the Document. We have no reason to doubt the truth, accuracy and completeness of the information, facts, opinions and representations provided to us by the Company and the Directors. The Directors have confirmed to us that no material facts have been omitted from the information supplied and opinions expressed; thus we have no reason to doubt that any relevant material facts have been withheld or omitted from the information provided and referred to in the Document, or the reasonableness of the opinions and representations provided to us by the Company. We have relied on such information and opinions and have not, however conducted any independent investigation into the business affairs, financial position or prospects of the Company nor have we carried out any independent verification of the information supplied. We have however obtained and reviewed sufficient information to support the bases of our opinion.

The information in the Document regarding the Offeror, has been supplied by the Offeror. The sole director of the Offeror accepts full responsibility for the accuracy of the information contained in the Document (other than information relating to the Company and the Vendor) and confirms, having made all reasonable enquiries, that to the best of his knowledge, opinions expressed in the Document have been arrived at after due and careful consideration and there are no other facts not contained in this Document the omission of which would make any such statement contained in the Document misleading.

We have not considered the tax implications on the Independent Shareholders of their acceptances or non-acceptances of the Offer since these are particular to their own individual circumstances. We will not accept responsibility of any tax effect on, or liabilities of, any person resulting from holding of or dealing in the Offer Shares or otherwise. In particular, the Independent Shareholders who are residents outside Hong Kong or subject to overseas taxes or Hong Kong taxation on securities dealings should consider their own tax positions with regard to the Offer and, if in doubt, should consult their own professional advisers.

– 21 –

LETTER FROM ASIAVEST

PRINCIPAL FACTORS AND REASONS CONSIDERED

In formulating our opinion, we have taken into consideration the following principal factors and reasons:

1. Background information

The principal activities of the Company comprise the manufacturing and trading of packaging products, paper gifts items, promotional products and investment holding.

On 1 September 2005, the Company and the Offeror jointly announced that the Vendor, with Mr. Ng as warrantor, entered into the Sales and Purchase Agreement on 25 August 2005 with the Offeror as purchaser, pursuant to which the Vendor has conditionally agreed to sell, and the Offeror has conditionally agreed to purchase, the Sale Shares for an aggregate cash consideration of HK$47,215,000 equivalent to HK$0.497 per Sale Share. The 95,000,000 Sale Shares represent the entire beneficial interests in the Company owned by the Vendor prior to Completion and approximately 52.78% of the entire issued share capital of the Company as at the Latest Practicable Date. Completion of the Sales and Purchase Agreement is subject to, among other things, the following conditions being fulfilled.

(a) the Shares remaining listed and traded on the main board of the Stock Exchange at all times from the date of the Sale and Purchase Agreement to the date of Completion, save for (i) any suspension due to any act or omission on the part of the Offeror; (ii) any suspension for less than seven business days; or (iii) any suspension due to or for the purpose of any of the transactions contemplated under the Sale and Purchase Agreement and the Offer, and no indication being received on or before the date of Completion from the SFC or the Stock Exchange to the effect that the listing of the Shares on the main board of the Stock Exchange will or may be withdrawn or objected to (or conditions will or may be attached thereto) as a result of Completion or in connection with the Sale and Purchase Agreement (including, but not limited to, in connection with an allegation that the Company is no longer suitable for listing);
(b) the relevant corporate guarantees given by the Company in respect of certain banking and/ or credit facilities granted to the Company having been fully released, and/or the relevant bank and financial institutions having given written agreements in principle that the such guarantees will be fully released subject to satisfaction of such conditions as the Purchaser may agree, and all such conditions having been completely satisfied; and
(c) all waivers, consents and approvals from any third parties required in connection with the Sale and Purchase Agreement having been obtained.

Immediately after Completion, the Offeror and parties acting in concert with it owned an aggregate of 95,000,000 Shares, representing approximately 52.78% of the entire issued share capital of the Company as at Latest Practicable Date. Under Rule 26.1 of the Takeovers Code, the Offeror is required to make a mandatory unconditional cash offer for all the issued Shares not already owned by the Offeror and parties acting in concert with it.

– 22 –

LETTER FROM ASIAVEST

2. Principal terms of the offer

Kingston Securities on behalf of the Offeror, makes a mandatory unconditional cash offer to all the Shareholders to acquire all the Shares, other than those held by the Offeror and parties acting in concert with it, on terms set out in the Composite Offer Document in accordance with the Takeovers Code on the following basis:

For each Share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .HK$0.497 in cash

The Offer Price is the same as the price paid by the Offeror for each Sale Share under the Sale and Purchase Agreement.

There are no outstanding options, warrants or securities convertible or exchangeable into Shares as at the date of this letter.

Further terms and conditions of the Offer, including the procedures for acceptance, are set out in the Composite Offer Document.

3. Financial performance of the Company

A summary of the audited consolidated results of the Company for the three years ended 31 March 2005 are set out below:

Turnover Profit/(Loss) before taxation Net (loss) attributable to Shareholders (Loss) per Share	Year 2005 HK$’000 134,270 663 (87) (0.05¢)	ended 31 March 2004 2003 HK$’000 HK$’000 146,239 156,042 (13,728) (4,030) (18,880) (5,384) (10.50¢) (3.00¢)

As reported, for the year ended 31 March 2004, the Company was confronted with a lethargic macroeconomic environment and as further aggravated by the emanating outbreak of SARS (Severe Acute Respiratory Syndrome) during the first half of that financial year, which hampered the consumer confidence and business sentiments in the retail market generally. The demands for packaging materials, paper gift and promotional items were then temporarily suppressed. The said temporary adverse effect has nevertheless an exaggerated impact on the Company operating performance during that year. Furthermore, the profit margin of the Company’s business was generally pressurized as a result of the competitive pricing adopted and sharp increases in production costs, particularly in relation to the considerable rises in paper cost and other operating charges resulting from unfavorable oil price fluctuations, during the financial year in discussion.

– 23 –

LETTER FROM ASIAVEST

For the year ended 31 March 2005, the Company recorded a consolidated turnover of approximately HK$134.3 million (2004: approximately HK$146.2 million), representing a decrease of 8.1% as compared to prior financial year. Net loss attributable to Shareholders was HK$0.09 million (2004: net loss of approximately HK$18.9 million) with loss per share of HK$0.05 cents (2004: loss per share of HK$10.5 cents).

The management indicated that the year 2004/2005 was another difficult operating year for the Company whereas the increase in material costs (especially in terms of the worldwide increase in paper and oil prices), interrupted electricity supply and shortage in labor supply in Guangdong province continued to pose challenges to the Company business operation. Notwithstanding the aforesaid, with the rejuvenation of retail business coupled with the Group’s stringent retrenchment control and improved production efficiency, the Company successfully minimized its loss attributable to shareholders from HK$18.9 million in last year to approximately HK$0.09 million for the year ended 31 March 2005.

Packaging printing division remained to be the Company’s biggest revenue generator contributing over 50.20% of the Company total revenue. Notwithstanding the Company’s effort in actively participating local and overseas exhibitions, in light of the keen market and price competitions, the packaging printing division recorded a decrease in divisional turnover during the year ended 31 March 2005.

Since September 2004, the management had, in response to the said unfavorable production constraints (in terms of electricity shortage and scare labor supply), the Company restructured and consolidated its production facilities and workflow in Sha Jing, Shenzhen. With the implementation of such restructuring, the unfavorable impact as caused by the interrupted provincial electricity supply and labor shortage was, to certain extent, alleviated. Such restructuring also enabled the Company to better utilize its production facilities and resources on higher profit margin products.

Due to the said production restructuring resulting from the change in the Company’s strategy in response to the said production constraints, the turnover of the paper gift division decreased by 67.3% over prior year and recorded a turnover of approximately HK$9.7 million, which accounted for approximately only 7.2% of the Group’s operation.

Looking ahead in this financial year, it was reported in the Ink World, a European publication, that worries among ink producers and distributors about the rising costs of providing services have been overshadowed in the year 2004 by anxieties about the spiraling cost of raw materials.

Much of these have stemmed from the soaring cost of crude oil, which has impacted chemicals made from petrochemicals. There have been shortages of a wide range of materials worldwide, which have pushed prices. These have not only been caused by the power of China to acquire a huge amount of imports but by low investment in Europe in upstream chemical plants and even in some refinery units. Cutbacks in benzene capacity in refineries around the world have had a ripple effect on the price of a variety of derivatives, particularly in the ink and coatings markets.

– 24 –

LETTER FROM ASIAVEST

As a result of price escalation of raw materials for the printing industry, and the operational uncertainties faced by the Company as stated above, with particular reference to the decision of the principal shareholder to dispose of his controlling shares in the Company, we are unable to form an opinion as to whether the success achieved by Company in minimizing loss for the its year ended 31 March 2005 will continue for the coming year. Furthermore, for the three years ended 31 March 2005, the Company has not paid or declared any dividend to Shareholders due to unsatisfactory performance of the Company.

4. The Share Offer Price

The Offer Price of HK$0.497 per Share is the same as the price as agreed to be paid by the Offeror to the Vendor for each Sales Shares under the Sales and Purchase Agreement and represents:

(i) a discount of approximately 0.6% to the closing price of HK$0.50 per Share as quoted on the Stock Exchange on 24 August 2005, being the last full trading day prior to the suspension of trading of the Shares on 25 August 2005. (the “ Lasting Trading Day ”);
(ii) a discount of approximately 0.1% to the average closing price of approximately HK$0.4975 per Share as quoted on the Stock Exchange for the last 10 trading days up to and including the Last Trading Day;
(iii) a discount of approximately 0.4% to the average closing price of HK$0.4993 per Share as quoted on the Stock Exchange for the last 50 trading days up to and including the Last Trading Day;
(iv) a premium of approximately 18.4% over the audited consolidated net asset value per Share of approximately HK$0.4198 as at 31 March 2005 (based on audited consolidated net assets of approximately HK$75,550,000 as at 31 March 2005 and 180,000,000 Shares in issue).

– 25 –

LETTER FROM ASIAVEST

5. Historical share price performance and liquidity of the Shares

(i) Share Price

The chart below illustrates the historical simple moving average prices of the Shares traded on the Stock Exchange from August 2004 to August 2005. The closing price as at the Last Trading Day on 24 August 2005 was HK$0.50 (“ Review Period ”). (Source: Bloomberg)

Closing Price

==> picture [427 x 181] intentionally omitted <==

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

1.00
0.90
0.80
0.70
0.60
Offer Price $0.497
0.50
0.40
0.30
0.20
Aug- Sep- Oct- Nov- Dec- Jan- Feb- Mar- Apr- May- Jun- Jul- Aug-
04 04 04 04 04 05 05 05 05 05 05 05 05
SMAVG on close (10 days) = HK$0.50 SMAVG on close (50 days) = HK$0.4993
Sources: 2005 Bloomberg LP
HK$
----- End of picture text -----

From August 2004 to the Last Trading Day, the closing prices of the Shares had been steadily moving downward from its highest closing price of HK$0.78 per share in 22 September 2004 to its lowest closing price of HK$0.40 per share in 16 June 2005. Since 16 June 2005 the Share prices had been traded upward to HK$0.50 per Share until the trading of the Shares were suspended, pending for the issue of the Announcement.

It is observed that the Shares have traded at level slightly below the Offer Price since June 2005 and remained close to the Offer Price of HK$0.497 for almost a two months period. The Company was having an average closing price of HK$0.4993 per Share for the last 50 trading days up to and including the Last Trading Day and the discount on the share Offer Price is only 0.4% to this average closing price. We are therefore of the view that the Offer Price is fair and reasonable on the basis of market price of Shares.

– 26 –

LETTER FROM ASIAVEST

(ii) Liquidity of the Shares

The following table sets out the total number of Shares traded per month and the respective percentages of monthly trading volume compared to the issued share capital of the Company and the Shares held by the public during the Review Period.

			Percentage of
		Percentage of	average daily
		average trading	trading volume
		volume for the	for the month
		month to total	to total number
		number of issued	of Shares held by
		Shares as at the	the public as at the
		Last Trading Day	Last Trading Day
Month/period	Total trading volume	(Note a)	(Note b)
	(Shares)	%	%
August 2005_(Note c)_	140,000	0.078	0.160
July 2005	200,000	0.111	0.240
June 2005	5,072,000	2.817	5.960
May 2005	620,000	0.344	0.729
April 2005	1,520,000	0.844	1.788
March 2005	360,000	1.200	0.423
February 2005	172,000	0.095	0.200
January 2005	442,000	0.245	0.520
December 2004	250,000	0.139	0.294
November 2004	40,000	0.022	0.047
October 2004	0	N/A	N/A
September 2004	10,000	0.005	0.01
August 2004	4,000	Negligible	Negligible

Source: 2005 Bloomberg LP

Notes: (a) total number of issued Shares is 180 million Shares

(b) total number of Share held by the public is 85 million Shares

– 27 –

LETTER FROM ASIAVEST

Trading Volume

==> picture [365 x 219] intentionally omitted <==

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

6,000
5,500
5,000
4,500
4,000
3,500
3,000
2,500
2,000
1,500
1,000
500
0
Aug- Sep- Oct- Nov- Dec- Jan- Feb- Mar- Apr- May- Jun- Jul- Aug-
04 04 04 04 04 05 05 05 05 05 05 05 05
Sources: 2005 Bloomberg LP
No. of Shares
----- End of picture text -----

During the Review Period, the trading volume of the Shares was extremely thin with the highest volumes in June 2005, having five million Shares changed hand. We made enquiry regarding the volume of trading of Shares for June, 2005 and the Company confirmed to us that they are not aware of any reasons for such increase. Despite the exceptional, the trading volume for the months of June 2005 and April 2005 still only represent 2.8% and 0.85% respectively to total number of issued Shares as at the Last Trading Day. During the Review Period, the total monthly turnover of the Shares was consistently no more than 1% of the Shares held by public except June 2005 and April 2005 as stated above, and no trading of the Shares was recorded in the entire month of October 2004. Given the low liquidity in trading of the Shares, we are of the opinion that, while the Offer Price is only at a discount of 0.6% to the closing price of the Shares on the Last Trading Day, Shareholders might find it difficult to dispose of their Shares in the open market, and if possible, without exerting downward pressure on the price of the Shares. The Offer therefore provides an alternative exit opportunity at a price close to the average closing price of the Shares as discussed above to the Independent Shareholders to realize their investment in the Company and therefore is fair and reasonable.

6. Market comparables

Comparison with other Listed Issuers

To assess the fairness and reasonableness of the Offer Price, we attempted to review companies listed on the Stock Exchange which are primarily engaged in the business of packaging and printing. However, based on information published on the website of the Stock Exchange, there is no other listed company which is principally engaged in exactly the same activities of the Company. Nevertheless, we have identified three other companies listed on the Stock Exchange which business activities appear to be close enough for analysis.

Independent Shareholders should note that these other Listed Issuers (“Comparables”) are not directly comparable to the Company since their business nature only matches some of the Company’s activities. The purpose of showing the Comparables is to provide additional information to the Shareholders on the performance of companies which are engaged in industry of packaging and printing.

– 28 –

LETTER FROM ASIAVEST

We set out below a table comparing the Company with the Comparables: (i) the closing prices of their shares as at the Last Trading Day; (ii) profit as reported in the latest published annual report; (iii) price earning ratio (‘PER’); (iv) net asset value per share; and (v) the premium/ discount of the market price as at the Last Trading Day to net asset value per share.

					Market price
					as at the
				Net asset value	Last Trading
				per share	Day to net
	Closing price			as at the	asset value
	of shares as	Latest audited	PER as at	latest audited	per share
	at the Last	profit/(loss)	the Last	financial year	%
Company	Trading Day	per share	Trading Day	end date	Premium/
(Stock code)	(HK$)	(HK$)	(Times)	(HK$)	(Discount)
New Island Printing Holdings Ltd	0.65	0.0178	36.50	1.172	(44.54)%
(377)
– Printing and manufacturing of
high quality, multi-color
packaging products and
carton boxes; printing of books,
brochures and other paper
products
Midas International Holdings Ltd.	0.56	0.1090	5.10	1.030	(49.57)%
(1172)
– Printing and property investment
and development
SNP Leefung Holdings Ltd. (623)	1.18	0.1230	9.60	1.809	(35.69)%
– Printing of books, magazines,
packaging products and
financial printing
The Company (690)	0.50	(0.0005)	N/A	0.4197	18.00%
– Manufacture and sale of		(Loss Per Share)
packaging products and paper
gift items and the printing of
paper promotional materials
in accordance with customers’
designs and specifications

Sources: The Stock Exchange of Hong Kong Limited

– 29 –

LETTER FROM ASIAVEST

Price Earning Ratio (PER)

One of the most commonly used reference for valuing a company is the PER based on its historical earnings. However, since the Company incurred losses during the past three financial years, the use of the PER as reference to assess the Share Offer Price is not applicable. Having regard to the limitation of using PER for this analysis, Investors appear to value the Company favorably despite the unavailability of the Price-Earning multiple. All other Comparables are traded at PER multiple ranging from 5.10 – 36.5. We are therefore of the view that the Offer Price is fair and reasonable even the Company was reporting losses for the last three years.

Net Asset Value (NAV)

The market prices of shares of the Comparables are trading at discount ranging between approximately 36% to approximately 50% to their NAV. In comparison, the Offer Price is at a premium of approximately 18% over the NAV of the Company. On this basis, we are of the view that the Offer Price is fair and reasonable in terms of premium to net asset values.

7. Intention of the Offeror

The Offeror is an investment holding company incorporated in the British Virgin Islands on 18 May 2000 with limited liability. The Offeror is wholly and beneficially owned by Mr. Tong. Mr. Liu is the sole director of the Offeror. Before the date of the Sale and Purchase Agreement, the Offeror has not conducted any business since its incorporation, and it does not have any material assets as at the Last Practicable Date. Before the date of the Sale and Purchase Agreement, neither the Offeror, Mr. Tong nor the parties acting in concert with any of them owned any Shares or any options, warrants or securities convertible into Shares. Mr. Tong and Mr. Liu have already been acquainted with each other for 5 years and, save as aforesaid and save for the respective ownership and directorship in the Offeror, there is no other relationship between Mr. Tong and Mr. Liu.

Following the close of the Offer, the Offeror intends to continue the existing business of the Company and will regularly review its business activities and assets. The Offeror has no intention to discontinue the employment of the employees (save for a change in the composition of the Board) or to dispose of or re-deploy the assets of the Company other than those in its ordinary course of business. The Offeror has no plan on any injection of any assets or business into the Company as at the date of this announcement.

– 30 –

LETTER FROM ASIAVEST

Immediately following the dispatch of these Composite Offer Document, three executive Directors and three independent non-executive Directors will be appointed to the Board. No services contract or appointment letter has been entered into between the Company and any of these proposed Directors as at the Latest Practicable Date and therefore their respective terms of employment or appointment and emoluments, if any have not been fixed as at the Latest Practicable Date. Further announcement will be made upon any appointment of new Directors.

Details of the proposed Directors are set out below:

Proposed Executive Directors

Mr. Tong Kit Shing

Mr. Tong Kit Shing, aged 44, was engaged in metal trading business in the PRC since 1997. Mr. Tong also has been investing in a company in the PRC which is principally engaged in the development of water treatment system.

Save as disclosed in this document, Mr. Tong does not have any other relationship with any Directors, senior management, substantial shareholders or controlling shareholders of the Company.

As at the Latest Practicable Date, as Mr. Tong owns the entire issued share capital at the Offeror, he is deemed to the interested in the Sale Shares, representing approximately 52.78% of the existing issued share capital of the Company. Save Mr. Tong does not have any interests in Shares within the meaning of Part XV of the SFO.

Mr. Liu Guoyao

Save as disclosed in this document, Mr. Tong does not have any other relationship with any Directors, senior management, substantial shareholders or controlling shareholders of the Company and he does not hold any directorship of any listed companies in the last three years.

As at the Latest Practicable Date, as Mr. Tong owns the entire issued share capital at the Offeror, he is deemed to the interested in the Sale Shares, representing approximately 52.78% of the existing issued share capital of the Company. Save as disclosed Mr. Liu does not have any interests in Shares within the meaning of Part XV of the SFO.

Mr. Cheng Wai Man

Mr. Cheng Wai Man, Simon aged 46, has four years of experience in corporate and marketing management in printing industry. Mr. Cheng currently is engaged in trading of bio-chemical products.

– 31 –

LETTER FROM ASIAVEST

As at the Latest Practicable Date, as Mr. Cheng does not have any interests in the securities of the Company within the meaning of XV of the SFO.

Proposed independent non-executive Directors

Mr. Zhou Yaoming

Mr. Zhou does not have any relationship with any Directors, senior management, substantial shareholders or controlling shareholders of the Company. Save as Mr. Zhou is an independent director of Bio-Treat Technology Limited listed on the main board of Singapore Exchange Securities Trading Limited, he did not hold any directorship of any listed companies in the last three years.

As at the Latest Practicable Date, as Mr. Zhou does not have any interests in the securities of the Company within the meaning of XV of the SFO.

Mr. Lin Jian

Mr. Lin Jian, aged 70, working at Jinan University in Guangzhou, the PRC as a professor in Biological Engineering. He had also held various local social offices including Committee Member of the Technology Consultancy Committee of the Government of the Guangdong Province and the Managing Director of the Biological Engineering Society of the Guangdong Province.

Mr. Lin is also independent non-executive director of Global Green Tech Group Limited, a company listed on the Stock Exchange. Mr. Lin does not have any relationship with any Directors, senior management, substantial shareholders or controlling shareholders of the Company.

As at the Latest Practicable Date, as Mr. Lin does not have any interests in the securities of the Company within the meaning of XV of the SFO.

Mr. So Yin Wai

– 32 –

LETTER FROM ASIAVEST

Public Accountants). Apart from auditing, Mr. So also specializes in company secretarial, tax planning and management consultancy matters. Mr. So is currently the Vice-Chairman of China Business Association. He is the Honorary Auditor of a number of Voluntary organization, including HK Parkinson’s Disease Foundation, Life Currents and Caring Centre Foundation Ltd.

As at the Latest Practicable Date, as Mr. So does not have any interests in the securities of the Company within the meaning of XV of the SFO.

Based on the aforesaid, it is noted that the principal business of the Company shall not change in the near future, however the business plans and strategies for the future business development of the Company are still under review by the Offeror. The Company’s new management team and new Directors, after the resignations of the existing Directors, do not appear to have any direct experience in the principal activities of the Company and there is no assurance that the Company financial performance will turn-around in the near future. Given the above uncertainties, unless Independent Shareholders are confident with the business prospects and future management of the Company, we are of the view that the Offer represents an opportunity for Independent Shareholders to realize their investment in the Company.

8. Recommendation

In arriving at our recommendation in respect of the Offer, we have considered the principal factors as summarized below:

The Company has been making losses in the three years ended 31 March 2005 and no dividend has been declared or paid to Shareholders during the three years ended 31 March 2005;
The Offer Price represents a premium of approximately 18.4% over the latest audited net assets value of the Group.
The Offer Price was at the discount of mere 0.4% to the average closing price of HK$0.4993 per shares for the last 50 trading days up to and including the Last Trading Day.
The historical liquidity and trading volume of the Shares had been low. It may be difficult for the Independent Shareholders to dispose of their Shares in the market although the current prices of Shares are trading above the Share Offer Price. There is no assurance that prices of the Shares will remain at the current level after the closing of the Offer; and
The future business development and prospects of the Company remain uncertain.

– 33 –

LETTER FROM ASIAVEST

Based on the above, we are of the view that the Offer is fair and reasonable so far as the Independent Shareholders are concerned. Accordingly, we recommend the Independent Board Committee to advise the Independent Shareholders to accept the Share Offer.

However, we would also like to advise the Independent Board Committee to recommend those Independent Shareholders who intend to accept the Offer to closely monitor the price and liquidity of the Shares in the market during the period of the Offer, and to consider selling their Shares in the market rather than accepting the Offer, if the net proceeds of such sale would exceed the amount receivable under the Offer.

For those Independent Shareholders who wish to retain part or all of their investments in the Shares, they should carefully consider the future intentions of the Offeror regarding the Company and the implication of possible suspension of dealings in Shares, the details of which are set out in the Letter and the “Letter from Kingston Securities” contained in the Composite Offer Document.

Independent Shareholders should read carefully the procedures for accepting the Offer as detailed in Appendix I and the accompanying Form of Acceptance to the Composite Offer Document.

Yours faithfully, For and on behalf of

AsiaVest Investment Advisory Limited

Andrew Sherrill Raymond Mum Lam Lo Executive Director Executive Director Responsible Officer Responsible Officer

– 34 –

FURTHER TERMS OF THE OFFER

APPENDIX I

1. PROCEDURE FOR ACCEPTANCE

If the Share certificate(s) and/or transfer receipt(s) and/or any other document(s) of title in respect of your Shares are in your name, and you wish to accept the Offer, you must send the duly completed Form of Acceptance together with the relevant Share certificate(s) and/or transfer receipt(s) and/or any other document(s) of title (and/or any indemnity or indemnities required in respect thereof), to the Registrar, Abacus Share Registrars Limited of G/F, Bank of East Asia Harbour View Centre, 56 Gloucester Road, Wanchai, Hong Kong in any event not later than 4:00 p.m. on Thursday, 13 October 2005 or such later time and/or date as the Offeror may determine and announce in accordance with the Takeovers Code.

If the Share certificate(s) and/or transfer receipt(s) and/or any other document(s) of title in respect of your Shares is in the name of a nominee company or some name other than your own, and you wish to accept the Offer whether in full or in respect of part of your holding of Shares, you must either:

(a) lodge your Share certificate(s) and/or transfer receipt(s) and/or any other document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) with the nominee company, or other nominee, with instructions authorising it to accept the Offer on your behalf and requesting it to deliver the relevant Form of Acceptance duly completed together with the relevant share certificate(s) and/or transfer receipt(s) and/or any other document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) to the Registrar; or
(b) arrange for the Shares to be registered in your name by the Company through the Registrar and send the relevant Form of Acceptance duly completed together with the relevant share certificate(s) and/or transfer receipt(s) and/or any other document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) to the Registrar; or
(c) if your Shares have been lodged with your licensed securities dealer in securities/custodian bank through CCASS, instruct your licensed securities dealer in securities/custodian bank to authorise HKSCC Nominees Limited to accept the Offer on your behalf on or before the deadline set out by HKSCC Nominees Limited. In order to meet the deadline set by HKSCC Nominees Limited, you should check with your licensed securities dealer in securities/ custodian bank for the timing on processing of your instruction, and submit your instruction to your licensed securities dealer in securities/custodian bank as required by them; or
(d) if your Shares have been lodged with your Investor Participant’s Account with CCASS, authorise your instruction via the CCASS Phone System or CCASS Internet System on or before the deadline set out by HKSCC Nominees Limited.

If the Share certificate(s) and/or transfer receipt(s) and/or any other document(s) of title in respect of your Shares (and/or any satisfactory or indemnity indemnities required in respect thereof) is not readily available and/or is lost and you wish to accept the Offer, as the case may be, the relevant Form of Acceptance should nevertheless be completed and delivered to the Registrar together with a letter stating that you have lost one or more of your Share certificate(s) and/or transfer receipts and/or other document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) or that it/they is/are

– 35 –

FURTHER TERMS OF THE OFFER

APPENDIX I

not readily available. If you find such document(s) or if it/they become available, the relevant Share certificate(s) and/or transfer receipt(s) and/or any other document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) should be forwarded to the Registrar as soon as possible thereafter. If you have lost your Share certificate(s), you should also write to the Registrar a letter of indemnity which, when completed in accordance with the instruction given, should be returned to the Registrar.

If you have lodged transfer(s) of any of your Shares for registration in your name and have not yet received your Share certificate(s), and you wish to accept the Offer, you should nevertheless complete the relevant Form of Acceptance and deliver it/them to the Registrar together with the transfer receipt(s) duly signed by yourself. Such action will be deemed to be an irrevocable authority to any of Kingston Securities, the Offeror or their respective agent(s) to collect from the Company or the Registrar on your behalf the relevant Share certificate(s) when issued and to deliver such certificates to the Registrar and to authorise and instruct the Registrar to hold such certificate(s), subject to the terms and conditions of the Offer, as if it/they were delivered to the Registrar with the relevant Form of Acceptance.

An acceptance may not be counted as valid unless:

(a) it is received by the Registrar on or before the latest time for acceptance at 4:00 p.m. on Thursday, 13 October 2005 or such later time and/or date as the Offeror may determine and announce in accordance with the Takeovers Code and the Registrar has recorded that the acceptance has been so received; and
(b) the Form of Acceptance is duly completed and is:
(i) accompanied by Share certificate(s) and/or transfer receipt(s) and/or any other document(s) of title in respect of the relevant Shares (and/or any satisfactory indemnity or indemnities required in respect thereof) and, if those certificate(s) are not in the name of the acceptor, such other documents (e.g. a duty stamped transfer of the relevant Shares in blank or in favour of the acceptor executed by the registered holder) in order to establish the right of the acceptor to become the registered holder of the relevant Shares; or
(ii) from a registered Shareholder or his personal representatives (but only up to the amount of the registered holding and only to the extent that the acceptance relates to the Shares which are not taken into account under another sub-paragraph of this paragraph (b)); or
(iii) certified by the Registrar or the Stock Exchange.

If the Form of Acceptance is executed by a person other than the registered holder, appropriate evidence of authority (e.g. grant of probate or certified copy of a power of attorney) must be produced.

No acknowledgement of receipt of any Form of Acceptance, Share certificate(s) and/or transfer receipt(s) and/or any other document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) will be given.

– 36 –

FURTHER TERMS OF THE OFFER

APPENDIX I

2. SETTLEMENT

Provided that the relevant Form of Acceptance and the relevant Share certificate(s) and, or transfer receipt(s) and, or any document(s) of title (and, or any satisfactory indemnity or indemnities required in respect thereof) are in complete and good order in all respects and have been received by the Registrar not later than by 4:00 p.m. on Thursday, 13 October 2005 or such later time and/or date as the Offeror may determine and announce in accordance with the Takeovers Code, a cheque for the amount representing the cash consideration due to you in respect of the Offer Shares tendered by you under the Offer, less seller’s ad valorem stamp duty payable by you will be despatched to you by ordinary post at your own risk as soon as possible but in any event within 10 days of the date on which all the relevant documents which render such acceptance complete and valid are received by the Registrar.

Settlement of the consideration to which any accepting Shareholder are entitled under the Offer will be implemented in full in accordance with the terms of the Offer, without regard to any lien, right of set-off, counterclaim or other similar right to which the Offeror may otherwise be, or claim to be, entitled against such accepting Shareholder.

3. ACCEPTANCE PERIOD, REVISIONS AND EXTENSIONS

If any terms of the Offer are revised or extended, the announcement of such revision or extension will state the next closing date. If the Offer are revised or extended, the Offer will remain open for acceptance for a period of not less than 14 days from the day following the posting of such written notification of the revision or extension to the Shareholders, and, unless previously revised or extended, shall be closed on the subsequent closing date as stated in the written notification.

4. ANNOUNCEMENTS

(i) By 6:00 p.m. on Thursday, 13 October 2005, which is the Closing Date, the Offeror must inform the Executive and the Stock Exchange of its decisions in relation to revision or expiry of the Offer. The Offeror shall publish a teletext announcement through the Stock Exchange by 7:00 p.m. on the Closing Date stating whether the Offer has expired, been extended or revised (as the case may be). Such announcement will be published on the next business day in accordance with paragraph (iii) below. The announcement shall specify the total number of Shares and the rights over Shares which the Offeror and any person acting in concert with it, directly and indirectly, owns or controls as at the date of that announcement; the number of Shares for which valid acceptances have been received, held, controlled or directed by the Offeror or persons acting in concert with it before the Offer period; and the number of Shares acquired or agreed to be acquired by the Offeror or any person acting in concert with it during the period of the Offer.

The announcement shall include details of voting rights, rights over Shares, derivatives and arrangements as required by Rule 3.5(c), (d) and (f) of the Takeovers Code. The announcement shall also specify the percentages of the relevant class of share capital and the percentages of voting rights of the Company represented by these numbers of Shares.

– 37 –

FURTHER TERMS OF THE OFFER

APPENDIX I

(ii) As required under the Takeovers Code and the Listing Rules, all announcements in relation to the Offer, in respect of which the Executive and the Stock Exchange have confirmed that they have no further comments thereon, must be published as a paid announcement in at least one English language newspaper and one Chinese language newspaper, being in each case a newspaper which is published daily and circulated generally in Hong Kong and specified in the list of newspapers issued and published in the Gazette for the purpose of section 71A of the Companies Ordinance, and must be published on the Stock Exchange website.

5. RIGHT OF WITHDRAWAL

Acceptances of the Offer shall be irrevocable and will not be permitted to be withdrawn, except in the circumstances to the effect that if the Offeror is unable to comply with any of the requirements of making announcements under Rule 19 of the Takeovers Code relating to the Offer, the Executive may require that acceptors be granted a right of withdrawal, on terms acceptable to the Executive, until such requirements are met.

6. STAMP DUTY

Seller’s ad valorem stamp duty arising in connection with acceptance of the Offer amounting to 0.1% of the amount payable in respect of the relevant acceptances or if higher, the market value of the Shares, will be deducted from the amount payable to Shareholders who accept the Offer. The Offeror will bear its own portion of buyer’s ad valorem stamp duty at the rate of 0.1% of the amount payable in respect of the relevant acceptances or if higher, the market value of the Shares, and will be responsible to account to the Stamp Office of Hong Kong for stamp duty payable for the sale and purchase of the Shares.

7. OVERSEAS SHAREHOLDERS

The making of the Offer to Overseas Shareholders may be prohibited or affected by the laws of the relevant jurisdictions. Overseas Shareholders should obtain appropriate legal advice on, inform themselves about and observe any applicable legal requirement. It is the responsibility of each Overseas Shareholders who wishes to accept the Offer to satisfy himself, herself or itself as to the full observance of the laws of the relevant jurisdiction in connection therewith, including the obtaining of any governmental, exchange control or other consents which may be required and the compliance with other necessary formalities or legal requirements and the payment of any transfer or other taxes due in respect of such jurisdiction.

8. GENERAL

(i) Acceptance of the Offer by any person or persons holding Shares will be deemed to constitute a warranty by such person or persons to the Offeror that the Share(s) acquired under the Offer are sold by any such person or persons free from all liens, charges, encumbrances, equities and third party rights and together with all rights attaching thereto, including the right to receive all dividends and distributions declared, made or paid on or after the posting of this document.

– 38 –

FURTHER TERMS OF THE OFFER

APPENDIX I

(ii) All communications, notices, Forms of Acceptance, certificates, transfer receipts, other documents of title (and/or any satisfactory indemnity or indemnities required in respect thereof) and remittances to be delivered by or sent to or from the Shareholders will be delivered by or sent to or from them, or their designated agents, through post at their own risk, and none of the Offeror, the Company, Kingston Corporate Finance, Kingston Securities nor the Registrar or any of their respective agents, accepts any liability for any loss in postage or any other liabilities that may arise as a result thereof.
(iii) The provisions set out in the Forms of Acceptance form part of the terms of the Offer.
(iv) The accidental omission to despatch this Composite Offer Document and/or the Form of Acceptance or any of them to any person to whom the Offer are made will not invalidate the Offer in any way.
(v) The Offer and all acceptances will be governed by and construed in accordance with the laws of Hong Kong.
(vi) Due execution of a Form of Acceptance will constitute an authority to Directors, the Offeror, Kingston Securities or such person or persons as they may direct, to complete and execute any document on behalf of the person or persons accepting the Offer and to do any other act that may be necessary or expedient for the purposes of vesting in the Offeror, or such person or persons as they may direct, the Shares in respect of which such person or persons has/have accepted the Offer.
(vii) References to the Offer in this Composite Offer Document and in the Forms of Acceptance shall include any extension and/or revision thereof.
(viii) The English text of this Composite Offer Document and of the Forms of Acceptance shall prevail over their respective Chinese text.

– 39 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

I. SUMMARY OF FINANCIAL RESULTS FOR THE THREE YEARS ENDED 31 MARCH 2005

The following financial information has been extracted from the audited financial statements of the Group for each of the three years ended 31 March 2005:

Turnover Cost of sales Gross profit Other revenues Distribution costs Administrative expenses Operating profit/(loss) Finance costs Profit/(loss) before taxation Taxation Profit/(loss) after taxation Minority interests Loss attributable to shareholders Dividends Basic loss per share	For the year ended 31 2005 2004 HK$’000 HK$’000 134,270 146,239 (102,610) (121,221) 31,660 25,018 2,345 4,294 (5,592) (7,110) (23,267) (30,131) 5,146 (7,929) (4,483) (5,799) 663 (13,728) (87) (4,495) 576 (18,223) (663) (657) (87) (18,880) – – (0.05 cents) (10.5 cents)	March 2003 HK$’000 156,042 (120,224) 35,818 1,959 (7,981) (30,352) (556) (3,474) (4,030) (1,231) (5,261) (123) (5,384) – (3.0 cents)

There were neither extraordinary nor exceptional items during each of the three years ended 31 March 2005.

No dividend has been paid or declared by the Company for each of the three years ended 31 March 2005.

No qualified opinion has been issued by the Company’s auditors for each of the three years ended 31 March 2005.

– 40 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

II. FINANCIAL STATEMENTS

The following is a summary of the audited consolidated accounts of the Company for the two years ended 31 March 2005 as extracted from the 2005 annual report of the Company.

Consolidated Profit and Loss Account

Year ended 31 March 2005

Note Turnover 3 Cost of sales Gross profit Other revenues 3 Distribution costs Administrative expenses Operating profit/(loss) 4 Finance costs 5 Profit/(loss) before taxation Taxation 6 Profit/(loss) after taxation Minority interests Loss attributable to shareholders 7 Dividends 8 Basic loss per share 9	2005 HK$’000 134,270 (102,610) 31,660 2,345 (5,592) (23,267) 5,146 (4,483) 663 (87) 576 (663) (87) – (0.05 cents)	2004 HK$’000 146,239 (121,221) 25,018 4,294 (7,110) (30,131) (7,929) (5,799) (13,728) (4,495) (18,223) (657) (18,880) – (10.5 cents)

– 41 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

Consolidated Balance Sheet

31 March 2005

Note Non-current assets Deferred tax assets 24 Goodwill 12 Fixed assets 13 Current assets Inventories 15 Trade receivables 16 Other receivables, deposits and prepayments Taxation recoverable Pledged bank deposits 26 Bank balances and cash 17 Current liabilities Trade payables 18 Accrued charges and other payables Due to a related company 19 Taxation payable Current portion of non-current liabilities 20 Trust receipt loans Bank overdrafts, secured 26 Net current assets Total assets less current liabilities Financed by: Share capital 21 Reserves 23 Shareholders’ funds Minority interests Non-current liabilities 20 Deferred tax liabilities 24	2005 HK$’000 139 6,538 80,839 87,516 -------------- 19,824 31,996 35,594 103 6,170 1,911 95,598 -------------- 33,357 7,826 – 539 33,117 1,960 12,748 89,547 -------------- 6,051 93,567 18,000 57,555 75,555 975 7,076 9,961 93,567	2004 HK$’000 315 9,154 100,432
		109,901 -------------- 24,147 35,553 38,367 104 3,600 1,032
		102,803 -------------- 42,196 8,857 999 349 29,800 6,844 13,471
		102,516 -------------- 287
		110,188

		18,000 58,515
		76,515 612 22,912 10,149
		110,188

– 42 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

Balance Sheet

31 March 2005

Note Non-current assets Interests in subsidiaries 14 Current assets Dividend receivable Other receivables Bank balances and cash Current liabilities Other loan, secured 20 Other payables Net current (liabilities)/assets Total assets less current liabilities Financed by: Share capital 21 Reserves 23 Shareholders’ funds	2005 HK$’000 106,627 -------------- – 181 1,052 1,233 -------------- 6,000 691 6,691 -------------- (5,458) -------------- 101,169 18,000 83,169 101,169	2004 HK$’000 100,770 -------------- 2,000 5 1,044
		3,049 -------------- – 1,268
		1,268 -------------- 1,781 -------------- 102,551

		18,000 84,551
		102,551

– 43 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

Consolidated Statement of Changes in Equity

Year ended 31 March 2005

Note Total equity at the beginning of year Exchange differences arising on translation of the financial statements of overseas subsidiaries 23 Net gain not recognized in the profit and loss account Valuation released upon disposal of leasehold land and building and plant and machinery Loss attributable to shareholders 23 Total equity at the end of year	2005 HK$’000 76,515 – – -------------- (873) (87) 75,555	2004 HK$’000 95,388 7 7 -------------- – (18,880) 76,515

– 44 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

Consolidated Cash Flow Statement

Year ended 31 March 2005

Note Operating activities Net cash inflow generated from operations 25(a) Interest paid Hong Kong profits tax refund Hong Kong profits tax paid Net cash inflow from operating activities Investing activities Purchase of fixed assets Sales of fixed assets Interest received Net cash inflow from investing activities Financing activities Bank deposits pledged New bank and other loans 25(b) Repayment of bank and other loans 25(b) Capital elements of finance lease rental payments 25(b) Interest elements of finance lease rental payments Dividends paid to minority shareholders by a subsidiary 25(b) Net cash outflow from financing activities Net increase in cash and cash equivalents Cash and cash equivalents at the beginning of year Effect of foreign exchange rate changes 23 Cash and cash equivalents at the end of year Analysis of balances of cash and cash equivalents Bank balances and cash Bank overdrafts Trust receipt loans	2005 HK$’000 19,401 (3,388) 574 (482) 16,105 -------------- (5,246) 12,573 72 7,399 -------------- (2,570) 21,509 (23,309) (11,253) (1,095) (300) (17,018) -------------- 6,486 (19,283) – (12,797) 1,911 (12,748) (1,960) (12,797)	2004 HK$’000 18,762 (4,826) 2,310 (912) 15,334 -------------- (3,159) 4,426 86 1,353 -------------- (100) 48,015 (50,252) (8,551) (973) – (11,861) -------------- 4,826 (24,116) 7 (19,283) 1,032 (13,471) (6,844) (19,283)

– 45 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

Notes to Financial Statements

31 March 2005

1. PRINCIPAL ACCOUNTING POLICIES

The principal accounting policies adopted in the preparation of these financial statements are set out below:

(a) Basis of preparation

The financial statements have been prepared in accordance with accounting principles generally accepted in Hong Kong and comply with accounting standards issued by the Hong Kong Institute of Certified Public Accountants. The financial statements have been prepared under the historical cost convention except that, as disclosed in the accounting policies below, certain leasehold land and buildings and plant and machinery are stated at open market valuation.

(b) Basis of consolidation

The consolidated financial statements include the financial statements of the Company and its subsidiaries made up to 31 March 2005.

Subsidiaries are those entities in which the Company, directly or indirectly, controls more than one half of the voting power; has the power to govern the financial and operating policies; to appoint or remove the majority of the members of the board of directors; or to cast majority of votes at the meetings of the board of directors.

The results of subsidiaries acquired or disposed of during the year are included in the consolidated profit and loss account from the effective date of acquisition or up to the effective date of disposal, as appropriate.

All significant intercompany transactions and balances within the Group are eliminated on consolidation.

The gain or loss on disposal of a subsidiary represents the difference between the proceeds of the sale and the Group’s share of its net assets together with any unamortized goodwill or goodwill taken to reserves and which was not previously charged or recognised in the consolidated profit and loss account.

Minority interests represent the interests of outside shareholders in the operating results and net assets/ liabilities of subsidiaries.

In the Company’s balance sheet the investments in subsidiaries are stated at cost less provision for impairment losses. The results of subsidiaries are accounted for by the Company on the basis of dividends received and receivable.

(c) Goodwill

Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the net assets of the acquired subsidiaries at the date of acquisition.

In accordance with Statement of Standard Accounting Practice (“SSAP”) 30, goodwill on acquisitions occurring on or after 1 January 2001 is included in intangible assets and is amortised using the straightline method over its estimated useful life but not exceeding 20 years. Goodwill on acquisitions, which occurred prior to 1 January 2001 was written off against reserves. The Group has taken advantages of the transitional provision 1(a) in SSAP 30 and goodwill previously written off against reserves has not been restated. However, any impairment arising on such goodwill is accounted for in accordance with SSAP 31.

Where an indication of impairments exists, the carrying amount of any goodwill, including goodwill previously written off against reserves, is assessed and written down immediately to its recoverable amount.

– 46 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

1. PRINCIPAL ACCOUNTING POLICIES (Continued)

(d) Fixed assets

Leasehold land and buildings and plant and machinery are stated at valuation less accumulated depreciation and accumulated impairment losses. The valuations of leasehold land and buildings are on an open market basis related to individual properties and separate values are not attributed to land and buildings. Independent valuations are performed every three years. In the intervening years, the directors review the carrying value of these fixed assets and adjustments are made where they consider that there has been a material change. Increases in valuation are credited to the revaluation reserve. Decrease in valuation are first offset against increases on earlier valuations in respect of the same asset and thereafter debited to the operating result. Any subsequent increases are credited to the operating result up to the amount previously debited.

In current year, the revaluation of plant and machinery, which was previously performed by independent valuer for every three years, are performed by the directors of the Company. This is a change in accounting policy that has been applied retrospectively and the comparative figures have been restated, where required. The adoption of this new accounting policy had no material effect on the Group’s previous years’ results.

Other fixed assets are stated at cost less accumulated depreciation and accumulated impairment losses.

Leasehold land is depreciated over the period of the lease while other fixed assets are depreciated at rates sufficient to write off their cost/valuation less accumulated impairment losses over their estimated useful lives on a straight-line basis.

The principal annual rates are as follows:

Buildings	2.5%
Plant and machinery	6.6-20%
Furniture, fixtures and equipment	10-20%
Leasehold improvements	15-18%
Motor vehicles	15-20%

Major costs incurred in restoring fixed assets to their normal working condition are charged to the profit and loss account. Improvements are capitalized and depreciated over their expected useful lives to the Group.

At each balance sheet date, both internal and external sources of information are considered to assess whether there is any indication that fixed assets are impaired. If any such indication exists, the recoverable amount of the asset is estimated and where relevant, an impairment loss is recognized to reduce the asset to its recoverable amount. Such impairment loss is recognised in the profit and loss account except where the asset is carried at valuation and the impairment loss does not exceed the revaluation surplus for that same asset, in which case it is treated as a revaluation decrease.

The gain or loss on disposal of a fixed asset is the difference between the net sale proceeds and the carrying amount of the relevant asset, and is recognised in the profit and loss account. Any revaluation reserve balance remaining attributable to the relevant asset is transferred to retained earnings/accumulated losses and is shown as a movement in reserves.

(e) Assets under leases

(i) Finance leases

Leases that substantially transfer to the Group all the risks and rewards of ownership of assets are accounted for as finance leases. Finance leases are capitalized at the inception of the leases at the lower of the fair value of the leased assets or the present value of the minimum lease payments. Each lease payment is allocated between the capital and finance charges so as to achieve a constant rate on the capital balance outstanding. The corresponding rental obligations, net of finance charges, are included in non-current liabilities. The finance charges are charged to the profit and loss account over the lease periods.

Assets held under finance leases are depreciated over the shorter of their lease terms and their estimated useful lives or their estimated useful lives if there is reasonable certainty that the assets held under finance leases will be owned by the Group by the end of the lease periods.

– 47 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

1. PRINCIPAL ACCOUNTING POLICIES (Continued)

(e) Assets under leases (Continued)
(ii) Operating leases

Leases where substantially all the risks and rewards of ownership of assets remain with the leasing company are accounted for as operating leases. Payments made under operating leases net of any incentives received from the leasing company are charged to the profit and loss account on a straight-line basis over the lease periods.

(f) Inventories

Inventories are stated at the lower of cost and net realizable value. Cost, calculated on the first-in, firstout basis, comprises materials, direct labour and an appropriate proportion of all production overhead expenditure. Net realizable value is determined on the basis of anticipated sale proceeds less estimated selling expenses.

(g)

Trade receivables

Provision is made against trade receivables to the extent which they are considered to be doubtful. Trade receivables in the balance sheet are stated net of such provision.

(h) Cash and cash equivalents

Cash and cash equivalents comprise cash on hand and demand deposits, and short term highly liquid investments which are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value, and have a short maturity of generally within three months when acquired, less bank overdrafts which are repayable on demand and form an integral part of the Company’s cash management.

(i) Provisions

Provisions are recognised when the Group has a present legal or constructive obligations as a result of past events, it is probable that an outflow of resources will be required to settle the obligation, and a reliable estimate of the amount can be made. Where the Group expects a provision to be reimbursed, the reimbursement is recognized as a separate asset but only when the reimbursement is virtually certain.

(j) Employee benefits

(i) Employee leave entitlements

Employee entitlements to annual leave are recognised when they accrue to employees. A provision is made for the estimated liability for annual leave as a result of services rendered by employees up to the balance sheet date. Employee entitlements to sick leave and maternity leave are not recognised until the time of leave.

(ii) Pensions obligations

The group contributes to a defined contribution retirement scheme which is available to all employees. Contributions to the scheme by the Group and employees are calculated as a percentage of employees’ basis salaries. The retirement benefit scheme cost charged to the profit and loss account represents contributions payable by the Group to the funds.

The Group’s contributions to the defined contribution retirement scheme are expensed as incurred. The assets of the scheme are held separately from those of the Group in independently administered funds.

(k) Deferred taxation

Deferred tax is the tax expected to be payable or recoverable 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 is charged or credited in 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.

– 48 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

1. PRINCIPAL ACCOUNTING POLICIES (Continued)

(k) Deferred taxation (Continued)

Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets should be recognised for all deductible temporary differences to the extent that it is probable that taxable profit will be available against which the deductible temporary difference can be utilized, and also should be recognised for the carryforward of unused tax losses and unused tax credits to the extent that it is probable that future taxable profit will be available against which the unused tax losses and unused tax credits can be utilised.

Deferred tax assets and liabilities should be measured at the tax rates that are expected to apply to the period when the asset is realized or the liability is settled, based on tax rates that have been enacted or substantively enacted by the balance sheet date.

(l) Contingent liabilities and contingent assets

A contingent liability is a possible obligation that arises from past events and whose existence will only be confirmed by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Group. It can also be a present obligation arising from past events that is not recognised because it is not probable that outflow of economic resources will be required or the amount of obligation cannot be measured reliably.

A contingent liability is not recognised but is disclosed in the notes to the financial statements. When a change in the probability of an outflow occurs so that the outflow is probable, it will then be recognised as a provision.

A contingent asset is a possible asset that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain events not wholly within the control of the Group.

Contingent assets are not recognised but are disclosed in the notes to the financial statements when an inflow of economic benefits is probable. When inflow is virtually certain, an asset is recognised.

(m) Revenue recognition

Revenue from the sale of goods is recognised on the transfer of risks and rewards of ownership, which generally coincides with the time when the goods are delivered to customers and the title has passed.

Interest income is recognised on a time proportion basis, taking into account the principal amounts outstanding and the interest rates applicable.

Operating lease rental income is recognised on a straight-line basis.

(n) Borrowing costs

Borrowing costs that are directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalised as part of the cost of that asset.

All other borrowing costs are charged to the profit and loss account in the year in which they are incurred.

(o) Translation of foreign currencies

Transactions in foreign currencies are translated at exchange rates ruling at the transaction dates. Monetary assets and liabilities expressed in foreign currencies at the balance sheet date are translated at rates of exchange ruling at the balance sheet date. Exchange differences arising in these cases are dealt with in the profit and loss account.

The balance sheet of subsidiaries expressed in foreign currencies are translated at the rate of exchange ruling at the balance sheet date whilst the profit and loss account is translated at an average rate. Exchange differences are dealt with as movements in reserves. Upon disposal of an overseas subsidiary, the related cumulated exchange difference is included in the profit and loss account as part of the gain or loss on disposal.

– 49 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

1. PRINCIPAL ACCOUNTING POLICIES (Continued)

(p) Segment reporting

In accordance with the Group’s internal financial reporting the Group has determined that business segments be presented as the primary reporting format and geographical as the secondary reporting format.

Unallocated costs represent corporate expenses. Segment assets consist primarily of fixed assets, inventories, receivables and operating cash. Segment liabilities comprise operating liabilities and exclude items such as taxation and certain corporate borrowings. Capital expenditure comprises additions to fixed assets, including additions resulting from acquisitions through purchases of subsidiaries.

In respect of geographical segment reporting, sales are based on the country in which the customer is located. Total assets and capital expenditure are based on where the assets are located.

(q) Dividends

Dividends proposed or declared after the balance sheet date are not recognized as a liability at the balance sheet date.

2. IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS

The Hong Kong Institute of Certified Public Accountants has issued a number of new and revised Hong Kong Financial Reporting Standards and Hong Kong Accounting Standards (“new HKFRSs”) which are effective for accounting periods beginning on or after 1 January 2005. The Group has not early adopted these new HKFRSs in the financial statements for the year ended 31 March 2005.

The Group has already commenced an assessment of the impact of these new HKFRSs but is not yet in a position to state whether these new HKFRSs would have a significant impact on its results of operations and financial position.

3. TURNOVER, REVENUE AND SEGMENT INFORMATION

The Group is principally engaged in manufacturing and trading of packaging products, paper gifts items and promotional products. Revenues recognised during the year are as follows:

Turnover Sales of goods at invoiced value to customers, net of discounts and returns Other revenues Interest income Rental income from land and buildings General provision for doubtful debts written back Sundry income Total revenues	2005 HK$’000 134,270 ------------ 72 – – 2,273 2,345 ------------ 136,615	2004 HK$’000 146,239 ------------ 86 14 1,000 3,194
		4,294 ------------
		150,533

– 50 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

3. TURNOVER, REVENUE AND SEGMENT INFORMATION (Continued)

Primary reporting format – business segments

Turnover Segment results Unallocated income Unallocated costs Operating profit Finance costs Profit before taxation Taxation Profit after taxation Minority interests Loss attributable to shareholders Segment assets Unallocated assets Total assets Segment liabilities Unallocated liabilities Total liabilities Capital expenditure Depreciation of fixed assets Amortisation of goodwill (unallocated) Impairment of goodwill (unallocation)	Year ended 31st March 2005 Packaging Paper Promotional products gifts items products HK$’000 HK$’000 HK$’000 67,360 9,710 57,200 13,593 3,163 14,904 95,524 20,977 59,861 28,074 6,668 17,823 2,242 954 2,584 4,495 1,753 4,547	Group HK$’000 134,270 31,660 2,345 (28,859) 5,146 (4,483) 663 (87) 576 (663) (87) 176,362 6,752 183,114 52,565 54,994 107,559 5,780 10,795 2,616 –

– 51 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

3. TURNOVER, REVENUE AND SEGMENT INFORMATION (Continued)

Primary reporting format – business segments (Continued)

Turnover Segment results Unallocated income Unallocated costs Operating loss Finance costs Loss before taxation Taxation Loss after taxation Minority interests Loss attributable to shareholders Segment assets Unallocated assets Total assets Segment liabilities Unallocated liabilities Total liabilities Capital expenditure Depreciation of fixed assets Amortisation of goodwill (unallocated) Impairment of goodwill (unallocation)	Year ended 31st March 2004 Packaging Paper Promotional products gifts items products HK$’000 HK$’000 HK$’000 75,606 29,660 40,973 12,412 5,190 7,416 81,289 25,640 48,604 61,286 15,396 22,774 7,401 1,967 3,106 5,709 2,240 3,094	Group HK$’000 146,239 25,018 4,294 (37,241) (7,929) (5,799) (13,728) (4,495) (18,223) (657) (18,880) 155,533 57,171 212,704 99,456 36,733 136,189 12,474 11,043 2,650 95

– 52 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

3. TURNOVER, REVENUE AND SEGMENT INFORMATION (Continued)

Secondary reporting format – geographical segments

Hong Kong Mainland China Other countries Unallocated income Unallocated costs Operating profit Hong Kong Mainland China Other countries Unallocated income Unallocated costs Operating loss	Year ended 31st Segment Turnover results HK$’000 HK$’000 93,662 22,085 38,620 9,106 1,988 469 134,270 31,660 2,345 (28,859) 5,146 Year ended 31st Segment Turnover results HK$’000 HK$’000 97,940 16,755 39,114 6,692 9,185 1,571 146,239 25,018 4,294 (37,241) (7,929)	March 2005 Total Capital assets expenditure HK$’000 HK$’000 46,512 757 136,603 5,023 – – 183,115 5,780 March 2004 Total Capital assets expenditure HK$’000 HK$’000 74,341 124 138,363 12,350 – – 212,704 12,474	March 2005 Total Capital assets expenditure HK$’000 HK$’000 46,512 757 136,603 5,023 – – 183,115 5,780 March 2004 Total Capital assets expenditure HK$’000 HK$’000 74,341 124 138,363 12,350 – – 212,704 12,474
			12,474

– 53 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

4. OPERATING PROFIT/(LOSS)

Operating profit/(loss) was stated after charging the following:

Auditors’ remuneration – Current year – Overprovision in prior year Cost of inventories sold Provision for and write off of bad debts Provision for and write off of obsolete inventories Amortisation of goodwill Impairment of goodwill Depreciation of fixed assets – owned assets – assets held under finance leases Operating lease rentals in respect of land and buildings Loss on fixed assets written off Loss on disposal of fixed assets Investment written off Staff costs, including directors emoluments_(note 10)_ Exchange loss FINANCE COSTS Interests on bank loans and overdrafts Interests element of finance leases Other interests	2005 HK$’000 398 – 398 102,610 1,337 1,197 2,616 – 7,272 3,523 1,371 – 1,132 – 12,679 13 2005 HK$’000 2,377 1,095 1,011 4,483	2004 HK$’000 300 (25) 275 121,221 2,035 3,348 2,650 95 8,834 2,209 1,375 366 276 60 13,005 42 2004 HK$’000 2,857 973 1,969 5,799

5. FINANCE COSTS

6. TAXATION

Hong Kong profits tax has been provided at the rate of 17.5% (2004: 17.5%) on the estimated assessable profit for the year. Taxation on overseas profits has been calculated on the estimated assessable profit for the year at the rates of taxation prevailing in the countries in which the group operates.

Subsidiaries of the Company established in the People’s Republic of China (the “PRC”) is subject to the PRC Enterprise Income Tax (“EIT”) on the taxable income as reported in its PRC statutory financial statements adjusted in accordance with relevant income tax laws. The applicable EIT rate is 33%. However, the subsidiaries have tax privileges granted by the PRC Government that they are entitled to full exemption from EIT for the first two years and 50% reduction in EIT for the next three years, commencing from the first profitable year after offsetting all tax losses carried forward from the previous years.

– 54 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

6. TAXATION (Continued)

The amount of taxation charged/(credited) to the consolidated profit and loss account represents:

Hong Kong profits tax – Current – Under/(Over) provision in prior years Deferred taxation_(note 24)_ Taxation charge	2005 HK$’000 83 16 (12) 87	2004 HK$’000 165 (610) 4,940 4,495

Reconciliation between accounting profit/(loss) and tax expense at applicable tax rate is as follows:

Profit/(loss) before taxation Calculated at the taxation rate of 17.5% (2004: 17.5%) Net effect of income and expense items which are not assessable/deductible for income tax purpose Utilization of previously unrecognized tax losses Effect of tax loss not recognized in current year Under/(Over) provision in prior years Tax expense	2005 HK$’000 663 116 (279) (88) 322 16 87	2004 HK$’000 (13,728) (2,402) 3,920 (123) 3,710 (610) 4,495

7. LOSS ATTRIBUTABLE TO SHAREHOLDERS

The loss attributable to shareholders is dealt with in the financial statements of the Company to the extent of a loss of HK$1,382,000 (2004: loss of HK$740,000).

8. DIVIDENDS

No dividend was proposed or paid by the Company during the year. (2004: Nil).

9. BASIC LOSS PER SHARE

The calculation of basic loss per share (2004: loss per share) is based on the Group’s loss attributable to shareholders of HK$87,000 (2004: loss of HK$18,880,000) and of 180,000,000 shares (2004: 180,000,000 shares) in issue during the year.

Diluted loss per share was not presented for both years as there were no dilutive potential ordinary shares at year end.

– 55 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

10. STAFF COSTS (INCLUDING DIRECTORS’ REMUNERATION)

Wages and salaries Redundancy costs Retirement benefits costs – defined contribution benefit schemes	2005 HK$’000 12,188 200 291 12,679	2004 HK$’000 12,595 – 410
		13,005

11. DIRECTORS’ AND SENIOR MANAGEMENT’S EMOLUMENTS

(a) Directors’ emoluments

The aggregate amounts of emoluments payable to the directors of the Company during the year are as follows:

Fees Other emoluments Bonus Retirement benefit costs	2005 HK$’000 30 1,560 16 26 1,632	2004 HK$’000 40 2,204 – 36
		2,280

No directors waived any emoluments and no incentive payment or compensation for loss of office was paid or payable to any director during the year.

The emoluments of the directors fell within the following bands:

	Number of directors	Number of directors
Emoluments bands	2005	2004
Nil – HK$1,000,000	6	6
HK$1,000,001 – HK$1,500,000	–	–

Directors’ emoluments disclosed above include HK$120,000 (2004: HK$120,000) paid to independent non-executive directors.

(b) Five highest paid individuals

The five individuals whose emoluments were the highest in the Group for the year include two (2004: three) directors whose emoluments are reflected in the analysis presented above. The emoluments payable to the remaining three (2004: two) individuals during the year are as follows:

Basic salaries and allowances Retirement benefit costs	2005 HK$’000 1,957 36 1,993	2004 HK$’000 934 24
		958

– 56 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

12. GOODWILL

Year ended 31 March 2005 Opening net book amount Amortisation charge Closing net book amount At 31 March 2005 Cost Accumulated amortisation Accumulated impairment Net book amount At 31 March 2004 Cost Accumulated amortization Accumulated impairment Net book amount	Group HK$’000 9,154 (2,616) 6,538 13,250 (6,617) (95) 6,538 13,250 (4,001) (95) 9,154

13. FIXED ASSETS

Cost or valuation At 1 April 2004 Additions Disposals At 31 March 2005 Accumulated depreciation At 1 April 2004 Charge for the year Disposals At 31 March 2005 Net book value At 31 March 2005 At 31 March 2004	Leasehold land and buildings HK$’000 3,956 – (3,956) – ----------- 897 69 (966) – ----------- – 3,059	Plant and machinery HK$’000 110,795 5,023 (21,154) 94,664 ----------- 30,232 6,853 (9,848) 27,237 ----------- 67,427 80,563	Group Furniture, fixtures and Leasehold equipment improvements HK$’000 HK$’000 8,332 18,885 10 – – – 8,342 18,885 ----------- ----------- 4,726 6,364 818 2,776 – – 5,544 9,140 ----------- ----------- 2,798 9,745 3,606 12,521	Motor vehicles HK$’000 2,220 747 (1,280) 1,687 ----------- 1,537 279 (998) 818 ----------- 869 683	Total HK$’000 144,188 5,780 (26,390) 123,578 ----------- 43,756 10,795 (11,812) 42,739 ----------- 80,839 100,432

– 57 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

13. FIXED ASSETS (Continued)

The analysis of the cost or valuation of the above assets at 31st March 2005 is as follows:

At cost At valuation_(note (a))_	Leasehold land and buildings HK$’000 – – –	Plant and machinery HK$’000 50,569 44,095 94,664	Furniture, fixtures and Leasehold equipment improvements HK$’000 HK$’000 8,342 18,885 – – 8,342 18,885	Motor vehicles HK$’000 1,687 – 1,687	Total HK$’000 79,483 44,095
					123,578

The analysis of the cost or valuation of the above assets at 31st March 2004 is as follows:

At cost At valuation_(note (a))_ Net book value of lease assets At 31 March 2005 At 31 March 2004	Leasehold land and buildings HK$’000 – 3,956 3,956 – –	Plant and machinery HK$’000 46,862 63,933 110,795 41,804 47,382	Furniture, fixtures and Leasehold equipment improvements HK$’000 HK$’000 8,332 18,885 – – 8,332 18,885 31 – 35 –	Motor vehicles HK$’000 2,220 – 2,220 180 343	Total HK$’000 76,299 67,889
					144,188

					42,015

					47,760

(a) The leasehold land and buildings and plant and machinery were revalued by Knight Frank and Sallmanns (Far East) Limited, independent firms of professional valuers, at 31 August 2001 on the basis of open market value. The leasehold land and buildings were disposed to third parties during the year. In previous years, the revaluation of plant and machinery was performed by independent valuer for every three years. This is a change in the accounting policy that, in the opinion of the directors, the amount of plant and machinery at 1 April 2004 is not restated on the balance sheet as the valuation is not materially different from the carrying amount in previous years.

The directors of the Company was undertaken a review on the carrying value of plant and machinery at 31 March 2005 and are of the opinion that the valuation is not materially different from the above carrying amount.

The revaluations of the Group’s plant and machinery do not constitute temporary difference (2004: timing difference) for tax purposes.

(b) The carrying amount of revalued land and buildings and plant and machinery held by the Group would have been HK$Nil (2004: HK$2,827,000) and HK$27,084,000 (2004: HK$38,354,000) respectively had they been stated at cost less accumulated depreciation and impairment losses.
(c) At 31 March 2005, the net book values of leasehold land and buildings and plant and machinery pledged for the Group’s facilities were approximately HK$Nil (2004: HK$3,059,000) and HK$547,000 (2004: HK$590,000).

– 58 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

14. INTERESTS IN SUBSIDIARIES

Unlisted shares, at cost Amounts due from subsidiaries Amount due to a subsidiary	Company 2005 2004 HK$’000 HK$’000 71,870 71,870 35,607 29,750 (850) (850 106,627 100,770	Company 2005 2004 HK$’000 HK$’000 71,870 71,870 35,607 29,750 (850) (850 106,627 100,770
		100,770

The amounts due from/(to) subsidiaries are unsecured, interest-free and have no fixed terms of repayment.

The following is a list of principal subsidiaries as at 31st March 2005:

		Issued and fully
	Country/place	paid up share
	of incorporation	capital/registered	Attributable		Principal activities
Name	or establishment	capital	equity	interest	and place of operation
			2005	2004
Direct subsidiary:
New Master Group	British Virgin	200 Ordinary shares	100%	100%	Investment holding
Limited	Islands	of US$1 each			in Hong Kong
Indirect subsidiaries:
New Spring Group	Hong Kong	2 Ordinary shares	100%	100%	Manufacturing and
Company Limited		of HK$1 each and			trading of gift and toy
		10,000 Non-voting			boxes and other paper
		deferred shares			products in Hong Kong
		of HK$1 each			and the PRC
Sun Hip Fung (JF)	Hong Kong	2 Ordinary shares of	100%	100%	Trading of paper products
Printing Products		HK$1 each and 20,000			in Hong Kong
Company Limited		Non-voting deferred
		shares of HK$1 each
Today Graphic	Hong Kong	2 Ordinary shares of	100%	100%	Trading of packaging
Company Limited		HK$1 each and 20,000			products in Hong Kong
		Non-voting deferred
		shares of HK$1 each
Today Advertising	Hong Kong	2 Ordinary shares of	100%	100%	Investment holding
Products Company		HK$1 each and 200,000			in Hong Kong
Limited		Non-voting deferred
		shares of HK$1 each
New Richest Holdings	Hong Kong	10,000 Ordinary shares	63%	63%	Investment holding
Limited		HK$1 each			in Hong Kong
力新時紙製品（深圳）	The PRC	Registered capital of	100%	100%	Manufacturing and sale of
有限公司*		HK$3,000,000			paper products in the PRC
Anson Printing Group	Hong Kong	10,000 Ordinary shares	51%	51%	Provision of printing and
Limited		of HK$1 each			colour separation services
					in Hong Kong

– 59 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

14. INTERESTS IN SUBSIDIARIES (Continued)

		Issued and fully
	Country/place	paid up share
	of incorporation	capital/registered	Attributable		Principal activities
Name	or establishment	capital	equity	interest	and place of operation
			2005	2004
Visual Products Limited	Hong Kong	10,000 Ordinary shares	100%	100%	Manufacturing and trading of
		of HK$1 each			lenticular plastic products
					in Hong Kong
Pronto Print Limited	Hong Kong	50,000 Ordinary shares	99.2%	99.2%	Provision of printing and
		of HK$10 each			colour separation services
					and trading of lenticular
					plastic products in
					Hong Kong
Great Tech Trading	Hong Kong	10,000 Ordinary shares	100%	100%	Trading of lenticular plastic
Limited		of HK$1 each			products in Hong Kong
New Spring Label &	Hong Kong	10,000 Ordinary	34.65%	34.65%	Production and trading of
Packaging Limited		of HK$1 each			label and packaging
					products in Hong Kong
New Pearl Hot Stamping	Hong Kong	10,000 Ordinary	100%	100%	Provision of hot stamping and
& Packaging Limited		shares of HK$1 each			packaging services in
					Hong Kong

* foreign wholly-owned enterprise

15. INVENTORIES

Raw materials Work in progress Finished goods	Group 2005 2004 HK$’000 HK$’000 6,665 11,759 2,285 3,819 10,874 8,569 19,824 24,147	Group 2005 2004 HK$’000 HK$’000 6,665 11,759 2,285 3,819 10,874 8,569 19,824 24,147
		24,147

At 31 March 2004 and 2005, all inventories were carried at cost.

16. TRADE RECEIVABLES

At 31 March 2005, the ageing analysis of the trade receivables are as follows:

Current to 30 days 31 days to 60 days 61 days to 90 days 91 days to 180 days Over 180 days 180	Group 2005 2004 HK$’000 HK$’000 11,731 8,424 2,567 6,009 3,335 3,104 5,669 3,304 8,694 14,712 31,996 35,553	Group 2005 2004 HK$’000 HK$’000 11,731 8,424 2,567 6,009 3,335 3,104 5,669 3,304 8,694 14,712 31,996 35,553
		35,553

Customers are generally granted with credit terms of 30 to 90 days. Longer payment terms are granted to those customers which have good payment history and long-term business relationship with the Group. Among debts due over 180 days, HK$6,575,000 approximately had been received up to the date of this report.

– 60 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

17. BANK BALANCES AND CASH

Included in the balance of the Group is an amount of approximately HK$1,150,000 (2004: HK$26,000) denominated in Renminbi in the PRC. The conversion of these Renminbi denominated balances into foreign currencies is subject to the rules and regulations of foreign exchange control promulgated by the PRC government.

18. TRADE PAYABLES

At 31st March 2005, the ageing analysis of the trade payables are as follows:

Current to 30 days 31 days to 60 days 61 days to 90 days Over 90 days	Group 2005 2004 HK$’000 HK$’000 4,669 5,002 2,023 4,180 2,206 2,053 24,459 30,961 33,357 42,196	Group 2005 2004 HK$’000 HK$’000 4,669 5,002 2,023 4,180 2,206 2,053 24,459 30,961 33,357 42,196
		42,196

19. DUE TO A RELATED COMPANY

The amount due to a related company is unsecured, interest free and has no fixed terms of repayment.

20. NON-CURRENT LIABILITIES

Bank loans, secured Other loans, secured Obligations under finance leases Current portion of non-current liabilities	Group 2005 2004 HK$’000 HK$’000 17,712 26,012 9,000 2,500 13,481 24,200 40,193 52,712 (33,117) (29,800) 7,076 22,912	Group 2005 2004 HK$’000 HK$’000 17,712 26,012 9,000 2,500 13,481 24,200 40,193 52,712 (33,117) (29,800) 7,076 22,912
		52,712 (29,800)
		22,912

At 31 March 2005, the Group’s bank loans are repayable as follows:

Within one year In the second year In the third to fifth years Over fifth year	Group 2005 2004 HK$’000 HK$’000 13,613 16,325 2,238 3,541 1,861 4,920 – 1,226 17,712 26,012	Group 2005 2004 HK$’000 HK$’000 13,613 16,325 2,238 3,541 1,861 4,920 – 1,226 17,712 26,012
		26,012

– 61 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

20. NON-CURRENT LIABILITIES (Continued)

At 31 March 2005, the Group’s other loans are repayable as follows:

Within one year
At 31 March 2005, the Group’s finance lease liabilities are repayable as follows:
Within one year
In the second year
In the third to fifth years
Future finance charges on finance leases
Present value of finance lease liabilities
The present value of finance lease liabilities is as follows:
Within one year
In the second year
In the third to fifth years
At 31 March 2005, the Company’s other loan is repayable as follows:
Within one year
21.
SHARE CAPITAL
Authorised:
2,000,000,000 (2004: 2,000,000,000) ordinary shares of HK$0.1 each
Issued and fully paid:
180,000,000 (2004: 180,000,000) 180,000,000 ordinary shares of HK$0.1 each

Group
2005
2004
HK$’000
HK$’000
9,000
2,500
Group
2005
2004
HK$’000
HK$’000
10,848
11,738
2,818
10,629
228
2,964
13,894
25,331
(413)
(1,131)
13,481
24,200
10,504
10,975
2,774
10,295
203
2,930
13,481
24,200
Company
2005
2004
HK$’000
HK$’000
6,000
–
2005
2004
HK$’000
HK$’000
200,000
200,000
18,000
18,000

– 62 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

22. SHARE OPTIONS

Under the share option scheme (the “Scheme”) approved by the shareholders on 22 October 2001, the directors of the Company may, at its discretion, invite directors and employees of the Group to take up options to subscribe for shares in the Company representing up to a maximum of 30 per cent of the issued share capital of the Company from time to time.

The subscription price for the shares in relation to options to be granted under the Scheme shall be determined by the board and shall be at least the highest of (i) the nominal value of the shares of the Company; (ii) the closing price of the shares on the date of grant (the “Offer Date”); and (iii) the average closing price of the shares for the five business days immediately preceding the Offer Date. The options are exercisable within 10 years from the Offer Date.

No options have been granted since the establishment of the Scheme.

23. RESERVES

Share premium HK$’000 At 1 April 2003 12,667 Exchange differences arising on translation of the financial statements of the overseas – Loss attributable to shareholders – At 31 March 2004 12,667 Representing: Reserves At 1 April 2004 12,667 Valuation released upon disposal of leasehold land and buildings and plant and machinery – Loss attributable to shareholders – At 31 March 2005 12,667 Representing: Reserves	Capital reserve HK$’000 (243) – – (243) (243) – – (243)	Statutory reserve HK$’000 534 – – 534 534 – – 534	Group Revaluation reserve HK$’000 2,203 – – 2,203 2,203 (873) – 1,330	Exchange reserve HK$’000 13 7 – 20 20 – – 20	Retained earnings HK$’000 62,214 – (18,880) 43,334 43,334 – (87) 43,247	Total HK$’000 77,388 7 (18,880) 58,515 58,515 58,515 (873) (87) 57,555 57,555

– 63 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

23. RESERVES (Continued)

At 1 April 2003 Loss attributable to shareholders At 31 March 2004 Representing: Reserves At 1 April 2004 Loss attributable to shareholders At 31 March 2005 Representing: Reserves	Company Retained earnings/ Share (Accumulated premium losses) HK$’000 HK$’000 84,270 1,021 – (740) 84,270 281 84,270 281 – (1,382) 84,270 (1,101)	Total HK$’000 85,291 (740)
		84,551

		84,551

		84,551 (1,382)
		83,169

		83,169

At 31 March 2005, goodwill written off against the Group’s retained earnings as a result of the acquisition of subsidiaries prior to 1 April 2001 amounted to HK$293,000 (2004: HK$293,000).

24. DEFERRED TAXATION

The major components of the deferred tax liability/(asset) provided for at the balance sheet date and for the year then ended are as follows:

Deferred tax liabilities

In April Charged/(credited) to consolidated profit and loss account_(note 6)_ In March	Accelerated tax depreciation 2005 2004 HK$’000 HK$’000 11,949 6,027 (686) 5,922 11,263 11,949	Group Tax losses 2005 2004 HK$’000 HK$’000 (1,800) (1,133) 498 (667) (1,302) (1,800)	Total 2005 2004 HK$’000 HK$’000 10,149 4,894 (188) 5,255 9,961 10,149	Total 2005 2004 HK$’000 HK$’000 10,149 4,894 (188) 5,255 9,961 10,149
				10,149

The major components of the deferred tax asset provided for at the balance sheet date and for the year then ended are as follows:

Deferred tax assets

In April Charged/(credited) to consolidated profit and loss account_(note 6)_ In March	Accelerated tax depreciation 2005 2004 HK$’000 HK$’000 (8) – 8 (8) – (8)	Group Tax losses 2005 2004 HK$’000 HK$’000 (307) – 168 (307) (139) (307)	Total 2005 2004 HK$’000 HK$’000 (315) – 176 (315) (139) (315)	Total 2005 2004 HK$’000 HK$’000 (315) – 176 (315) (139) (315)
				(315)

– 64 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

25. NOTES TO CONSOLIDATED CASH FLOW STATEMENT

(a) Reconciliation of profit/(loss) before taxation to net cash inflow generated from operations

Profit/(loss) before taxation Depreciation Impairment of goodwill Loss on fixed assets written off Loss on disposal of fixed assets Interest income Interest expenses Interest element of finance leases Amortisation of goodwill Decrease/(increase) in inventories Decrease/(increase) in trade receivables, other receivables, deposits and prepayments (Decrease)/increase in trade payables, accrued charges and other payables (Decrease)/increase in amount due to a related company Net cash inflow generated from operations	2005 HK$’000 663 10,795 – – 1,132 (72) 3,388 1,095 2,616 4,323 6,330 (9,870) (999) 19,401	2004 HK$’000 (13,728) 11,043 95 366 276 (86) 4,826 973 2,650 (1,409) (8,003) 21,036 723
		18,762

(b) Analysis of changes in financing during the year

Share capital including share premium 2005 2004 HK$’000 HK$’000 At the beginning of the year 30,667 30,667 Minority interests in share of profits in subsidiaries – – Dividends paid to minority shareholders by a subsidiary – – New bank and other loans – – Repayment of bank and other loans – – Capital elements of finance lease rental payments – – Inception of finance leases – – At the end of the year 30,667 30,667	Minority interests 2005 2004 HK$’000 HK$’000 612 (45) 663 657 (300) – – – – – – – – – 975 612	Loans and obligations under finance leases 2005 2004 HK$’000 HK$’000 52,712 54,185 – – – – 21,509 48,015 (23,309) (50,252) (11,253) (8,551) 534 9,315 40,193 52,712	Loans and obligations under finance leases 2005 2004 HK$’000 HK$’000 52,712 54,185 – – – – 21,509 48,015 (23,309) (50,252) (11,253) (8,551) 534 9,315 40,193 52,712
			52,712

(c) Major non-cash transactions

During the year, the Group had the following major non-cash transactions:

	2005	2004
	HK$’000	HK$’000
Finance lease arrangements in respect of assets with
total capital values at the inception of leases	534	9,315

– 65 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

26. BANKING FACILITIES

As at 31 March 2005, the Group’s banking facilities were secured by the followings:

(i) corporate guarantees given by the Company and its subsidiaries;
(ii) bank deposits of HK$6,170,000;
(iii) personal guarantees of the Company’s directors; and
(iv) certain leasehold land and buildings of related party and related companies.

27. CONTINGENT LIABILITIES

Guarantees for bank loans and overdrafts of subsidiaries Guarantees for finance lease assets of subsidiaries	Company 2005 2004 HK$’000 HK$’000 30,461 38,622 5,528 10,497 35,989 49,119	Company 2005 2004 HK$’000 HK$’000 30,461 38,622 5,528 10,497 35,989 49,119
		49,119

28. COMMITMENTS

(a) Capital commitments

At 31 March 2005, the Group had capital commitments contracted but not provided for in respect of machineries of approximately HK$2,050,000 (2004: HK$1,980,000).

(b) Commitments under operating leases

At 31 March 2005, the Group had future aggregate minimum lease payments under non-cancellable operating leases in respect of land and buildings which expire as follows:

Not later than one year Later than one year and not later than five years	2005 HK$’000 1,205 532 1,737	2004 HK$’000 928 402
		1,330

29. RELATED PARTY TRANSACTIONS

Save as disclosed in other notes to the financial statements, other significant related party transactions, which were carried out in the normal course of the Group’s business and were charged at prices mutually agreed, are as follows:

	2005	2004
	HK$’000	HK$’000
Interest income
Beautiking Investments Limited_(i)_	62	55
Rental paid
Beaumax Company Limited_(ii)_	228	338
Beautiking Investments Limited_((iii), (iv) & (v))_	504	544
Glory Motion Company Limited_(iii)_	276	276

– 66 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

29. RELATED PARTY TRANSACTIONS (Continued)

(i) During the year, the amount due from Beautiking Investments Limited was unsecured and interest bearing at 12% per annum which was charged at market rates.
(ii) One of the subsidiaries, Sun Hip Fung (JF) Printing Products Company Limited, has entered into a lease agreement with a related company, Beaumax Company Limited, to lease office space for a period of two years commencing 1 February 2003 at a monthly rental of HK$19,000. The lease agreement was renewed for a period of two years commencing 1 February 2005 at a monthly rental of HK$19,000. Certain executive directors of the Company have beneficial interests in Beaumax Company Limited. The lease was entered into on normal commercial terms.
(iii) One of the subsidiaries, New Spring Group Company Limited, has entered into lease agreements with related companies, Beautiking Investments Limited and Glory Motion Company Limited, to lease office spaces for a period of two years commencing 1 February 2003 and 1 July 2003 at a monthly rental of HK$22,000 and HK$23,000 respectively. The lease agreement with Beautiking Investments Limited was renewed for a period of two years commencing 1 February 2005 at a monthly rental of HK$22,000. The leases were entered into on normal commercial terms.
(iv) One of the subsidiaries, Visual Products Limited, has entered into a lease agreement with Beautiking Investments Limited to lease office space for a period of two years commencing 1 April 2004 at a monthly rental of HK$10,000. The lease was entered into on normal commercial terms.
(v) One of the subsidiaries, New Spring Label and Packaging Limited has entered into a lease agreement with Beautiking Investments Limited to lease office space for a period of two years commencing 1 April 2004 at monthly rental of HK$10,000. The lease was entered into on normal commercial terms.

30. ULTIMATE HOLDING COMPANY

The directors regard Fortune Gold Developments Limited, a company incorporated in British Virgin Islands, as being the ultimate holding company.

31. APPROVAL OF FINANCIAL STATEMENTS

The financial statements were approved by the board of directors on 27 July 2005.

– 67 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

III. MATERIAL CHANGE

As at the Latest Practicable Date, the Directors confirm that there are no material changes in the financial or trading position or prospects of the Group subsequent to 31 March 2005, being the date to which the last published audited financial statements of the Group were made up.

IV. STATEMENT OF INDEBTEDNESS

Borrowings

As at the close of business on 31 July 2005, being the latest practicable date for the purpose of this indebtedness statement prior to the printing of this document, the Group had outstanding borrowings and debts of approximately HK$50,121,000, comprising the following:

Bank overdrafts of HK$13,880,000;
Bank loans of HK$15,250,000;
Trust receipt loans of HK$1,998,000;
Other loans of HK$8,718,000; and
Finance lease liabilities of HK$10,275,000.

All the borrowings and debts were secured by the following:

Corporate guarantees given by the Company and its subsidiaries;
Bank deposits of HK$6,170,000;
Personal guarantees of the Company’s directors;
Certain leasehold land and buildings of a related party and related companies; and
The Group’s plant and machinery having a carrying amount of approximately HK$36,730,000.

Contingent liabilities

As at the close of business on 31 July 2005, being the latest practicable date for the purpose of this indebtedness statement, the Company had the following contingent liabilities:

Guarantees for bank loans and overdraft of subsidiaries to the extent of HK$45,241,000; and
Guarantees for finance lease assets of subsidiaries to the extent of HK$4,076,000.

– 68 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

Disclaimer

Save as aforesaid or as otherwise disclosed in this document and apart from intra-group liabilities, the Group did not have any loan capital issued and outstanding and authorised or otherwise created but unissued, or agreed to be issued, bank overdrafts, term loans, debt securities or other similar indebtedness, liabilities under acceptance (other than normal trade bills and payables) or acceptance credits, debentures, mortgages, charges, obligations under hire purchase contracts or other finance leases, guarantees or other material contingent liabilities outstanding as at the close of business on 31 July 2005.

– 69 –

STATUTORY AND GENERAL INFORMATION

APPENDIX III

1. RESPONSIBILITY STATEMENTS

The Composite Offer Document includes particulars given in compliance with the Takeovers Code for the purpose of giving information with regard to the Group and the Offer.

The information contained in the Composite Offer Document (other than information on future intentions of the Offeror in respect of the Group) has been supplied by the Directors who jointly and severally accept full responsibility for the accuracy of the information stated in the Composite Offer Document (other than that relating to the Offeror). The Directors confirm, having made all reasonable enquiries, that to the best of their knowledge, opinions expressed in the Composite Offer Document have been arrived at after due and careful consideration and there are no other facts not contained in the Composite Offer Document the omission of which would make any statement contained in the Composite Offer Document misleading. The issue of the Composite Offer Document has been approved by the Board.

The Composite Offer Document includes particulars given in compliance with the Takeovers Code for the purpose of giving information with regard to the Offeror, the Offer and the future intention of the Offeror regarding the Group. The information contained in the Composite Offer Document relating to the Offeror, the terms and conditions of the Offer and the Offeror’s intentions regarding the Group have been supplied by the sole director of the Offeror. The sole director of the Offeror accepts full responsibility for the accuracy of the information contained in the Composite Offer Document relating to the Offeror and its future intentions regarding the Group and confirm, having made all reasonable enquiries, that to the best of his knowledge, opinions expressed in the Composite Offer Document have been arrived at after due and careful consideration and there are no other facts not contained in the Composite Offer Document the omission of which would make any statement contained in the Composite Offer Document misleading.

2. SHARE CAPITAL OF THE COMPANY

(a) Authorised and issued share capital

The authorised and issued share capital of the Company as at the Latest Practicable Date were as follows:

Authorised: 2,000,000,000 Shares Issued and fully paid up: 180,000,000 Shares	HK$ 200,000,000

	18,000,000

All existing Shares rank equally in all respects, including in particular as to dividend, voting rights and capital. No Shares have been issued since the end of the last financial year of the Company ended 31 March 2005.

– 70 –

STATUTORY AND GENERAL INFORMATION

APPENDIX III

(b) Share options

There was no outstanding option under the share option scheme of the Company adopted on 22 October 2001. The Board confirms that no share options will be granted under the share option scheme until the close of the Offer.

(c) Convertible securities

The Company has not issued any options, warrants, derivatives or securities convertible or exchangeable into Shares since 31 March 2005, being the date to which the latest published audited consolidated accounts of the Group were made up. As at the Latest Practicable Date, there were no outstanding options, warrants, derivatives or securities convertible or exchangeable into, the Shares.

3. DISCLOSURE OF INTERESTS

(a) Interests and short positions of the Directors in the Company and its associated corporations

As at the Latest Practicable Date, none of the Directors have any interests or short positions in the Shares, underlying Shares or debentures of the Company and its associated corporations (within the meaning of Part XV of the SFO) which are required (a) to be notified to the Company or the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests or short positions which he is taken or deemed to have under such provisions of the SFO); (b) pursuant to section 352 of the SFO, to be entered in the register referred to therein; or (c) pursuant to Listing Rules relating to securities transactions by directors to be notified to the Company and the Stock Exchange; or (d) to be disclosed in the Composite Offer Document pursuant to the requirements of the Takeovers Code.

(b) Persons who have an interest or short position which is discloseable under Divisions 2 and 3 of the SFO

As at the Latest Practicable Date, according to the register kept by the Company pursuant to Section 336 of SFO, and so far as is known to any Directors or chief executive or the Company, the following persons had, or was deemed or taken to have, an interest or short position in the Shares or underlying Shares which would fall to be disclosed to the Company and the Stock Exchange under the provisions of Divisions 2 and 3 of Part XV of the SFO:

			Approximate
Name of	Nature of	Number of	percentage of
Shareholder	interests	Shares held	shareholding
			(%)
Automatic Result Limited	Beneficial	95,000,000	52.78%
Mr. Liu_(Note 1)_	Corporate	95,000,000	52.78%
Mr. Tong_(Note 1)_	Corporate	95,000,000	52.78%

– 71 –

STATUTORY AND GENERAL INFORMATION

APPENDIX III

Note 1: Automatic Result Limited is wholly and beneficially owned by Mr. Tong, Mr. Liu is the sole director of Automatic Result Limited.

Save as disclosed above, the Directors and chief executive of the Company were not aware of any persons who has an interest or short position in the Shares, or underlying Shares which would fall to be disclosed to the Company and the Stock Exchange under the provisions of Divisions 2 and 3 Part XV of the SFO.

(c) Other interests in the Company

As at the Latest Practicable Date,

(i) save for the holding of 95,000,000 Shares, representing approximately 52.78% of the issued share capital of the Company, by the Offeror, none of the Offeror and parties acting in concert with it, including the sole beneficial owner and the sole director of the Offeror, own or control any Shares or has dealt in the securities of the Company for the period from the six months prior to the date of the Announcement and up to the Latest Practicable Date;
(ii) save for the sale of the Sale Shares by the Vendor in which Mr. Ng, being the Director, is the beneficial owner, none of the Directors owned or controlled any Shares or other securities of the Company or had dealt in the securities of the Company for the period from the six months prior to the date of the Announcement and up to the Latest Practicable Date;
(iii) there was no irrevocable undertaking regarding whether to accept or reject the Offer, nor was there any agreement or arrangement between any Director and any other person which is conditional on or dependent upon the outcome of the Offer or otherwise connected with the Offer;
(iv) there was no agreement, arrangement or understanding (including any compensation arrangement) between the Offeror or any person acting in concert with it and any director, recent directors, shareholders or recent shareholder of the Company having any connection with or dependent upon the Offer;
(v) no benefit (other than statutory compensation) would be given to any Director as compensation for loss of office or otherwise in connection with the Offer;
(vi) save for the Sale and Purchase Agreement, entered into between the Offeror and the Vendor which is beneficially owned by Mr. Ng, there is no contract or arrangement entered into by the Offeror existing at the date of the Composite Offer Document in which a Director has a material personal interest;
(vii) no subsidiary of the Company nor any pension fund of the Group owned or controlled any interests in the Shares or had dealt for value in any securities of the Company for the period from the six months prior to the date of the Announcement and up to the Latest Practicable Date;

– 72 –

STATUTORY AND GENERAL INFORMATION

APPENDIX III

(viii) to the best knowledge of the sole director of the Offeror and the Directors after making all reasonable enquiries, there is no person who had any arrangement of the kind referred to in Note 8 to Rule 22 of the Takeovers Code with the Offeror or with the Offeror’s concert party or with any persons who is an associate of the Offeror;
(ix) to the best knowledge of the sole director of the Offeror and the Directors after making all reasonable enquiries, no persons who had any arrangement of the kind referred to in Note 8 to Rule 22 of the Takeovers Code with the Offeror or with parties acting in concert with it or with the Company or with any persons who is an associate of the Company by virtue of classes (1), (2), (3) and (4) of the definition of associate as described by the Takeovers Code owned or controlled any interests in any securities nor had dealt in any securities of the Company for the period from the six months prior to the date of the Announcement and up to the Latest Practicable Date;
(x) there are no arrangements of the kind referred to in the third paragraph of Note 8 to Rule 22 of the Takeovers Code which exist between the Offeror, or any person acting in concert with the Offeror, and any other person;
(xi) no fund manager (other than exempt fund managers) connected with the Company who managed the shareholdings in the Company on a discretionary basis had dealt in any securities of the Company for the period from the six months prior to the date of the Announcement and up to the Latest Practicable Date;
(xii) none of Kingston Corporate Finance, Kingston Securities and AsiaVest has any interests in the Shares, and none of them had dealt in any securities of the Company for the period from the six months prior to the date of the Announcement and up to the Latest Practicable Date; and
(xiii) no adviser to the Company as specified in class (2) of the definition of “associate” (but excluding exempt principal traders) in the Takeovers Code owned or controlled any Shares or had dealt for value in the securities of the Company for the period from the six months prior to the date of Announcement and up to the Latest Practicable Date.

(d) Interests in the Offeror

The Offeror is wholly and beneficially owned by Mr. Tong. Mr. Liu, being the sole director of the Offeror, is not interested in any share of the Offeror.

As at the Latest Practicable Date,

(i) neither the Company nor any Directors are interested in any shares in the Offeror or had dealt for value in any securities of the Offeror during the period beginning the six months prior to the date of the Announcement and up to the Latest Practicable Date; and

– 73 –

STATUTORY AND GENERAL INFORMATION

APPENDIX III

(ii) none of the Company, Kingston Corporate Finance, Kingston Securities and AsiaVest had any interests in the shares of the Offeror.

4. DEALING IN SECURITIES

The following table sets out the dealings in the Shares by the Offeror and party acting in concert with the Offeror during the six-month period prior to the date of the Announcement and up to the Latest Practicable Date.

			No. of Shares	Type of	Price
Date	Purchaser	Vendor	transacted	transaction	per share
					(HK$)
25 August 2005	Offeror	Fortune Gold	95,000,000	Purchase of	0.497
		Developments		Sale Shares from
		Limited		Fortune Gold
		(Note 1)		Developments
				Limited
				by the Offeror

Note:

Fortune Gold Developments Limited is wholly and beneficially owned by Mr. Ng, a Director.

Pursuant to the Takeovers Code, as the Offer is made through Kingston Securities and Kingston Corporate Finance which is the financial advisor to the Offeror, each of Kingston Corporate Finance and Kingston Securities is deemed to be acting in concert with the Offeror for the purpose of the Offer. Other than making the Offer on behalf of the Offeror, none of Kingston Corporate Finance and Kingston Securities is a shareholder of the Company or has dealt for value in Shares and other securities of the Company for the period from the six months prior to the date of the Announcement and up to the Latest Practicable Date.

Save as disclosed above, the Offeror, the sole director of the Offeror and parties acting in concert with the Offeror had no other dealings in the Shares and other securities of the Company in the sixmonth period prior to the date of the Announcement and up to the Latest Practicable Date.

Save for the disposal of the Sale Shares to the Offeror by the Vendor, in which Mr. Ng, being the Director, is the ultimate beneficial owner, none of the Directors had dealt in any Shares or other securities of the Company for the period from the six months prior to the Announcement and up to the Latest Practicable Date.

5. MARKET PRICES

(a) The highest and lowest closing price per Share as quoted on the Stock Exchange in the six months period prior to the date of the Announcement and up to and including the Latest Practicable Date, were HK$1.20 per Share on 7 September 2005, and HK$0.40 per Share on 16 June 2005, respectively.

– 74 –

STATUTORY AND GENERAL INFORMATION

APPENDIX III

(b) The table below sets out the closing price per Share as quoted on the main board of the Stock Exchange on (i) the last business day of each of the six calendar months immediately preceding the date of the Announcement on which trading of the Shares; (ii) the Last Trading Day; and (iii) the Latest Practicable Date:

	Closing price
Date	of Shares
	(HK$)
2005
31 March	0.51
29 April	0.50
31 May	0.48
30 June	0.50
29 July	0.50
24 August (being the Last Trading Day)	0.50
16 September (being the Latest Practicable Date)	0.66

6. LITIGATION

Neither the Company nor any other members of the Group is engaged in any litigation or arbitration of material importance and no litigation or claim of material importance is known to the Directors to be pending or threatened against any member of the Group as at the Latest Practicable Date.

7. MATERIAL CONTRACTS

No contracts (not being contracts entered into in the ordinary course of business of the Group), have been entered into by any member of the Group within the two years prior to the date of the Announcement and up to the Latest Practicable Date that are or may be material.

8. SERVICE CONTRACTS

As at the Latest Practicable Date, none of the Directors has any existing or proposed service contracts with any member of the Group or any associated company of the Company which has more than twelve months to run and none of the Director has entered into or amended any service contract with any member of the Group or any associated company of the Company within six months before the date of the Announcement.

– 75 –

STATUTORY AND GENERAL INFORMATION

APPENDIX III

9. EXPERTS

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

Name Qualification Kingston Corporate Finance a licensed corporation to carry on business in type 6 (advising on corporate finance) regulated activity under the SFO Kingston Securities a licensed corporation to carry on business in type 1 (dealing in securities) regulated activity under the SFO AsiaVest a licensed corporation under the SFO to carry out type 4, 6, 9 regulated activities (advising on securities, advising on corporate finance and asset management) under the SFO

Each of Kingston Corporate Finance, Kingston Securities and AsiaVest has given and has not withdrawn its written consent to the issue of the Composite Offer Document with the inclusion herein of its letter and/or references to its names, in the form and context in which it appears.

10. GENERAL

(a) The registered office of the Company is at P.O. Box 2681 GT, Century Yard, Cricket Square Hutchins Drive George Town Grand Cayman British West Indies. Its principal place of business in Hong Kong is at Room 2302, 23rd Floor, Lippo Centre Tower II, 89 Queensway, Admiralty, Hong Kong.
(b) The principal members of the Offeror’s concert group comprise the Offeror, the sole director, Mr. Liu and the sole shareholder of the Offeror, Mr. Tong. The registered office of the Offeror is P.O. Box 957 offshore Incorporations Centre, Road Town, Tortola, British Virgin Islands. The correspondence address of the Offeror and Mr. Liu and Mr. Tong is at Room 2302, 23rd Floor, Lippo Centre Tower II, 89 Queensway, Admiralty, Hong Kong.
(c) Kingston Corporate Finance is the financial adviser to the Offeror in respect of the Offer and Kingston Securities is making the Offer on behalf of the Offeror. The registered office of Kingston Corporate Finance and Kingston Securities is at 2801, 28th Floor, One International Finance Centre, 1 Harbour View Street, Central, Hong Kong.
(d) As at the Latest Practicable Date, there is no agreement, arrangement or understanding as to the Shares acquired in pursuance of the Offer will be transferred to any other persons by the Offeror.
(e) None of the Directors held any Shares as at the Latest Practicable Date and intend to accept or reject the Offer.

– 76 –

STATUTORY AND GENERAL INFORMATION

APPENDIX III

(f) The Company’s Hong Kong branch share registrar and transfer office is Abacus Share Registrars Limited, Ground Floor, Bank of East Asia Harbour View Centre, 56 Gloucester Road, Wanchai, Hong Kong.
(g) All time references contained in this Composite Offer Document refer to Hong Kong time.
(h) The English text of this Composite Offer Document and the Form of Acceptance shall prevail over the Chinese text.

11. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be made available for inspection during normal business hours on any weekday (except for public holidays) at the office of the legal advisers to the Offeror, Chiu & Partners, up to and including the Closing Date:

(a) the memorandum and articles of association of the Company and the Offeror;
(b) the annual reports of the Company for the two years ended 31 March 2005;
(c) the letter from the Independent Board Committee, the text of which is set out on page 18 of the Composite Offer Document;
(d) the letter from Kingston Securities, the text of which is set out on pages 10 to 17 of the Composite Offer Document;
(e) the letter from AsiaVest, the text of which is set out on pages 19 to 34 of the Composite Offer Document;
(f) the letter of consent from each of Kingston Corporate Finance, Kingston Securities and AsiaVest referred to in this Appendix;
(g) the letter regarding the loan facility granted by Kingston Securities to the Offeror referred to in the section headed “The Offer” in the letter from Kingston Securities;
(h) the Sale and Purchase Agreement; and
(i) the Composite Offer Document.

– 77 –

AI assistant

Uni-Bio Science Group Limited — M&A Activity 2005

49397_rns_2005-09-22_cbc5c34a-42e7-4b11-a492-d71fae0724ed.pdf

Automatic Result Limited

Mandatory unconditional cash offer by

ASIAVEST INVESTMENT ADVISORY LIMITED

ASIAVEST PARTNERS

CONTENTS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

EXPECTED TIMETABLE

Announcement of the results of the Offer

All time references contained in the Composite Offer Document refer to Hong Kong time.

INTRODUCTION

THE OFFER

Principal terms of the Offer

Comparison of value

Effect of accepting the Offer

Payment

Stamp duty

INFORMATION ON THE GROUP

MAINTAINING THE LISTING STATUS OF THE COMPANY

LETTER FROM THE BOARD

GENERAL

RECOMMENDATIONS

FURTHER INFORMATION

KINGSTON SECURITIES LIMITED

Mandatory unconditional cash offer by Kingston Securities Limited on behalf of Automatic Result Limited to acquire all the issued shares in New Spring Holdings Limited (other than those already owned by Automatic Result Limited and parties acting in concert with it)

INTRODUCTION

THE OFFER

Principal terms of the Offer

Comparison of value

Total consideration

Effect of accepting the Offer

Payment

Stamp duty

Compulsory acquisition

INFORMATION ON THE OFFEROR, ITS INTENTION REGARDING THE COMPANY AND PROPOSED CHANGE OF BOARD COMPOSITION OF THE COMPANY

LETTER FROM KINGSTON SECURITIES

Proposed Executive Directors

Mr. Tong Kit Shing

Mr. Liu Guoyao

Mr. Cheng Wai Man

Proposed Independent non-executive Directors

Mr. Zhou Yaoming

Mr. Lin Jian

Mr. So Yin Wai

MAINTAINING THE LISTING STATUS OF THE COMPANY

FURTHER TERMS OF THE OFFER

TAXATION

GENERAL

Independent Shareholders are strongly advised to consider carefully the information contained in the letter from the Board, the letter from the Independent Board Committee and the letter from AsiaVest set out in the Composite Offer Document.

Kingston Securities Limited Nicholas Chu Director

Mandatory unconditional cash offer by Kingston Securities Limited on behalf of Automatic Result Limited to acquire all the issued shares in New Spring Holdings Limited (other than those already owned by Automatic Result Limited and parties acting in concert with it)

ASIAVEST INVESTMENT ADVISORY LIMITED

Mandatory unconditional cash offer by Kingston Securities Limited on behalf of Automatic Result Limited

INTRODUCTION

LETTER FROM ASIAVEST

BASIS OF OUR OPINION

PRINCIPAL FACTORS AND REASONS CONSIDERED

1. Background information

LETTER FROM ASIAVEST

2. Principal terms of the offer

3. Financial performance of the Company

LETTER FROM ASIAVEST

LETTER FROM ASIAVEST

4. The Share Offer Price

5. Historical share price performance and liquidity of the Shares

Closing Price

LETTER FROM ASIAVEST

(ii) Liquidity of the Shares

LETTER FROM ASIAVEST

Trading Volume

6. Market comparables

LETTER FROM ASIAVEST

LETTER FROM ASIAVEST

Price Earning Ratio (PER)

Net Asset Value (NAV)

Uni-Bio Science Group Limited M&A Activity 2005