Vision Values Holdings Ltd. - Proxy Solicitation & Information Statement 2004

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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

If you have sold or transferred all your shares in Asia Logistics Technologies Limited, you should at once hand this circular and the accompanying form of proxy to the purchaser or the transferee or to the bank, a licensed securities dealer or other agent through whom the sale or transfer was effected for transmission to the purchaser or transferee.

The Stock Exchange of Hong Kong Limited and Hong Kong Securities Clearing Company Limited take no responsibility for the contents of this circular, 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 circular.

This circular does not constitute an offer to buy, or the solicitation of an offer to sell or subscribe for, any securities or an invitation to enter into an agreement to do any such things, nor is it calculated to invite any offer to buy, sell or subscribe for any securities.

ASIA LOGISTICS TECHNOLOGIES LIMITED 亞洲物流科技有限公司 *

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 862)

MAJOR AND CONNECTED TRANSACTIONS

(1) PROPOSED ACQUISITION OF THE ENTIRE INTEREST IN NEW WORLD PCS HOLDINGS LIMITED; (2) PROPOSED ISSUE OF NEW SHARES AND A CONVERTIBLE NOTE TO A WHOLLY-OWNED SUBSIDIARY OF NEW WORLD DEVELOPMENT COMPANY LIMITED (STOCK CODE: 17); (3) APPLICATION FOR A WHITEWASH WAIVER BY POWER PALACE GROUP LIMITED, A WHOLLY-OWNED SUBSIDIARY OF NEW WORLD DEVELOPMENT COMPANY LIMITED; (4) PROPOSED DISTRIBUTION IN SPECIE OF THE ENTIRE INTEREST IN NEW WORLD CYBERBASE LIMITED (STOCK CODE: 276), SHARE PREMIUM ACCOUNT REDUCTION, INCREASE IN AUTHORISED SHARE CAPITAL AND SHARE CONSOLIDATION; AND (5) PROPOSED CHANGE OF NAME

Financial adviser

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Joint independent financial advisers to the Independent Director (as defined herein) and the Independent ALT Shareholders (as defined herein)

COMMERZBANK

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A letter from the ALT Board (as defined herein) is set out on pages 10 to 41 of this circular. A letter from the NWD Board (as defined herein) is set out on pages 42 to 49 of this circular. A letter from the Independent Director containing his advice to the Independent ALT Shareholders is set out on pages 50 to 51 of this circular. A letter from Commerzbank (as defined herein) and Access Capital (as defined herein), the joint independent financial advisers to the Independent Director and the Independent ALT Shareholders, containing their advice to the Independent Director and the Independent ALT Shareholders is set out on pages 52 to 77 of this circular.

It should be noted that the Existing ALT Shares (as defined herein) will be dealt in on ex-rights basis as from Friday, 18 June 2004 and that dealings in such Existing ALT Shares on ex-rights basis will take place whilst the conditions to which the ALT Distribution (as defined herein) is subject remain unfulfilled. You or any other person dealing in the Existing ALT Shares up to the date on which all conditions to which the ALT Distribution is subject are fulfilled, will accordingly bear the risk that the ALT Distribution may not become unconditional or may not proceed. You or any other person contemplating selling or purchasing the Existing ALT Shares during the aforesaid period who are/is in doubt about your position are/is advised to consult your professional adviser.

A notice convening the EGM (as defined herein) to be held at Room Elbrus, Pacific Place Conference Centre, Level 5, One Pacific Place, 88 Queensway, Hong Kong at 11:00 a.m. on Friday, 25 June 2004 is set out on pages 179 to 183 of this circular. If you are not able to attend the EGM, you are strongly urged to complete and return the enclosed form of proxy in accordance with the instructions printed thereon, and to lodge it with the branch share registrars of ALT (as defined herein) in Hong Kong, Abacus Share Registrars Limited, at Ground Floor, Bank of East Asia Harbour View Centre, 56 Gloucester Road, Wanchai, Hong Kong, as soon as possible but in any event not later than 48 hours before the time appointed for the holding of the EGM or any adjourned meeting thereof (as the case may be). Completion and return of the form of proxy will not preclude you from attending and voting in person at the EGM or any adjourned meeting thereof should you so wish.

2 June 2004

* For identification purposes only

Page
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Expected timetable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Letter from the ALT Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Letter from the NWD Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Letter from the Independent Director. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Letter from Commerzbank and Access Capital. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Appendix I – Accountants’ report on the NWPCS Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
Appendix II – Financial information on the ALT Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113
Appendix III – Proforma financial information on the Enlarged ALT Group. . . . . . . . . . . . . 150
Appendix IV – General information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 166
Notice of EGM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 179

DEFINITIONS

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

“Access Capital”

Access Capital Limited, a deemed licensed corporation licensed to carry out Types 1 (dealing in securities), 4 (advising on securities), 6 (advising on corporate finance) and 9 (asset management) regulated activities under the SFO, being one of the joint independent financial advisers to the Independent Director and the Independent ALT Shareholders;

“Aggregate Liabilities”

the aggregate amount of consolidated borrowings of the NWPCS Group, comprising the NWD Shareholder’s Loan and the Bank Loans;

“ALT”

Asia Logistics Technologies Limited, a company incorporated in the Cayman Islands and the shares of which (stock code: 862) are listed on the Stock Exchange;

“ALT Board” the board of ALT Directors;
“ALT Capital Reduction”

the cancellation of the entire amount standing to the credit of the share premium account of ALT by applying such credit to (a) set off the accumulated losses of ALT as at 31 December 2003; (b) towards the ALT Distribution; and (c) the balance (if any) as the ALT Board may consider appropriate subject to compliance with the laws of the Cayman Islands, including the payment of future dividends (if any) to the ALT Shareholders and setting off such amount against any further accumulated losses of ALT;

“ALT Convertible Note”

the outstanding convertible note of ALT of face value of HK$28,286,000, with an initial conversion price of HK$0.10 (subject to adjustment) per Existing ALT Share;

“ALT Director(s)” the director(s) of ALT;
“ALT Distribution”

the proposed distribution by ALT which involves, among others, the ALT Shareholders whose names appear on the register of members of ALT on the Record Date receiving by way of distribution in specie of NWCB Shares held by ALT on the basis of 426 NWCB Shares for every 10 Consolidated ALT Shares (or 1,000 Existing ALT Shares) held;

“ALT Group”

ALT and its subsidiaries;

DEFINITIONS

“ALT Share Consolidation”	the proposed consolidation of every 100 issued or unissued Existing
	ALT Shares of HK$0.01 each into one Consolidated ALT Share
	of HK$1.00;
“ALT Share Increase”	the increase in the existing authorised share capital of ALT from
	HK$100,000,000 to HK$2,000,000,000 by the creation of an
	additional 190,000,000,000 Existing ALT Shares (or 1,900,000,000
	Consolidated ALT Shares);
“ALT Share Options”	the share options granted under the old share option scheme
	adopted by ALT on 11 September 1998 and to be granted under
	the new share option scheme adopted by ALT on 28 May 2002
	from time to time;
“ALT Shareholder(s)”	holder(s) of Existing ALT Shares or Consolidated ALT Shares;
“Amended Listing Rules”	the Rules Governing the Listing of Securities on the Stock
	Exchange, the version of which has taken effect since 31 March
	2004 and as amended from time to time;
“Announcement”	the joint announcement dated 1 April 2004 issued by NWD and
	ALT in connection with, among others, the Transactions;
“associate(s)”	has the same meaning as ascribed to under the Listing Rules or
	the Amended Listing Rules;
“Bank Guarantees”	guarantees executed by NWD in favour of various banks to
	guarantee the repayment of the Bank Loans by the NWPCS Group;
“Bank Loans”	the bank loans and banking facilities owed by the NWPCS Group
	to the banks from time to time;
“Business Day”	a day (other than a Saturday or a Sunday) on which banks are
	generally open for business for more than five hours in Hong
	Kong;
“CCASS”	the Central Clearing and Settlement System established and
	operated by HKSCC;
“Commerzbank”	Commerzbank AG acting through its Hong Kong Branch, an
	authorised institution registered with the Hong Kong Monetary
	Authority licensed to carry out Types 1 (dealing in securities), 4
	(advising on securities), 6 (advising on corporate finance) and 9
	(asset management) regulated activities under the SFO, being one
	of the joint independent financial advisers to the Independent
	Director and the Independent ALT Shareholders;

DEFINITIONS

“Completion”	S&P Completion and Subscription Completion;
“Concert Parties”	in respect of a person, means parties acting in concert (within the
	meaning ascribed to that term under the Takeovers Code) with
	such person in relation to the voting rights of Existing ALT Shares
	or Consolidated ALT Shares;
“Consolidated ALT Share(s)”	share(s) of HK$1.00 each immediately following the ALT Share
	Consolidation becoming unconditional and effective;
“Continuing Connected	the transactions contemplated under certain agreements entered
Transactions”	into between the Post-Completion NWD Group and the NWPCS
	Group, which would constitute continuing connected transactions
	for the Enlarged ALT Group upon Completion under Chapter 14A
	of the Amended Listing Rules;
“Conversion Shares”	new Existing ALT Shares (or new Consolidated ALT Shares) which
	fall to be issued upon the exercise of any of the conversion rights
	attaching to the Subscription Note at an initial conversion price of
	HK$0.012 per Existing ALT Share (or HK$1.20 per Consolidated
	ALT Share), subject to adjustment;
“EGM”	the extraordinary general meeting of ALT to be held on Friday, 25
	June 2004 at 11:00 a.m. to approve, among others, the Transactions
	and the Whitewash Waiver;
“EGM Notice”	the notice convening the EGM set out on pages 179 to 183 of
	this circular;
“Enlarged ALT Group”	ALT and its subsidiaries immediately after Completion;
“Executive”	the Executive Director of the Corporate Finance Division of the
	Securities and Futures Commission of Hong Kong, or any delegate
	of the Executive Director;
“Existing ALT Share(s)”	existing share(s) of HK$0.01 each in the share capital of ALT;
“Hong Kong”	the Hong Kong Special Administrative Region of the PRC;
“HKSCC”	Hong Kong Securities Clearing Company Limited;

DEFINITIONS

“Independent ALT	the ALT Shareholders other than those who are interested in or
Shareholders”	involved in the Transactions and are required to abstain
	from voting under the Listing Rules or the Takeovers Code;
“Independent Director”	Mr. Wei Chi Kuan, Kenny, the independent non-executive ALT
	Director;
“Independent Third Party(ies)”	a party(ies) who, to the best knowledge and belief of the ALT
	Directors having made all reasonable enquiries, is(are) not
	connected with or acting in concert with the directors, the chief
	executives and the substantial shareholders of ALT and its
	subsidiaries and their respective associates;
“Latest Practicable Date”	31 May 2004, being the latest practicable date prior to the printing
	of this circular for ascertaining certain information contained
	herein;
“Listing Rules”	the Rules Governing the Listing of Securities on the Stock
	Exchange, which remained effective up to and including 30 March
	2004;
“Long Stop Date”	31 August 2004 or such later date as may be agreed in writing
	between the respective parties to the S&P Agreement and the
	Subscription Agreement;
“Mr. Chan”	Mr. Chan Ki, the vice-chairman of ALT and an executive ALT
	Director;
“Mr. Simon Lo”	Mr. Lo Lin Shing, Simon, the chairman of ALT, an executive ALT
	Director and the controlling ALT Shareholder as at the Latest
	Practicable Date;
“NWCB”	New World CyberBase Limited, a company incorporated in
	Bermuda and the shares of which (stock code: 276) are listed on
	the Stock Exchange. As at the Latest Practicable Date the issued
	share capital of NWCB was owned as to approximately 27.48%
	by ALT;
“NWCB Group”	NWCB and its subsidiaries;
“NWCBN”	New World CyberBase Nominee Limited, a company incorporated
	in the British Virgin Islands with limited liability and a wholly-
	owned subsidiary of NWD;
“NWCB Share(s)”	1,600,419,388 ordinary share(s) of HK$0.02 each in the issued
	capital of NWCB which were beneficially owned by a wholly-
	owned subsidiary of ALT as at the Latest Practicable Date;
“NWD”	New World Development Company Limited, a company
	incorporated in Hong Kong and the shares of which (stock code:
	17) are listed on the Stock Exchange;

	DEFINITIONS
“NWD Board”	the board of directors of NWD;
“NWD Group”	NWD and its subsidiaries;
“NWD Shareholder’s Loan”	a loan owed by the NWPCS Group to the NWD Group which
	amounted to approximately HK$1,791.7 million as at 31 March
	2004;
“NWD Shareholders”	holders of ordinary shares of HK$1.00 each in the issued capital
	of NWD;
“NWPCS”	New World PCS Holdings Limited, a company incorporated in
	the Cayman Islands and a wholly-owned subsidiary of NWTHL
	as at the Latest Practicable Date;
“NWPCS Board”	the board of directors of NWPCS;
“NWPCS Group”	NWPCS and its subsidiaries;
“NWT”	New World Telecommunications Limited, a company incorporated
	in Hong Kong with limited liability and a wholly-owned subsidiary
	of NWTHL;
“NWTHL”	New World Telephone Holdings Limited, a company incorporated
	in Hong Kong with limited liability, and a wholly-owned subsidiary
	of NWD and the beneficial owner of the entire issued share capital
	of NWPCS;
“NWTHL Group”	NWTHL and its subsidiaries;
“OFTA”	Office of the Telecommunications Authority;
“Post-Completion NWD Group”	NWD and its subsidiaries immediately after Completion excluding
	the Enlarged ALT Group;
“PPG”	Power Palace Group Limited, a company incorporated in the British
	Virgin Islands with limited liability and a wholly-owned subsidiary
	of NWD;
“PRC”	the People’s Republic of China;
“Record Date”	Friday, 25 June 2004, being the record date to determine
	entitlements to the distribution in specie of the NWCB Shares by
	ALT;
“S&P Agreement”	the agreement dated 29 March 2004 under which ALT has
	conditionally agreed to acquire the Sale Shares from NWTHL;

DEFINITIONS

“S&P Completion” completion of the S&P Agreement; “Sale Shares” the entire issued share capital of NWPCS;
“SFC” the Securities and Futures Commission of Hong Kong; “SFO” the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong);
“Stock Exchange” The Stock Exchange of Hong Kong Limited; “Subscription Agreement” the agreement dated 29 March 2004 under which PPG has conditionally agreed to subscribe for the Subscription Shares and the Subscription Note to be issued by ALT;
“Subscription Completion” completion of the Subscription Agreement;
“Subscription Note” the convertible note in the principal amount of HK$1,200 million to be issued to PPG (or as it may direct) pursuant to the Subscription Agreement entitling the holder thereof to convert the principal amount thereof into new Existing ALT Shares (or new Consolidated ALT Shares) at the initial conversion price of HK$0.012 per Existing ALT Share (or HK$1.20 per Consolidated ALT Share), subject to adjustment;
“Subscription Shares” 4,166,666,667 new Existing ALT Shares (or 41,666,666 new Consolidated ALT Shares ) to be allotted and issued at HK$0.012 per Existing ALT Share (or HK$1.20 per Consolidated ALT Share) to PPG (or as it may direct) pursuant to the Subscription Agreement;
“Suspension” the suspension of trading of the Existing ALT Shares on the Stock Exchange with effect from 9:30 a.m. on 26 March 2004 pending the release of the Announcement;
“Tai Fook Capital” Tai Fook Capital Limited, a corporation licensed under the transitional arrangements to carry out Type 6 regulated activity (advising on corporate finance) for the purposes of the SFO, which is the financial adviser to ALT;
“Takeovers Code” the Hong Kong Code on Takeovers and Mergers; “Transactions” the transactions contemplated under the S&P Agreement and the Subscription Agreement;
6 -

DEFINITIONS

“United States” the United States of America “Whitewash Waiver” a waiver of the obligation of PPG and its Concert Parties to make mandatory offers for all the securities of ALT other than those already owned or agreed to be subscribed by PPG or its Concert Parties under Rule 26 of the Takeovers Code as a result of the issue of the Subscription Shares to PPG (or as it may direct);

“sq.ft.” square feet; “%” per cent; “HK$” Hong Kong dollars, the lawful currency of Hong Kong; and “US$” United States dollars, the lawful currency of the United States.

For the purposes of illustration only, amounts denominated in US$ have been translated into HK$ at the rate of US$1.00 to HK$7.80. Such translation should not be construed as a representation that the amounts in question have been, could have been or could be converted at any particular rate or at all.

EXPECTED TIMETABLE

The following timetable is subject to changes, depending on the date on which Completion is to take place. (Note 5) 2004 Last day of trading in Existing ALT Shares on a cum-rights basis in relation to the ALT Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Thursday, 17 June First day of trading in Existing ALT Shares on an ex-rights basis in relation to the ALT Distribution (Note 1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Friday, 18 June Latest time for lodging transfer of Existing ALT Shares in order to qualify for the ALT Distribution (Note 1) . . . . . . . . . . . . . . . . 4:00 p.m. on Monday, 21 June Latest time for lodging forms of proxy for the EGM . . . . . . . . . . . . . . 11:00 a.m. on Wednesday, 23 June Register of members closed to determine entitlements to the ALT Distribution (both dates inclusive) . . . . . . . . . . . . . . .Wednesday, 23 June to Friday, 25 June EGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11:00 a.m. on Friday, 25 June Record date for the ALT Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Friday, 25 June Expected date of Completion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Tuesday, 6 July Proposed change of name becomes effective (Note 2) . . . . . . . . . . . . . . after 4:00 p.m. on Tuesday, 6 July ALT Share Consolidation becomes effective (Note 3) . . . . . . . . . . . . . . . . . 9:30 a.m. on Wednesday, 7 July Closure of original counter for trading in Existing ALT Shares in board lots of 2,000 (represented by blue colour share certificates for Existing ALT Shares) . . . . . . . . . . . . . . . . . . . . . . . . 9:30 a.m. on Wednesday, 7 July Establishment of temporary counter for trading in Consolidated ALT Shares in board lots of 20 (represented by blue colour share certificates for Existing ALT Shares) . . . . . . . . . . . . . 9:30 a.m. on Wednesday, 7 July First day of free exchange of existing blue colour share certificates for new pink colour share certificates for Consolidated ALT Shares under the new name of ALT (Note 4) . . . . . . . . . . . . . . . . . Wednesday, 7 July Expected date of despatch of certificates of the NWCB Shares to the ALT Shareholders entitled to the ALT Distribution (if Subscription Completion takes place) . . . . . . . . . . . . . . . . . . . . . . . . on or before Wednesday, 21 July

EXPECTED TIMETABLE

Original counter re-opens for trading in Consolidated ALT Shares

(to be represented by new pink colour share certificates)

in board lots of 2,000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9:30 a.m. on Wednesday, 21 July

Parallel trading commences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9:30 a.m. on Wednesday, 21 July

First day of operation of odd lot trading facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Wednesday, 21 July

Closure of temporary counter for trading in Consolidated

ALT Shares in board lots of 20 (represented by

blue colour share certificates for Existing ALT Shares) . . . . . . . . . 4:00 p.m. on Wednesday, 11 August

Parallel trading ends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4:00 p.m. on Wednesday, 11 August

Last day of operation of odd lot trading facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Wednesday, 11 August

Last day of free exchange of existing blue colour share

certificates for new pink colour share certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . Tuesday, 17 August

No assurance is however given that Completion will take place on 6 July 2004 or at all. ALT Shareholders will be informed of any changes to the expected timetable by press announcement(s).

Notes:

It should be noted that the Existing ALT Shares will be dealt in on ex-rights basis as from Friday, 18 June 2004 and that dealings in such Existing ALT Shares on ex-rights basis will take place whilst the conditions to which the ALT Distribution is subject remain unfulfilled. ALT Shareholders or any other person dealing in the Existing ALT Shares up to the date on which all conditions to which the ALT Distribution is subject are fulfilled, will accordingly bear the risk that the ALT Distribution may not become unconditional or may not proceed. ALT Shareholders or any other persons contemplating selling or purchasing the Existing ALT Shares during the aforesaid period who are/is in doubt about his/her/its/their position are/is advised to consult his/her/its/their professional adviser(s).
This also assumes that the Registrar of Companies in the Cayman Islands enters the new name of ALT in the register of companies on the date of Completion. If Completion does not take place, the proposed change of name will not become effective.
If Subscription Completion does not take place, the ALT Share Consolidation will not become effective.
It is expected that new certificates for the Consolidated ALT Shares will be available for collection within a period of ten Business Days after the submission of certificates for the Existing ALT Shares to the branch share registrars of ALT in Hong Kong for exchange.
All time refers to Hong Kong local time.
9 -

LETTER FROM THE ALT BOARD

ASIA LOGISTICS TECHNOLOGIES LIMITED 亞洲物流科技有限公司 *

(Incorporated in the Cayman Islands with limited liability)

Executive Directors: Lo Lin Shing, Simon (Chairman) Chan Ki (Vice Chairman) Chan Wai Keung, Ringo (Chief Executive Officer) Yu Ansheng, Ben Lo Lin Kwong Zhao Rui

Non-executive Directors: Dr. Cheng Kar Shun, Henry Ho Hau Chong, Norman

Independent non-executive Directors: To Hin Tsun, Gerald Wei Chi Kuan, Kenny

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

Principal place of business in Hong Kong: 21st Floor Asia Orient Tower Town Place 33 Lockhart Road Wanchai Hong Kong

2 June 2004

To the ALT Shareholders, the holder of the ALT Convertible Note and the holders of the ALT Share Options

Dear Sir or Madam,

MAJOR AND CONNECTED TRANSACTIONS

(1) PROPOSED ACQUISITION OF THE ENTIRE INTEREST IN NEW WORLD PCS HOLDINGS LIMITED;

(2) PROPOSED ISSUE OF NEW SHARES AND A CONVERTIBLE NOTE TO A WHOLLY-OWNED SUBSIDIARY OF

NEW WORLD DEVELOPMENT COMPANY LIMITED (STOCK CODE: 17); (3) PROPOSED DISTRIBUTION IN SPECIE OF THE ENTIRE INTEREST IN NEW WORLD CYBERBASE LIMITED (STOCK CODE: 276), SHARE PREMIUM ACCOUNT REDUCTION, INCREASE IN AUTHORISED SHARE CAPITAL AND SHARE CONSOLIDATION; AND (4) PROPOSED CHANGE OF NAME

* For identification purposes only

10 -

LETTER FROM THE ALT BOARD

1. INTRODUCTION

On 29 March 2004, the S&P Agreement was entered into between NWTHL, a wholly-owned subsidiary of NWD, and ALT, pursuant to which ALT agreed to purchase and NWTHL agreed to dispose of the entire interest in NWPCS. The aggregate consideration for the Sale Shares amounts to HK$1,250 million which will be satisfied in cash upon S&P Completion. S&P Completion is conditional upon, among other conditions, the Subscription Completion.

On the same day, the Subscription Agreement was also entered into between PPG, a wholly-owned subsidiary of NWD, and ALT, pursuant to which PPG agreed to subscribe for: (i) 4,166,666,667 Subscription Shares (or 41,666,666 Consolidated ALT Shares) at an issue price of HK$0.012 per Existing ALT Share (or HK$1.20 per Consolidated ALT Share), representing a discount of approximately 72.7% to HK$0.044, being the closing price of the last trading day of the Existing ALT Shares prior to the Suspension; and (ii) the Subscription Note at a principal amount of HK$1,200 million. The proceeds to be received by ALT upon Subscription Completion will be applied for the acquisition of the entire interest in NWPCS under the S&P Agreement.

The ALT Board also proposes to effect the ALT Distribution, the ALT Capital Reduction, the ALT Share Increase and the ALT Share Consolidation. If Completion takes place, ALT also proposes to change its name to “New World Mobile Holdings Limited” and will adopt a Chinese name 「新世界移動控股有限公司」.

The details of the above were set out in the Announcement. The purpose of this circular is to provide with you, among other things, (i) further details of the Transactions; (ii) the recommendation from the Independent Director in respect of the S&P Agreement, the Subscription Agreement and the Whitewash Waiver; (iii) the letter of advice from Commerzbank and Access Capital to the Independent Director and the Independent ALT Shareholders; and (iv) the EGM Notice.

2. THE S&P AGREEMENT

Date:

29 March 2004

Parties:

NWTHL (as vendor)

ALT (as purchaser)

Assets to be acquired by ALT:

The Sale Shares

Consideration:

HK$1,250 million payable in cash upon S&P Completion.

The consideration for the Sale Shares was determined after arm’s length negotiations between the parties to the S&P Agreement, taking into account, among other factors, (i) the audited consolidated profits attributable to the shareholders of NWPCS for the year ended 30 June 2003 of approximately HK$201.9 million (before the provision of deferred taxation of approximately HK$13.1 million as adjusted

11 -

LETTER FROM THE ALT BOARD

in the accountants’ report on the NWPCS Group as set out in Appendix I to this circular); (ii) the restated consolidated earnings before interests, taxation, depreciation and amortisation (EBITDA) of NWPCS for the year ended 30 June 2003 of approximately HK$440.8 million; and (iii) the audited consolidated net deficit of NWPCS as at 30 June 2003 of approximately HK$1,263.8 million (before the adjustment in relation to the deferred tax assets of HK$224.4 million as adjusted in the accountants’ report on the NWPCS Group as set out in Appendix I to this circular) and the proposed capitalisation of the NWD Shareholder’s Loan in the manner as described under the paragraph headed “Treatment of the NWD Shareholder’s Loan and the Bank Loans” below.

Treatment of the NWD Shareholder’s Loan and the Bank Loans:

As at 31 March 2004, the Aggregate Liabilities amounted to approximately HK$2,231.7 million, representing amounts outstanding under the Bank Loans (being approximately HK$440.0 million) and the NWD Shareholder’s Loan (being approximately HK$1,791.7 million). The NWD Shareholder’s Loan is unsecured, interest-free and will be repayable on demand. NWTHL has agreed that immediately prior to S&P Completion, it will extend, or will procure another subsidiary of NWD to extend, a new loan to NWPCS in an amount equal to the then outstanding amount of the NWD Shareholder’s Loan for the purposes of repayment of the NWD Shareholder’s Loan upon S&P Completion. The aforesaid new loan advanced by the subsidiary of NWD for the repayment of the NWD Shareholder’s Loan will be repayable on demand after 18 months from the date of the S&P Agreement. The Bank Loans are currently guaranteed by NWD, which the Bank Guarantees are to be released as one of the conditions precedent to the S&P Completion. If required, the Bank Loans will be repaid at S&P Completion by a fresh loan from another subsidiary of NWD to NWPCS. If the Aggregate Liabilities on the Business Day prior to S&P Completion exceeds HK$1,250 million, part of the NWD Shareholder’s Loan will be capitalised so that the Aggregate Liabilities as at Completion does not exceed that amount. In sum, the Aggregate Liabilities in the books of NWPCS Group would be amounted to no more than HK$1,250 million upon Completion.

ALT Board’s view:

The ALT Board (including the independent non-executive ALT Directors) considers the consideration for the Sale Shares, in the context of the Transactions as a whole, to be fair and reasonable so far as the interest of the ALT Shareholders is concerned. A letter from the Independent Director containing his advice to the Independent ALT Shareholders in connection with the S&P Agreement is set out on pages 50 to 51 of this circular. A letter from Commerzbank and Access Capital containing their advice to the Independent Director and the Independent ALT Shareholders in connection with the S&P Agreement is set out on pages 52 to 77 of this circular.

Conditions precedent:

S&P Completion is subject to the following conditions precedent:

(a) approval by the Independent ALT Shareholders of the transactions contemplated under the S&P Agreement;
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LETTER FROM THE ALT BOARD

(b) compliance (unless otherwise waived by the Stock Exchange) of announcement and shareholders approval requirements under the Amended Listing Rules or otherwise of the Stock Exchange in relation to present and future transactions of the NWPCS Group which, immediately following S&P Completion, will constitute non-exempt continuing connected transactions of ALT under the Amended Listing Rules;
(c) no indication having been received from the Stock Exchange that as a result of the sale and purchase of the Sale Shares as contemplated under the S&P Agreement, ALT is or will be treated as a new listing applicant under the Amended Listing Rules;
(d) completion of the legal and financial due diligence on the NWPCS Group to the reasonable satisfaction of ALT;
(e) agreement having been received from the relevant banks for the release on or before S&P Completion of the Bank Guarantees;
(f) the Consolidated ALT Shares or the Existing ALT Shares remaining listed on the Stock Exchange at all times prior to and on S&P Completion and the current listing of the Consolidated ALT Shares or the Existing ALT Shares not having been withdrawn or the trading of the Consolidated ALT Shares or the Existing ALT Shares not having been suspended for a consecutive period of more than seven trading days (other than any suspension due to the clearance of the announcement in respect of the transactions contemplated under the S&P Agreement) and no indication being received on or before the date of S&P Completion from the Stock Exchange or the SFC to the effect that such listing may be withdrawn or objected to (or conditions will or may be attached thereto) including but not limited to as a result of S&P Completion or in connection with the terms of the S&P Agreement or for any other reason;
(g) all consents (subject only to conditions which NWTHL and ALT have no reasonable objection) having been obtained from the OFTA (if required);
(h) the obtaining of such other consent, approval, authorisation, permission, waiver or exemption which may be required from government or regulatory authorities or other third parties which are necessary or desirable in connection with the performance of the S&P Agreement and any of the transactions contemplated under the S&P Agreement; and
(i) Subscription Completion.

If the conditions are not fulfilled or (in respect of the condition (d) above only) waived in writing by ALT or (in respect of the condition (f) above only) waived in writing by NWTHL, on or before the Long Stop Date, the S&P Agreement shall terminate at 11:59 p.m. on the Long Stop Date and neither party to the S&P Agreement shall have any claim against the other for costs, damages, compensation or otherwise (save in respect of any prior breach of the S&P Agreement).

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LETTER FROM THE ALT BOARD

S&P Completion:

S&P Completion shall take place at 10:00 a.m. on the third Business Day after satisfaction or waiver by ALT or NWTHL of the above conditions (other than the condition (i) above which is required to have fulfilled immediately before S&P Completion).

3. THE SUBSCRIPTION AGREEMENT

A. THE SUBSCRIPTION SHARES AND THE SUBSCRIPTION NOTE:

Date:

29 March 2004

Parties:

PPG (as subscriber)

ALT (as issuer)

The subscriptions:

PPG has agreed to subscribe for the Subscription Shares and the Subscription Note on the terms described in more detail below.

The Subscription Shares:

4,166,666,667 new Existing ALT Shares (or 41,666,666 new Consolidated ALT Shares) to be issued and allotted at an issue price of HK$0.012 per Existing ALT Share (or HK$1.20 per Consolidated ALT Share) by ALT to PPG.

Based on the closing price of HK$0.044 per Existing ALT Share as at 25 March 2004 (being the last trading day of the Existing ALT Shares on the Stock Exchange prior to the Suspension), the Subscription Shares will have a market value of approximately HK$183.3 million. Based on the average closing price of approximately HK$0.0452 per Existing ALT Share for the last five consecutive trading days up to and including 25 March 2004, the Subscription Shares will have a market value of approximately HK$188.3 million. Based on the average closing price of approximately HK$0.02 per Existing ALT Share for the last five consecutive trading days up to and including the Latest Practicable Date, the Subscription Shares will have a market value of approximately HK$83.3 million. Based on the closing price of HK$0.022 per Existing ALT Share as at the Latest Practicable Date, the Subscription Shares will have a market value of approximately HK$91.7 million.

The number of the Subscription Shares (i.e. 4,166,666,667 new Existing ALT Shares or 41,666,666 new Consolidated ALT Shares) represents approximately 111.07% of the existing issued share capital of ALT as at the Latest Practicable Date and approximately 52.62% of the issued share capital of ALT as

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LETTER FROM THE ALT BOARD

enlarged by the issue of the Subscription Shares, but without taking into account of the issue of the Conversion Shares and the exercise of the conversion rights attaching to the ALT Convertible Note.

Application will be made by ALT to the Stock Exchange for the listing of, and permission to deal in, the Subscription Shares. The consideration of the Subscription Shares amounted to approximately HK$50 million and will be paid by PPG in cash.

The issue price of the Subscription Shares of HK$0.012 per Existing ALT Share (or HK$1.20 per Consolidated ALT Share) represents:

(i) a discount of approximately 72.7% to HK$0.044, being the closing price of the Existing ALT Shares on the Stock Exchange on 25 March 2004, being the last trading day of the Existing ALT Shares before the Suspension;
(ii) a discount of approximately 74.2% to approximately HK$0.0465, being the average closing price of the Existing ALT Shares on the Stock Exchange during the last 10 consecutive trading days up to and including 25 March 2004, being the last trading day of the Existing ALT Shares on the Stock Exchange before the Suspension;
(iii) a discount of approximately 76.1% to approximately HK$0.0502, being the average closing price of the Existing ALT Shares on the Stock Exchange during the last 30 consecutive trading days up to and including 25 March 2004, being the last trading day of the Existing ALT Shares before the Suspension;
(iv) a discount of approximately 45.5% to HK$0.022, being the closing price of the Existing ALT Shares on the Stock Exchange as at the Latest Practicable Date;
(v) a discount of approximately 58.3% to approximately HK$0.0288, being the audited consolidated net asset value of the ALT Group per Existing ALT Share as at 31 December 2003; and
(vi) a premium of approximately 37.9% to approximately HK$0.87, being the unaudited proforma adjusted consolidated net tangible asset value of the ALT Group per Consolidated ALT Share as at 31 December 2003 after the ALT Distribution but before Completion.

The Subscription Note:

The Subscription Note in the principal amount of HK$1,200 million to be issued by ALT to PPG.

The principal terms of the Subscription Note are summarised below:

Issuer:

ALT

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LETTER FROM THE ALT BOARD

Noteholder:

PPG

Principal amount:

HK$1,200 million to be issued at its face value.

Maturity date and early redemption:

Unless previously converted, the outstanding principal amount of the Subscription Note (together with all unpaid and accrued interest) will be repaid by ALT upon its maturity on the Business Day immediately preceding the third anniversary of the date of its first issue. All or part (in the amount or integral multiples of HK$1,200,000) of the outstanding principal amount of the Subscription Note is redeemable at any time at the election of ALT without penalty.

Coupon:

The Subscription Note will bear a coupon from its date of issue at the rate of 0.75% per annum, which will be payable on the maturity date on the principal amount of the Subscription Note outstanding from time to time or if redeemed or converted earlier, on the date of redemption or conversion on the redeemed or converted principal amount of the Subscription Note.

Conversion rights:

The outstanding principal amount of the Subscription Note or any part thereof may, at the discretion of the holder, be converted (in the amount of integral multiples of HK$1,200,000) into new Existing ALT Shares or Consolidated ALT Shares to be issued to the holder of the Subscription Note (or as it may direct) at any time on or after the date of issue (but prior to the maturity date) at the relevant conversion price which is initially HK$0.012 per Existing ALT Share (or HK$1.20 per Consolidated ALT Share), subject to adjustment.

No fraction of Existing ALT Share or Consolidated ALT Share will be issued on conversion nor will any cash payment be made to the holder of the Subscription Note in respect of such fraction.

Assuming that the entire principal amount of the Subscription Note is converted at its initial conversion price, a total of approximately 100,000,000,000 new Existing ALT Shares (or 1,000,000,000 new Consolidated ALT Shares) will be issued, representing (i) approximately 2,665.6% of the existing issued capital of ALT as at the Latest Practicable Date; and (ii) approximately 92.7% of the existing issued share capital of ALT as enlarged by the issue of the Subscription Shares and the Conversion Shares.

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LETTER FROM THE ALT BOARD

Ranking of the Consolidated ALT Shares to be issued upon conversion:

The Existing ALT Shares (or the Consolidated ALT Shares) to be issued by ALT upon any exercise of the conversion rights under the Subscription Note will rank pari passu in all respects with all other Existing ALT Shares (or the Consolidated ALT Shares) in issue on the date of the conversion notice.

Conversion price:

The initial conversion price of HK$0.012 per Existing ALT Share (or HK$1.20 per Consolidated ALT Share), subject to adjustment in accordance with the terms of the Subscription Note (e.g. for dilutive events such as ALT issuing Consolidated ALT Shares or other securities convertible into Consolidated ALT Shares, where such Consolidated ALT Shares are to be issued at less than 95% of the then market price), was determined after arm’s length negotiations among the parties.

The initial conversion price of HK$0.012 per Existing ALT Share (or HK$1.20 per Consolidated ALT Share) represents:

(i) a discount of approximately 72.7% to HK$0.044, the closing price of the Existing ALT Shares on the Stock Exchange on 25 March 2004, being the last trading day of the Existing ALT Shares on the Stock Exchange before the Suspension;
(ii) a discount of approximately 74.2% to approximately HK$0.0465, being the average closing price of the Existing ALT Shares on the Stock Exchange during the last 10 consecutive trading days up to and including 25 March 2004, being the last trading day of the Existing ALT Shares on the Stock Exchange before the Suspension;
(iii) a discount of approximately 76.1% to approximately HK$0.0502, being the average closing price of the Existing ALT Shares on the Stock Exchange during the period of 30 consecutive trading days up to and including 25 March 2004, being the last trading day of the Existing ALT Shares on the Stock Exchange before the Suspension;
(iv) a discount of approximately 45.5% to HK$0.022, being the closing price of the Existing ALT Shares on the Stock Exchange as at the Latest Practicable Date;
(v) a discount of approximately 58.3% to approximately HK$0.0288, being the audited consolidated net asset value of the ALT Group per Existing ALT Share as at 31 December 2003; and
(vi) a premium of approximately 37.9% to approximately HK$0.87, being the unaudited proforma adjusted consolidated net tangible asset value of the ALT Group per Consolidated ALT Share as at 31 December 2003 after the ALT Distribution but before Completion.
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LETTER FROM THE ALT BOARD

Voting:

The holder of the Subscription Note will not be entitled to receive notice of, attend or vote at general meetings of ALT by reason only of its being a holder of the Subscription Note.

Transferability:

The Subscription Note is not transferable without the prior written consent of ALT.

ALT will notify the Stock Exchange upon ALT becoming aware of any dealings by or transfer of the Subscription Note to any connected persons (as defined in the Amended Listing Rules) of ALT.

Listing:

No application has been or will be made for the listing of the Subscription Note on the Stock Exchange or any other stock exchanges. Application will be made to the Stock Exchange for the listing of, and permission to deal in, the Conversion Shares.

B. ALT BOARD’S VIEW:

The ALT Board (including the independent non-executive ALT Directors) considers the issue price of the Subscription Shares and the conversion price of the Subscription Note, in the context of the Transactions as a whole, to be fair and reasonable so far as the interest of the ALT Shareholders is concerned. A letter from the Independent Director containing his advice to the Independent ALT Shareholders in connection with the Subscription Agreement is set out on pages 50 to 51 of this circular. A letter from Commerzbank and Access Capital containing their advice to the Independent Director and the Independent ALT Shareholders in connection with the Subscription Agreement is set out on pages 52 to 77 of this circular.

C. CONDITIONS PRECEDENT:

Subscription Completion is subject to the following conditions precedent:–

(a) approval by the Independent ALT Shareholders of the transactions contemplated under the Subscription Agreement including but not limited to (i) the issue and allotment of the Subscription Shares to PPG; (ii) the issue of the Subscription Note to PPG and the Conversion Shares; and (iii) the ALT Share Increase;
(b) the Whitewash Waiver having been obtained from the Executive pursuant to Note 1 of the Notes on dispensations from Rule 26 of the Takeovers Code and having been approved by the Independent ALT Shareholders at the EGM;
(c) all necessary sanctions and approvals (including the approval by the ALT Shareholders) being obtained for the ALT Distribution;
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LETTER FROM THE ALT BOARD

(d) the Listing Committee of the Stock Exchange granting the listing of, and permission to deal in, the Subscription Shares and the Conversion Shares;
(e) completion of the legal and financial due diligence on the ALT Group to the reasonable satisfaction of PPG;
(f) the Consolidated ALT Shares or the Existing ALT Shares remaining listed on the Stock Exchange at all times prior to and on Subscription Completion and the current listing of the Consolidated ALT Shares or the Existing ALT Shares not having been withdrawn or the trading of the Consolidated ALT Shares or the Existing ALT Shares not having been suspended for a consecutive period of more than seven trading days (other than any suspension due to the clearance of the announcement in respect of the transactions contemplated under the Subscription Agreement) and no indication being received on or before the date of the Subscription Completion from the Stock Exchange or the SFC to the effect that such listing may be withdrawn or objected to (or conditions will or may be attached thereto) including but not limited to as a result of Subscription Completion or in connection with the terms of the Subscription Agreement or for any other reason; and
(g) the obtaining of such other consent, approval, authorisation, permission, waiver or exemption which may be required from government or regulatory authorities or other third parties which are necessary or desirable in connection with the performance of the Subscription Agreement and any of the transactions contemplated under the Subscription Agreement.

If the conditions are not fulfilled or (in respect of the conditions (b), (e) and (f) above only) waived in writing by PPG, on or before the Long Stop Date, the Subscription Agreement shall terminate at 11:59 p.m. on the Long Stop Date and neither party to the Subscription Agreement shall have any claim against the other for costs, damages, compensation or otherwise (save in respect of any prior breach of the Subscription Agreement).

PPG shall not waive the condition (b) above unless it shall have demonstrated to the satisfaction of the Executive that it has sufficient financial resources to fulfil its obligations under Rule 26 of the Takeovers Code (unless the Executive has in writing waived such a requirement). PPG has undertaken to ALT that it shall make offers for all the securities of ALT as required by the Takeovers Code and shall comply with its obligations thereunder in respect of such offers, if it waives the condition (b) above.

D. SUBSCRIPTION COMPLETION:

Subscription Completion shall take place at 10:00 a.m. on the third Business Day after satisfaction or waiver (in respect of conditions (b), (e) and (f) above) by PPG.

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LETTER FROM THE ALT BOARD

E. SHAREHOLDING AND GROUP STRUCTURES:

Set out below is a table showing the shareholding structure of ALT (i) as at the Latest Practicable Date; (ii) upon Subscription Completion (after taking into account the effect of the ALT Share Consolidation) but before conversion of the Subscription Note and the ALT Convertible Note; (iii) after Subscription Completion (after taking into account the effect of the ALT Share Consolidation) and full conversion of the Subscription Note but before the conversion of the ALT Convertible Note; and (iv) after Subscription Completion (after taking into account the effect of the ALT Share Consolidation) and full conversion of the Subscription Note and the ALT Convertible Note (assuming there is no other change in the shareholding structure and/or the issued share capital of ALT from the Latest Practicable Date):

The NWD Group Party presumed to be acting in concert with the NWD Group under the Takeovers Code: Mr. Simon Lo Sub-total of the NWD Group and its presumed Concert Parties Mr. Chan Public ALT Shareholders Total	As at the Latest Practicable Date No. of Existing ALT Shares % 210,000,000 5.60 1,129,758,000 30.11 1,339,758,000 35.71 258,700,000 6.90 2,153,097,700 57.39 3,751,555,700 100.00	Immediately after Subscription Completion (after taking into account the effect of the ALT Share Consolidation) but before conversion of the Subscription Note and the ALT Convertible Note No. of Consolidated ALT Shares % 43,766,666 55.27 11,297,580 14.27 55,064,246 69.54 2,587,000 3.27 21,530,977 27.19 79,182,223 100.00	After Subscription Completion (after taking into account the effect of the ALT Share Consolidation) and full conversion of the Subscription Note but before the conversion of the ALT Convertible Note No. of Consolidated ALT Shares % 1,043,766,666 96.71 11,297,580 1.05 1,055,064,246 97.76 2,587,000 0.24 21,530,977 2.00 1,079,182,223 100.00	After Subscription Completion (after taking into account the effect of the ALT Share Consolidation) and full conversion of the Subscription Note and the ALT Convertible Note No. of Consolidated ALT Shares % 1,046,595,266* 96.73 11,297,580 1.04 1,057,892,846 97.77 2,587,000 0.24 21,530,977 1.99 1,082,010,823 100.00	After Subscription Completion (after taking into account the effect of the ALT Share Consolidation) and full conversion of the Subscription Note and the ALT Convertible Note No. of Consolidated ALT Shares % 1,046,595,266* 96.73 11,297,580 1.04 1,057,892,846 97.77 2,587,000 0.24 21,530,977 1.99 1,082,010,823 100.00
					97.77 0.24 1.99
					100.00

The number of new Consolidated ALT Shares issued under the ALT Convertible Note is calculated based on the current conversion price (subject to adjustment) of HK$0.10 per Existing ALT Share and after taking into account the effect of the ALT Share Consolidation.
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LETTER FROM THE ALT BOARD

Set out below are the simplified shareholding and group structures of NWD, ALT, NWPCS and NWCB as at the Latest Practicable Date and, immediately after Completion but before conversion of the Subscription Note and the ALT Convertible Note:

As at the Latest Practicable Date:

==> picture [246 x 216] intentionally omitted <==

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

NWD
100.00% 100.00%
Public
Mr. Simon
NWCBN Mr. Chan ALT
Lo
Shareholders
5.60% 30.11% 6.90% 57.39%
(Note)
Existing public
NWTHL ALT shareholders
of NWCB
100.00% 27.48% 72.52%
NWPCS NWCB
----- End of picture text -----

Note: NWCBN, a wholly-owned subsidiary of NWD, is the holder of the ALT Convertible Note.

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LETTER FROM THE ALT BOARD

Immediately after Completion but before conversion of the Subscription Note and the ALT Convertible Note:

(i) Regarding ALT and NWPCS:

==> picture [242 x 216] intentionally omitted <==

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

NWD
100.00% 100.00%
Public
Mr. Simon
NWCBN Mr. Chan ALT
Lo
Shareholders
2.65% 14.27% 3.27% 27.19%
(Note 1)
PPG (Note 2) ALT
52.62%
100.00%
NWPCS
----- End of picture text -----

Notes:

NWCBN, a wholly-owned subsidiary of NWD, is the holder of the ALT Convertible Note.
PPG, a wholly-owned subsidiary of NWD, will be the holder of the Subscription Note.
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LETTER FROM THE ALT BOARD

(ii) Regarding NWCB:

==> picture [354 x 197] intentionally omitted <==

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

NWD
100.00%
Public Existing public
Mr. Simon
NWCBN Mr. Chan ALT shareholders of
Lo
Shareholders NWCB
1.54% 8.26% 1.89% 15.79% 72.52%
NWCB
----- End of picture text -----

4. ALT DISTRIBUTION, ALT CAPITAL REDUCTION, ALT SHARE INCREASE AND ALT SHARE CONSOLIDATION

A. ALT DISTRIBUTION:

ALT proposes, if Subscription Completion takes place, to effect the ALT Distribution which would involve a distribution in specie of all NWCB Shares held by ALT to all ALT Shareholders.

All the NWCB Shares held by ALT will be distributed to the ALT Shareholders whose names appear on the register of members of ALT on the Record Date. The NWCB Shares will continue to be listed on the Stock Exchange.

ALT Shareholders, whose names appear on the register of members of ALT on the Record Date, will, if Subscription Completion takes place, receive:

FOR 10 CONSOLIDATED ALT SHARES

(OR 1,000 EXISTING ALT SHARES) HELD . . . . . . . . . . . . . . . . . . . . . . . 426 NWCB SHARES

It is the responsibility of the ALT Shareholders whose addresses as stated in the register of members of ALT are outside Hong Kong on the Record Date and who receive the NWCB Shares under the ALT Distribution, to satisfy themselves as to the full observance of the laws of any relevant jurisdiction in connection therewith, including the obtaining of any governmental, exchange control or other consent which may be required to comply with other necessary formalities or legal requirements. Any such ALT Shareholders will be responsible for the payment of any taxes by whomsoever payable due in respect of that jurisdiction.

Fractions of NWCB Shares arising from the ALT Distribution will not be distributed to the ALT Shareholders but will be aggregated and, if possible, sold for the benefit of ALT. It is expected that the certificates of the NWCB Shares will be despatched to the ALT Shareholders on or before Wednesday, 21 July 2004 by ordinary post at their own risk.

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LETTER FROM THE ALT BOARD

Reasons for distribution in specie of NWCB Shares:

The ALT Board is optimistic about the prospects of the mobile telecommunications market and considers that the Transactions will provide a solid ground for ALT to invest in mobile telecommunications projects. The ALT Board intends that the ALT Group be focused on the provision of supply chain and logistics related solutions and data services as well as mobile telecommunications. As such, the ALT Board considers that the distribution of ALT’s entire interest in the NWCB Shares to all ALT Shareholders would (i) provide investors, research analysts and rating agencies with greater clarity on the business and financial position of ALT through segregation of NWCB’s information technology businesses from its mobile telecommunications business (upon S&P Completion); and (ii) offer an opportunity for the ALT Shareholders to realise their investments in the NWCB Shares through direct holding of the NWCB Shares.

B. ALT CAPITAL REDUCTION AND ALT SHARE INCREASE:

For the reasons stated in greater detail below and to facilitate the ALT Distribution as described above and the issue of the Subscription Shares and the Conversion Shares (in the event that the conversion rights under the Subscription Note are exercised) and in any event to give ALT greater flexibility in making future dividend payments (if any), ALT Board also proposes to effect the ALT Capital Reduction and the ALT Share Increase, whereby (i) the entire amount standing to the credit of the share premium account of ALT (the audited share premium account being approximately HK$450.8 million as at 31 December 2003) will be applied first to set off accumulated losses of ALT as at 31 December 2003 (the audited accumulated losses being approximately HK$357.2 million as at 31 December 2003), and thereafter to effect the ALT Distribution and the balance (if any) to be applied as the ALT Board may consider appropriate, subject to compliance with the laws of the Cayman Islands, including the payment of future dividends to the ALT Shareholders (if any) and setting off such amount against any further accumulated losses of ALT; and (ii) the existing authorised share capital of ALT will be increased from HK$100,000,000 to HK$2,000,000,000 by the creation of an additional 190,000,000,000 Existing ALT Shares (or 1,900,000,000 Consolidated ALT Shares).

Reasons for the ALT Capital Reduction:

The ALT Board intends first to apply the amount standing to the credit of the share premium account of ALT to set off the accumulated losses of ALT as at 31 December 2003. The latest annual report of the ALT as at 31 December 2003 showed that ALT had audited accumulated losses of approximately HK$357.2 million. The ALT Board believes that it is unlikely that the ALT Group will generate sufficient profits from its existing operations in the immediate future to eliminate those accumulated losses and that it would be inappropriate for ALT to pay dividends while the losses remain. The ALT Capital Reduction will allow ALT to eliminate those accumulated losses to facilitate the ALT Distribution which involves a distribution in specie. Any remaining surplus in the share premium account of ALT could be used for the payment of future dividends to the ALT Shareholders (if any) and setting off such amount against any further accumulated losses of ALT. On that basis, the ALT Board considers it appropriate to effect the ALT Capital Reduction.

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LETTER FROM THE ALT BOARD

C. ALT SHARE CONSOLIDATION:

The ALT Board further proposes that, if Subscription Completion takes place, every 100 issued or unissued Existing ALT Shares of HK$0.01 each will be consolidated into one Consolidated ALT Share of HK$1.00.

The Consolidated ALT Shares after the ALT Share Consolidation will rank pari passu in all respects with each other. Notwithstanding the implementation of the ALT Share Consolidation, all the existing certificates for the Existing ALT Shares will continue to be effective as documents of title for the Consolidated ALT Shares.

Reasons for the ALT Share Consolidation:

The ALT Board believes that the ALT Share Consolidation is beneficial to the ALT Group. For the ALT Shareholders, the transaction costs and the registration costs incurred by the ALT Shareholders for the same number of Existing ALT Shares after the implementation of the ALT Share Consolidation (having regard to the enlarged share capital base as a result of the Subscription Completion) might be lower.

D. CONDITIONS OF THE ALT DISTRIBUTION, THE ALT CAPITAL REDUCTION, THE ALT SHARE INCREASE AND THE ALT SHARE CONSOLIDATION:

The ALT Capital Reduction is conditional upon, among others:

(i) the passing at the EGM of a special resolution by the ALT Shareholders in the terms of resolution numbered 5 in the EGM Notice approving the ALT Capital Reduction; and
(ii) compliance by ALT with the requirements of the Companies Law, Cap. 22 (Law 3 of 1961, as consolidated and revised) of the Cayman Islands.

The ALT Share Increase and the ALT Distribution are conditional upon the passing at the EGM of the ordinary resolution numbered 1 in the EGM Notice by the Independent ALT Shareholders and Subscription Completion.

The ALT Share Consolidation is conditional upon the passing at the EGM of the ordinary resolution numbered 4 in the EGM Notice by the ALT Shareholders and Subscription Completion.

ALT Shareholders should note that the ALT Distribution, the ALT Share Increase and the ALT Share Consolidation will only become effective upon Subscription Completion. Since Subscription Completion is subject to the fulfillment of a number of conditions precedent, the ALT Distribution, the ALT Share Increase and the ALT Share Consolidation may or may not take place. However, the ALT Capital Reduction will become effective irrespective of whether the S&P Agreement or the Subscription Agreement is completed or not.

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LETTER FROM THE ALT BOARD

5. PROPOSED CHANGE OF NAME OF ALT

The ALT Board also proposes that if Completion taking place, ALT will change its name to “New World Mobile Holdings Limited” and will adopt a Chinese name 「新世界移動控股有限公司」. The change of name will reflect the business focus of the ALT Group after Completion.

The proposed change of name of ALT is subject to:

(i) the passing of a special resolution on the change of name by the ALT Shareholders at the EGM;
(ii) Completion taking place; and
(iii) the approval of the new name by the Registrar of Companies in Cayman Islands.

The change of name of ALT will take effect upon satisfaction of the conditions attaching to the special resolution approving the change of name provided the Registrar of Companies in Cayman Islands enters the new name on the register in place of the existing name. Thereafter, ALT will comply with the necessary filing procedures in Hong Kong. The proposed change of name of ALT will not affect any of the rights of the ALT Shareholders.

All existing blue colour share certificates for the Existing ALT Shares in issue bearing the current name of ALT will continue to be evidence of title to the shares of ALT under the new name and will not require replacement as a result of the change of name becoming effective. It is currently intended that the change of name will take effect after Completion but on the same day as Completion subject to registration as mentioned above in the Cayman Islands. The new pink share certificates for the Consolidated ALT Shares referred to in the paragraph headed “Trading arrangement and free exchange of new share certificates” below will bear the new company name “New World Mobile Holdings Limited” on the basis that the proposed change of name takes effect.

If the change of name takes effect on a date different from the date stated above, further announcement will be made by ALT on the free exchange of share certificates arrangement.

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LETTER FROM THE ALT BOARD

6. TAKEOVERS CODE IMPLICATIONS OF THE TRANSACTIONS

Immediately after the issue of the Subscription Shares at Subscription Completion but before the exercise of any of the conversion rights under the Subscription Note and the ALT Convertible Note, the aggregate voting rights of the NWD Group and its Concert Parties in ALT (including the interest to be held by PPG) will increase from approximately 35.71% to approximately 69.54%. As such, PPG and its Concert Parties will have an obligation to make mandatory general offers for all the Existing ALT Shares or Consolidated ALT Shares, the ALT Convertible Note and the outstanding ALT Share Options other than those already owned or agreed to be subscribed by PPG and its Concert Parties following Subscription Completion pursuant to Rule 26.1 of the Takeovers Code. Immediately after the issue of the Subscription Shares at Subscription Completion and the full exercise of the conversion rights attaching to the Subscription Note and the ALT Convertible Note (based on the current conversion price (subject to adjustment) of HK$0.10 per Existing ALT Share and after taking into account the effect of the ALT Share Consolidation), the aggregate voting rights of PPG and its Concert Parties in ALT will increase to approximately 97.77%.

One of the conditions precedent to Subscription Completion requires that the Whitewash Waiver be obtained. If the Whitewash Waiver cannot be obtained, the transactions contemplated under the Subscription Agreement will not become unconditional and will not proceed (unless that condition is waived). In such circumstances, mandatory offers will not be made by PPG and its Concert Parties (unless that condition is waived).

Notwithstanding the rights of waiver of PPG in respect of the condition precedent that requires the Whitewash Waiver be obtained, PPG shall not waive such condition precedent unless it shall have demonstrated to the satisfaction of the Executive that it has sufficient financial resources to fulfill its obligations under Rule 26.1 of the Takeovers Code (unless the Executive has in writing waived such a requirement).

Save for the allotment and issue of 110,000,000 Existing ALT Shares to NWCBN upon conversion of part of the ALT Convertible Note on 5 December 2003, neither PPG nor its Concert Parties has dealt in the securities of ALT during the six-month period immediately preceding the date of the S&P Agreement and for the period from the date of the S&P Agreement and up to and including the Latest Practicable Date. In addition, PPG has undertaken that PPG and its Concert Parties will not deal with the voting rights of ALT for the period from the date of the Announcement up to and including the date of the EGM.

An application has been made by PPG to the Executive for the grant of the Whitewash Waiver under Note 1 of the Notes on dispensations from Rule 26 of the Takeovers Code. The Executive has indicated that the Whitewash Waiver will be granted subject to the votes of the Independent ALT Shareholders to be taken by poll at the EGM.

As the NWD Group will be interested in more than 50% of the entire issued share capital of ALT after Subscription Completion, the NWD Group may further acquire the securities of ALT without incurring any obligation to make general offers to acquire all the securities of ALT, other than those already owned by the NWD Group or its Concert Parties under Rule 26.1 of the Takeovers Code.

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LETTER FROM THE ALT BOARD

7. INFORMATION ON THE ALT GROUP AND THE NWCB GROUP

The ALT Group is principally engaged in the provision of supply chain and logistics related solutions and data services, including research and development, consultancy, offering of software solutions, implementation and turnkey solutions.

The audited consolidated results of the ALT Group for the years ended 31 December 2002 and 31 December 2003 were as follows:

	For the year ended	For the year ended
	31 December 2003	31 December 2002
	(HK$ million)	(HK$ million)
Audited consolidated net loss
before taxation and extraordinary items
and minority interests	153.4	92.9
Audited consolidated net loss attributable
to the shareholders	153.4	89.4

As at 31 December 2003, the audited consolidated net tangible asset value of the ALT Group amounted to approximately HK$97.5 million.

The NWCB Group is principally engaged in the provision of information technology outsourcing and application services to customers in the PRC. As at 30 September 2003, the unaudited consolidated net asset value of the NWCB Group amounted to approximately HK$236.2 million. For the six months ended 30 September 2003, the unaudited consolidated net loss attributable to the shareholders of the NWCB Group amounted to approximately HK$17.9 million.

8. REASONS FOR AND BENEFITS OF THE TRANSACTIONS

The ALT Board is optimistic about the prospects of the mobile telecommunications market and considers that the Transactions will provide a solid ground for ALT to invest in mobile telecommunications projects. The ALT Board also believes that the Transactions will enlarge ALT’s business scope and broaden its revenue stream.

Based on the above, the ALT Board (including the Independent non-executive ALT Directors) believes that the Transactions will be beneficial to ALT and the ALT Shareholders as a whole.

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LETTER FROM THE ALT BOARD

9. TRADING ARRANGEMENT AND FREE EXCHANGE OF NEW SHARE CERTIFICATES

Application will be made to the Stock Exchange for the listing of, and permission to deal in, the Consolidated ALT Shares. Subject to the granting of listing of, and permission to deal in, the Consolidated ALT Shares on the Stock Exchange, the Consolidated ALT Shares will be accepted as eligible securities by HKSCC for deposit, clearance and settlement in CCASS with effect from the date of commencement of dealings in the Consolidated ALT Shares on the Stock Exchange or such other date as determined by HKSCC. Settlement of transactions between participants of the Stock Exchange on any trading day is required to take place in CCASS on the second trading day thereafter. All activities under CCASS are subject to the General Rules of CCASS and CCASS Operational Procedures in effect from time to time.

The Consolidated ALT Shares will be traded in board lots of 2,000 each. Subject to the ALT Share Consolidation becoming effective which is expected to be on 7 July 2004, dealings in the Consolidated ALT Shares are expected to commence on the same day. Parallel trading arrangements will be established with the Stock Exchange and parallel trading will be permitted from 21 July 2004 to 11 August 2004, both days inclusive, at the counters mentioned in (a) and (b) below:

(a) with effect from 9:30 a.m. on 7 July 2004, a temporary counter for trading in the Consolidated ALT Shares (represented by blue colour share certificates for the Existing ALT Shares in board lots of 20) will be established and only blue colour share certificates for Existing ALT Shares can be traded at this counter. Each blue colour share certificate for Existing ALT Shares will be valid for settlement and delivery for trading transacted at this counter on the basis of 100 Existing ALT Shares for one Consolidated ALT Share. The original counter for trading in the Existing ALT Shares in board lots of 2,000 each will be temporarily closed with effect from 9:30 a.m. on 7 July 2004; and
(b) with effect from 9:30 a.m. on 21 July 2004, the original counter will be re-opened and will become a counter for trading in the Consolidated ALT Shares in board lot of 2,000 Consolidated ALT Shares. Only new pink colour share certificates under the new name of ALT for the Consolidated ALT Shares can be traded at this counter; and the temporary counter for trading in the Consolidated ALT Shares (represented by blue colour share certificates for the Existing ALT Shares in board lots of 20) will be removed after the close of business on 11 August 2004. The blue colour share certificates for the Existing ALT Shares will continue to be good evidence of legal title on the basis of 100 Existing ALT Shares for one Consolidated ALT Share, but will not be acceptable for trading and settlement purposes after 11 August 2004.

Subject to the ALT Share Consolidation becoming effective on 7 July 2004, the ALT Shareholders may, during 7 July 2004 to 17 August 2004, submit certificates for the Existing ALT Shares to the branch share registrars of ALT in Hong Kong, Abacus Share Registrars Limited at Ground Floor, Bank of East Asia Harbour View Centre, 56 Gloucester Road, Wanchai, Hong Kong for exchange, at the expense of ALT, for certificates for the Consolidated ALT Shares under the new name of ALT. Thereafter, certificates for the Existing ALT Shares will be accepted for exchange only on payment of a fee of HK$2.50 (or such higher amount as may from time to time be allowed by the Stock Exchange) for each new certificate

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LETTER FROM THE ALT BOARD

issued for the Consolidated ALT Shares under the new name of ALT, or for each certificate for the Existing ALT Shares submitted for cancellation, whichever the number is greater. Nevertheless, the blue colour certificates for the Existing ALT Shares will continue to be good evidence of legal title and may be exchanged for certificates for the Consolidated ALT Shares at any time at the prescribed fee.

It is expected that new certificates for the Consolidated ALT Shares under the new name of ALT will be available for collection within a period of ten Business Days after the submission of certificates for the Existing ALT Shares to the branch share registrars of ALT in Hong Kong for exchange. Unless otherwise instructed, new share certificates will be issued in board lots of 2,000 each.

ALT has appointed Tai Fook Securities Company Limited as its agent to match the sale and purchase of odd lots of the Consolidated ALT Shares arising from the ALT Share Consolidation from 21 July 2004 up to and including 11 August 2004. Such arrangement is to facilitate the ALT Shareholders who wish to dispose of or top up their odd lots of Consolidated ALT Shares. ALT Shareholders who wish to take advantage of the facility should contact Ms. Eon Lee of Tai Fook Securities Company Limited at 25th Floor, New World Tower, 16-18 Queen’s Road Central, Hong Kong (Tel: 2160 9983). ALT Shareholders should note that the matching of the sale and purchase of odd lots of Consolidated ALT Shares is not guaranteed.

10. CONTINUING CONNECTED TRANSACTIONS

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LETTER FROM THE ALT BOARD

A. LEASING AND LICENSING OF PROPERTIES AND SHARING OF COMMON FACILITIES

The Post-Completion NWD Group has agreed to lease various properties to the NWPCS Group for use as its offices, retail shops, warehouse and switching centres.

On 1 July 2002 and 15 December 2003, the Post-Completion NWD Group has agreed to let approximately 136,472 sq.ft. of the premises situated at Chevalier Commercial Centre, Kowloon Bay, Kowloon, Hong Kong as the head office of the NWPCS Group. In relation to the premises leased by the Post-Completion NWD Group to the NWPCS Group, the rental payment was determined with reference to market rates at the time when the relevant agreement was signed. The term for the lease is for the period of three years up to and including 31 July 2006.

Furthermore, out of the aforesaid area of 136,472 sq.ft. of the premises situated at Chevalier Commercial Centre, Kowloon Bay, Kowloon, Hong Kong, the NWPCS Group has agreed to license portion of the aforesaid premises to NWT for use as the office of NWT and to share some common facilities and related services with NWT. In relation to the premises licensed by the NWPCS Group to NWT, the licence payment was determined with reference to market rates at the time when the relevant agreement was signed. The term for the licence is for the period of three years up to and including 31 July 2006.

In addition, the NWPCS Group also agreed on 10 December 2001 and 10 May 2004 to lease premises from the Post-Completion NWD Group as warehouse and switching centre for the term of three years up to 31 December 2005. The rental payments were determined with reference to market rates at the time when the relevant agreements were signed.

On 30 June 2000, the Post-Completion NWD Group has agreed to license certain premises at World Peace Centre, Kwai Chung, New Territories, Hong Kong to the NWPCS Group as a switching centre for operations of its infrastructure facilities under a co-location agreement. The licence fee payable by the NWPCS Group was determined with reference to market rates at the time when the co-location agreement was signed.

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LETTER FROM THE ALT BOARD

The details of the transactions contemplated under the various agreements in respect of leasing and licensing of properties are set out below:

(i) Leasing and licensing of properties – payments by the NWPCS Group

1.

						Actual
						amount paid
						for the financial
					Relationship	year ended
					of the lessor	30 June
	Date of		Floor area		with the NWD	2003
Description	agreement	Expiry date	(sq.ft.)	Lessor	Group	(HK$’000)
Tenancy of 8/F, 16/F, 17/F,	1 July 2002/	31 July	136,472	Newly	a wholly-owned	19,382
18/F and Rooms	15 December	2006		Development	subsidiary of
1112-1116 of 11/F of	2003			Limited	NWD
Chevalier Commercial Centre,
8 Wang Hoi Road,
Kowloon Bay, Kowloon
Tenancy of Workshops 1-12,	10 December	31 December	13,492	Global	a jointly controlled	791
10/F, World Peace Centre,	2001/	2005		Winner	entity of NWD
55 Wo Tong Tsui Street,	10 May 2004			Limited
Kwai Chung,
New Territories
Co-location agreement for	30 June 2000	30 June 2006	2,504	NWT	a wholly-owned	7,807
licensing of 6/F,					subsidiary of
World Peace Centre,					NWD
55 Wo Tong Tsui Street,
Kwai Chung,
New Territories
					sub-total	27,980
(ii) Licensing of properties – receipts by the			NWPCS Group
						Actual
						amount received
						for the financial
					Relationship	year ended
					of the licensee	30 June
	Date of		Floor area		with the NWD	2003
Description	agreement	Expiry date	(sq.ft.)	Licensee	Group	(HK$’000)
Licensing of part of 8/F, 16/F,	19 May 2004	31 July 2006	59,236	NWT	a wholly-owned	9,255
17/F, 18/F and Rooms 1112-1116 of	(no written				subsidiary of
11/F of Chevalier Commercial Centre,	licence agreement				NWD
8 Wang Hoi Road,	for the term from
Kowloon Bay, Kowloon	1 August 2001 to
	31 July 2003
	was signed)
Management support agreement	30 June 2000/	31 July 2006	N.A.	NWT	a wholly-owned	313
for sharing of office supplies and	22 March 2002/				subsidiary of
administration of common areas	29 July 2002				NWD
and supplemental agreements for
8/F, 16/F, 17/F, 18/F and Rooms
1112-1116 of 11/F of Chevalier
Commercial Centre,
8 Wang Hoi Road,
Kowloon Bay, Kowloon
					sub-total	9,568

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LETTER FROM THE ALT BOARD

B. LICENSING OF CELL SITES

In order to facilitate the NWPCS Group to provide geographic coverage of mobile services throughout Hong Kong, the Post-Completion NWD Group has licensed to the NWPCS Group 15 premises as cell sites for installation and operations of antenna and repeater equipment which form an integral and mandatory part of the mobile network architect of the NWPCS Group. The licences for the aforesaid cell sites are for various terms of not more than three years, expiring no later than 30 June 2006. The licence payments were determined with reference to market rates at the time when the relevant agreements were signed and based on, among other factors, the locations of cell sites, total areas occupied, facilities provided and availability of alternative sites.

The details of the transactions contemplated under the various agreements in respect of licensing of cell sites are set out below:

					Relationship
					of the licensor
		Date of			with the NWD
	Description	agreement	Expiry date	Licensor	Group
1.	Licensing of cell sites at main roof,	18 March 2002/	20 March	New World	a wholly-owned
	New World Tower Two,	26 May 2003	2005	Tower Company	subsidiary of
	18 Queen’s Road Central,			Limited	NWD
	Hong Kong
2.	Licensing of cell sites at shop	12 March 2002/	28 February	New World	a jointly controlled
	No. RBS03 of Pier 6, Central,	15 March 2004	2006	First Ferry	entity of NWD
	Hong Kong			Services Limited
3.	Licensing of cell sites at shop	12 March 2002/	28 February	New World	a jointly controlled
	No. RBS04 of North Point (West)	15 March 2004	2006	First Ferry	entity of NWD
	Ferry Pier, Hong Kong			Services Limited
4.	Licensing of cell sites at	29 June 2002/	30 November	New World	a jointly controlled
	roof and store room at 7/F,	20 May 2004	2005	First Bus	entity of NWD
	New World First Bus Depot,			Services Limited
	8 Chong Fu Road, Chaiwan,
	Hong Kong
5.	Licensing of cell sites at	21 June 2001/	31 May 2005	Grand Hyatt	a 64% owned
	Grand Hyatt, 1 Harbour Road,	30 May 2003		Hong Kong	subsidiary of
	Wanchai, Hong Kong			Limited	NWD
6.	Licensing of cell sites at G/F-7/F	24 December	31 December	New World	a wholly-owned
	carpark at New World Tower,	2001/	2004	Tower Company	subsidiary of
	18 Queen’s Road Central,	26 May 2003		Limited	NWD
	Hong Kong
7.	Licensing of cell sites at	16 October 2001/	31 August	Renaissance	a 64% owned
	Renaissance Harbour View Hotel,	27 August 2003	2005	Harbour View	subsidiary of
	1 Harbour Road, Wanchai,			Hotel Limited	NWD
	Hong Kong

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LETTER FROM THE ALT BOARD

					Relationship
					of the licensor
		Date of			with the NWD
	Description	agreement	Expiry date	Licensor	Group
8.	Licensing of cell sites at	1 March 2002/	28 February	Kiu Lok Service	a 54% owned
	Office Tower, Convention Plaza,	9 February	2006	Management	subsidiary of
	1 Harbour Road, Wanchai,	2004		Company Limited	NWD
	Hong Kong
9.	Licensing of cell sites at	9 July 2003	30 June 2006	New World First	a jointly controlled
	New World First Ferry Office,			Ferry Services	entity of
	Room G12-13, G/F,			(Macau) Limited	NWD
	China Hong Kong Ferry Terminal,
	Tsimshatsui, Kowloon
10.	Licensing of cell sites at	4 September	31 August	Hong Kong Island	a wholly-owned
	Flat roof and upper roof of	2001	2004	Development	subsidiary of
	East Wing Office Building,			Limited	NWD
	New World Centre,
	20 Salisbury Road,
	Tsimshatsui, Kowloon
11.	Licensing of cell sites at	8 May 2002/	28 February	Hong Kong Island	a wholly-owned
	Level 3A, multi-storey car park,	7 May 2004	2006	Development	subsidiary of
	New World Centre,			Limited	NWD
	18-24 Salisbury Road,
	Tsimshatsui, Kowloon
12.	Licensing of cell sites at	31 July 2002	31 July 2004	Hong Kong Island	a wholly-owned
	B1-B4, New World Centre			Development	subsidiary of
	Palace Mall,			Limited	NWD
	12 Salisbury Road,
	Tsimshatsui, Kowloon
13.	Licensing of cell sites at	5 February	31 December	New World	a 64% owned
	Levels 5 and 6,	2002/	2005	Hotel Company	subsidiary of
	New World Renaissance Hotel	31 December		Limited	NWD
	and New World Sauna,	2003
	22 Salisbury Road,
	Tsimshatsui, Kowloon
14.	Licensing of cell sites at	1 February	31 January	New World	a 51% owned
	Level 5, New World Department	2002	2005	Sauna Limited	subsidiary of
	Store, 22 Salisbury Road,				NWD
	Tsimshatsui, Kowloon
15.	Licensing of cell sites at roof, B1,	13 January	31 January	Tsuen Wan	a wholly-owned
	B2, G/F, 2/F, 5/F, 6/F and 8/F	2003/	2005	Properties Limited	subsidiary of
	Riviera Plaza, 28 Wing Shun Street,	4 February			NWD
	Tsuen Wan, New Territories	2004

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LETTER FROM THE ALT BOARD

C. INTERCONNECTION, TRANSMISSION, TRAFFIC ROUTING AND OTHER RELATED SERVICES

The fixed telecommunications networks of NWT and the mobile networks of the NWPCS Group are interconnected under an interconnection agreement (as supplemented) for delivery of telephone calls. Pursuant to the interconnection agreement, the NWPCS Group has agreed to pay for the inter-switch transmission (ISW) links, point-of-interconnection (POI) links, public non-exclusive telephone services (PNETS) charges and mobile number porting (MNP) and dipping charges. The charges of the said services were determined either by OFTA or by reference to the applicable rates of PCCW-HKT Limited.

In addition, the NWPCS Group has leased some high-speed transmission links from NWT for connection amongst its cell sites, retail shops, switching centres, offices and some telephone lines for office use of the NWPCS Group. The NWPCS Group has also agreed to use the wholesale international direct dial traffic routing service of NWT.

The details of the transactions contemplated under the various agreements in respect of interconnection, transmission, traffic routing and other related services are set out below:

						Relationship
						of the party
			Date of			with the
	Description		agreement	Expiry date	Party	NWD Group
1.	Price review for telephone line service		8 February 2002/	30 June 2006	NWT	a wholly-owned
		andsupplementalagreement	12 December 2003/			subsidiary of NWD
			31 May 2004
2.	Wholesale international direct		3 July 2000/	30 June 2006	NWT	a wholly-owned
		dial 009 agreement	31 May 2004			subsidiary of NWD
		andsupplementalagreement
3.	Interconnection agreement_(Note 1)_		30 June 2000	30 June 2006	NWT	a wholly-owned
	regarding provision of ISW links,					subsidiary of NWD
	POI links, PNETS charges and MNP,
	as	supplemented by:–
	a.	Letter agreement dated
		1 May 1999 regarding POI E1,
		MNP and dipping services
	b.	Summary of terms and conditions for
		interconnection and POI dated
		10 January 2002
	c.	Summary of terms and conditions for
		provision of inter-switch E1 links
		for data transmission dated 1 May 2002
	d.	Letter agreement dated
		21 February 2003
	e.	Annex dated 31 March 2003
	f.	Supplemental agreement dated
		31 March 2003 to summary of
		terms and conditions for provision
		of inter-switch E1 links for
		data transmission.
	g.	Letter agreement dated
		2 February 2004
	h.	Letter agreement dated 7 May 2004
		regarding the offer of renewal for
		POI ports.

i. Supplemental agreement dated 31 May 2004
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LETTER FROM THE ALT BOARD

					Relationship
					of the party
		Date of			with the
	Description	agreement	Expiry date	Party	NWD Group
4.	Letter agreement for ETS transit	3 July 2000/	30 June 2006	NWT	a wholly-owned
	as amended by a fax message	6 February 2004/			subsidiary of NWD
	and supplemental agreement	31 May 2004
5.	Letter agreement for E1 service for	9 November 1998	December	NWT	a wholly-owned
	NWPCS in MTR stations		2005		subsidiary of NWD
6.	Provision of mobile access E1 and	1 January 2002	No later than	NWT	a wholly-owned
	T1 lines_(Note 2)_		January 2005		subsidiary of NWD
7.	Offer for contract renewal for multiple	27 October 2002/	30 June 2006	NWT	a wholly-owned
	protocols labeling switch service	20 November 2003/			subsidiary of NWD
	and supplemental agreement	31 May 2004
8.	Purchase order for leasing of	5 February 2002/	30 June 2006	NWT	a wholly-owned
	OC3 fibre linkand supplemental	31 May 2004			subsidiary of NWD
	agreement
9.	Letter agreement regarding offer	14 September 2001	18 June 2004	NWT	a wholly-owned
	for T3 link data services		(Note 4)		subsidiary of NWD
10.	Letter agreement regarding offer for	3 January 2002	26 April 2004	NWT	a wholly-owned
	T3 link data services		(Note 4)		subsidiary of NWD
11.	Order for T3 link data	7 April 2003/	30 June 2006	NWT	a wholly-owned
	servicesand supplemental	31 May 2004			subsidiary of NWD
	agreement
12.	Data link servicesand supplemental	Between August	30 June 2006	NWT	a wholly-owned
	agreement	1997 and December			subsidiary of NWD
		2002/31 May 2004

In addition, the NWPCS Group and NWT have entered into the following agreements since 1 July 2003 up to the Latest Practicable Date:–

				Relationship
				of the party
	Date of			with the
Description	agreement	Expiry date	Party	NWD Group
Letter agreement regarding	5 August 2003	30 June 2006	NWT	a wholly-owned
international internet protocols				subsidiary of NWD
transit service
Letter agreement regarding	5 August 2003	30 June 2006	NWT	a wholly-owned
international internet protocols				subsidiary of NWD
transit service
MultiCom IPLC service	16 June 2003	30 June 2006	NWT	a wholly-owned
application form				subsidiary of NWD
Letter agreement regarding E1 data	11 November 2003/	30 June 2006	NWT	a wholly-owned
servicesand supplemental agreement	31 May 2004			subsidiary of NWD
Offer of renewal for POI ports	7 May 2004	30 June 2006	NWT	a wholly-owned
(supplemental to the interconnect				subsidiary of NWD
agreement dated 30 June 2000)
(see item 3(h) above)

Notes:

This is the master agreement covering various types of interconnection services or links ordered by the NWPCS Group.
Under this agreement, NWT orders E1 and T1 links on behalf of the NWPCS Group in order to obtain volume discounts.
“E1”
“T1”
- digital telephony format that carries data at a rate of 2.048 million bits per second.
- – digital telephony format that carries data at a rate of 1.544 million bits per second.
“OC3” – digital telephony format that carries data at a rate of 155.52 million bits per second. “T3” – digital telephony format that carries data at a rate of 45 million bits per second.
These agreements were already terminated by notice and the transactions under such agreements will not continue following Completion.
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LETTER FROM THE ALT BOARD

D. DEALERSHIP, VALUE TRANSFER ARRANGEMENT AND PROVISION OF MISCELLANEOUS SERVICES

The NWPCS Group has appointed NWT to act as its non-exclusive dealer to sell prepaid SIM cards and recharge coupons for the prepaid SIM cards to any mobile service users. In addition, commercial agreement has been entered between the NWPCS Group and NWT, which allows the prepaid international calling card customers of NWT to transfer the credit balance in the customers’ prepaid international calling card of NWT to the mobile SIM card of the NWPCS Group. On the other hand, NWT also appointed the NWPCS Group as its non-exclusive dealer for prepaid and post-paid international calling cards, and for enlisting international direct dial 009 customers.

The NWPCS Group has also entered into other agreements with the Post-Completion NWD Group, under which the Post-Completion NWD Group will continue to provide miscellaneous services to the NWPCS Group, which includes cleaning services for office premises and provision of websites maintenance services for the websites of the NWPCS Group.

The details of the transactions contemplated under the various agreements in respect of dealerships, value transfer arrangement and provision of miscellaneous services are set out below:

(i) Dealership, value transfer arrangement and provision of miscellaneous services – payments by the NWPCS Group

						Actual
						amount paid
						for the financial
						year ended
						30 June
		Date of			Relationship of the party	2003
	Description	agreement	Expiry date	Party	with the NWD Group	(HK$’000)
1.	Agreement for appointment	17 May 2002/	30 June 2006	NWT	a wholly-owned	5
	of NWT as non-exclusive	31 May 2004			subsidiary of NWD
	dealer for prepaid SIM
	cards and recharge coupons
	and supplemental agreement
2.	Value transfer agreement	30 April 2004/	30 June 2006	NWT	a wholly-owned	1,238
	and supplemental agreement	31 May 2004			subsidiary of NWD
3.	Agreement for cleaning for	18 December	31 December	Pollution &	a 54% owned	534
	the office of the	2003	2005	Protection	subsidiary of NWD
	NWPCS Group			Services
				Limited
4.	Purchase order for	19 February 2003/	31 December	New World	a wholly-owned	60
	maintenance of website	9 December	2003 and	Concepts	subsidiary of NWD
		2003	31 December	Co. Ltd.
			2004
					sub-total	1,837

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LETTER FROM THE ALT BOARD

(ii) Dealership – receipts by the NWPCS Group

					Actual
					amount
					received
					for the financial
				Relationship	year ended
				of the party	30 June
	Date of			with the NWD	2003
Description	agreement	Expiry date	Party	Group	(HK$’000)
Dealer distribution	30 June 2000/	30 June 2006	NWT	a wholly-owned	909
agreement for appointing	31 May 2004			subsidiary
NWPCS as the non-exclusive				of NWD
distributor for international calling
card and for enlisting IDD009
customers and supplemental agreement

11. AMOUNTS OF CONTINUING CONNECTED TRANSACTIONS

The actual and expected values of the Continuing Connected Transactions are set out below:

		For the financial	For the financial
		year	ended	For	the financial year	ending
		30 June			30 June
			2003	2004	2005	2006
		(HK$ million)		(HK$ million)	(HK$ million)	(HK$ million)
			Actual	Expected	Expected	Expected
Amounts paid/to be paid by the Enlarged ALT Group:
(i)	Leasing and licensing of properties		28.0	24.0	21.0	21.0
(ii)	Licensing of cell sites		3.0	3.0	2.9	2.9
(iii)	Interconnection, transmission, traffic routing
	and other related services		99.1	78.0	71.0	71.0
(iv)	Dearlership, value transfer arrangement and
	provision of miscellaneous services		1.8	4.0	5.0	5.0
Amounts received/to be received by the Enlarged ALT Group:
(v)	Licensing of properties and sharing of
	common facilities		9.6	9.0	8.0	8.0
(vi)	Dealer distribution agreement		1.0	0.2	0.1	0.1

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LETTER FROM THE ALT BOARD

The expected values of the Continuing Connected Transactions for the three years ending 30 June 2006 are based on the projections with reference to the terms of the relevant agreements, which do not show significant fluctuations during the corresponding period. The ALT Board considers that (i) the terms of the Continuing Connected Transactions are on normal commercial terms; and (ii) the entering into of the Continuing Connected Transactions would be in the ordinary and usual course of business of the Enlarged ALT Group. The ALT Board is of the view that the entering into of the Continuing Connected Transactions, together with the entering into of the S&P Agreement and the Subscription Agreement, would be in the interests of ALT and the ALT Shareholders as a whole.

12. EGM

Set out on pages 179 to 183 of this circular is a notice convening the EGM to be held at Room Elbrus, Pacific Place Conference Centre, Level 5, One Pacific Place, 88 Queensway, Hong Kong at 11:00 a.m. on Friday, 25 June 2004 at which resolutions will be proposed to the ALT Shareholders to consider and, if thought fit, to approve the S&P Agreement, the Subscription Agreement, the Whitewash Waiver, the ALT Capital Reduction, the ALT Share Increase, the ALT Share Consolidation, the ALT Distribution and the proposed change of company name of ALT. The Whitewash Waiver will be voted by poll by an independent vote (within the meaning of Note 1 of the Notes on dispensations from Rule 26 of the Takeovers Code or as may be required by the Executive) of the Independent ALT Shareholders.

A poll may be demanded in respect of any resolution put to the vote at the EGM (or any adjourned meeting) by:–

(a) the chairman of the meeting; or
(b) at least five members present in person or by proxy and entitled to vote; or
(c) any member or members present in person or by proxy and representing in the aggregate not less than one-tenth of the total voting rights of all members having the right to attend and vote at the meeting; or
(d) any member or members present in person or by proxy and holding shares conferring a right to attend and vote at the meeting on which there have been paid up sums in the aggregate equal to not less than one-tenth of the total sum paid up on all shares conferring that right.

Given the consideration of the Sale Shares, the S&P Agreement constitutes a major transaction for ALT under the Listing Rules. The effect of the Subscription Agreement and the S&P Agreement (the completion of which is conditional upon Subscription Completion) taken together is that ALT has agreed to purchase 100% equity interest in NWPCS, the indirect owner of which (being NWD) will become the controlling ALT Shareholder (through PPG and NWCBN, each of them being a wholly-owned subsidiary of NWD). As such, the Subscription Agreement and the S&P Agreement, taken as a whole, also constitute connected transactions for ALT pursuant to Rule 14.23(1)(b) of the Listing Rules which require the Independent ALT Shareholders’ approval taken by poll. Given that each of PPG and NWTHL is a whollyowned subsidiary of NWD and each of them is interested in the Subscription Agreement and the S&P Agreement, the NWD Group and its associates (which were altogether interested in approximately 5.60% of the voting rights of ALT as at the Latest Practicable Date) shall abstain from voting in respect of the proposed resolutions regarding the Subscription Agreement and the S&P Agreement.

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LETTER FROM THE ALT BOARD

The ALT Share Increase and the ALT Distribution which are conditions precedent to completion of the Subscription Agreement will take effect only after Subscription Completion, will be voted in the same resolution as that which will be proposed to approve the Subscription Agreement. None of the ALT Shareholders is required to abstain from voting in respect of the resolutions regarding the ALT Share Consolidation, the ALT Capital Reduction and the proposed change of company name of ALT.

The Whitewash Waiver is subject to the approval by the Independent ALT Shareholders at the EGM by poll. Given that (i) NWD is the beneficial owner of PPG; and (ii) Mr. Simon Lo was involved in the discussion and negotiation in relation to the Subscription Agreement, NWD, Mr. Simon Lo and their respective Concert Parties shall abstain from voting in respect of the proposed resolution regarding the Whitewash Waiver.

A form of proxy for use at the EGM is also enclosed. If you are not able to attend the EGM, you are strongly urged to complete and return the enclosed form of proxy in accordance with the instructions printed thereon, and to lodge it with the branch share registrars of ALT in Hong Kong, Abacus Share Registrars Limited, at Ground Floor, Bank of East Asia Harbour View Centre, 56 Gloucester Road, Wanchai, Hong Kong, as soon as possible but in any event not later than 48 hours before the time appointed for the holding of the EGM or any adjourned meeting thereof (as the case may be). Completion and return of the form of proxy will not preclude you from attending and voting in person at the EGM or any adjourned meeting thereof should you so wish.

13. RECOMMENDATION

The ALT Board (including the independent non-executive ALT Directors) believes that the resolutions approving the S&P Agreement, the Subscription Agreement, the Whitewash Waiver, the ALT Capital Reduction, the ALT Share Increase, the ALT Share Consolidation, the ALT Distribution and the proposed change of company name of ALT are in the interests of ALT and recommends the ALT Shareholders to vote in favour of such resolutions to be proposed at the EGM.

The Independent Director, having taken into account the advice from Commerzbank and Access Capital, considers that the terms of the S&P Agreement, the Subscription Agreement and the Whitewash Waiver are fair and reasonable so far as the Independent ALT Shareholders are concerned. Accordingly, the Independent Director recommends the Independent ALT Shareholders to vote in favour of the resolutions to be proposed at the EGM to approve, among others, the S&P Agreement, the Subscription Agreement and the Whitewash Waiver.

14. ADDITIONAL INFORMATION

Mr. Simon Lo, the chairman of ALT, is a presumed party acting in concert with the NWD Group. Mr. Chan, the vice chairman of ALT, was interested in approximately 6.90% of the issued share capital of ALT as at the Latest Practicable Date. Messrs. Chan Wai Keung, Ringo, Yu Ansheng, Ben, Lo Lin Kwong, the brother of Mr. Lo Lin Shing, Simon and Zhao Rui, being the executive ALT Directors, are salaried ALT Directors. Dr. Cheng Kar Shun, Henry, a non-executive ALT Director, is the managing director of NWD. Mr. Ho Hau Chong, Norman, a non-executive ALT Director, is a non-executive director of Tai Fook Securities Group Limited, an associated company of NWD. Mr. To Hin Tsun, Gerald, an

40 -

LETTER FROM THE ALT BOARD

independent non-executive ALT Director, is currently a director of certain subsidiaries of NWD and a consultant to the NWD Group. Mr. To Hin Tsun, Gerald had abstained from voting at the meeting of the ALT Board which approved, among other things, the entering into of each of the Subscription Agreement and the S&P Agreement. As such, the ALT Directors mentioned above are not considered to be sufficiently independent for the purpose of advising the Independent ALT Shareholders in respect of the Subscription Agreement, the S&P Agreement and the Whitewash Waiver. Mr. Wei Chi Kuan, Kenny, the Independent Director, is eligible to advise the Independent ALT Shareholders in respect of the Subscription Agreement, the S&P Agreement and the Whitewash Waiver.

Your attention is drawn to the letter of advice from the Independent Director to the Independent ALT Shareholders and the letter from Commerzbank and Access Capital containing their advice to the Independent Director and the Independent ALT Shareholders in relation to the S&P Agreement, the Subscription Agreement and the Whitewash Waiver, as set out on pages 50 to 51 and pages 52 to 77 of this circular respectively.

Your attention is also drawn to the additional information set out in the appendices to this circular and the notice of the EGM.

Yours faithfully, By Order of the Board Asia Logistics Technologies Limited Lo Lin Shing, Simon Chairman

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LETTER FROM THE NWD BOARD

==> picture [231 x 42] intentionally omitted <==

(Incorporated in Hong Kong with limited liability)

Directors: Executive Directors: Dato’ Dr. CHENG Yu-Tung (Chairman) Dr. CHENG Kar-Shun, Henry (Managing Director) Dr. SIN Wai-Kin, David LIANG Chong-Hou, David

Registered Office:

30th Floor, New World Tower 18 Queen’s Road Central Hong Kong

Non-executive Directors: The Honourable LEE Quo-Wei Lord SANDBERG, Michael Dr. HO Tim CHENG Yue-Pui YEUNG Ping-Leung, Howard Dr. CHA Mou-Sing, Payson* CHENG Kar-Shing, Peter LEUNG Chi-Kin, Stewart CHAN Kam-Ling CHOW Kwai-Cheung

CHA Mou-Zing, Victor (Alternate Director to Dr. CHA Mou-Sing, Payson) HO Hau-Hay, Hamilton (Alternate Director to Dr. HO Tim)

Independent non-executive Directors

2 June 2004

To the ALT Shareholders, the holder of the ALT Convertible Note and the holders of the ALT Share Options

Dear Sir or Madam,

(1) PROPOSED SUBSCRIPTION OF NEW SHARES AND A CONVERTIBLE NOTE TO BE ISSUED BY ASIA LOGISTICS TECHNOLOGIES LIMITED;

AND

(2) APPLICATION FOR THE WHITEWASH WAIVER BY POWER PALACE GROUP LIMITED, A WHOLLY-OWNED SUBSIDIARY OF NEW WORLD DEVELOPMENT COMPANY LIMITED

1. INTRODUCTION

On 29 March 2004, the Subscription Agreement was entered into between PPG, a wholly-owned subsidiary of NWD, and ALT, pursuant to which PPG agreed to subscribe for: (i) 4,166,666,667 Subscription Shares (or 41,666,666 Consolidated ALT Shares) at an issue price of HK$0.012 per Existing ALT Share (or HK$1.20 per Consolidated ALT Share), representing a discount of approximately 72.7% to HK$0.044, being the closing price of the last trading day of the Existing ALT Shares prior to the Suspension; and (ii) the Subscription Note at a principal amount of HK$1,200 million. The details of the Subscription Agreement were set out in the Announcement.

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LETTER FROM THE NWD BOARD

Immediately after the issue of the Subscription Shares at Subscription Completion but before the exercise of any of the conversion rights under the Subscription Note and the ALT Convertible Note, the aggregate voting rights of the NWD Group and its Concert Parties in ALT (including the interest to be held by PPG) will increase from approximately 35.71% to approximately 69.54%. As such, PPG and its Concert Parties will have an obligation to make mandatory general offers for all the Existing ALT Shares or Consolidated ALT Shares, the ALT Convertible Note and the outstanding ALT Share Options other than those already owned or agreed to be subscribed by PPG and its Concert Parties following Subscription Completion pursuant to Rule 26.1 of the Takeovers Code. PPG has made an application to the Executive for the grant of the Whitewash Waiver. Save for the allotment and issue of 110,000,000 Existing ALT Shares to NWCBN upon conversion of part of the ALT Convertible Note on 5 December 2003, neither PPG nor its Concert Parties has dealt in the securities of ALT during the six-month period immediately preceding the date of the S&P Agreement and for the period from the date of the S&P Agreement and up to and including the Latest Practicable Date. In addition, PPG has undertaken that PPG and its Concert Parties will not deal with the voting rights of ALT for the period from the date of the Announcement up to and including the date of the EGM. The Executive has indicated that the Whitewash Waiver will be granted subject to the Independent ALT Shareholders’ approval at the EGM by poll.

Immediately after the issue of the Subscription Shares at Subscription Completion and assuming full exercise of the conversion rights attaching to the Subscription Note and the ALT Convertible Note (based on current conversion price (subject to adjustment) at HK$0.10 per Existing ALT Share), the aggregate voting rights of PPG and its Concert Parties in ALT will increase to approximately 97.77%.

2. INFORMATION ON THE NWD GROUP AND THE NWPCS GROUP

The NWD Group is principally engaged in property development, provision of various services including transport and facilities, infrastructure, ports and telecommunications.

NWPCS is a wholly-owned subsidiary of NWTHL. The NWPCS Group is principally engaged in offering a host of quality mobile services including voice service and customized value-added services. Since its launch in August 1997, the NWPCS Group has become one of Hong Kong’s fastest growing mobile operators. In the face of the launch of third generation (3G) mobile services in Hong Kong, the NWPCS Group believes that providing services tailored to customer needs via its existing GSM 2.5G network will remain to be the most cost-effective strategy for staying competitive in the market.

Through the provision of a mobile network, the introduction of value-added data services, and the development of advanced and innovative multi-media mobile solutions, the NWPCS Group has further reinforced its position in the industry.

As one of the market leaders, the NWPCS Group has established a strong foothold in the marketplace with a total of 35 retail outlets strategically located in high-traffic areas. The presence of the NWPCS Group has been accentuated by entering into dealership agreements with various retail chains, which subsequently extended the retail network of the NWPCS Group to over 1,300 sales points throughout Hong Kong. The subscriber base of the NWPCS Group amounted to approximately 1.2 million in December 2003 with 40% prepaid customers.

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LETTER FROM THE NWD BOARD

In 2003, the NWPCS Group introduced TrafficWatcher, the first video-streaming service in town that allows mobile phone users to obtain live broadcast of real-time traffic information. The NWPCS Group regrouped its multi-media value-added services under the brand-new M Kee service platform in November 2003, giving customers easy access to their desired service with an icon-based color WAP interface. In the same month, the NWPCS Group introduced blah! instant phone chat, an SMS-based anonymous chat service allowing users to communicate seamlessly with over 3 million blah! users in the world. NWPCS believes that reliable and innovative data solutions in the next generation of mobile services will bring immense potential for its subscribers.

Looking into the future, the NWPCS Group will continue its effort in research and development of advanced and innovative multi-media mobile solutions in order to fulfill the expectation of its subscribers.

The audited consolidated results of the NWPCS Group for the years ended 30 June 2002 and 30 June 2003 and six months period ended 31 December 2003 are set out as follows:

	For the
	six months	For the	For the
	ended	year ended	year ended
	31 December 2003	30 June 2003	30 June 2002
	(HK$ million)	(HK$ million)	(HK$ million)
Audited consolidated net profit before
taxation and extraordinary items	93.9	201.9	87.1
Audited consolidated net profit
attributable to the shareholders	77.5	188.8*	86.8*

Restated for the retrospective effect of the adoption of Statements of Standard Accounting Practice No. 12 (revised)

As at 31 December 2003, the audited consolidated net deficit of the NWPCS Group was approximately HK$961.9 million (which included approximately HK$1,791.7 million of the NWD Shareholder’s Loan, a portion of which will be capitalised before S&P Completion in the manner as described under the paragraph headed “Treatment of the NWD Shareholder’s Loan and the Bank Loans” in the letter from the ALT Board as set out on pages 10 to 41 of this circular). The proforma unaudited consolidated net asset value of the NWPCS Group as at 31 December 2003 immediately after the aforesaid capitalisation of the NWD Shareholder’s Loan would be approximately HK$87.3 million.

3. REASONS FOR AND BENEFITS OF THE TRANSACTIONS

The NWD Board believes that the mobile telecommunications businesses of the NWD Group are inherently different in terms of the nature of the industry, rivalry, capital requirements, and management expertise from the core business of the NWD Group. The Transactions will allow the mobile telecommunication businesses and the other businesses of the NWD Group to be run by separately listed companies, each focusing on its particular businesses. The management of the NWD Group will be able to focus on its core business in property development, provision of various services including transport and facilities, infrastructure, ports and fixed-line telecommunications, while the NWPCS Group will, as a

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LETTER FROM THE NWD BOARD

result of its acquisition by ALT, obtain an independent identity with its management focusing on mobile telecommunications. As part of ALT, a separately listed company, NWPCS will be able to provide investors, research analysts and rating agencies with greater clarity on its business and financial positions. The NWD Board also believes that the NWPCS Group after Completion, as part of the Enlarged ALT Group, will be able to attract greater interest from investors focused on mobile telecommunications business, which will be of benefit to the NWPCS Group and NWD as the controlling ALT Shareholder upon Completion. The NWD Board has no intention on any deployment of the fixed assets of the ALT Group, and has no concrete plan to change the continued employment of the employees of the ALT Group. The NWD Board considers that the entering into of the Transactions is in the interests of the NWD Group and the shareholders of NWD as a whole.

4. PROPOSED CHANGES IN DIRECTORS OF ALT

With immediate effect after Completion, it is proposed that Mr. Doo Wai Hoi, William, Mr. Chow Yu Chun, Alexander, Dr. Wai Fung Man, Norman, Mr. Kwong Che Keung, Gordon and Mr. Cheng Ming Fun, Paul, JP will be appointed to the ALT Board.

Dr. Cheng Kar Shun, Henry and Mr. To Hin Tsun, Gerald will be re-designated as the executive ALT Directors. Mr. Doo Wai Hoi, William, Mr. Chow Yu Chun, Alexander and Dr. Wai Fung Man, Norman will be appointed as the executive ALT Directors. It is proposed that Dr. Cheng Kar Shun, Henry and Mr. Doo Wai Hoi, William will be the chairman and vice-chairman of the ALT Board respectively. Mr. Lo Lin Shing, Simon will be re-designated as a non-executive ALT Director and Mr. Ho Hau Chong, Norman will remain a non-executive ALT Director. Mr. Wei Chi Kuan, Kenny, Mr. Kwong Che Keung, Gordon and Mr. Cheng Ming Fun, Paul, JP will be the independent non-executive ALT Directors. Dr. Wai Fung Man, Norman will be appointed as the chief executive officer of ALT immediately after Completion.

Save for Mr. Lo Lin Shing, Simon, Dr. Cheng Kar Shun, Henry, Mr. Ho Hau Chong, Norman, Mr. To Hin Tsun, Gerald and Mr. Wei Chi Kuan, Kenny, all the existing ALT Directors will resign after Completion.

Further announcement containing detailed information regarding the proposed appointments of the re-designated or new ALT Directors (as prescribed under Rule 13.51(2) of the Amended Listing Rules) will be issued by ALT on or around the effective date of such appointments.

The biography and information of each of the re-designated or new ALT Directors to be appointed are set out below:

Executive Directors

Dr. Cheng Kar Shun, Henry, (aged 57). Dr. Cheng was appointed as a non-executive ALT Director in November 2001. Dr. Cheng is the managing director of NWD, the chairman and managing director of New World China Land Limited, the chairman of each of New World TMT Limited, NWS Holdings Limited and Tai Fook Securities Group Limited. Dr. Cheng is also the

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LETTER FROM THE NWD BOARD

managing director of NWD (Hotels Investments) Limited and a director of each of Chow Tai Fook Enterprises Limited and HKR International Limited. Dr. Cheng is the chairman of the Advisory Council for The Better Hong Kong Foundation and a Committee Member of the Tenth National Committee of Chinese People’s Political and Consultative Conference of the PRC. In 2001, he was awarded the Gold Bauhinia Star by the Government of Hong Kong. Dr. Cheng is the brother-in-law of Mr. Doo Wai Hoi, William.

Mr. Doo Wai Hoi, William (aged 59). Mr. Doo is currently the deputy chairman of each of New World China Land Limited, NWS Holdings Limited and Tai Fook Securities Group Limited. He also acts as a director of each of NWD (Hotels Investments) Limited and Fund Seng Diamond Company Limited. Mr. Doo has served as a Governor of the Canadian Chamber of Commerce in Hong Kong. In addition, he is appointed as a member of the Executive Committee of the Chinese People’s Political and Consultative Conference in Shanghai, the PRC. Mr. Doo is the brother-inlaw of Dr. Cheng Kar Shun, Henry.

Mr. Chow Yu Chun, Alexander (aged 57). Mr. Chow is currently an executive director of New World China Land Limited. He is a fellow of The Association of Chartered Certified Accountants, the United Kingdom and an associate of the Hong Kong Society of Accountants and has over 28 years of experience in property development and investment in Hong Kong. Mr. Chow joined the NWD Group in 1973 and is responsible for the financial operations of the NWD Group.

Dr. Wai Fung Man, Norman (aged 55). Dr. Wai is currently an executive director of New World TMT Limited and the president and chief executive officer of New World PCS Limited. Dr. Wai is a veteran with 30 years’ experience in telecommunications. Previously, he was a senior executive of various telecommunications companies in Europe, Canada and Hong Kong. Dr. Wai holds a doctoral degree in Electronic Engineering, specializing in digital mobile data communications. He is a qualified Chartered Engineer and a Fellow of The Institution of Electrical Engineers.

Mr. To Hin Tsun, Gerald (aged 54). Mr. To is currently an independent non-executive ALT Director. Mr. To was appointed as an independent non-executive ALT Director in March 2000. Mr. To has been a practicing solicitor in Hong Kong since 1975. Mr. To is also qualified as a solicitor in the United Kingdom, as well as an advocate and solicitor in Singapore. Mr. To is currently the senior and managing partner of Messrs. T. S. Tong & Co., Solicitors and Notaries. Mr. To is also a non-executive director of The Kwong Sang Hong International Limited, NWCB, NWS Holdings Limited and Tai Fook Securities Group Limited.

Non-executive Director

Mr. Lo Lin Shing, Simon (aged 48). Mr. Lo is currently the chairman of ALT. Mr. Lo joined ALT as an independent non-executive ALT Director in March 2000 and was re-designated as an executive ALT Director in December 2000. Mr. Lo is the chairman of Cyber On-Air Group Company Limited and NWCB, and the deputy chairman of Tai Fook Securities Group Limited. He is also an executive director of The Kwong Sang Hong International Limited and a non-executive director of Beijing Beida Jade Bird Universal Sci-Tech Company Limited. Mr. Lo possesses over 20 years of experience in the financial, securities and futures industries.

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LETTER FROM THE NWD BOARD

Independent Non-executive Directors

Mr. Kwong Che Keung, Gordon (aged 54). Mr. Kwong is currently a non-executive director of each of COSCO Pacific Limited and COSCO International Holdings Limited and an independent non-executive director of a number of Hong Kong listed companies, such as NWS Holdings Limited, Tianjin Development Holdings Limited, Beijing Capital International Airport Company Limited, Vision Century Corporation Limited and China Oilfield Services Limited. Mr. Kwong graduated from the University of Hong Kong in 1972, qualifying as a chartered accountant in England in 1977 and was a partner of PricewaterhouseCoopers from 1984 to 1998. He had served as a part-time panel member of the Hong Kong Government’s Central Policy Unit from 1993 to 1995 and was an independent member of the Council of the Stock Exchange from 1992 to 1997, during which, he had acted as convener of both the Compliance Committee and the Listing Committee. He was a member of the Panel of Inquiry appointed by the Financial Secretary on the Penny Stocks Incident in 2002.

Mr. Cheng Ming Fun, Paul, JP (aged 66). Mr. Cheng is an independent non-executive director of various listed companies such as Wharf (Holdings) Limited, Sino Land Company Limited and Esprit Holdings Limited in Hong Kong. As a private investor, he is also involved with private equity projects in both Hong Kong and the PRC.

Mr. Cheng is a member of the Executive Committee of the PRC-based All China Federation of Industry and Commerce and serves as an adviser to the China National Committee for Pacific Economic Co-operation and China Center for Economic Research of the Peking University. In Hong Kong, he is a member of the Chinese University of Hong Kong Council and an adjunct professor of Management of Organisations at the Hong Kong University of Science and Technology. He is also a Steward of the Hong Kong Jockey Club.

Prior to 1999, Mr. Cheng was active both as a corporate leader and in politics. He was formerly chairman of Inchcape Pacific Limited, N M Rothschild and Sons (Hong Kong) Limited and a founding partner of China Key Consultants Ltd. He served as chairman of the American Chamber of Commerce in Hong Kong in 1987 and was chairman of the Hong Kong General Chamber of Commerce from 1992 to 1994.

He was a member of the Hong Kong Legislative Council prior to the handover of Hong Kong and also served on the Provisional Legislature after 1997. He was also a member of the Preparatory Committee, appointed by the PRC government, to prepare for the establishment of the Hong Kong SAR on 1 July 1997.

Mr. Cheng is a Justice of Peace and was decorated “Chevalier de I’order de la Couronne” by the King of Belgium in 1991. He was made an honorary citizen of Nanjing in Jiangsu Province, the PRC, in September 1994, and was also appointed an Economic Adviser to the city. In 2001, he was inducted into the Beta Gamma Sigma Chapter of the Hong Kong University of Science and Technology in honour of his contributions as a community leader in Hong Kong.

Born in the PRC, Mr. Cheng was raised in Hong Kong and received his higher education in the United States. He has a BA degree from Lake Forrest College (Illinois, the United States) and received his MBA degree from the Wharton Graduate School of Business at the University of Pennsylvania, the United States.

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LETTER FROM THE NWD BOARD

5. FUTURE PLANS

Maintenance of the listing of ALT:

Immediately after the issue of the Subscription Shares at Subscription Completion but before the exercise of any of the conversion rights under the Subscription Note and the ALT Convertible Note, and assuming that there have been no other changes in the issued share capital of ALT as at the Latest Practicable Date, NWD Group will indirectly hold approximately 55.27% of ALT’s issued share capital as enlarged by the issue and allotment of the Subscription Shares. Accordingly, in the absence of other changes in shareholding in ALT, ALT will become a subsidiary of NWD immediately after the Subscription Completion.

It is the intention of NWD to maintain the listing of the Consolidated ALT Shares on the Stock Exchange after Subscription Completion. Accordingly, each of NWD and ALT will ensure that it will use its best endeavours to take appropriate steps to ensure that, as soon as possible following issue of the Subscription Shares and the Conversion Shares, the public float of ALT will not be less than 25%.

a false market exists or may exist in the trading in the Consolidated ALT Shares; or
there are too few Consolidated ALT Shares in public hands to maintain an orderly market,

then it will consider exercising its discretion to suspend trading in the Consolidated ALT Shares until a sufficient public float is attained. In this connection, it should be noted that upon Subscription Completion and conversion of all or part of the Subscription Note, there may be insufficient public float for the Consolidated ALT Shares and therefore trading in the Consolidated ALT Shares may be suspended until a sufficient level of public float is attained.

If ALT remains a company listed on the Stock Exchange, the Stock Exchange will closely monitor all future acquisitions or disposals of assets by ALT. The Stock Exchange has indicated that it has the discretion to require ALT to issue an announcement and a circular to the ALT Shareholders irrespective of the size of the proposed transactions, particularly when such proposed transactions represent a departure from the principal activities of the ALT. The Stock Exchange also has the power, pursuant to the Amended Listing Rules, to aggregate a series of transactions of ALT and any such transactions may result in ALT being treated as if it were a new listing applicant as set out in the Amended Listing Rules.

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LETTER FROM THE NWD BOARD

Save for pursuant to the S&P Agreement and the ALT Distribution, neither the NWD Board has any present intention to change the business of the ALT Group, nor the NWD Board has any present plans of disposal of assets of the ALT Group or injection of assets into the ALT Group.

6. CONTINUING CONNECTED TRANSACTIONS FOR THE ENLARGED ALT GROUP

Members of the Post-Completion NWD Group has entered into certain agreements with members of the NWPCS Group in respect of (i) leasing and licensing of certain properties and sharing of common facilities; (ii) licensing of cell sites; (iii) interconnection, transmission, traffic routing and other related services; and (iv) dealership, value transfer arrangement and provision of miscellaneous services. The transactions contemplated under such agreements will continue after Completion and will constitute Continuing Connected Transactions for the Enlarged ALT Group upon Completion under Chapter 14A of the Amended Listing Rules. Details of the Continuing Connected Transactions are set out in the “Letter from the ALT Board” of this circular. The NWD Board considers that (i) the terms of the Continuing Connected Transactions are on normal commercial terms; and (ii) the entering into of the Continuing Connected Transactions would be in the ordinary and usual course of business of the Enlarged ALT Group.

7. GENERAL

Your attention is drawn to the additional information set out in the appendices to this circular.

Yours faithfully,

By Order of the Board New World Development Company Limited Leung Chi-Kin, Stewart Company Secretary

49 -

LETTER FROM THE INDEPENDENT DIRECTOR

ASIA LOGISTICS TECHNOLOGIES LIMITED 亞洲物流科技有限公司 *

(Incorporated in the Cayman Islands with limited liability)

2 June 2004

To the Independent ALT Shareholders, the holder of the ALT Convertible Note and the holders of the ALT Share Options

MAJOR AND CONNECTED TRANSACTIONS

Dear Sir or Madam,

I refer to the circular of ALT to the ALT Shareholders dated 2 June 2004 (the “Circular”), of which this letter forms part. Terms defined herein shall have the same meanings as defined in the Circular unless the context otherwise requires.

I have been appointed to give a recommendation to the Independent ALT Shareholders in respect of the S&P Agreement, the Subscription Agreement and the Whitewash Waiver. Commerzbank and Access Capital have been appointed as the joint independent financial advisers to advise me and the Independent ALT Shareholders in connection with the same. I understand from the joint independent financial advisers that they do not have any financial interest with NWD and their subsidiaries, its directors and the chief executive, its substantial shareholders, or their associates save for Commerzbank, which have an immaterial amount of credit facilities, with the average daily balance of which over the past three years, including and up to the Latest Practicable Date, representing less than 1.2% of the NWD Group’s gross borrowings of approximately HK$39.4 billion, HK$40.7 billion and HK$38.1 billion as at 31 December in each of the respective past three years. Commerzbank further confirmed that the aforementioned credit facilities to the NWD Group are immaterial in comparison with their total credit exposure and they have in place separate teams handling corporate finance transactions and commercial lending business, and proper Chinese wall procedures are in place which limit the flow of information between the corporate finance team and the commercial banking officers thus avoiding any conflict of interest in relation thereto. In this connection, I consider that this will not create a conflict of interest for the joint independent financial advisers to advise me and the Independent ALT Shareholders in connection with the S&P Agreement, the Subscription Agreement and the Whitewash Waiver. Details of their advice, together with the principal factors and reasons taken into consideration in arriving at such advice, are set out in their letter on pages 52 to 77 of the Circular.

Your attention is also drawn to the “Letter from the ALT Board” and “Letter from the NWD Board” set out on pages 10 to 41 and pages 42 to 49 respectively of the Circular and the additional information set out in the appendices to the Circular.

* For identification purposes only

50 -

LETTER FROM THE INDEPENDENT DIRECTOR

Having taken into account the terms of the S&P Agreement, the Subscription Agreement and the Whitewash Waiver, the interests of the Independent ALT Shareholders and upon the advice of Commerzbank and Access Capital in the capacity as the joint independent financial advisers, I consider that the terms of the S&P Agreement, the Subscription Agreement and the Whitewash Waiver are fair and reasonable so far as the Independent ALT Shareholders are concerned. Accordingly, I recommend the Independent ALT Shareholders to vote in favour of the proposed resolutions to approve the S&P Agreement, the Subscription Agreement and the Whitewash Waiver at the EGM.

Yours faithfully, Wei Chi Kuan, Kenny Independent non-executive Director

51 -

LETTER FROM COMMERZBANK AND ACCESS CAPITAL

The following is the text of a letter prepared for the purpose of incorporation in this circular, received from Commerzbank and Access Capital, the joint independent financial advisers to the Independent Director and the Independent ALT Shareholders.

2 June 2004

To the Independent Director and the Independent ALT Shareholders

Dear Sir,

MAJOR AND CONNECTED TRANSACTIONS

(1) PROPOSED ACQUISITION OF THE ENTIRE INTEREST IN NEW WORLD PCS HOLDINGS LIMITED

(2) PROPOSED ISSUE OF NEW SHARES AND A CONVERTIBLE NOTE

AND

(3) APPLICATION FOR A WHITEWASH WAIVER BY POWER PALACE GROUP LIMITED

INTRODUCTION

We refer to our appointment as the joint independent financial advisers to advise the Independent Director in respect of the S&P Agreement, the Subscription Agreement and the Whitewash Waiver, details of which are set out in the circular dated 2 June 2004 (the “ Circular ”) of which this letter forms part. Terms defined in the Circular shall have the same meanings when used in this letter unless the context requires otherwise.

BACKGROUND OF THE TRANSACTIONS

On 1 April 2004, the ALT Board announced that ALT had, on 29 March 2004, entered into a S&P Agreement with NWTHL, a wholly-owned subsidiary of NWD, pursuant to which ALT agreed to purchase and NWTHL agreed to dispose of the entire interest in NWPCS. NWPCS is principally engaged in offering a host of quality mobile services including voice service and customized value-added services. The aggregate consideration for the Sale Shares amounts to HK$1,250 million which will be satisfied in cash upon S&P Completion. The S&P Completion is conditional upon, among other conditions, the Subscription Completion and obtaining of the approval by the Independent ALT Shareholders. On the same day, the Subscription Agreement was also entered into between PPG, a wholly-owned subsidiary of NWD, and ALT, pursuant to which PPG agreed to subscribe for: (i) 4,166,666,667 Existing ALT Shares (or 41,666,666 Consolidated ALT Shares) at an issue price of HK$0.012 per Existing ALT Shares (or HK$1.20 per Consolidated ALT Share), representing a discount of approximately 72.7% to HK$0.044, being the closing price of the last trading day of the Existing ALT Shares prior to the Suspension; and (ii) the Subscription Note at a principal amount of HK$1,200 million, which carries coupon of 0.75% per annum and rights to convert into shares of ALT at an initial conversion price of HK$0.012 per Existing ALT Share (or HK$1.20 per Consolidated ALT Share), subject to adjustment.

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LETTER FROM COMMERZBANK AND ACCESS CAPITAL

As set out in the letter from the ALT Board dated 2 June 2004 of the Circular (the “ Letter from the ALT Board ”), the NWD Group and its presumed Concert Parties currently hold approximately 35.71% in the issued share capital of ALT. Immediately after the issue of the Subscription Shares at Subscription Completion but before the exercise of any of the conversion rights under the Subscription Note and the ALT Convertible Note, the aggregate voting rights of the NWD Group and its presumed Concert Parties in ALT (including the interest to be held by PPG) will increase to approximately 69.54%. As such, PPG and its Concert Parties will have an obligation to make mandatory general offers for all the Existing ALT Shares or Consolidated ALT Shares, the ALT Convertible Note and the outstanding ALT Share Options other than those already owned or agreed to be subscribed by PPG and its Concert Parties following Subscription Completion pursuant to Rule 26.1 of the Takeovers Code.

An application has been made by PPG to the Executive for the Whitewash Waiver under Note 1 of the Notes on the dispensations from Rule 26 of the Takeovers Code. The Executive has indicated that the Whitewash Waiver will be granted, subject to the approval by the Independent ALT Shareholders by poll at the EGM, to waive any obligation of PPG and its Concert Parties to make a mandatory general offer which might result from the issue of the Subscription Shares upon Subscription Completion.

If the Whitewash Waiver is not obtained for any reason, the transactions contemplated under the Subscription Agreement will not become unconditional and will not proceed unless such condition is waived by PPG. PPG cannot waive such condition unless it has demonstrated to the satisfaction of the Executive that it has sufficient financial resources to fulfil its obligations under Rule 26 of the Takeovers Code. Our role as the joint independent financial advisers to the Independent Director is to give our opinion as to whether the terms of the S&P Agreement, the Subscription Agreement and the Whitewash Waiver are all based on normal commercial terms and are fair and reasonable so far as the interests of the Independent ALT Shareholders are concerned.

Mr. Lo Lin Shing, Simon is a presumed party acting in concert with the NWD Group. Messrs. Chan Wai Keung, Ringo, Yu Ansheng, Ben, Lo Lin Kwong, the brother of Mr. Lo Lin Shing, Simon and Zhao Rui are salaried ALT Directors. Mr. Chan Ki was interested in approximately 6.90% of the issued share capital of ALT as at the Latest Practicable Date. Dr. Cheng Kar Shun, Henry, a non-executive ALT Director, is the managing director of NWD. Mr. To Hin Tsun, Gerald, an independent non-executive ALT Director, is currently a director of certain subsidiaries of NWD and a consultant to the NWD Group. Mr. Ho Hau Chong, Norman, a non-executive ALT Director, is a non-executive director of Tai Fook Securities Group Limited, an associated company of NWD. As such, the ALT Directors mentioned above are not considered to be sufficiently independent for the purpose of advising the Independent ALT Shareholders in respect of the Subscription Agreement, the S&P Agreement and the Whitewash Waiver. Mr. Wei Chi Kuan, Kenny, the Independent Director, is eligible to advise the Independent ALT Shareholders in respect of the Subscription Agreement, the S&P Agreement and the Whitewash Waiver.

We do not have any financial interest with NWD and its subsidiaries, its directors and the chief executive, its substantial shareholders, or their associates save for Commerzbank, which has an immaterial amount of credit facilities, with the average daily balance over the past three years, including and up to the Latest Practicable Date, representing less than 1.2% of the NWD Group’s gross borrowings of approximately HK$39.4 billion, HK$40.7 billion and HK$38.1 billion as at 31 December in each of the respective past three years. Moreover, Commerzbank has in place separate teams handling corporate finance transactions and commercial lending business. Proper Chinese wall procedures are in place which

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limit the flow of information between the corporate finance team and the commercial banking officers. In this connection, we consider that this will not create a conflict of interest for us to give independent advice to the Independent Director.

In formulating our recommendation, we have relied on the information and facts supplied to us by ALT. We have assumed that all information, opinions and representations contained or referred to in the Circular are true, complete and accurate and we have relied on the same. Also, we have relied on the representations of ALT that having made all due enquiries and careful decisions, and to the best of their knowledge and belief, there is no other fact or representation, the omission of which would make any statement contained in the Circular, including this letter, misleading. We have also assumed that all information, statements and representations made or referred to in the Circular, which have been provided to us by ALT, and for which they are wholly responsible, are true, complete and accurate at the time they were made and continue to be so at the date of despatch of the Circular.

We consider that we have reviewed sufficient information to enable us to reach an informed view regarding the terms of the S&P Agreement, the Subscription Agreement and the Whitewash Waiver and to provide us with a reasonable basis for our recommendation. We have no reason to suspect that any material facts have been omitted or withheld, nor are we aware of any facts or circumstances, which would render the information and the representations made to us untrue, inaccurate or misleading. We have not, however, carried out any independent verification of the information provided by ALT, nor have we conducted any independent in-depth investigation into the business and affairs of the ALT Group.

PRINCIPAL FACTORS AND REASONS CONSIDERED

In assessing the proposed Transactions, the Whitewash Waiver and giving our recommendation to the Independent Director, we have taken into consideration the principal factors and reasons as set out below.

1. Reasons for and benefits of the proposed Transactions

As referred to in the Letter from the ALT Board, the ALT Board is optimistic about the prospect of the mobile telecommunications market and considers that the Transactions will provide a solid ground for ALT in mobile telecommunications projects. The ALT Board also believes that the Transactions will enlarge ALT’s business scope and broaden its revenue stream.

The ALT Group principally engages in the provision of supply chain and logistics related solutions and data services, including research and development, consultancy, offering of software solutions, implementation and turnkey solutions. The ALT Group recorded an aggregate audited consolidated net loss of approximately HK$267.2 million for the three years ended 31 December 2003.

The NWPCS Group principally engages in offering a host of quality mobile services, including voice service and customized value-added services. Since its launch in August 1997, the NWPCS Group has become one of Hong Kong’s fastest growing mobile operators. As one of the market leaders, the subscriber base of the NWPCS Group amounted to approximately 1.2 million in December 2003 with 40% prepaid customers. The NWPCS Group has established a strong foothold in the marketplace with 35 retail outlets strategically located in high-traffic areas, and entered into dealership agreements with various retail chains, which subsequently extended the retail network of the NWPCS Group to over 1,300 sales points throughout Hong Kong.

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The scope of the business of the ALT Group will be expanded by virtue of the S&P Completion, where mobile business would then form a substantial part of its business. It is the current intention of the NWD Group that the ALT Group will continue to engage in the provision of supply chain and logistics businesses. NWD will appoint new members who have the experience and expertise in telecommunication and mobile business to the ALT Board upon Completion.

(a) Historical financial performance of NWPCS

As set out in the Circular, NWPCS’s restated* audited consolidated profits attributable to shareholders for the two years ended 30 June 2003 and the six months ended 31 December 2003, were approximately HK$86.8 million, HK$188.8 million and HK$77.5 million, respectively.

Audited Consolidated Profit and Loss Accounts of NWPCS

Turnover Cost of sales Gross profit Other revenue Selling expenses Administrative expenses Other operating expenses Operating (loss)/profit Finance costs (Loss)/profit before taxation Taxation (Loss)/profit attributable to shareholders	Six months ended 31st December 2003 2002* HK$’000 HK$’000 848,061 841,967 (375,489) (363,710) 472,572 478,257 110 58 (58,317) (57,497) (135,124) (152,937) (180,423) (179,431) 98,818 88,450 (4,891) (1,700) 93,927 86,750 (16,430) (13,871) 77,497 72,879	Year ended 30th June	Year ended 30th June	2001* HK$’000 1,984,899 (1,230,518) 754,381 33,834 (180,007) (333,882) (337,196) (62,870) (102,610) (165,480) 26,931 (138,549)
	2003 HK$’000 848,061 (375,489) 472,572 110 (58,317) (135,124) (180,423) 98,818 (4,891) 93,927 (16,430) 77,497	2003* HK$’000 1,662,328 (701,949) 960,379 128 (108,360) (278,124) (362,933) 211,090 (9,216) 201,874 (13,068) 188,806	2002* HK$’000 1,618,837 (742,172) 876,665 92,447 (123,942) (331,270) (387,952) 125,948 (38,882) 87,066 (259) 86,807

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*Note: Figures for the three years ended 30 June 2003 and the six months ended 31 December 2002 have been restated for the retrospective effect of the adoption of Statement and Standard Accounting Practice No. 12 (revised).
(b) Historical financial performance of ALT

As set out in the Circular, ALT’s audited consolidated losses attributable to the ALT Shareholders for the three years ended 31 December 2003 were approximately HK$24.4 million, HK$89.4 million and HK$153.4 million, respectively.

Audited Consolidated Profit and Loss Accounts of ALT

Turnover
Cost of sales
Gross profit
Other revenue
Other operating income
Selling and distribution costs
Administrative expenses
Other operating expenses
Impairment of goodwill
Loss on deemed disposal of subsidiaries
Loss on disposal of discontinued
operations
Operating loss
Finance costs
Share of losses of:
Jointly controlled entity
Associated companies
Loss before taxation
Taxation
Loss before minority interests
Minority interests
Loss attributable to shareholders

For the year ended 31 December
2003
2002
2001
HK$’000
HK$’000
HK$’000
8,030
18,511
62,809
(7,477)
(14,737)
(43,208)
553
3,774
19,601
454
2,182
7,923
12,223
–
–
(4,290)
(3,814)
(4,865)
(24,260)
(40,510)
(43,373)
(8,304)
(33,818)
(835)
(94,523)
–
–
–
(1,032)
–
–
–
(534)
(118,147)
(73,218)
(22,083)
(1,171)
(1,565)
(326)
(262)
(128)
–
(33,844)
(18,033)
(70)
(153,424)
(92,994)
(22,479)
–
–
(183)
(153,424)
(92,994)
(22,662)
–
3,550
(1,690)
(153,424)
(89,394)
(24,352)

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2. The S&P Agreement

(a) Consideration

As set out in the Circular, the consideration for the Sale Shares is HK$1,250 million (the “ Consideration ”), which was determined after arm’s length negotiation between the parties to the S&P Agreement, taking into account, among other factors, (i) the audited consolidated profits attributable to the shareholders of NWPCS for the year ended 30 June 2003 of approximately HK$201.9 million (before the provision of deferred taxation of approximately HK$13.1 million as adjusted in the accountants’ report on the NWPCS Group as set out in Appendix I to this Circular); (ii) the restated consolidated earnings before interest, taxation, depreciation and amortisation (“ EBITDA ”) of NWPCS for the year ended 30 June 2003 of approximately HK$440.8 million; (iii) the audited consolidated net deficit of NWPCS as at 30 June 2003 of approximately HK$1,263.8 million (before the adjustment in relation to the deferred tax assets of HK$224.3 million as adjusted in the accountants’ report on the NWPCS Group as set out in Appendix I to this Circular); and (iv) the proposed capitalisation of the NWD Shareholder’s Loan in the manner as described under the section headed “Treatment of the NWD Shareholder’s Loan and the Bank Loans” in the Letter from the ALT Board.

(b) Conditions precedent

The S&P Completion is subject to a number of conditions. We set out below some of the conditions which are significant in so far as the Independent ALT Shareholders are concerned:

(i) the Subscription Completion; and
(ii) no indication having been received from the Stock Exchange that as a result of the sale and purchase of the Sale Shares as contemplated under the S&P Agreement, ALT is or will be treated as a new listing applicant under the Amended Listing Rules.
(c) Basis of the consideration

As stated in the Letter from the ALT Board, if the Aggregate Liabilities on the Business Day prior to Completion exceeds HK$1,250 million, part of the NWD Shareholder’s Loan will be capitalised so that the Aggregate Liabilities as at S&P Completion would be HK$1,250 million. Taking into account this amount, the enterprise value (“ EV ”) of NWPCS, which is the sum of the cash consideration paid and the assumption of the debts of NWPCS, is approximately HK$2,500 million.

In assessing the fairness and reasonableness of the Consideration, we have made reference to (i) the trading multiples of comparable companies, (ii) comparable transactions and (iii) investment costs.

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(i) Trading multiples of comparable companies

We have performed this analysis based on the trading multiples commonly used in the mobile telecommunications industry, in particular price/earnings (“ P/E ”) ratios and EV/EBITDA ratios.

The Consideration implies a historical P/E ratio of approximately 6.6 times based on the restated audited consolidated profits attributable to the shareholders of NWPCS for the year ended 30 June 2003 of approximately HK$188.8 million. In addition, the EV of NWPCS implies a EV/EBITDA ratio of approximately 5.7 times based on the restated consolidated EBITDA of NWPCS for the year ended 30 June 2003 of approximately HK$440.8 million.

We have reviewed the trading multiples of nine listed companies, representing all of the mobile telecommunication companies whose principal business is largely the provision of mobile telecommunications services in developed Asian countries (excluding Japan) (the “Comparable Companies” ), which, in our view, are broadly comparable to NWPCS. The Comparable Companies have been selected after taking into account, including but not limited to, their scope of business, which largely focuses on mobile telecommunications, their geographical presence and their respective operating environment, which has similar level of development in terms of penetration rates. We confirm that we are not aware of any other matters which render our analysis of the Comparable Companies not meaningful or not relevant.

Based on the closing prices as at 29 March 2004, which is the date of the S&P Agreement, the historical P/E ratios of the Comparable Companies range from approximately 7.3 times to 64.4 times with an average of approximately 16.4 times. The implied P/E ratio of the Consideration of approximately 6.6 times falls within the range of the P/E ratios of the Comparable Companies and is below the average of the P/E ratios of the Comparable Companies.

Based on the closing prices as at 29 March 2004, which is the date of the S&P Agreement, the historical EV/EBITDA ratios of the Comparable Companies range from approximately 2.6 times to 11.5 times with an average of approximately 6.1 times. The implied EV/EBITDA ratio of the EV of NWPCS of approximately 5.7 times also falls within the range of the EV/EBITDA ratios of the Comparable Companies and below the average of the EV/EBITDA ratios of the Comparable Companies.

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			P/E	EV/EBITDA
		Bloomberg	ratio*	ratio*
Comparables Companies	Country	code	(x)	(x)
Smartone Telecommunications	Hong Kong	315 HK	12.6	2.6
SUNDAY Communications	Hong Kong	866 HK	64.4	11.5
China Resources Peoples Telephone	Hong Kong	331 HK	7.3	7.0
KT Freetel	Korea	032390 KS	9.2	4.2
SK Telecom	Korea	017670 KS	9.7	4.7
LG Telecom	Korea	032640 KS	11.8	4.0
MobileOne	Singapore	M1 SP	11.1	6.0
Far Eastone Telecommunications	Taiwan	4904 TT	10.2	5.8
Taiwan Cellular	Taiwan	3045 TT	11.3	9.1
Average			16.4	6.1
The S&P Agreement			6.6	5.7

Based on the closing prices as at 29 March 2004 with the exception of China Resources Peoples Telephone, which is based on the issue price at its initial public offering.

(ii) Comparable transactions

We have researched transactions in the same developed Asian countries in the analysis of the trading multiples of comparable companies since 2002 where assets or shareholding interests of companies engaging in the provision of mobile telecommunications services are involved and we have identified six transactions (the “ Comparable Transactions ”). We have conducted our comparable transaction analysis based on both the P/E ratios and EV/EBITDA ratios.

The historical P/E ratios of the Comparable Transactions range from approximately 6.1 times to 42.5 times with an average of approximately 18.7 times. The implied P/E ratio of the Consideration of approximately 6.6 times falls within the range of the P/E ratios of the Comparable Transactions.

The historical EV/EBITDA ratios of the Comparable Transactions range from 2.4 times to 8.8 times with an average of 5.1 times. The implied EV/EBITDA ratio of the EV of NWPCS of 5.7 times also falls within the range of the EV/EBITDA ratio of the Comparable Transactions.

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We note that four out of the six Comparable Transactions that we have used in this analysis involved the acquisitions of minority stakes of mobile telecommunications companies and only the Far EasTone’s acquisition of KG Telecom involved the acquisition of the entire equity interest of a mobile telecommunications company. We note that the general offer made by Sun Hung Kai Properties for SmarTone’s shares also implied the acquisition of the entire issued share capital of the latter. However, we also note that, at the time of the general offer was made, it was the intention of Sun Hung Kai Properties to maintain the listing status of the SmarTone’s shares on the Stock Exchange. Hence, we are of the view that Sun Hung Kai Properties had no intention to acquire 100% of the share capital of SmarTone at the time of the general offer and such general offer is not directly comparable to the S&P Agreement. In this connection, we are of the view that the Far EasTone’s acquisition could be used as the most comparable transaction. Given that the P/E and EV/EBITDA ratios implied by the Consideration are in line with the Far EasTone’s acquisition and the average of the Comparable Transactions, we are of the view that the Consideration is fair and reasonable so far as the interests of the Independent ALT Shareholders are concerned.

			P/E	EV/EBITDA
Country/Comparable	Date of	% of	ratio	ratio
Transactions	announcement	equity sold	x	x
Hong Kong
China Resources Peoples Telephone’s
initial public offering	3/22/04	36%	12.5	4.8
Sun Hung Kai Properties’s general offer
for SmarTone’s shares	12/30/02	20%	42.5	2.4
PCCW’s disposal of 40% of CSL to Telstra	6/28/02	40%	n.a.	8.8
Singapore
MobileOne’s initial public offering	12/4/02	57%	10.2	5.9
Taiwan
Far EasTone’s acquisition of KG Telecom	10/8/03	100%	22.0	5.1
AT&T disposal of 23% of Far EasTone	10/9/03	23%	6.1	3.5
Average			18.7	5.1
The S&P Agreement		100%	6.6	5.7

(iii) Comparison to investment costs

We note that in the accountants’ report on the NWPCS Group as set out in Appendix I to the Circular, as at 31 December 2003, the total investments in fixed assets of the NWPCS Group, with the majority of which is the mobile telecommunications network in Hong Kong, was approximately HK$2,334 million. We have researched investments in fixed assets by companies listed on the Stock

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Exchange, which are mainly engaged in the provision of mobile telecommunications services in Hong Kong and have identified three companies. As at 31 December 2003, the total investments in fixed assets of these three companies range from approximately HK$1,914 million to HK$4,264 million. As at 31 December 2003, the number of subscribers of these three companies ranged from approximately 0.66 million to 1.05 million. Since the amount of total investment in fixed assets by the NWPCS Group, which had approximately 1.20 million subscribers as at 31 December 2003, with 40% prepaid customers, is within the range of these three companies, we are of the view that the amount is a reasonable benchmark for assessing the reasonableness of the Consideration.

		Total
		investments
		in fixed	Subscribers	EV/Total
		assets as at	as at	investments
	Bloomberg	31 December	31 December	in
Company	code	2003	2003	fixed assets*
		HK$m	million	x
SmarTone Telecommunications	315 HK	4,264	1.04	0.48
SUNDAY Communications	866 HK	2,511	0.66	0.98
China Resources Peoples Telephone	331 HK	1,914	1.05	2.15
NWPCS		2,334	1.20	1.07

* Based on closing prices as at 29 March 2004 with the exception of China Resources Peoples Telephone, which is based on the issue price at its initial public offering.

The EV/Total investments in fixed assets ratios of the three companies in this analysis range from approximately 0.48 times to 2.15 times. Since the EV/Total investments in fixed assets ratio of NWPCS of approximately 1.07 times is within the range of the three companies in this analysis, we are of the view that the EV of NWPCS is within a reasonable range of the investment costs.

Given that (i) the implied P/E ratio of the Consideration and the implied EV/ EBITDA ratio of the EV of NWPCS fall within the range of the Comparable Companies, (ii) the implied EV/EBITDA ratio of the EV of NWPCS falls within the range of the Comparable Transactions and (iii) the EV of NWPCS is within a reasonable range of the investment costs, we are of the view that the Consideration is fair and reasonable so far as the interests of the Independent ALT Shareholders are concerned.

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(d) NWD Shareholder’s Loan and the Bank Loans

As set out in the Letter from the ALT Board, the Aggregate Liabilities as at 31 March 2004 amounted to approximately HK$2,231.7 million (being approximately HK$440.0 million as Bank Loans and approximately HK$1,791.7 million as NWD Shareholder’s Loan, which is unsecured, interest-free and will be repayable on demand). The Bank Loans are currently guaranteed by NWD, in which the Bank Guarantees are to be released as one of the conditions precedent to the S&P Completion. If required, the Bank Loans will be repaid at Completion by a fresh loan from another subsidiary of NWD to NWPCS which loan will be repaid in accordance with the terms and conditions similar to the existing Bank Loans. NWTHL has agreed that immediately prior to S&P Completion it will extend, or will procure another subsidiary of NWD to extend, a new loan to NWPCS in an amount equal to the then outstanding amount of the NWD Shareholder’s Loan for the purposes of repayment of the NWD Shareholder’s Loan upon S&P Completion, which shall be repayable on demand after 18 months from the date of the S&P Agreement.

In view of ALT’s net loss position for the three years ended 31 December, 2003, ALT is unlikely to be able to refinance the NWD Shareholder’s Loan with borrowings from independent third-party lenders on the same favourable terms and as a result, ALT itself could not have been able to make such significant acquisition if the Bank Loans and the NWD Shareholder’s Loan are required to be refinanced.

3. The Subscription Agreement

(a) The issue price of the Subscription Shares and the conversion price of the Subscription Note

The issue price of the Subscription Shares (the “ Issue Price ”) and the initial conversion price (the “ Conversion Price ”) of the Subscription Note of HK$0.012 per Existing ALT Share represents:

(i) a discount of approximately 72.7% to HK$0.044, the closing price of the Existing ALT Shares on the Stock Exchange on 25 March 2004, being the last trading day of the Existing ALT Shares on the Stock Exchange before the Suspension;
(ii) a discount of approximately 74.2% to approximately HK$0.0465, being the average closing price of the Existing ALT Shares on the Stock Exchange during the last 10 consecutive trading days of the Existing ALT Shares on the Stock Exchange up to and including 25 March 2004, being the last trading day of the Existing ALT Shares on the Stock Exchange before the Suspension;
(iii) a discount of approximately 76.1% to approximately HK$0.0502, being the average closing price of the Existing ALT Shares on the Stock Exchange during the period of 30 consecutive trading days up to and including 25 March 2004, being the last trading day of the Existing ALT Shares on the Stock Exchange before the Suspension;
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(iv) a discount of approximately 45.5% to HK$0.022, being the closing price of the Existing ALT Shares on the Stock Exchange as at the Latest Practicable Date;
(v) a discount of approximately 58.3% to approximately HK$0.0288, being the audited consolidated net asset value of the ALT Group per Existing ALT Share as at 31 December 2003; and
(vi) a premium of approximately 37.9% to approximately HK$0.87, being the unaudited proforma adjusted consolidated net tangible asset value of the ALT Group per Consolidated ALT Share as at 31 December 2003 after the ALT Distribution but before Completion.
(b) Conditions precedent

The Subscription Completion is subject to a number of conditions. We set out below some of the conditions which are significant so far as the Independent ALT Shareholders are concerned:

(i) approval by the Independent ALT Shareholders of the transactions contemplated under the Subscription Agreement;
(ii) Whitewash Waiver having been obtained from the Executive; and
(iii) the Listing Committee granting the listing of, and permission to deal in, the Subscription Shares and the Conversion Shares.
(c) Basis of the Issue Price and the Conversion Price

As stated in the Letter from the ALT Board, the Issue Price and the Conversion Price of the Subscription Note were determined after arm’s length negotiation among the parties, with reference to the unaudited proforma consolidated net asset value of the ALT Group immediately after the ALT Distribution but before Completion. In assessing whether the Issue Price and the Conversion Price are fair and reasonable, we have considered the following factors:

(i) Share price performance and trading volume

We have reviewed the share price performance of the Existing ALT Shares from 1 January 2003 up to and including the last trading day prior to the Suspension (the “ Comparison Period ”).

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Share price performance of Existing ALT Shares

==> picture [319 x 197] intentionally omitted <==

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

Closing price (HK$)
0.08
0.07
0.06
0.05
0.04
0.03 Issue Price and Conversion Price
0.02
0.01
0.00
1/1/03 1/2/03 1/3/03 1/4/03 1/5/03 1/6/03 1/7/03 1/8/03 1/9/03 1/10/03 1/11/03 1/12/03 1/1/04 1/2/04 1/3/04 1/4/04
----- End of picture text -----

We have also reviewed the average daily trading volume and average daily trading volume as a percentage to the issued Existing ALT Shares at the end of each of the corresponding month.

	Average daily	% to total	% to total
	trading volume	issued share
	(shares)	capital of ALT
January-2003	1,585,048		0.04
February-2003	1,498,842		0.04
March-2003	1,497,875		0.04
April-2003	436,706		0.01
May-2003	2,386,211		0.06
June-2003	813,100		0.02
July-2003	1,807,333		0.05
August-2003	2,087,048		0.06
September-2003	4,883,524		0.13
October-2003	2,808,095		0.07
November-2003	1,729,300		0.05
December-2003	4,356,316		0.12
January-2004	2,437,895		0.06
February-2004	22,953,975		0.61
1-March-2004 to 25-March-2004	7,025,895		0.19

The closing price of the Existing ALT Shares during the Comparison Period ranged from HK$0.072 to HK$0.040, with an average closing price of HK$0.055. During the Comparison Period, the Existing ALT Shares were consistently thinly traded with monthly average daily trading volume of less than 1% of the issued share capital of ALT at the end of each of the corresponding month. Given (i) the ALT Group has been loss making in recent years; and (ii) the thin trading volume of the Existing ALT Shares, we are of the view that it is not appropriate to place much

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weight on the comparison of the Issue Price and the Conversion Price to the market price of the Existing ALT Shares, which may not truly reflect the fair value of the Existing ALT Shares.

(ii) Comparable transactions

We have conducted research on acquisitions by listed companies in Hong Kong with size ranges from HK$1,000 million to HK$10,000 million since 2002, in which consideration shares issued represented a substantial portion of the issued share capital of the relevant companies at the time of the relevant transactions. We have identified five transactions and note that the respective issue prices ranged from a discount of approximately 94% to a premium of approximately 20%. Accordingly, the discount of the Issue Price and the Conversion Price as compared to the last trading day of the Existing ALT Shares on the Stock Exchange before the Suspension falls within this range.

Moreover, as stated in the section headed “Share price performance and trading volume” above, due to the thin trading volume of the Existing ALT Shares prior to the Announcement, the last closing price of the Existing ALT Shares before the Announcement may not truly reflect the fair value of the Existing ALT Shares. We note that, of the five transactions in this analysis, the respective issue prices ranged from a discount of approximately 91.2% to 7.3% to the closing prices of the respective latest practicable dates of the relevant transactions. We note that the Issue Price and the Conversion Price represent a discount of approximately 45.5% to the closing price as at the Latest Practicable Date, which also falls within the range of the comparable transactions in this analysis.

However, due to the differences in (i) different underlying business of different companies; (ii) the trading pattern of different companies involved; (iii) the nature of the assets acquired; and (iv) different size of the companies, we are of the view that these data could only be used as a reference rather than as direct comparables with the terms of the Subscription Agreement. In addition, analysis under this paragraph is amongst one of our analysis methodology used, which should be read in conjunction with our analysis in other paragraphs under “Share price performance and trading volume” and “Net tangible assets” in this section in assessing the fairness and reasonableness of the Issue Price and the Conversion Price.

						Issue price
					Issue	discount/
				New	price discount/	(premium) to
			Announced	share issued	(premium) to	closing price
	Acquirer		total	as % of	last closing	on the latest
Acquirer	Bloomberg	Date of	value of the	issued	price before	practicable
Name	code	Announcement	transaction(1)	capital(2)	announcement(2)	date(2)
			(HK$m)	(%)	(%)	(%)
Wai Yuen Tong
Medicine Holdings	897 HK	5/23/02	1,577	7,200	93.9	91.2
Dong Fang Gas Holdings	432 HK	3/8/04	4,387	142	62.5	62.5
Hutchison Global
Communications	757 HK	1/28/04	7,803	349	27.9	23.8
Stone Group Holdings	409 HK	12/15/03	1,223	62	8.4	7.3
South Sea Holdings	680 HK	12/30/03	2,307	91	(20.0)	18.2
The Transactions		4/1/04	2,500	111	72.7	45.5
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LETTER FROM COMMERZBANK AND ACCESS CAPITAL

(1) These figures are extracted from Bloomberg and are in terms of EV. The original figures, which are in US dollars, are translated into HK dollars at US$1=HK$7.80.
(2) These figures are extracted from the respective announcements made by the relevant companies.
Note: The above list of comparable transactions is based on the screening results from Bloomberg from acquisitions range from HK$1,000 million to HK$10,000 million by companies listed on the Stock Exchange since 2002, in which new shares were issued to satisfy part of the consideration, representing a substantial portion of the issued share capital of the relevant companies at the time of the relevant transactions. We cannot assure the completeness of the list and it is by no means exhaustive.

(iii) Net tangible assets

We have also compared the Issue Price and the Conversion Price with reference to the unaudited proforma consolidated net tangible asset value per Existing ALT Share immediately after the ALT Distribution. We note that the unaudited proforma consolidated net tangible asset value per Existing ALT Share immediately after the ALT Distribution but before Completion is approximately HK$0.0087. Hence, the Issue Price and the Conversion Price represent a premium of approximately 37.9% to the unaudited proforma consolidated net tangible asset value per Existing ALT Share immediately after the ALT Distribution but before Completion. The issue of the Subscription Shares and conversion of the Subscription Note will enhance the net tangible asset value per Existing ALT Share immediately after the ALT Distribution. We note that the consolidated revenues of ALT were approximately HK$8.0 million for the year ended 31 December 2003, which were approximately 56.6% below that of the year ended 31 December 2002. We also note that the consolidated net loss of ALT was approximately HK$153.4 million for the year ended 31 December 2003, which has increased by approximately 71.6% from that of the year ended 31 December 2002. We note from the latest annual report of ALT that the prospects of ALT’s core business of providing supply chain and logistics related solutions shall continue to be full of challenges and it is unclear when ALT will become profitable.

Having considered the existing difficult operating environment of ALT and the thin trading of the Existing ALT Shares, we are of the view that the adjusted net tangible asset is a reasonable benchmark for the assessment of the fair value of the Existing ALT Shares. Given that (i) the Issue Price and the Conversion Price are approximately 37.9% above the unaudited proforma consolidated net tangible asset per Existing ALT Share immediately after the ALT Distribution but before Completion; and (ii) the issue of Subscription Shares and conversion of the Subscription Note will enhance the net tangible asset value per Existing ALT Share immediately after the ALT Distribution, we consider the Issue Price and the Conversion Price to be fair and reasonable.

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LETTER FROM COMMERZBANK AND ACCESS CAPITAL

Based on our (i) analysis of the basis of consideration for the Transactions; (ii) analysis on the price performance and trading volume of the Existing ALT Shares; (iii) research and comparison performed on the issue price of consideration shares in the acquisition transactions in Hong Kong with minimum size of HK$1,000 million since 2002; (iv) comparison of the Issue Price and the Conversion Price to the net tangible asset value per Existing ALT Share; and (v) observation of the telecom and mobile business market industry and condition in Hong Kong, we concur with the view of the ALT Board that the Issue Price and the Conversion Price are, taken into consideration the Transactions as a whole, fair and reasonable.

(d) Terms of the Subscription Note

We have also researched acquisitions by listed companies in Hong Kong with size ranges from HK$1,000 million to HK$10,000 million since 2002, in which both new shares and convertible securities were issued to satisfy part of the consideration in the relevant transactions. We note that the coupon rates of the convertible securities in these transactions range from 0% to 3.8% and the maturity ranges from 3 years to 10 years. We also note that the conversion prices of these convertible securities represented approximately 0% to 100% premium over the issue prices of the respective consideration shares in the relevant transactions. Given that i) the coupon rate of 0.75%, ii) the three year term to maturity and iii) the 0% premium of the Conversion Price over the Issue Price falls within the ranges of the respective terms of the convertible securities of the comparable transactions, we are of the view that the terms of the Subscription Note are fair and reasonable.

4. Proforma effect on the financial position of the ALT Group

(a) Earnings

The ALT Group has incurred audited consolidated net losses of approximately HK$89.4 million and HK$153.4 million for the two years ended 31 December 2003. For the year ended 30 June 2003, the NWPCS Group recorded restated audited consolidated net profit of approximately HK$188.8 million, which represented a substantial increase over the restated audited consolidated net profit of approximately HK$86.8 million for the year ended 30 June 2002. For the six months ended 31 December 2003, the NWPCS Group recorded audited consolidated net profit of approximately HK$77.5 million, which represented a 6.3% increase over the restated audited consolidated net profit of approximately HK$72.9 million for the six months ended 31 December 2002. Therefore, the Transactions involve the acquisition of a profitable business. As stated in the Letter from the ALT Board, based on the audited net asset value of ALT as at 31 December 2003, upon Completion, a goodwill of approximately HK$10.74 million will arise and such goodwill will be amortised on a straight line basis over a period of 10 years, thus the profit and loss accounts of the Enlarged ALT Group upon consolidation will be affected by the amortisation of goodwill. Also, the results of the Enlarged ALT Group will be affected by interest payments on the Subscription Note of approximately HK$9 million annually, assuming no conversion before maturity.

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LETTER FROM COMMERZBANK AND ACCESS CAPITAL

Assuming that there is no deterioration in the mobile telecommunications market in Hong Kong, given the revenues provided by the subscriber base of the NWPCS Group, the ALT Directors consider that the Transactions represent a good opportunity for the ALT Group to enlarge its business scope and broaden its revenue streams.

(b) Net tangible asset value

The unaudited proforma consolidated net tangible asset value of the ALT Group immediately after the ALT Distribution but before Completion was approximately HK$32.6 million, which represented approximately HK$0.0087 per Existing ALT Share. As set out in Appendix III to the Circular, the unaudited proforma adjusted consolidated net tangible liabilities value of the Enlarged ALT Group after Completion but before the conversion of the Subscription Note and the ALT Convertible Note would be approximately HK$1,077.7 million. Accordingly, the unaudited proforma adjusted consolidated net tangible liabilities value of the Enlarged ALT Group after Completion but before the conversion of the Subscription Note and the ALT Convertible Note per Existing ALT Share would be approximately HK$0.1361. We note that the change of ALT from net tangible asset position to net tangible liabilities position is due to the assumption of debts of NWPCS and the issue of the Subscription Note, which is a non-cash transaction. As stated in the section headed “Gearing” below, the ALT Board is of the opinion that, after taking into account the working capital requirements and the expected cash flows of the ALT Group, and the opinion of the NWPCS Board on the working capital requirements and the expected cash flows of the NWPCS Group, the Enlarged ALT Group will have sufficient working capital for its requirements, including interest payments and debt repayments, in the absence of unforeseen circumstances. We are of the view that, in the context of the Transactions and the potential commercial benefits provided by the Transactions, in particular, the acquisition of a profitable business by ALT, the net tangible liabilities of the Enlarged ALT Group after Completion is fair and reasonable.

(c) Gearing

As a result of the Transactions, there will be a substantial increase in the assets of the Enlarged ALT Group as the underlying assets of NWPCS, which are largely the mobile telecommunications network in Hong Kong, will be added to the Enlarged ALT Group as at 31 December 2003. However, there will be substantial increase in liabilities with the issue of the Subscription Note of HK$1,200 million and the assumption of Aggregate Liabilities upon Completion of approximately HK$1,250 million. The total debt to tangible assets ratio and total debt to equity ratio of the ALT Group as at 31 December 2003 and the proforma total debt to tangible assets ratio and total debt to equity ratio are as follow:

	As at	Proforma figures of the
	31 December 2003	Enlarged ALT Group
Debt to tangible assets ratio_(Note)_	0.22x	1.41x
Debt to equity ratio_(Note)_	0.27x	(2.32)x

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LETTER FROM COMMERZBANK AND ACCESS CAPITAL

Note: Debt used in the calculation of the debt to tangible assets ratio and debt to equity ratio as at 31 December 2003 include amount due to associated companies, related companies and the ALT Convertible Note. Debt used in the calculation of the two ratios for the Enlarged ALT Group include the Subscription Note, the ALT Convertible Note, amount due to associated companies, related companies, bank loans and other borrowings.

Prior to the Transactions, the total debt (including amount due to associated companies, related companies and the ALT Convertible Note) of the ALT Group amounted to approximately HK$29.1 million as at 31 December 2003. Upon Completion, the total debt of the Enlarged ALT Group will increase substantially due to the issue of the Subscription Note of HK$1,200 million and the assumption of liabilities from NWPCS of approximately HK$1,250 million.

As stated in the section headed “Working capital and liquidity” below, the ALT Board is of the opinion that, after taking into account the working capital requirements and the expected cash flows of the ALT Group, and the opinion of the NWPCS Board on the working capital requirements and the expected cash flows of the NWPCS Group, the Enlarged ALT Group will have sufficient working capital for its requirements in the absence of unforeseen circumstances. We have discussed with the ALT Directors and understand that the working capital requirement calculation has taken into account interest payments and debt repayments. We also note that the Subscription Note has a maturity period of three years, and the uncapitalised portion of the NWD Shareholder’s Loan will be repayable after 18 months from the date of the S&P Agreement, hence, there is no immediate need for the repayment of the Subscription Note and the uncapitalised portion of the NWD Shareholder’s Loan.

We note that there is a possible upward trend in the interest rates. Of the approximately HK$2,479.1 million of total debts of the Enlarged ALT Group as at 31 December 2003, approximately 50% of which carry fixed interest rates. The remaining debts are floating-rate debts, which carry interest at 0.65% above Hong Kong Interbank Offer Rate (“ HIBOR ”). We understand from NWPCS that the estimated aggregate interest payment on the floating rate debts for the next 18 months (commencing from July 2004) amounts to approximately HK$15.2 million, after taking into consideration the possible increase in interest rates over the next 18 months. The ALT Board is of the opinion that after taking into account the working capital requirements and the expected cash flows of the ALT Group, and the opinion of NWPCS Board on the working capital requirements and the expected cash flows of the NWPCS Group, the Enlarged ALT Group will have sufficient working capital to service the above interest and debt payment in the absence of unforeseen circumstances. Although both the debt to tangible asset ratio and debt to equity ratio will be worsen upon Completion (please refer to the table above), as stated in the section “Trading multiples of comparable companies” in this letter, the EV/EBITDA ratio implied by the EV, which takes into account the assumption of debts of NWPCS, of the Transactions falls within the range of the Comparable Companies and the sufficient working capital for its requirements, including interest payments and debt repayments, we are of the view that the assumption of additional debts, in the context of the Transactions and the improving profitability of the ALT Group, to be fair and reasonable.

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LETTER FROM COMMERZBANK AND ACCESS CAPITAL

(d) Working capital and liquidity

The current ratio of the ALT Group was approximately 12.8 times as at 31 December 2003. The proforma current ratio of the Enlarged ALT Group is approximately 0.45 times. According to the terms of the Subscription Note, ALT will only be required to repay the outstanding principal of the Subscription Note on the third anniversary of the issue of the Subscription Note, subject to conversion by PPG. The ALT Board is of the opinion that, after taking into account the working capital requirements and the expected cash flows of the ALT Group, and NWPCS Board’s opinion on the working capital requirements and the expected cash flows of the NWPCS Group, the Enlarged ALT Group will have sufficient working capital for its requirements in the absence of unforeseen circumstances.

We have reviewed three companies listed on the Stock Exchange which are mainly engaged in the provision of mobile telecommunications services in Hong Kong. As at 31 December 2003, the current ratio of these three companies (as set out in the table below) ranges from 0.23x to 6.43x. Since the proforma current ratio of the Enlarged ALT Group as at 31 December 2003 is within the range of these three companies, we are of the view that the liquidity of the Enlarged ALT Group is in line with other mobile operators in Hong Kong.

		Current ratio
	Bloomberg	as at 31
Company	code	December 2003*
SmarTone Telecommunications	315 HK	6.43x
SUNDAY Communications	866 HK	0.88x
China Resources Peoples Telephone	331 HK	0.23x

These figures are extracted from Bloomberg.

5. Dilution and potential dilution of existing shareholdings of the ALT Shareholders

Set out below is a table showing the shareholding structure of ALT (i) as at the Latest Practicable Date; (ii) upon Subscription Completion (and taking into account the effect of the ALT Share Consolidation) but before conversion of the Subscription Note and the ALT Convertible Note; (iii) after Subscription Completion (and taking into account the effect of the ALT Share Consolidation) and full conversion of the Subscription Note but before the conversion of the ALT Convertible Note; and (iv) after Subscription Completion (and taking into account the effect of the ALT Share Consolidation) and full conversion of the Subscription Note and the ALT Convertible

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LETTER FROM COMMERZBANK AND ACCESS CAPITAL

Note (assuming there is no other change in the shareholding structure and/or the issued share capital of ALT from the Latest Practicable Date):

As at the Latest Practicable Date No. of Existing ALT Shares % The NWD Group 210,000,000 5.60 Party presumed to be acting in concert with the NWD Group under the Takeovers Code: Mr. Simon Lo 1,129,758,000 30.11 Sub-total of the NWD Group and its presumed Concert Parties 1,339,758,000 35.71 Mr. Chan 258,700,000 6.90 Public ALT Shareholders 2,153,097,700 57.39 Total 3,751,555,700 100.00	Immediately after Subscription Completion (after taking into account the effect of the ALT Share Consolidation) but before conversion of the Subscription Note and ALT Convertible Note No. of Consolidated ALT Shares % 43,766,666 55.27 11,297,580 14.27 55,064,246 69.54 2,587,000 3.27 21,530,977 27.19 79,182,223 100.00	After Subscription Completion (after taking into account the effect of the ALT Share Consolidation) and full conversion of the Subscription Note but before the conversion of the ALT Convertible Note No. of Consolidated ALT Shares % 1,043,766,666 96.71 11,297,580 1.05 1,055,064,246 97.76 2,587,000 0.24 21,530,977 2.00 1,079,182,223 100.00	After Subscription Completion (after taking into account the effect of the ALT Share Consolidation) and full conversion of the Subscription Note and the ALT Convertible Note No. of Consolidated ALT Shares % 1,046,595,266* 96.73 11,297,580 1.04	After Subscription Completion (after taking into account the effect of the ALT Share Consolidation) and full conversion of the Subscription Note and the ALT Convertible Note No. of Consolidated ALT Shares % 1,046,595,266* 96.73 11,297,580 1.04
	55,064,246 2,587,000 21,530,977	1,055,064,246 2,587,000 21,530,977	1,057,892,846 2,587,000 21,530,977	97.77 0.24 1.99
	79,182,223	1,079,182,223	1,082,010,823	100.00

The number of new Consolidated ALT Shares issued under the ALT Convertible Note is calculated based on the current conversion price (subject to adjustment) at HK$0.10 per Existing ALT Share and taking into account the effect of the ALT Share Consolidation.

The ALT Shareholders should note that immediately after the issue of the Subscription Shares at Subscription Completion but before the exercise of any of the conversion rights under the Subscription Note and the Convertible ALT Note, and assuming that there have been no other changes in the issued share capital of ALT as at the Latest Practicable Date, the NWD Group will indirectly hold approximately 55.27% of ALT’s issued share capital as enlarged by the issue and allotment of the Subscription Shares. Accordingly, in the absence of other changes in the shareholding in ALT, ALT will become a subsidiary of NWD immediately after the Subscription Completion. Accordingly, each of NWD and ALT will ensure that it will use its best endeavours to

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LETTER FROM COMMERZBANK AND ACCESS CAPITAL

take appropriate steps to ensure that, as soon as possible following issue of the Subscription Shares and the Conversion Shares, the public float of ALT will not be less than 25%.

The Stock Exchange has stated that if, following Subscription Completion and conversion of all or part of the Subscription Note, less than 25% of the Consolidated ALT Shares are held by the public, then it will consider exercising its discretion to suspend trading in the Consolidated ALT Shares until a sufficient public float is attained. In this connection, it should be noted that upon Subscription Completion and conversion of all or part of the Subscription Note, there may be insufficient public float for the Consolidated ALT Shares and therefore trading in the Consolidated ALT Shares may be suspended until a sufficient level of public float is attained.

Each of PPG and NWCBN will also ensure that it will not exercise the conversion rights under the Subscription Note and the ALT Convertible Note to the extent that such conversion would result in insufficient public float of ALT. In the event that the exercise of the conversion rights under the Subscription Note and ALT Convertible Note would result in insufficient public float, it is intended that steps will be taken with a view to increasing the public float, including effecting a possible placing of the Consolidated ALT Shares by PPG and/or NWCBN.

As at the Latest Practicable Date:

==> picture [289 x 254] intentionally omitted <==

Note: NWCBN, a wholly-owned subsidiary of NWD, is the holder of the ALT Convertible Note.

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LETTER FROM COMMERZBANK AND ACCESS CAPITAL

Immediately after Completion but before conversion of the Subscription Note and the ALT Convertible Note:

(i) Regarding ALT and NWPCS:

==> picture [303 x 270] intentionally omitted <==

Notes:

NWCBN, a wholly-owned subsidiary of NWD, is the holder of the ALT Convertible Note.
PPG, a wholly-owned subsidiary of NWD, will be the holder of the Subscription Note.
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LETTER FROM COMMERZBANK AND ACCESS CAPITAL

(ii) Regarding NWCB:

==> picture [393 x 218] intentionally omitted <==

The number of the Subscription Shares (i.e. 4,166,666,667 new Existing ALT Shares) represents approximately 111.07% of the existing issued share capital of ALT as at the Latest Practicable Date. The shareholdings of the public ALT Shareholders will be diluted from 57.39% to 27.19% before any conversion of the Subscription Note and the ALT Convertible Note, implying a dilution of approximately 53%. Nevertheless, the ALT Shareholders have in exchange holding an improved company in terms of profitability with strong controlling shareholder support for future development. We are of the view that, so far as the Independent ALT Shareholders are concerned, it would be in their interests for the ALT Group to expand into a more profitable business with better prospects rather than concentrating on the existing operations, which has experienced three consecutive years of net losses. As the Transactions would also provide an opportunity for the ALT Group to enlarge its business scope, increase the sources of revenues and increase the chance of paying dividends to the ALT Shareholders, we consider the prospects of the Enlarged ALT Group to be more viable than the existing ALT Group.

We also note that, upon Completion, the NWD Group will be the controlling ALT Shareholder holding approximately 55.27% of the issued share capital of ALT. The NWD Group is one of the major conglomerates in Hong Kong with operations and investments in a diversified range of businesses, including investments in properties, transport facilities, infrastructure, ports and telecommunications. We believe that the NWD Group’s involvement in ALT will have a beneficial impact on the value of investments of the ALT Shareholders.

We note that the conversion of the Subscription Note will increase the dilution effect on the public ALT Shareholders from approximately 53% to approximately 97%. Upon the conversion of the Subscription Note, the Enlarged ALT Group will change from a net tangible liabilities position to a net tangible asset position with an unaudited proforma adjusted consolidated net tangible asset value of approximately HK$122.3 million. The unaudited proforma adjusted consolidated net

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tangible asset value attributable to each of the Consolidated ALT Share after Completion, the ALT Distribution and the conversion of the Subscription Note will be approximately HK$0.11. We also note that such change from a net tangible liabilities position to a net tangible asset position is a non-cash transaction.

We have conducted research on acquisitions by listed companies in Hong Kong with size ranges from HK$1,000 million to HK$10,000 million since 2002, in which the new shares were issued to satisfy part of the consideration, representing a substantial portion of the issued share capital of the relevant companies at the time of the relevant transactions. We have identified five transactions and note that the dilution on shareholding interests ranges from approximately 38% to 99% and the approximately 53% dilution on public ALT Shareholders resulting from the Subscription Completion before any conversion of the Subscription Note and the ALT Convertible Note falls into the range of the comparable transactions.

				New shares issued
				as % of existing
			Announced	issued capital
	Acquirer		total value	at the
Acquirer	Bloomberg	Date of	of the	announcement
Name	code	announcement	transaction(1)	date(2)	Dilution
			(HK$m)	(%)	(%)
Wai Yuen Tong Medicine
Holdings	897 HK	5/23/02	1,577	7,200	98.6
Hutchison Global
Communications	757 HK	1/28/04	7,803	349	77.7
Dong Fang Gas Holdings	432 HK	3/8/04	4,387	142	58.7
South Sea Holdings	680 HK	12/30/03	2,307	91	47.5
Stone Group Holdings	409 HK	12/15/03	1,223	62	38.2
The Transactions		4/1/04	2,500	111	52.6
After Completion and
the conversion of
the Subscription Note					96.5

(1) These figures are extracted from Bloomberg in terms of EV. The original figures, which are in US dollars, are translated into HK dollars at US$1=HK$7.80.

(2) These figures are extracted from the respective announcements made by the relevant companies.

Note: The list of comparable transactions is based on the screening results from Bloomberg from acquisitions range from HK$1,000 million to HK$10,000 million by companies listed on the Stock Exchange since 2002, in which new shares were issued to satisfy part of the consideration, representing a substantial portion of the issued share capital of the relevant companies at the time of the relevant transactions. We cannot assure the completeness of the list and it is by no means exhaustive. We have calculated the dilution effect based on the number of new shares issued as a percentage of existing issued capital at the announcement date of the respective transactions.

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LETTER FROM COMMERZBANK AND ACCESS CAPITAL

We note that one of the conditions for the S&P Completion is the Subscription Completion. In the event that the Subscription Agreement is approved by the Independent ALT Shareholders but not the S&P Agreement, resulting in the issue of the Subscription Shares, shareholding of the public ALT Shareholders will be diluted from approximately 57.39% to approximately 27.19%. We note that under this circumstance, ALT can still use the cash raised from the Subscription Agreement for other investment opportunities and as general working capital. We also note that, as set out in the Letter from the ALT Board, all or part of the outstanding principal amount of the Subscription Note is redeemable at any time at the election of ALT without penalty. Taking into account these factors, in particular, given that the ALT Board has the discretion as to the redemption of the Subscription Note at any time without any penalty, we are of the view that, taking into consideration the Transactions as a whole, such dilution is fair and reasonable so far as the Independent ALT Shareholders are concerned.

6) Whitewash Waiver

It is one of the conditions precedent to the Subscription Completion that the Whitewash Wavier be obtained. If the Whitewash Waiver is not obtained for any reason, the transactions contemplated under the Subscription Agreement will not become unconditional and will not proceed (unless the condition is waived by PPG). Under such circumstances, mandatory offers will not be made by PPG (unless waived by PPG).

As the NWD Group will be interested in more than 50% of the entire issued share capital of ALT after Subscription Completion, the NWD Group may further acquire the securities in ALT without incurring any obligation to make general offers to acquire all of the securities in ALT, other than those already owned by the NWD Group or its Concert Parties under Rule 26.1 of the Takeovers Code.

OVERALL RECOMMENDATION

Having considered the principal factors referred to above, in particular:

(i) the current scope of business of the ALT Group and its historical financial performance;
(ii) the opportunity provided by the Transactions for ALT to acquire a profitable mobile telecommunications operation, which will enlarge ALT’s business scope and broaden its revenue stream;
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LETTER FROM COMMERZBANK AND ACCESS CAPITAL

(iii) the fairness and reasonableness of the S&P Agreement, in particular, the fairness and reasonableness of the Consideration in terms of the implied multiples when comparing to trading multiples of comparable companies, multiples of comparable transactions and the investment costs;
(iv) the fairness and reasonableness of the Subscription Agreement, in particular, the fairness and reasonableness of the Issue Price and the Conversion Price after taking into account the trading volume of the Existing ALT Shares, comparable transactions and the unaudited proforma consolidated net tangible asset value per Existing ALT Share;
(v) the proforma effects on earnings, net tangible assets, gearing, working capital and liquidity; and
(vi) the acceptable dilution of shareholding interest given the potential commercial benefits provided by the Transactions;

we are of the view that the Transactions and the Whitewash Waiver are in the interests of ALT and its Independent ALT Shareholders as a whole and the terms thereof are fair and reasonable so far as ALT and the Independent ALT Shareholders are concerned, and are on normal commercial terms. Accordingly, we recommend the Independent Director to advise the Independent ALT Shareholders to vote in favour of the resolutions to be proposed at the EGM to approve (i) the Subscription Agreement; (ii) the S&P Agreement; and (iii) the Whitewash Waiver.

Yours faithfully, Yours faithfully, For and on behalf of For and on behalf of Commerzbank AG Hong Kong Branch Access Capital Limited Johnson Fu Helen Ho Ambrose W. H. Lam Regional Head of Head of Corporate Finance Chairman Corporate Finance M&A Advisory

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ACCOUNTANTS’ REPORT ON THE NWPCS GROUP

APPENDIX I

The following is the text of a report, prepared for the purpose of inclusion in this circular, from the auditors and reporting accountants of NWPCS, PricewaterhouseCoopers, Certified Public Accountants, Hong Kong.

PricewaterhouseCoopers 22nd Floor Prince’s Building Central Hong Kong Telephone (852) 2289 8888 Facsimile (852) 2810 9888

2 June 2004

The directors

New World PCS Holdings Limited Asia Logistics Technologies Limited

Dear Sirs

We set out below our report on the financial information relating to New World PCS Holdings Limited (“NWPCS”) and its subsidiaries (herein collectively referred to as the “NWPCS Group”) for each of the three years ended 30 June 2001, 2002 and 2003 and the six months ended 31 December 2002 and 2003 (the “Relevant Periods”) for inclusion in the circular of Asia Logistics Technologies Limited (“ALT”) dated 2 June 2004 (the “Circular”), in connection with the proposed acquisition of the entire interest in NWPCS by ALT pursuant to the sale and purchase agreement dated 29 March 2004 (the “S&P Agreement”) between New World Telephone Holdings Limited (“NWTHL”), a wholly-owned subsidiary of New World Development Company Limited (“NWD”) and ALT, and the proposed issue of new shares and a convertible note to a wholly-owned subsidiary of NWD by ALT under the subscription agreement dated 29 March 2004 (collectively the “Transactions”).

NWPCS was incorporated in the Cayman Islands on 1 June 2000 with limited liability. As at the date of this report, NWPCS has direct and indirect interests in the following subsidiaries, all of which are private companies.

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ACCOUNTANTS’ REPORT ON THE NWPCS GROUP

APPENDIX I

		Issued and fully	Attributable
	Place and date	paid share	equity	Principal
Subsidiaries	of incorporation	capital	interests	activities
Interests held directly:
New World PCS Limited	Hong Kong	1,000,000	100%	Provision of
	16 February	ordinary shares		personal
	1995	of HK$1 each		communication
				services
New World 3G Limited	Hong Kong	100 ordinary	100%	Dormant
	10 August	shares of
	2001	HK$0.01 each
Interests held indirectly:
New World Mobile Holdings	Hong Kong	2 ordinary shares	100%	Provision of
Limited (formerly known	29 August	of HK$1 each		debt collection
as Retriever Credit	2001			services to the
Management				NWPCS Group
Company Limited)
New World Mobility Limited	Hong Kong	2 ordinary shares	100%	Dormant
	18 November	of HK$1 each
	1998

All companies comprising the NWPCS Group have adopted 30 June as their financial year end date.

We acted as the auditors of NWPCS, New World PCS Limited and New World Mobile Holdings Limited (formerly known as Retriever Credit Management Company Limited) for the three years ended 30 June 2003, or since their respective dates of incorporation, whichever period is shorter.

No audited accounts have been prepared for New World Mobility Limited and New World 3G Limited as they have not been involved in any significant business transactions since their respective dates of incorporation. For the purpose of this report, we have, however, reviewed all the relevant transactions of these companies for the Relevant Periods, or since their respective dates of incorporation to 31 December 2003, whichever period is shorter.

For the purpose of this report, we have examined the audited consolidated accounts of NWPCS for the three years ended 30 June 2003 and the unaudited consolidated management accounts of NWPCS for the six months ended 31 December 2002 and 2003, and have carried out such additional procedures as are necessary in accordance with the Auditing Guideline “Prospectuses and the Reporting Accountant” issued by the Hong Kong Society of Accountants.

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ACCOUNTANTS’ REPORT ON THE NWPCS GROUP

APPENDIX I

The financial information as set out in Sections I to IV below (the “Financial Information”) has been prepared based on the audited consolidated accounts of NWPCS or, where appropriate, the unaudited consolidated management accounts of NWPCS for the Relevant Periods in accordance with the generally accepted accounting principles in Hong Kong, after making such adjustments as are appropriate. The directors of NWPCS are responsible for preparing these accounts which give a true and fair view. In preparing these accounts, it is fundamental that appropriate accounting policies are selected and applied consistently.

The directors of NWPCS are responsible for the Financial Information. It is our responsibility to form an independent opinion, based on our examination, on the Financial Information and to report our opinion.

In our opinion, the Financial Information, for the purpose of this report, gives a true and fair view of the consolidated state of affairs of the NWPCS Group and the state of affairs of NWPCS as at 30 June 2001, 2002 and 2003, and as at 31 December 2003, and of the consolidated results and cash flows of the NWPCS Group for the Relevant Periods.

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ACCOUNTANTS’ REPORT ON THE NWPCS GROUP

APPENDIX I

I. FINANCIAL INFORMATION

(A) CONSOLIDATED PROFIT AND LOSS ACCOUNTS

Year ended 30 Section II note 2001 2002 HK$’000 HK$’000 Turnover 3 1,984,899 1,618,837 Cost of sales (1,230,518) (742,172) Gross profit 754,381 876,665 Other revenue 3 33,834 92,447 Selling expenses (180,007) (123,942) Administrative expenses (333,882) (331,270) Other operating expenses (337,196) (387,952) Operating (loss)/profit 5 (62,870) 125,948 Finance costs 6 (102,610) (38,882) (Loss)/profit before taxation (165,480) 87,066 Taxation 7 26,931 (259) (Loss)/profit attributable to shareholders 12 (138,549) 86,807 Basic (loss)/earnings per share 13 (HK$127) HK$80 Fully diluted earnings per share 13 N/A HK$73	June 2003 HK$’000 1,662,328 (701,949) 960,379 128 (108,360) (278,124) (362,933) 211,090 (9,216) 201,874 (13,068) 188,806 HK$173 N/A	Six months ended 31 December 2002 2003 HK$’000 HK$’000 841,967 848,061 (363,710) (375,489) 478,257 472,572 58 110 (57,497) (58,317) (152,937) (135,124) (179,431) (180,423) 88,450 98,818 (1,700) (4,891) 86,750 93,927 (13,871) (16,430) 72,879 77,497 HK$67 HK$71 N/A N/A

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ACCOUNTANTS’ REPORT ON THE NWPCS GROUP

APPENDIX I

I. FINANCIAL INFORMATION

(B) CONSOLIDATED BALANCE SHEETS

Section II 2001 note HK$’000 Fixed assets 14 1,418,407 Deferred tax assets 28 237,681 Current assets Inventories 16 28,437 Trade receivables 17 51,486 Prepayments and other receivables 34,199 Rental and other deposits 66,782 Amounts due from fellow subsidiaries 18 72 Amount due from an intermediate holding company 18 1,031 Amount due from the ultimate holding company 18 19 Amount due from a related company 19 383 Cash and bank balances 20 32,608 215,017 Current liabilities Trade payables 21 241,104 Accrued charges, deposits received and deferred income 296,594 Amount due to the ultimate holding company 22 73 Amount due to an intermediate holding company 23 – Amounts due to fellow subsidiaries 23 19,724 Amounts due to related companies 23 2,755 Current portion of long–term liabilities 27 39,900 Promissory note issued to immediate holding company 24 – 600,150 Net current liabilities (385,133) Total assets less current liabilities 1,270,955 Represented by: Share capital 25 1 Reserves 26 (457,014) Deficit of shareholders’ funds (457,013) Long-term liabilities 27 1,727,968 1,270,955	As at 30 June 2002 HK$’000 1,380,169 237,422 10,035 45,374 12,468 63,452 11,600 – – – 39,542 182,471 64,665 323,382 73 5,841 – – – 858,000 1,251,961 (1,069,490) 548,101 1 (1,228,207) (1,228,206) 1,776,307 548,101	2003 HK$’000 1,286,904 224,354 11,520 31,075 10,466 50,961 7,137 – – – 113,640 224,799 42,678 298,604 73 – – – 270,000 858,000 1,469,355 (1,244,556) 266,702 1 (1,039,401) (1,039,400) 1,306,102 266,702	As at 31 December 2003 HK$’000 1,254,057 207,924 17,057 56,904 28,293 49,339 8,693 – – – 62,643 222,929 30,966 316,672 73 – – – 270,000 858,000 1,475,711 (1,252,782) 209,199 1 (961,904) (961,903) 1,171,102 209,199

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ACCOUNTANTS’ REPORT ON THE NWPCS GROUP

APPENDIX I

I. FINANCIAL INFORMATION

(C) BALANCE SHEETS

Section II note Subsidiaries 15 Current assets Cash and bank balances Current liabilities Accrued charges Amount due to the ultimate holding company 22 Promissory note issued to immediate holding company 24 Net current liabilities Total assets less current liabilities Financed by: Share capital 25 Reserves 26 Shareholders’ funds Amount due to immediate holding company 27(a)	2001 HK$’000 1,062,230 137 137 512 73 – 585 (448) 1,061,782 1 793,913 793,914 267,868 1,061,782	As at 30 June 2002 HK$’000 2,655,418 3 3 10 73 858,000 858,083 (858,080) 1,797,338 1 21,030 21,031 1,776,307 1,797,338	2003 HK$’000 1,812,589 57 57 10 73 858,000 858,083 (858,026) 954,563 1 20,960 20,961 933,602 954,563	As at 31 December 2003 HK$’000 1,812,586 42 42 10 73 858,000 858,083 (858,041) 954,545 1 20,942 20,943 933,602 954,545

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ACCOUNTANTS’ REPORT ON THE NWPCS GROUP

APPENDIX I

I. FINANCIAL INFORMATION

(D) CONSOLIDATED CASH FLOW STATEMENTS

Section II note Operating activities Net cash inflow generated from operations 29(a) Interest paid Net cash inflow from operating activities Investing activities Purchase of fixed assets Sales of fixed assets Interest received Net cash outflow from investing activities Net cash (outflow)/inflow before financing Financing activities New loan payable Repayment of amounts borrowed Repurchase of shares Net cash (outflow)/inflow from financing 29(b) (Decrease)/increase in cash and cash equivalents Cash and cash equivalents at beginning of the year/period Cash and cash equivalents at end of the year/period Analysis of balances of cash and cash equivalents Cash and bank balances	Year ended 30 2001 2002 HK$’000 HK$’000 204,575 248,896 (102,610) (38,882) 101,965 210,014 (339,637) (211,984) 317 121 33,834 344 (305,486) (211,519) (203,521) (1,505) – 1,508,439 (599,852) (1,500,000) (65,103) – (664,955) 8,439 (868,476) 6,934 901,084 32,608 32,608 39,542 32,608 39,542	June 2003 HK$’000 423,439 (9,216) 414,223 (140,110) 62 128 (139,920) 274,303 777,500 (977,705) – (200,205) 74,098 39,542 113,640 113,640	Six months ended 31 December 2002 2003 HK$’000 HK$’000 184,478 183,217 (1,700) (4,891) 182,778 178,326 (49,785) (94,459) 27 26 58 110 (49,700) (94,323) 133,078 84,003 777,500 – (873,159) (135,000) – – (95,659) (135,000) 37,419 (50,997) 39,542 113,640 76,961 62,643 76,961 62,643

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ACCOUNTANTS’ REPORT ON THE NWPCS GROUP

APPENDIX I

I. FINANCIAL INFORMATION

(E) CONSOLIDATED STATEMENTS OF CHANGES IN EQUITIES

Section II note Total deficit at beginning of the year/period Redemption and cancellation of non-voting redeemable convertible preference shares 25 & 26 Redemption and cancellation of ordinary shares 25 & 26 (Loss)/profit for the year/period 26 Total deficit at end of the year/period	Year ended 30 2001 2002 HK$’000 HK$’000 (253,361) (457,013) – (858,000) (65,103) – (138,549) 86,807 (457,013) (1,228,206)	June 2003 HK$’000 (1,228,206) – – 188,806 (1,039,400)	Six months ended 31 December 2002 2003 HK$’000 HK$’000 (1,228,206) (1,039,400) – – – – 72,879 77,497 (1,155,327) (961,903)

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ACCOUNTANTS’ REPORT ON THE NWPCS GROUP

APPENDIX I

II NOTES TO THE FINANCIAL INFORMATION

1. BASIS OF PREPARATION

NWPCS was incorporated in the Cayman Islands on 1 June 2000.

The Financial Information has been prepared in accordance with generally accepted accounting principles in Hong Kong and complies with the accounting standards issued by the Hong Kong Society of Accountants. The Financial Information is prepared under the historical cost convention.

2. PRINCIPAL ACCOUNTING POLICIES

(A) GROUP ACCOUNTING

(i) Consolidation

The consolidated accounts of the NWPCS Group include the accounts of NWPCS and all its direct and indirect its subsidiaries made up to each of the three years ended 30 June 2003 and the six months ended 31 December 2002 and 2003.

Subsidiaries are those entities in which NWPCS, 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.

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

The gain or loss on the disposal of a subsidiary represents the difference between the proceeds of the sale and the NWPCS Group’s share of its net assets.

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

(ii) 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.

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ACCOUNTANTS’ REPORT ON THE NWPCS GROUP

APPENDIX I

(B) FIXED ASSETS

(i) Fixed assets

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

Fixed assets are depreciated at rates sufficient to write off their cost less accumulated impairment losses over their estimated useful lives on a straight–line basis. The principal annual rates are as follows:

Computer equipment	20%
Furniture and fittings	20%
Leasehold improvements	shorter of the lease term or 20%
Motor vehicles	20%
Testing equipment	33.33%
Digital, switching and transmission system	10% – 20%

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

(ii) Impairment and gain or loss on sale

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 recognised to reduce the asset to its recoverable amount. Such impairment losses are recognised in the profit and loss account.

The gain or loss on disposal of a fixed asset is the difference between the net sales proceeds and the carrying amount of the relevant asset, and is recognised in the profit and loss account.

(C) INVENTORIES

Inventories are stated at the lower of cost and net realisable value. Cost, calculated on the weighted average basis, comprises all direct costs of purchase. Net realisable value is determined on the basis of anticipated sales proceeds less estimated selling expenses.

(D) TRADE RECEIVABLES

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

(E) CASH AND CASH EQUIVALENTS

Cash and cash equivalents are carried in the balance sheet at cost. For the purposes of the cash flow statement, cash and cash equivalents comprise cash on hand and deposits held at call with banks.

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ACCOUNTANTS’ REPORT ON THE NWPCS GROUP

APPENDIX I

(F) PROVISIONS

Provisions are recognised when the NWPCS Group has a present legal or constructive obligation 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 NWPCS Group expects a provision to be reimbursed, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain.

(G) 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) Pension obligations

The NWPCS Group contributes to defined contribution retirement schemes which are available to eligible employees, the assets of which are held in separate trustee administered funds. The NWPCS Group’s contribution to the defined contribution retirement schemes are expensed as incurred.

(iii) Bonus

Provisions for bonus due wholly within twelve months after balance sheet date are recognised when the NWPCS Group has a present legal or constructive obligation as a result of services rendered by employees and a reliable estimate of the obligation can be made.

(H) DEFERRED TAXATION

Deferred taxation is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the accounts. Taxation rates enacted or substantially enacted by the balance sheet date are used to determine deferred taxation.

Deferred tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised.

Deferred taxation is provided on temporary differences arising on investment in subsidiaries, except where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

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ACCOUNTANTS’ REPORT ON THE NWPCS GROUP

APPENDIX I

(I) CONTINGENT LIABILITIES

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 NWPCS 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 accounts. When a change in the probability of an outflow occurs so that outflow is probable, they will then be recognised as a provision.

(J) REVENUE RECOGNITION

Telecommunications services revenue is recognised when the service is rendered and is based on the usage of the digital mobile radio telephone network and facilities. Telecommunications services revenue in respect of standard service plans billed in advance at year/period end is deferred and recognised on a straight-line basis over the relevant service agreement period. Revenue received in advance for the provision of telecommunications services using prepaid cards is deferred and amortised based on the actual usage by customers. The portion of deferred revenue is included under current liabilities as deferred income.

Revenue from sales of mobile phones and accessories is recognised when goods are delivered and title has passed.

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

(K) 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 straightline basis over the lease periods.

(L) BORROWING COSTS

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

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ACCOUNTANTS’ REPORT ON THE NWPCS GROUP

APPENDIX I

3. REVENUES AND TURNOVER

The NWPCS Group is principally engaged in the provision of personal communication services and the sales of related equipment and accessories. Revenues recognised during the Relevant Periods are as follow:

Turnover Telecommunications services revenue Sales of mobile phones and accessories Other revenue Bank interest income Compensations from former investors_(Note a)_ Total revenues	Year ended 30 2001 2002 HK$’000 HK$’000 1,374,554 1,432,325 610,345 186,512 1,984,899 1,618,837 33,834 344 – 92,103 33,834 92,447 2,018,733 1,711,284	June 2003 HK$’000 1,492,079 170,249 1,662,328 128 – 128 1,662,456	Six months ended 31 December 2002 2003 HK$’000 HK$’000 755,434 741,908 86,533 106,153 841,967 848,061 58 110 – – 58 110 842,025 848,171	Six months ended 31 December 2002 2003 HK$’000 HK$’000 755,434 741,908 86,533 106,153 841,967 848,061 58 110 – – 58 110 842,025 848,171
				848,061
				110 –
				110
				848,171

Note:

(a) Compensations from former investors

During the year ended 30 June 2002, certain former investors had paid a total compensation of approximately HK$92,103,000 to the NWPCS Group for their termination of investments in the NWPCS Group.

4. SEGMENT REPORTING

No segment information is presented in respect of the NWPCS Group’s business and geographical segments. Throughout the Relevant Periods, the NWPCS Group’s turnover and operating (loss)/profit were primarily attributable to its personal communication services and sales of related equipment and accessories in Hong Kong.

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ACCOUNTANTS’ REPORT ON THE NWPCS GROUP

APPENDIX I

5. OPERATING (LOSS)/PROFIT

Operating (loss)/profit is stated after crediting and charging the following:

Crediting Gain on disposal of fixed assets Net exchange gain Charging Auditors’ remuneration Costs of inventories sold Depreciation of fixed assets Net exchange losses Loss on disposal of fixed assets Operating lease rental for land and buildings Operating lease rental for switching and office equipment Operating lease rental for transmission sites Staff costs (including directors’ emoluments)(Note 8)	Year ended 30 June 2001 2002 2003 HK$’000 HK$’000 HK$’000 113 – – – – – 572 493 500 661,686 163,836 160,531 206,345 228,658 229,712 832 966 226 – 21,443 3,601 63,360 61,902 58,780 31,997 29,765 17,948 182,656 190,285 188,319 246,077 248,987 204,136	Six months ended 31 December 2002 2003 HK$’000 HK$’000 – – – 110 250 250 78,339 108,262 113,960 124,365 184 – 2,291 2,915 29,740 27,777 13,156 – 96,570 88,331 102,727 100,055	Six months ended 31 December 2002 2003 HK$’000 HK$’000 – – – 110 250 250 78,339 108,262 113,960 124,365 184 – 2,291 2,915 29,740 27,777 13,156 – 96,570 88,331 102,727 100,055

			250 108,262 124,365 – 2,915 27,777 – 88,331 100,055

6. FINANCE COSTS

Interest expenses on Secured long-term bank loan (Note 27(b)) Unsecured long-term bank loan (Note 27(b))	Year ended 30 June 2001 2002 2003 HK$’000 HK$’000 HK$’000 – – 9,216 102,610 38,882 – 102,610 38,882 9,216	Six months ended 31 December 2002 2003 HK$’000 HK$’000 1,700 4,891 – – 1,700 4,891	Six months ended 31 December 2002 2003 HK$’000 HK$’000 1,700 4,891 – – 1,700 4,891
			4,891

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ACCOUNTANTS’ REPORT ON THE NWPCS GROUP

APPENDIX I

7. TAXATION

Hong Kong profits tax has been provided at the rate of 17.5% for the six months ended 31 December 2003 (six months ended 31 December 2002: 16%; year ended 30 June 2003: 17.5%; year ended 30 June 2002: 16%; year ended 30 June 2001: 16%) on the estimated assessable profit. In 2003, the government enacted a change in the profits tax rate from 16% to 17.5% for the fiscal year 2003/2004.

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

Deferred taxation relating to the origination and reversal of temporary differences Deferred taxation resulting from an increase in tax rate Taxation (credited)/charged	Year ended 30 June 2001 2002 2003 HK$’000 HK$’000 HK$’000 (26,931) 259 35,327 – – (22,259) (26,931) 259 13,068	Six months ended 31 December 2002 2003 HK$’000 HK$’000 13,871 16,430 – – 13,871 16,430	Six months ended 31 December 2002 2003 HK$’000 HK$’000 13,871 16,430 – – 13,871 16,430
			16,430

The taxation on the NWPCS Group’s (loss)/profit before taxation differs from the theoretical amount that would arise using the taxation rate of the home country of NWPCS as follows:

(Loss)/profit before taxation Calculated at a taxation rate of Notional tax on (loss)/profit before taxation Income not subject to taxation Expenses not deductible for taxation purpose Increase in opening net deferred tax assets resulting from an increase in tax rate Others Taxation (credited)/charged	Year ended 30 June 2001 2002 2003 HK$’000 HK$’000 HK$’000 (165,480) 87,066 201,874 16% 16% 17.5% (26,477) 13,931 35,328 (478) (14,792) (21) 17 1,120 8 – – (22,259) 7 – 12 (26,931) 259 13,068	Six months ended 31 December 2002 2003 HK$’000 HK$’000 86,750 93,927 16% 17.5% 13,880 16,437 (9) (19 – – – – – 12 13,871 16,430	Six months ended 31 December 2002 2003 HK$’000 HK$’000 86,750 93,927 16% 17.5% 13,880 16,437 (9) (19 – – – – – 12 13,871 16,430
			17.5% 16,437 (19 – – 12
			16,430

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ACCOUNTANTS’ REPORT ON THE NWPCS GROUP

APPENDIX I

8. STAFF COSTS (INCLUDING DIRECTORS’ EMOLUMENTS)

Wages and salaries Bonuses Pension costs – defined contribution plans Termination benefits Medical insurance, staff welfare and other allowances Unutilised annual leave	Year ended 30 June 2001 2002 2003 HK$’000 HK$’000 HK$’000 203,731 201,449 166,082 22,132 20,609 11,514 7,646 8,934 8,553 2,749 11,214 8,064 9,819 6,781 7,142 – – 2,781 246,077 248,987 204,136	Six months ended 31 December 2002 2003 HK$’000 HK$’000 86,117 83,632 7,485 7,943 4,131 4,449 1,997 1,872 2,997 2,244 – (85) 102,727 100,055	Six months ended 31 December 2002 2003 HK$’000 HK$’000 86,117 83,632 7,485 7,943 4,131 4,449 1,997 1,872 2,997 2,244 – (85) 102,727 100,055
			100,055

9. DIRECTORS’ AND SENIOR MANAGEMENT’S EMOLUMENTS

(a) Directors’ emoluments

The aggregate amounts of emoluments paid and payable to directors of NWPCS by the NWPCS Group during the Relevant Periods are as follows:

Fees Other emoluments: Salaries and other emoluments Bonus Pension costs – defined contribution plans	Year ended 30 June 2001 2002 2003 HK$’000 HK$’000 HK$’000 – – – 4,296 1,980 – 34 – 1,000 125 99 – 4,455 2,079 1,000	Six months ended 31 December 2002 2003 HK$’000 HK$’000 – – – – 500 500 – – 500 500	Six months ended 31 December 2002 2003 HK$’000 HK$’000 – – – – 500 500 – – 500 500
			500

None of the directors of NWPCS waived any emoluments paid by the NWPCS Group during the Relevant Periods.

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ACCOUNTANTS’ REPORT ON THE NWPCS GROUP

APPENDIX I

The emoluments of the directors of NWPCS fell within the following bands:

Number of directors

				Six months	ended
	Year	ended 30 June		31 December
	2001	2002	2003	2002	2003
Emolument bands
HK$nil – HK$1,000,000	4	4	4	4	4
HK$2,000,001 – HK$2,500,000	–	1	–	–	–
HK$4,000,001 – HK$4,500,000	1	–	–	–	–

(b) Five highest paid individuals

The five highest paid individuals for the years ended 30 June 2001 and 2002 included one director whose emoluments are included in the analysis presented above. The emoluments of the remaining four highest paid individuals for the years ended 30 June 2001 and 2002 and the emoluments of the five highest paid individuals for the year ended 30 June 2003, six months ended 31 December 2002 and 2003, are as follows:

Salaries and other emoluments Bonuses Pension costs – defined contribution plans	Year ended 30 June 2001 2002 2003 HK$’000 HK$’000 HK$’000 7,744 8,787 9,612 544 3,772 2,857 370 445 498 8,658 13,004 12,967	Six months ended 31 December 2002 2003 HK$’000 HK$’000 4,808 4,809 2,857 3,108 249 249 7,914 8,166	Six months ended 31 December 2002 2003 HK$’000 HK$’000 4,808 4,809 2,857 3,108 249 249 7,914 8,166
			8,166

The emoluments of the individuals fell within the following bands:

Number of individuals

				Six months	ended
	Year	ended 30 June		31 December
	2001	2002	2003	2002	2003
Emolument bands
HK$1,000,001 – HK$1,500,000	–	–	–	3	3
HK$1,500,001 – HK$2,000,000	2	–	2	1	1
HK$2,000,001 – HK$2,500,000	1	1	1	–	–
HK$2,500,001 – HK$3,000,000	1	1	1	1	1
HK$3,500,001 – HK$4,000,000	–	1	–	–	–
HK$4,000,001 – HK$4,500,000	–	1	1	–	–

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ACCOUNTANTS’ REPORT ON THE NWPCS GROUP

APPENDIX I

(c) During the Relevant Periods, no emoluments were paid by the NWPCS Group to any of the above directors or the five highest paid individuals as an inducement to join or upon joining the NWPCS Group or as compensation for loss of office.

10. RETIREMENT BENEFITS

The NWPCS Group contributes to two defined contribution retirement schemes which include an Occupational Retirement Scheme (the “ORSO Scheme”) and a mandatory provident fund scheme (the “MPF Scheme”). Under the ORSO Scheme, the employees are required to contribute 5% of their monthly salaries, while the NWPCS Group’s contribution are calculated at a range from 5% to 10% of the monthly salaries of employees. The employees are entitled to 100% of the employer’s contributions after 10 years of completed service, or at a reduced scale after completion of 3 to 9 years of service. Contributions to the ORSO Scheme are reduced by contributions forfeited by those employees who leave the ORSO Scheme prior to vesting fully in the NWPCS Group’s contributions.

MPF Scheme has been established under Hong Kong Mandatory Provident Fund Scheme Ordinance in December 2000. The then existing employees of the NWPCS Group in Hong Kong could elect to join the MPF Scheme, while all new employees joining the NWPCS Group in Hong Kong from then onwards are required to join the MPF Scheme. The employees are required to contribute 5% of each individual’s relevant income with a maximum amount of HK$1,000 per month as a mandatory contribution, while the NWPCS Group’s contribution are calculated at a range from 5% to 10% of each individual’s relevant income. Employer’s mandatory contributions are 100% vested in the employees as soon as they are paid to the MPF Scheme. Employees may also elect to contribute more than the minimum as a voluntary contribution.

The aggregate employer’s contributions, net of forfeited contributions, which have been dealt with in the consolidated profit and loss account during the Relevant Periods are as follows:

Gross scheme contributions Less: Forfeited contributions utilised to offset contributions for the year/period Net scheme contributions	The NWPCS Group Six months ended Year ended 30 June 31 December 2001 2002 2003 2002 2003 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 8,384 11,083 10,096 4,995 5,128 (738) (2,149) (1,543) (864) (679) 7,646 8,934 8,553 4,131 4,449

11. DIVIDENDS

NWPCS did not declare or pay any dividends during the Relevant Periods.

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ACCOUNTANTS’ REPORT ON THE NWPCS GROUP

APPENDIX I

12. (LOSS)/PROFIT ATTRIBUTABLE TO SHAREHOLDERS

The (loss)/profit attributable to shareholders is dealt with in the accounts of NWPCS to the extent of a loss of HK$18,000 for the six months ended 31 December 2003 (six months ended 31 December 2002: loss of HK$59,000; year ended 30 June 2003: loss of HK$70,000; year ended 30 June 2002: profit of HK$85,117,000; year ended 30 June 2001: profit of HK$17,000).

13. BASIC AND FULLY DILUTED (LOSS)/EARNINGS PER SHARE

The calculation of basic and fully diluted (loss)/earnings per share are based on the NWPCS Group’s (loss)/ earnings for the Relevant Periods and the weighted average number shares in issue during the Relevant Periods as below:

(Loss)/profit attributable to shareholders (HK$’000) Weighted average number of shares in issue (in thousand) Incremental shares from assumed exercise of convertible preference shares (in thousand) Fully diluted weighted average number of shares (in thousand) Basic (loss)/earnings per share (HK$) Fully diluted earnings per share (HK$)	Year ended 30 June 2001 2002 2003 (138,549) 86,807 188,806 1,089 1,089 1,089 N/A 102 – N/A 1,191 1,089 (127) 80 173 N/A 73 N/A	Six months ended 31 December 2002 2003 72,879 77,497 1,089 1,089 – – 1,089 1,089 67 71 N/A N/A	Six months ended 31 December 2002 2003 72,879 77,497 1,089 1,089 – – 1,089 1,089 67 71 N/A N/A

			1,089 –
			1,089

			71

			N/A

There was no dilutive effect for loss per share for the year ended 30 June 2001.

For the year ended 30 June 2003, six months ended 31 December 2002 and 2003, no fully diluted earnings per share is presented as there were no potentially dilutive shares outstanding.

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ACCOUNTANTS’ REPORT ON THE NWPCS GROUP

APPENDIX I

14. FIXED ASSETS – THE NWPCS GROUP

Cost At 1 July 2000 Additions Disposals At 30 June 2001 Additions Disposals At 30 June 2002 Additions Transfer between classes Disposals At 30 June 2003 Additions Transfer between classes Disposals At 31 December 2003	Computer equipment HK$’000 76,927 31,393 (252) 108,068 55,179 (1,962) 161,285 28,310 (15,838) (379) 173,378 18,398 – (161) 191,615	Furniture and fittings HK$’000 15,836 13,810 – 29,646 852 (3,627) 26,871 499 (59) (6,209) 21,102 476 – (713) 20,865	Leasehold improvements HK$’000 16,884 7,708 – 24,592 25,688 (10,018) 40,262 1,559 1,060 (1,326) 41,555 3,400 – (4,581) 40,374	Motor vehicles HK$’000 1,974 629 (295) 2,308 165 (529) 1,944 – (46) – 1,898 118 – (428) 1,588	Testing equipment HK$’000 24,376 4,368 (74) 28,670 182 (515) 28,337 1,100 45 (1,296) 28,186 534 (516) (7) 28,197	Digital, switching and transmission system HK$’000 1,463,716 281,729 – 1,745,445 129,918 (14,151) 1,861,212 108,642 14,838 (2,260) 1,982,432 71,533 516 (3,161) 2,051,320	Total HK$’000 1,599,713 339,637 (621) 1,938,729 211,984 (30,802) 2,119,911 140,110 – (11,470) 2,248,551 94,459 – (9,051) 2,333,959

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ACCOUNTANTS’ REPORT ON THE NWPCS GROUP

APPENDIX I

Accumulated depreciation At 1 July 2000 Charge for the year Disposals At 30 June 2001 Charge for the year Disposals At 30 June 2002 Charge for the year Disposals At 30 June 2003 Charge for the period Disposals At 31 December 2003 Net book value At 30 June 2001 At 30 June 2002 At 30 June 2003 At 31 December 2003	Computer equipment HK$’000 28,278 20,764 (197) 48,845 24,050 (822) 72,073 25,181 (366) 96,888 12,615 (161) 109,342 59,223 89,212 76,490 82,273	Furniture and fittings HK$’000 5,611 5,871 – 11,482 9,161 (1,324) 19,319 2,112 (4,143) 17,288 816 (637) 17,467 18,164 7,552 3,814 3,398	Leasehold improvements HK$’000 2,382 5,799 – 8,181 9,832 (5,724) 12,289 7,778 (965) 19,102 3,872 (3,595) 19,379 16,411 27,973 22,453 20,995	Motor vehicles HK$’000 1,100 544 (150) 1,494 279 (167) 1,606 77 – 1,683 47 (428) 1,302 814 338 215 286	Testing equipment HK$’000 19,870 3,458 (70) 23,258 2,421 (221) 25,458 2,117 (1,278) 26,297 677 (7) 26,967 5,412 2,879 1,889 1,230	Digital, switching and transmission system HK$’000 257,153 169,909 – 427,062 182,915 (980) 608,997 192,447 (1,055) 800,389 106,338 (1,282) 905,445 1,318,383 1,252,215 1,182,043 1,145,875	Total HK$’000 314,394 206,345 (417) 520,322 228,658 (9,238) 739,742 229,712 (7,807) 961,647 124,365 (6,110) 1,079,902 1,418,407 1,380,169 1,286,904 1,254,057

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ACCOUNTANTS’ REPORT ON THE NWPCS GROUP

APPENDIX I

15. SUBSIDIARIES – NWPCS

Unlisted shares, at cost Amount due from a subsidiary – New World PCS Limited_(note a)_	2001 HK$’000 1,000 1,061,230 1,062,230	As at 30 June 2002 2003 HK$’000 HK$’000 1,000 1,000 2,654,418 1,811,589 2,655,418 1,812,589	As at 31 December 2003 HK$’000 1,000 1,811,586
			1,812,586

(a) The amount represents a long-term loan to New World PCS Limited, a wholly-owned subsidiary, which is unsecured, interest free and not repayable within twelve months from the balance sheet date.

16. INVENTORIES – THE NWPCS GROUP

				As at 31
		As at 30 June		December
	2001	2002	2003	2003
	HK$’000	HK$’000	HK$’000	HK$’000
Merchandise, at cost	28,437	10,035	11,520	17,057

17. TRADE RECEIVABLES – THE NWPCS GROUP

The NWPCS Group allows an average credit period of thirty days to its subscribers and other customers. The ageing analysis of trade receivables is as follows:

Current – 30 days 31 – 60 days 61 – 90 days Over 90 days Less: Provision for doubtful debts	2001 HK$’000 29,598 14,978 5,677 29,179 79,432 (27,946) 51,486	As at 30 June 2002 2003 HK$’000 HK$’000 26,052 16,810 17,145 10,976 6,174 4,236 19,377 18,903 68,748 50,925 (23,374) (19,850) 45,374 31,075	As at 31 December 2003 HK$’000 30,802 16,094 7,032 19,520
			73,448 (16,544
			56,904

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ACCOUNTANTS’ REPORT ON THE NWPCS GROUP

APPENDIX I

18. AMOUNTS DUE FROM FELLOW SUBSIDIARIES/AN INTERMEDIATE HOLDING COMPANY/THE ULTIMATE HOLDING COMPANY – THE NWPCS GROUP

The amounts are unsecured, interest free and have no fixed terms of repayment.

The amounts due from fellow subsidiaries represent the following:

New World Telecommunications Limited New World First Ferry Services Limited Infa Communication Services Limited	2001 HK$’000 – – 72 72	As at 30 June 2002 2003 HK$’000 HK$’000 11,600 6,913 – 224 – – 11,600 7,137	As at 31 December 2003 HK$’000 8,693 – –
			8,693

19. AMOUNT DUE FROM A RELATED COMPANY – THE NWPCS GROUP

The information relating to the amount due from a related company, disclosed pursuant to Section 161B of Hong Kong Companies Ordinance, are as follows:

						As at 31
				As at 30 June		December
		2001		2002	2003	2003
		HK$’000		HK$’000	HK$’000	HK$’000
New World CyberBase Limited (“NWCB”)		383		–	–	–

Maximum amount outstanding during the Relevant Periods are as follows:
					Six months ended
	Year ended 30		June		31 December
	2001	2002		2003	2002	2003
	HK$’000	HK$’000		HK$’000	HK$’000	HK$’000
NWCB	383	383		–	–	–

The amount is unsecured, interest free and has no fixed terms of repayment and no provision had been made for non-repayment.

Mr To Hin Tsun, Gerald, a director of NWPCS, is a director of NWCB.

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ACCOUNTANTS’ REPORT ON THE NWPCS GROUP

APPENDIX I

20. CASH AND BANK BALANCES – THE NWPCS GROUP

Included in the NWPCS Group’s cash and bank balances as at 31 December 2003 and 30 June 2003 are certain bank accounts totalling HK$49,468,000 and HK$98,254,000 respectively, which have been charged to a bank (“Charged Accounts”) as a continuing security for the repayment of the secured bank loan (Note 27(b)). The NWPCS Group has procured that the aggregate balance of these Charged Accounts shall not at any time be less than the debt service requirement which is approximately HK$24,000,000 as a surety for the monthly repayment of the bank loan principal and interest.

21. TRADE PAYABLES – THE NWPCS GROUP

The ageing analysis of trade payables is as follows:

Current – 30 days 31 – 60 days 61 – 90 days 91 – 180 days 181 – 360 days Over 360 days	2001 HK$’000 21,059 11,074 15,474 78,792 91,215 23,490 241,104	As at 30 June 2002 2003 HK$’000 HK$’000 5,206 2,096 2,515 911 2,668 553 41,936 32,781 8,750 2,124 3,590 4,213 64,665 42,678	As at 31 December 2003 HK$’000 1,872 6,246 5,456 8,681 3,106 5,605
			30,966

22. AMOUNT DUE TO THE ULTIMATE HOLDING COMPANY – THE NWPCS GROUP AND NWPCS

The amount is unsecured, interest free and has no fixed terms of repayment (see Section III(c)).

23. AMOUNTS DUE TO AN INTERMEDIATE HOLDING COMPANY/FELLOW SUBSIDIARIES/RELATED COMPANIES – THE NWPCS GROUP

The amounts are unsecured, interest free and have no fixed terms of repayment.

24. PROMISSORY NOTE ISSUED TO IMMEDIATE HOLDING COMPANY – THE NWPCS GROUP AND NWPCS

The promissory note issued to immediate holding company is unsecured, interest free and repayable on demand (see Section III(c)).

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ACCOUNTANTS’ REPORT ON THE NWPCS GROUP

APPENDIX I

25. SHARE CAPITAL

At 30 June 2001, 30 June 2002, 30 June 2003 and 31 December 2003 At 1 July 2000 Redemption and cancellation of shares_(Note (a)) At 30 June 2001 At 1 July 2001 Redemption and cancellation of shares(Note (b))_ At 30 June 2002, 30 June 2003 and 31 December 2003	Authorised Non-voting redeemable convertible preference shares of Ordinary shares HK$0.001 each HK$0.001 each No. of No. of shares HK$’000 shares HK$’000 300,000,000 300 200,000 – Issued and fully paid Non-voting redeemable convertible preference shares of Ordinary shares HK$0.001 each HK$0.001 each No. of No. of shares HK$’000 shares HK$’000 100,000 – 1,100,000 1 – – (11,000) – 100,000 – 1,089,000 1 100,000 – 1,089,000 1 (100,000) – – – – – 1,089,000 1	Total HK$’000 300

		Total HK$’000 1 –
		1

		1 –
		1

Notes:

(a) On 7 July 2000, NWPCS redeemed 11,000 ordinary shares of HK$0.001 each at a consideration of US$8,350,000 (equivalent to approximately HK$65,103,000). These shares were cancelled upon the repurchase.

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ACCOUNTANTS’ REPORT ON THE NWPCS GROUP

APPENDIX I

(b) The non-voting redeemable convertible preference shares (the “Preference Shares”) carry a right to be converted into 204,380 shares of fully paid Ordinary Shares on or before 31 December 2001.

The Preference Shares shall not confer on the preference shareholders the right to receive any dividend or other distribution and shall not be entitled to attend any general meeting of NWPCS or to be counted for the purposes of a quorum at such general meeting or to vote at any general meeting of NWPCS.

The Preference Shares were due to be redeemed at HK$8,580 per share on 31 December 2001, subject to the conditions of the Preference Shares and the provision of the Companies Law of the Cayman Islands and any other regulations and legislation applicable to NWPCS. These shares were redeemed on 31 December 2001 and cancelled upon the redemption.

26. RESERVES

At 1 July 2000 Redemption of shares_(Note 25(a)) Loss for the year At 30 June 2001 Redemption of shares(Note 25(b))_ Profit for the year At 30 June 2002 Profit for the year At 30 June 2003 At 1 July 2002 Profit for the period At 31 December 2002 At 1 July 2003 Profit for the period At 31 December 2003	The NWPCS Group Share Accumulated premium losses HK$’000 HK$’000 858,999 (1,112,361) (65,103) – – (138,549) 793,896 (1,250,910) (792,897) (65,103) – 86,807 999 (1,229,206) – 188,806 999 (1,040,400) 999 (1,229,206) – 72,879 999 (1,156,327) 999 (1,040,400) – 77,497 999 (962,903)	Total HK$’000 (253,362) (65,103) (138,549) (457,014) (858,000) 86,807 (1,228,207) 188,806 (1,039,401) (1,228,207) 72,879 (1,155,328) (1,039,401) 77,497 (961,904)

103 -

ACCOUNTANTS’ REPORT ON THE NWPCS GROUP

APPENDIX I

At 1 July 2000 Redemption of shares_(Note 25(a)) Profit for the year At 30 June 2001 Redemption of shares(Note 25(b))_ Profit for the year At 30 June 2002 Loss for the year At 30 June 2003 At 1 July 2002 Loss for the period At 31 December 2002 At 1 July 2003 Loss for the period At 31 December 2003	Share premium HK$’000 858,999 (65,103) – 793,896 (792,897) – 999 – 999 999 – 999 999 – 999	NWPCS Retained profits HK$’000 – – 17 17 (65,103) 85,117 20,031 (70) 19,961 20,031 (59) 19,972 19,961 (18) 19,943	Total HK$’000 858,999 (65,103) 17 793,913 (858,000) 85,117 21,030 (70) 20,960 21,030 (59) 20,971 20,960 (18) 20,942

27. LONG-TERM LIABILITIES

Amount due to immediate holding company_(Note (a)) Bank loan(Note (b))_ Less: Current portion of long-term liabilities	2001 HK$’000 267,868 1,500,000 1,767,868 (39,900) 1,727,968	The NWPCS Group As at 30 June 2002 2003 HK$’000 HK$’000 1,776,307 933,602 – 642,500 1,776,307 1,576,102 – (270,000) 1,776,307 1,306,102	As at 31 December 2003 HK$’000 933,602 507,500 1,441,102 (270,000) 1,171,102

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ACCOUNTANTS’ REPORT ON THE NWPCS GROUP

APPENDIX I

(a) Amount due to immediate holding company – the NWPCS Group and NWPCS

The amount is unsecured, interest free and not repayable within twelve months from the balance sheet date (see Section III(c)).

(b) Bank loan

Within one year In the second year In the third to fifth year Less: Amount repayable within one year shown under current liabilities Amount repayable after one year	2001 HK$’000 Note (a) 39,900 300,000 1,160,100 1,500,000 (39,900) 1,460,100	The NWPCS Group As at 30 June 2002 2003 HK$’000 HK$’000 Note (b) – 270,000 – 270,000 – 102,500 – 642,500 – (270,000) – 372,500	As at 31 December 2003 HK$’000 Note (b) 270,000 237,500 – 507,500 (270,000) 237,500

Notes:

(a) The bank loan was for a term of eight years ending March 2005 and carried interest at 0.75% above HIBOR per annum. During the year ended 30 June 2002, the loan had been early repaid in full. It was under a corporate guarantee given by the ultimate holding company.
(b) The bank loan is for a term of three years and carries interest at 0.65% above HIBOR per annum and is secured by:
(i) certain Charged Accounts (Note 20);
(ii) the pledge of the entire issued share capital of a subsidiary of NWPCS; and
(iii) corporate guarantee given by NWD.

The corporate guarantee given by NWD will be released upon completion of the Transactions. For details please refer to Section III (b) below.

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ACCOUNTANTS’ REPORT ON THE NWPCS GROUP

APPENDIX I

28. DEFERRED TAXATION

Deferred taxation are calculated in full on temporary differences under the liability method using a principal taxation rate of 17.5% for the six months ended 31 December 2003 (six month ended 31 December 2002: 16%; year ended 30 June 2003: 17.5%; year ended 30 June 2002: 16%; year ended 30 June 2001: 16%).

The movement on the deferred tax assets account is as follows:

At beginning of the year/period Deferred taxation (credited)/charged to profit and loss account_(Note 7)_ At end of the year/period	Year ended 30 June 2001 2002 2003 HK$’000 HK$’000 HK$’000 (210,750) (237,681) (237,422) (26,931) 259 13,068 (237,681) (237,422) (224,354)	Six months ended 31 December 2002 2003 HK$’000 HK$’000 (237,422) (224,354) 13,871 16,430 (223,551) (207,924)

Deferred income tax assets are recognised for tax loss carry forwards to the extent that realisation of the related tax benefit through the future taxable profits is probable. There is no limitation in Hong Kong on the period in which the NWPCS Group’s tax losses carried-forward can be utilised.

The movement in deferred tax assets and liabilities (prior to offsetting of balances within the same taxation jurisdiction) during the Relevant Periods are as follows:

Deferred tax assets At 1 July 2000 (Charged)/credited to profit and loss account At 30 June 2001 Charged to profit and loss account At 30 June 2002 Charged to profit and loss account At 30 June 2003	The NWPCS Group Provision Tax losses HK$’000 HK$’000 6,056 341,719 (1,232) 37,529 4,824 379,248 (1,084) (10,583) 3,740 368,665 (266) (15,482) 3,474 353,183	Total HK$’000 347,775 36,297 384,072 (11,667) 372,405 (15,748) 356,657

106 -

ACCOUNTANTS’ REPORT ON THE NWPCS GROUP

APPENDIX I

The NWPCS Group
Deferred tax assets
Provision
Tax losses
HK$’000
HK$’000
At 1 July 2002
3,740
368,665
Credited/(charged) to profit and loss account
58
(23,396)
At 31 December 2002
3,798
345,269
At 1 July 2003
3,474
353,183
Charged to profit and loss account
(579)
(26,054)
At 31 December 2003
2,895
327,129
The NWPCS Group
Accelerated
tax depreciation
Others
HK$’000
HK$’000
Deferred tax liabilities
At 1 July 2000
132,649
4,376
Charged/(credited) to profit and loss account
10,328
(962)
At 30 June 2001
142,977
3,414
Credited to profit and loss account
(7,994)
(3,414)
At 30 June 2002
134,983
–
Credited to profit and loss account
(2,680)
–
At 30 June 2003
132,303
–
At 1 July 2002
134,983
–
Credited to profit and loss account
(9,467)
–
At 31 December 2002
125,516
–
At 1 July 2003
132,303
–
Credited to profit and loss account
(10,203)
–
At 31 December 2003
122,100
–

Total
HK$’000
372,405
(23,338)
349,067
356,657
(26,633)
330,024
Total
HK$’000
137,025
9,366
146,391
(11,408)
134,983
(2,680)
132,303
134,983
(9,467)
125,516
132,303
(10,203)
122,100

107 -

ACCOUNTANTS’ REPORT ON THE NWPCS GROUP

APPENDIX I

The amount shown in the consolidated balance sheet include following:

		The NWPCS		Group
					As at 31
		As at 30 June			December
	2001	2002		2003	2003
	HK$’000	HK$’000	HK$’000		HK$’000
Deferred tax assets expected to be
recovered after more than 12 months	237,422	224,354		191,494	175,064

29. NOTES TO THE CONSOLIDATED CASH FLOW STATEMENTS

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

(Loss)/profit before taxation Depreciation of fixed assets (Gain)/loss on disposal of fixed assets Interest income Interest expenses Profit for the year/period before working capital changes Decrease/(increase) in inventories (Increase)/decrease in trade receivables Decrease/(increase) in prepayments and other receivables Decrease in rental and other deposits (Increase)/decrease in amounts due from group companies Decrease in amount due from a related company (Decrease)/increase in trade payables Increase/(decrease) in accrued charges, deposits received and deferred income Decrease in amounts due to group companies Decrease in amounts due to related companies Net cash inflow generated from operations	Year ended 30 June 2001 2002 2003 HK$’000 HK$’000 HK$’000 (165,480) 87,066 201,874 206,345 228,658 229,712 (113) 21,443 3,601 (33,834) (344) (128) 102,610 38,882 9,216 109,528 375,705 444,275 78,153 18,402 (1,485) (51,486) 6,112 14,299 146,764 21,731 2,002 58,730 3,330 12,491 (66,851) (10,478) 4,463 1,091 383 – (46,226) (176,439) (21,987) 7,201 26,788 (24,778) (26,940) (13,883) (5,841) (5,389) (2,755) – 204,575 248,896 423,439	Six months ended 31 December 2002 2003 HK$’000 HK$’000 86,750 93,927 113,960 124,365 2,291 2,915 (58) (110 1,700 4,891 204,643 225,988 1,713 (5,537 (12,534) (25,829 (9,112) (17,827) 590 1,622 (16,383) (1,556 – – 24,863 (11,712 (3,461) 18,068 (5,841) – – – 184,478 183,217	Six months ended 31 December 2002 2003 HK$’000 HK$’000 86,750 93,927 113,960 124,365 2,291 2,915 (58) (110 1,700 4,891 204,643 225,988 1,713 (5,537 (12,534) (25,829 (9,112) (17,827) 590 1,622 (16,383) (1,556 – – 24,863 (11,712 (3,461) 18,068 (5,841) – – – 184,478 183,217
			225,988 (5,537 (25,829 (17,827) 1,622 (1,556 – (11,712 18,068 – –
			183,217

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ACCOUNTANTS’ REPORT ON THE NWPCS GROUP

APPENDIX I

(b) Analysis of changes in financing during the Relevant Periods

At 1 July 2000 Cash outflows from financing At 30 June 2001 At 1 July 2001 Cash inflows/(outflows) from financing Redemption of shares through the issue of promissory note to immediate holding company_(note c)_ At 30 June 2002 At 1 July 2002 Cash (outflows)/inflows from financing At 30 June 2003 At 1 July 2002 Cash (outflows)/inflows from financing At 31 December 2002 At 1 July 2003 Cash outflows from financing At 31 December 2003	Amount due to immediate holding company HK$’000 867,720 (599,852) 267,868 267,868 1,508,439 – 1,776,307 1,776,307 (842,705) 933,602 1,776,307 (873,159) 903,148 933,602 – 933,602	Long-term bank loan HK$’000 1,500,000 – 1,500,000 1,500,000 (1,500,000) – – – 642,500 642,500 – 777,500 777,500 642,500 (135,000) 507,500	Share capital (including share premium) HK$’000 859,000 (65,103) 793,897 793,897 – (792,897) 1,000 1,000 – 1,000 1,000 – 1,000 1,000 – 1,000	Total HK$’000 3,226,720 (664,955) 2,561,765 2,561,765 8,439 (792,897) 1,777,307 1,777,307 (200,205) 1,577,102 1,777,307 (95,659) 1,681,648 1,577,102 (135,000) 1,442,102

(c) Major non-cash transaction

On 31 December 2001, the non-voting redeemable convertible preference shares were redeemed at the subscription price of HK$8,580 per share through the issuance of promissory note to immediate holding company of the same amount.

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ACCOUNTANTS’ REPORT ON THE NWPCS GROUP

APPENDIX I

30 COMMITMENTS

(a) Capital commitments

Digital, switching and transmission system: Contracted but not provided for	2001 HK$’000 3,309	The NWPCS Group As at 30 June 2002 2003 HK$’000 HK$’000 53,835 84,571	As at 31 December 2003 HK$’000 61,161

(b) Commitments under operating leases

The NWPCS Group had future aggregate minimum lease payments under non-cancellable operating leases which expire as follows:

Land and buildings, and transmission sites Within one year In the second to fifth years inclusive After the fifth year Other equipment Within one year In the second to fifth years inclusive	2001 HK$’000 159,774 229,803 15,920 405,497 19,673 39,345 59,018	The NWPCS Group As at 30 June 2002 2003 HK$’000 HK$’000 188,250 153,335 101,644 68,636 11,402 3,091 301,296 225,062 20,005 – 19,673 – 39,678 –	As at 31 December 2003 HK$’000 132,473 65,944 7,868
			206,285

			– –
			–

110 -

ACCOUNTANTS’ REPORT ON THE NWPCS GROUP

APPENDIX I

31. RELATED PARTY TRANSACTIONS

Save as disclosed in other notes to the Financial Information, the NWPCS Group undertook the following material transactions with related parties in the normal course of its business during the Relevant Periods:

The NWPCS Group

Note Purchase of fixed assets from related companies (a), (f) Purchase of fixed assets from fellow subsidiaries (a) Purchase from fellow subsidiaries (a) Equipment rental income from a fellow subsidiary (b) Reimbursement of rental expense from a fellow subsidiary (c) Service fee from a fellow subsidiary (d) Rental expense paid to fellow subsidiaries (e)	Year ended 30 2001 2002 HK$’000 HK$’000 (6,761) – – (701) (186,480) (160,972) 12,559 8,011 9,365 9,307 42,110 13,916 (31,419) (29,136)	June 2003 HK$’000 – (697) (101,008) 2,908 7,878 2,756 (33,041)	Six months ended 31 December 2002 2003 HK$’000 HK$’000 – – – – (61,265) (45,927) 902 – 272 – 1,466 378 (11,916) (9,039)

Notes:

(a) Purchases were conducted in the normal course of business which are subject to the contract terms as negotiated by the parties involved.
(b) Equipment rental income was calculated by applying a fixed rate, as agreed by the parties involved, on the depreciation charge of the shared equipment.
(c) Reimbursement of rental expense was based on the occupancy of floor area of the parties involved.
(d) Service fee was subject to the terms of the contracts entered by the parties involved.
(e) Rental expense was charged at a fixed monthly fee subject to the terms of the contract signed by the parties involved.
(f) The related companies included Infa Telecom Asia Limited, Infa Corporation Limited and Infa Technologies Limited.

Mr Tsang Cheung, Peter, a former director of NWPCS who resigned on 30 November 2000, had beneficial interest in these related companies.

111 -

ACCOUNTANTS’ REPORT ON THE NWPCS GROUP

APPENDIX I

III. SUBSEQUENT EVENTS

(a) On 29 March 2004, a sale and purchase agreement (the “S&P Agreement”) was entered into between NWTHL, NWPCS’s immediate holding company and a wholly-owned subsidiary of NWD, and ALT in respect of the sale of the entire share capital of NWPCS by NWTHL to ALT, which is subject to certain preceding conditions as stated in the S&P Agreement.
(b) Pursuant to the S&P Agreement, upon completion of the Transactions, the existing guarantee by NWD on the NWPCS Group’s bank loan will be released. If it is required by the bank for the repayment of the loan upon such a release of existing guarantee, this bank loan will be repaid by a fresh loan from another subsidiary of NWD to the NWPCS Group. This new loan will be repaid in accordance with the terms and conditions as similar to the existing bank loan.
(c) Pursuant to the S&P Agreement, if the total of the bank loan and amounts due to immediate holding company and ultimate holding company (collectively the “Aggregate Liabilities”) on the business day prior to the completion of the Transactions exceeds HK$1,250 million, part of the amount due to immediate holding company and ultimate holding company will be capitalised so that the Aggregate Liabilities as at the date of completion of the Transactions does not exceed that amount. Prior to the completion of the Transactions, the uncapitalised portion of the amount due to immediate holding company and ultimate holding company will be repaid by a fresh loan from a subsidiary of the ultimate holding company which would be repayable upon demand after 18 months from the date of the S&P Agreement.

IV. SUBSEQUENT ACCOUNTS

No audited accounts have been prepared for NWPCS or its subsidiaries in respect of any period subsequent to 31 December 2003. In addition, no dividend or distribution has been declared, made or paid by NWPCS or its subsidiaries in respect of any period subsequent to 31 December 2003.

Yours faithfully,

PricewaterhouseCoopers

Certified Public Accountants

Hong Kong

112 -

FINANCIAL INFORMATION ON THE ALT GROUP

APPENDIX II

1. SHARE CAPITAL

The authorised and issued share capitals of ALT as at the Latest Practicable Date were as follows:

HK$

Authorised:

10,000,000,000 Existing ALT Shares Issued and fully paid: 3,751,555,700 Existing ALT Shares	100,000,000

	37,515,557

Issued and fully paid:

All the Existing ALT Shares rank pari passu in all respects including all rights as to dividends, voting and return of capital.

On 28 May 2002, a new share option scheme (the “New Scheme”) was adopted by ALT to enable ALT to grant options to the eligible participants as incentive or rewards for their contributions to the ALT Group. The New Scheme replaced the share option scheme adopted by ALT on 11 September 1998 (the “Old Scheme”). The outstanding ALT Share Options were granted under the Old Scheme and continue to be valid and exercisable in accordance with the provisions of the Old Scheme. No share options have been granted under the New Scheme since its adoption. As at the Latest Practicable Date, there were outstanding ALT Share Options to subscribe for 44,800,000 Existing ALT Shares.

Save for the ALT Convertible Note and the outstanding ALT Share Options to subscribe for 44,800,000 Existing ALT Shares, ALT has no options, warrants and conversion rights convertible into Existing ALT Shares as at the Latest Practicable Date.

The ALT Shares are listed on the Stock Exchange. No part of the securities of ALT is listed or dealt in, nor is listing or permission to deal in the securities of ALT being or proposed to be sought, on any other stock exchanges.

Since 31 December 2003, being the last financial year end date of ALT, no new Existing ALT Shares have been issued by ALT.

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FINANCIAL INFORMATION ON THE ALT GROUP

APPENDIX II

2. SUMMARY OF AUDITED FINANCIAL STATEMENTS

The following is a summary of the results and assets and liabilities of the ALT Group for the three years ended 31 December 2003. The report of the auditors of ALT as extracted from page 24 of ALT’s annual report for the year ended 31 December 2003, the audited consolidated profit and loss accounts of the ALT Group for the two years ended 31 December 2003, the audited consolidated balance sheets of the ALT Group as at 31 December 2002 and 31 December 2003, the audited balance sheets of ALT as at 31 December 2002 and 31 December 2003, the audited consolidated statements of changes in equity of the ALT Group for the two years ended 31 December 2003, the audited consolidated cash flow statements of the ALT Group for two years ended 31 December 2003, together with the accompanying notes reproduced from the annual report of ALT for the year ended 31 December 2003 are also set out below.

FINANCIAL SUMMARY

Results

Turnover
Cost of sales
Gross profit
Other revenue
Other operating income
Selling and distribution costs
Administrative expenses
Other operating expenses
Impairment of goodwill
Loss on deemed disposal of subsidiaries
Loss on disposal of
discontinued operations
Operating loss
Finance costs
Share of losses of:
Jointly controlled entity
Associated companies
Loss before taxation
Taxation
Loss before minority interests
Minority interests
Loss attributable to shareholders
Extraordinary items
Dividend
Loss per share
Basic
Diluted

For the year ended 31 December
2003
2002
2001
HK$’000
HK$’000
HK$’000
(Restated)
8,030
18,511
62,809
(7,477)
(14,737)
(43,208)
553
3,774
19,601
454
2,182
7,923
12,223
–
–
(4,290)
(3,814)
(4,865)
(24,260)
(40,510)
(43,373)
(8,304)
(33,818)
(835)
(94,523)
–
–
–
(1,032)
–
–
–
(534)
(118,147)
(73,218)
(22,083)
(1,171)
(1,565)
(326)
(262)
(128)
–
(33,844)
(18,033)
(70)
(153,424)
(92,944)
(22,479)
–
–
(183)
(153,424)
(92,944)
(22,662)
–
3,550
(1,690)
(153,424)
(89,394)
(24,352)
–
–
–
–
–
–
HK4.20 cents
HK2.67 cents
HK0.84 cent
N/A
N/A
N/A

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FINANCIAL INFORMATION ON THE ALT GROUP

APPENDIX II

Assets, liabilities and minority interests

Total assets Total liabilities Minority interests	As at 31 December 2003 2002 HK$’000 HK$’000 141,213 301,928 (32,982) (51,273) – – 108,231 250,655	2001 HK$’000 363,471 (55,793) (11,506) 296,172

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FINANCIAL INFORMATION ON THE ALT GROUP

APPENDIX II

Set out below is the report of the auditors of ALT, PricewaterhouseCoopers, the text of which is extracted from page 24 of ALT’s annual report for the year ended 31 December 2003.

PricewaterhouseCoopers 22nd Floor Prince’s Building Central Hong Kong Telephone (852) 2289 8888 Facsimile (852) 2810 9888

AUDITORS’ REPORT TO THE SHAREHOLDERS OF ASIA LOGISTICS TECHNOLOGIES LIMITED

(Incorporated in the Cayman Islands with limited liability)

We have audited the accounts on pages 25 to 67 which have been prepared in accordance with accounting principles generally accepted in Hong Kong.

RESPECTIVE RESPONSIBILITIES OF DIRECTORS AND AUDITORS

The Company’s directors are responsible for the preparation of accounts which give a true and fair view. In preparing accounts which give a true and fair view it is fundamental that appropriate accounting policies are selected and applied consistently.

It is our responsibility to form an independent opinion, based on our audit, on those accounts and to report our opinion solely to you, as a body, and for no other purpose. We do not assume responsibility towards or accept liability to any other person for the contents of this report.

BASIS OF OPINION

We conducted our audit in accordance with Statements of Auditing Standards issued by the Hong Kong Society of Accountants. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the accounts. It also includes an assessment of the significant estimates and judgements made by the directors in the preparation of the accounts, and of whether the accounting policies are appropriate to the circumstances of the Company and the Group, consistently applied and adequately disclosed.

We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance as to whether the accounts are free from material misstatement. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the accounts. We believe that our audit provides a reasonable basis for our opinion.

OPINION

In our opinion the accounts give a true and fair view of the state of affairs of the Company and of the Group as at 31 December 2003 and of the Group’s loss and cash flows for the year then ended and have been properly prepared in accordance with the disclosure requirements of the Hong Kong Companies Ordinance.

PricewaterhouseCoopers

Certified Public Accountants

Hong Kong, 23 April 2004

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FINANCIAL INFORMATION ON THE ALT GROUP

APPENDIX II

CONSOLIDATED PROFIT AND LOSS ACCOUNT

Note
Turnover
3
Cost of sales
Gross profit
Other revenue
3
Other operating income
Selling and distribution costs
Administrative expenses
Other operating expenses
Impairment of goodwill
11
Loss on deemed disposal of subsidiaries
Operating loss
4
Finance costs
5
Share of losses of:
Jointly controlled entity
Associated companies
Loss before taxation
Taxation
8
Loss before minority interests
Minority interests
Loss attributable to shareholders
9, 26
Loss per share
10
Basic
Diluted

For the year ended
31 December
2003
2002
HK$’000
HK$’000
8,030
18,511
(7,477)
(14,737)
553
3,774
454
2,182
12,223
–
(4,290)
(3,814)
(24,260)
(40,510)
(8,304)
(33,818)
(94,523)
–
–
(1,032)
(118,147)
(73,218)
(1,171)
(1,565)
(262)
(128)
(33,844)
(18,033)
(153,424)
(92,944)
–
–
(153,424)
(92,944)
–
3,550
(153,424)
(89,394)
HK4.20 cents
HK2.67 cents
N/A
N/A

117 -

FINANCIAL INFORMATION ON THE ALT GROUP

APPENDIX II

CONSOLIDATED BALANCE SHEET

Note ASSETS Non-current assets Goodwill 11 Property, plant and equipment 12 Investments in associated companies 14 Investment in a jointly controlled entity 15 Investment securities 16 Current assets Inventories Amount due from an associated company Amount due from a jointly controlled entity Trade receivables 17 Prepayments, deposits and other receivables Exchangeable notes 18 Trading securities 19 Bank balances and cash 20 Current liabilities Amounts due to associated companies Amount due to a related company 21 Trade payables 22 Other payables and accruals Finance lease payables Taxation payable Net current assets Total assets less current liabilities Non-current liabilities Finance lease payables Convertible bonds 23 CAPITAL AND RESERVES Share capital 24 Reserves 26 Shareholders’ funds	As at 31 December 2003 2002 HK$’000 HK$’000 – 101,443 3,994 5,946 75,680 109,524 – 262 1,520 1,520 81,194 218,695 – 7,258 1,103 1,103 203 230 4,567 1,069 1,906 7,905 – 28,000 26,368 – 25,872 37,668 60,019 83,233 424 802 376 376 246 722 3,650 9,595 – 83 – 183 4,696 11,761 55,323 71,472 136,517 290,167 – 226 28,286 39,286 28,286 39,512 108,231 250,655 37,515 36,415 70,716 214,240 108,231 250,655	As at 31 December 2003 2002 HK$’000 HK$’000 – 101,443 3,994 5,946 75,680 109,524 – 262 1,520 1,520 81,194 218,695 – 7,258 1,103 1,103 203 230 4,567 1,069 1,906 7,905 – 28,000 26,368 – 25,872 37,668 60,019 83,233 424 802 376 376 246 722 3,650 9,595 – 83 – 183 4,696 11,761 55,323 71,472 136,517 290,167 – 226 28,286 39,286 28,286 39,512 108,231 250,655 37,515 36,415 70,716 214,240 108,231 250,655
		218,695
		7,258 1,103 230 1,069 7,905 28,000 – 37,668
		83,233
		802 376 722 9,595 83 183
		11,761
		71,472
		290,167 226 39,286
		39,512
		250,655

		36,415 214,240
		250,655

118 -

FINANCIAL INFORMATION ON THE ALT GROUP

APPENDIX II

BALANCE SHEET

Note ASSETS Non-current assets Property, plant and equipment 12 Investments in subsidiaries 13 Current assets Amount due from an associated company Amount due from a jointly controlled entity Prepayments, deposits and other receivables Bank balances and cash Current liabilities Amount due to an associated company Amount due to a related company 21 Other payables and accruals Net current assets Total assets less current liabilities Non-current liability Convertible bonds 23 CAPITAL AND RESERVES Share capital 24 Reserves 26 Shareholders’ funds	As at 31 December 2003 2002 HK$’000 HK$’000 1,380 1,853 137,312 251,806 138,692 253,659 161 161 203 230 103 5,837 22,383 31,420 22,850 37,648 12 496 376 376 1,775 7,407 2,163 8,279 20,687 29,369 159,379 283,028 28,286 39,286 131,093 243,742 37,515 36,415 93,578 207,327 131,093 243,742	As at 31 December 2003 2002 HK$’000 HK$’000 1,380 1,853 137,312 251,806 138,692 253,659 161 161 203 230 103 5,837 22,383 31,420 22,850 37,648 12 496 376 376 1,775 7,407 2,163 8,279 20,687 29,369 159,379 283,028 28,286 39,286 131,093 243,742 37,515 36,415 93,578 207,327 131,093 243,742
		253,659
		161 230 5,837 31,420
		37,648
		496 376 7,407
		8,279
		29,369
		283,028 39,286
		243,742

		36,415 207,327
		243,742

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FINANCIAL INFORMATION ON THE ALT GROUP

APPENDIX II

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Note Total equity at 1 January Issue of shares, including share premium 24, 26 Share issue expenses 26 Loss for the year 26 Total equity at 31 December	For the year ended 31 December 2003 2002 HK$’000 HK$’000 250,655 296,172 11,000 44,595 – (718) (153,424) (89,394) 108,231 250,655

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FINANCIAL INFORMATION ON THE ALT GROUP

APPENDIX II

CONSOLIDATED CASH FLOW STATEMENT

Note
Net cash outflow generated from operations
28(a)
Interest received
Interest paid
Interest element on finance lease rental payments
Net cash outflow from operating activities
Investing activities
Purchases of fixed assets
Proceeds from disposal of fixed assets
Purchase of trading securities
Proceeds from disposal of trading securities
Purchase of long term unlisted investment
28(c)
Acquisition of subsidiaries
28(c)
Deemed disposal of investments in subsidiaries
28(d)
Increase in investments in subsidiaries
Investments in associated companies
Investment in a jointly controlled entity
Purchases of investment securities
Subscription of exchangeable notes
18
Repayment of exchangeable notes
18
Decrease in pledged time deposits
Net cash inflow/(outflow) from investing activities
Net cash outflow before financing
Financing activities
Proceeds from issue of ordinary shares
Share issue expenses
New bank loans
Repayment of bank loans
Capital element of finance lease rental payments
Net cash (outflow)/inflow from financing activities
Net decrease in cash and cash equivalents
Cash and cash equivalents at 1 January
Cash and cash equivalents at 31 December

For the year ended
31 December
2003
2002
HK$’000
HK$’000
(21,091)
(31,049)
556
2,182
(1,179)
(761)
(12)
(16)
(21,726)
(29,644)
(1,014)
(1,356)
401
7
(24,940)
–
7,792
–
–
(3,000)
–
503
–
(3,671)
–
(400)
–
(44,615)
–
(390)
–
(3,011)
–
(28,000)
28,000
–
–
2,500
10,239
(81,433)
(11,487)
(111,077)
–
21,195
–
(718)
–
6,226
–
(8,302)
(309)
(204)
(309)
18,197
(11,796)
(92,880)
37,668
130,548
25,872
37,668

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FINANCIAL INFORMATION ON THE ALT GROUP

APPENDIX II

Note Analysis of balances of cash and cash equivalents Bank balances and cash Non-pledged time deposits with original maturity less than three months when acquired	2003 HK$’000 5,608 20,264 25,872	2002 HK$’000 10,120 27,548
		37,668

NOTES TO THE FINANCIAL STATEMENTS

1. Basis of preparation

The accounts have been prepared in accordance with accounting principles generally accepted in Hong Kong and comply with accounting standards issued by the Hong Kong Society of Accountants (“HKSA”). They have been prepared under the historical cost convention except that trading securities are stated at fair value as disclosed in Note 2(h)(ii).

In the current year, the Group adopted the revised Statement of Standard Accounting Practice Number 12 “Income Taxes” (“SSAP 12”) issued by the HKSA which is effective for accounting periods commencing on or after 1 January 2003. The changes to the Group’s accounting policies and the effect of adopting the new policy are set out in Note 2 below.

2. Principal accounting policies

(a) Consolidation

The consolidated accounts include the accounts of the Company and its subsidiaries made up to 31 December.

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 the 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 unamortised goodwill or goodwill taken to reserves and which was not previously charged or recognised in the consolidated profit and loss account and any related accumulated foreign currency translation reserve.

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.

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FINANCIAL INFORMATION ON THE ALT GROUP

APPENDIX II

(b) Associated companies

An associated company is a company, not being a subsidiary or a joint venture, in which an equity interest is held for the long-term and significant influence is exercised in its management.

The consolidated profit and loss account includes the Group’s share of the results of associated companies for the year, and the consolidated balance sheet includes the Group’s share of the net assets of the associated companies and goodwill (net of accumulated amortisation) on acquisition.

Equity accounting is discontinued when the carrying amount of the investment in an associated company reaches zero, unless the Group has incurred obligations or guaranteed obligations in respect of the associated company.

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

(c) Jointly controlled entity

A jointly controlled entity is a contractual arrangement whereby the Group and other parties undertake an economic activity which is subject to joint control and none of the participating parties has unilateral control over the economic activity.

The consolidated profit and loss account includes the Group’s share of the results of jointly controlled entities for the year, and the consolidated balance sheet includes the Group’s share of the net assets of the jointly controlled entity and goodwill (net of accumulated amortisation) on acquisition.

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

(d) Translation of foreign currencies

The balance sheet of subsidiaries, jointly controlled entities and associated companies expressed in foreign currencies are translated at the rates of exchange ruling at the balance sheet date whilst the profit and loss is translated at an average rate. Exchange differences arising in these cases are dealt with as a movement in reserves.

(e) 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 subsidiary/joint venture/associated company at the date of acquisition.

Goodwill on acquisition is included in intangible assets and is amortised using the straight-line method over its estimated useful life not more than 20 years.

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

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FINANCIAL INFORMATION ON THE ALT GROUP

APPENDIX II

(f) Property, plant and equipment

Property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses. Depreciation is provided at rates calculated to write off the cost of assets less accumulated impairment losses over their estimated useful life on a straight line basis at the following annual rates:

Leasehold improvements 10% – 16.7% Motor vehicles, computer equipment, office equipment, furniture and fixtures 15% – 33.3%

Major costs incurred in restoring assets to their normal working condition are charged to the profit and loss account. Improvements are capitalised 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 assets are impaired. If any such indication exists, the recoverable amount of the asset is estimated and where relevant, an impairment loss is recognised to reduce the asset to its recoverable amount. Such impairment losses are recognised in the profit and loss account.

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.

(g) Operating leases

(h) Investments in securities

(i) Investment securities

Investment securities are stated at cost less any provision for impairment losses.

The carrying amounts of individual investments are reviewed at each balance sheet date to assess whether the fair values have declined below the carrying amounts. When a decline other than temporary has occurred, the carrying amount of such securities will be reduced to its fair value. The impairment loss is recognised as an expense in the profit and loss account. This impairment loss is written back to profit and loss account when the circumstances and events that led to the writedowns or write-offs cease to exist and there is persuasive evidence that the new circumstances and events will persist for the foreseeable future.

(ii) Trading securities

Trading securities are carried at fair value. At each balance sheet, the net unrealized gains or losses arising from the changes in fair value of trading securities are recognised in the profit and loss account. Profits or losses on disposal of trading securities, representing the difference between the net sales proceeds and the carrying amounts, are recognised in the profit and loss account as they arise.

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FINANCIAL INFORMATION ON THE ALT GROUP

APPENDIX II

(i) Inventories

Inventories are stated at the lower of cost and net realisable value. Cost, calculated on the first-in, first-out basis, comprises all costs of purchase, costs of conversion, and other costs incurred in bringing the inventories to their present location and condition. Net realisable value is determined on the basis of anticipated sales proceeds less any estimated selling expenses.

(j) Accounts receivable

Provision is made against accounts receivable to the extent they are considered to be doubtful. Accounts receivable in the balance sheet are stated net of such provision.

(k) Cash and cash equivalents

Cash and cash equivalents are carried in the balance sheet at cost. For the purposes of the cash flow statement, cash and cash equivalents comprise cash on hand, deposits held at call with banks, cash investments with a maturity of three months or less from the date of investment and bank overdrafts.

(l) Employee benefits

(i) Employee leave entitlements

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

(ii) Retirement benefits

For employees in Hong Kong, a mandatory provident fund scheme (“MPF Scheme”) has been established pursuant to the Hong Kong Mandatory Provident Fund Scheme Ordinance under which the Group’s Hong Kong employees are compulsorily required to join the MPF Scheme. The Group, as employers, and the employees are each required to contribute 5% of each individual’s relevant income with a maximum amount of HK$1,000 per month as a mandatory contribution. Employer’s mandatory contributions are 100% vested in the employees as soon as they are paid to the MPF Scheme.

Contributions made by the Group under the MPF Scheme are charged to the profit and loss account as they become payable in accordance with the rules of the scheme. The assets of the MPF Scheme are held separately from those of the Group and managed by independent professional fund managers.

For employees in the Mainland China, the Group contributes to retirement schemes managed by local municipal authorities in the Mainland China based on a percentage of the relevant employees’ monthly salaries. The Group’s contributions under such schemes are charged to the profit and loss account as incurred while the relevant local municipal authorities undertake to assume the retirement benefit obligations of all existing and future retired employees of the Group in the Mainland China.

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FINANCIAL INFORMATION ON THE ALT GROUP

APPENDIX II

(iii) Equity compensation benefits

Share options are granted to certain directors and employees under a share option scheme. The financial impact of share options granted under the share option scheme is not recorded in the Company’s or the Group’s balance sheet until such time as the options are exercised, and no change is recorded in the profit and loss account or balance sheet for their cost. Upon the exercise of share options, the resulting shares issued are recorded by the Company as additional share capital at the nominal value of the shares, and the excess of the exercise price per share over the nominal value of the shares is recorded by the Company in the share premium account. Options which are cancelled prior to their exercise date, or lapsed, are removed from the register of outstanding options.

(m) Deferred taxation

Deferred taxation is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the accounts. Taxation rates enacted or substantively enacted by the balance sheet date are used to determine deferred taxation.

Deferred tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised.

Deferred taxation is provided on temporary differences arising on investments in subsidiaries, associates and joint ventures, except where the timing of the reversal of the temporary difference can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future.

In prior year, deferred taxation was accounted for at the current taxation rate in respect of timing differences between profit as computed for taxation purposes and profit as stated in the accounts to the extent that a liability or an asset was expected to be payable or recoverable in the foreseeable future. The adoption of the revised SSAP 12 represents a change in accounting policy; however, deferred taxation in prior year has not been restated as the effect of this change is not material to the accounts.

(n) Revenue recognition

Revenue from the provision of logistics technology services and logistics management services is recognised when services are rendered.

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

(o) Borrowing costs

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

(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 intangible assets, fixed assets, inventories, receivables and operating cash, and mainly exclude investments in securities. Segment liabilities comprise operating liabilities and exclude items such as taxation and certain corporate borrowings. Capital expenditure comprises additions to intangible assets and fixed assets, including additions resulting from acquisitions through purchases of subsidiaries.

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FINANCIAL INFORMATION ON THE ALT GROUP

APPENDIX II

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

3. Turnover, revenue and segment information

The Group is principally engaged in the provision of consultancy services for logistics management together with the supply of related software, and provision of logistics management services. Revenues recognised during the year are as follows:

Turnover Service income Other revenue Interest income Total revenue	2003 HK$’000 8,030 454 8,484	2002 HK$’000 18,511 2,182
		20,693

Primary reporting format – business segments

The Group is organised into two main business segments:

– Logistics technology provision of consultancy services for logistics management, together with the supply of related software – Logistics management provision of logistics management services

There are no sales or other transactions between the business segments.

Secondary reporting format – geographical segments

The Group’s two business segments operate in two main geographical areas:

Hong Kong Mainland China

There are no sales between the geographical segments.

127 -

FINANCIAL INFORMATION ON THE ALT GROUP

APPENDIX II

Primary reporting format – business segments

Group

Turnover Segment results Interest income Impairment of goodwill Provision for obsolete inventories Unallocated income Unallocated expenses Operating loss Finance costs Share of losses of: – Jointly controlled entity – Associated companies Loss before taxation Taxation Loss before minority interests Minority interests Loss attributable to shareholders	Logistics technology 2003 2002 HK$’000 HK$’000 3,582 18,511 (9,360) (29,550) – – – –	Logistics management 2003 2002 HK$’000 HK$’000 4,448 – (12,885) (13,149) (94,523) – (7,611) –	Total 2003 2002 HK$’000 HK$’000 8,030 18,511 (22,245) (42,699) 454 2,182 (94,523) – (7,611) – 12,223 – (6,445) (32,701) (118,147) (73,218) (1,171) (1,565) (262) (128) (33,844) (18,033) (153,424) (92,944) – – (153,424) (92,944) – 3,550 (153,424) (89,394)

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FINANCIAL INFORMATION ON THE ALT GROUP

APPENDIX II

Group

Segment assets Investments in associated companies Unallocated amount Investment in a jointly controlled entity Investment securities Trading securities Unallocated assets Total assets Segment liabilities Unallocated liabilities Total liabilities Other information: Capital expenditure Depreciation and amortisation Loss on disposal of fixed assets Write off of fixed assets Provision for doubtful debts Provision for other receivables Provision for obsolete inventories Impairment of goodwill	Logistics technology 2003 2002 HK$’000 HK$’000 6,253 6,822 – 15,621 – 262 1,429 1,920 708 1,302 1,909 2,025 74 668 167 4,508 – 1,104 – 3,819 – – – –	Logistics management 2003 2002 HK$’000 HK$’000 6,488 115,929 – – – – 858 1,480 306 567 7,051 4,027 132 – 152 – – – – – 7,611 – 94,523 –	Total 2003 2002 HK$’000 HK$’000 12,741 122,751 – 15,621 75,680 93,903 75,680 109,524 – 262 1,520 1,520 26,368 – 24,904 67,871 141,213 301,928 2,287 3,400 30,695 47,873 32,982 51,273 1,014 1,869 8,960 6,052 206 668 319 4,508 – 1,104 – 3,819 7,611 – 94,523 –	Total 2003 2002 HK$’000 HK$’000 12,741 122,751 – 15,621 75,680 93,903 75,680 109,524 – 262 1,520 1,520 26,368 – 24,904 67,871 141,213 301,928 2,287 3,400 30,695 47,873 32,982 51,273 1,014 1,869 8,960 6,052 206 668 319 4,508 – 1,104 – 3,819 7,611 – 94,523 –
				15,621 93,903
				109,524
				262 1,520 – 67,871
				301,928

				3,400 47,873
				51,273

				1,869 6,052 668 4,508 1,104 3,819 – –

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FINANCIAL INFORMATION ON THE ALT GROUP

APPENDIX II

Secondary reporting format – geographical segments

Group

Mainland China Hong 2003 2002 2003 HK$’000 HK$’000 HK$’000 Segment turnover: Sales to external customers 5,406 14,348 2,624 Other information: Segment assets 9,711 127,057 131,502 Capital expenditure 448 1,368 566 4. Operating loss Operating loss is stated after crediting and charging the following: Crediting Profit on disposal of trading securities Unrealised gain on trading securities Recovery of provision for other receivables Charging Depreciation Auditors’ remuneration Operating leases in respect of land and buildings Staff costs, excluding directors’ emoluments_(Note 6) Research and development costs Amortisation of goodwill (including in other operating expenses) Impairment of goodwill(Note 11)_ Loss on disposal of fixed assets Write off of fixed assets Net exchange losses Provision for impairment of investment securities Provision for doubtful debts Provision for other receivables Provision for obsolete inventories (including in other operating expenses)	Kong Total 2002 2003 2002 HK$’000 HK$’000 HK$’000 4,163 8,030 18,511 174,871 141,213 301,928 501 1,014 1,869 2003 2002 HK$’000 HK$’000 2,976 – 6,244 – 2,804 – 2,040 2,102 546 970 2,407 4,874 14,656 23,414 – 4,230 6,920 3,950 94,523 – 206 668 319 4,508 19 6 – 12,703 – 1,104 – 6,649 7,611 –	Kong Total 2002 2003 2002 HK$’000 HK$’000 HK$’000 4,163 8,030 18,511 174,871 141,213 301,928 501 1,014 1,869 2003 2002 HK$’000 HK$’000 2,976 – 6,244 – 2,804 – 2,040 2,102 546 970 2,407 4,874 14,656 23,414 – 4,230 6,920 3,950 94,523 – 206 668 319 4,508 19 6 – 12,703 – 1,104 – 6,649 7,611 –	Kong Total 2002 2003 2002 HK$’000 HK$’000 HK$’000 4,163 8,030 18,511 174,871 141,213 301,928 501 1,014 1,869 2003 2002 HK$’000 HK$’000 2,976 – 6,244 – 2,804 – 2,040 2,102 546 970 2,407 4,874 14,656 23,414 – 4,230 6,920 3,950 94,523 – 206 668 319 4,508 19 6 – 12,703 – 1,104 – 6,649 7,611 –

			301,928

			1,869

			2002 HK$’000 – – –

			2,102 970 4,874 23,414 4,230 3,950 – 668 4,508 6 12,703 1,104 6,649 –

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5. Finance costs

Interest on bank loans wholly repayable within one year Interest on convertible bonds_(Note 23)_ Interest element of finance leases Interest on other loan	Group 2003 2002 HK$’000 HK$’000 – 370 1,154 1,179 12 16 5 – 1,171 1,565	Group 2003 2002 HK$’000 HK$’000 – 370 1,154 1,179 12 16 5 – 1,171 1,565
		1,565

6. Staff costs (excluding directors’ emoluments)

Salaries Retirement benefits scheme contributions	Group 2003 2002 HK$’000 HK$’000 14,496 23,134 160 280 14,656 23,414	Group 2003 2002 HK$’000 HK$’000 14,496 23,134 160 280 14,656 23,414
		23,414

7. Directors’ and senior management’s emoluments

(a) Directors’ emoluments

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

Fees Other emoluments: Salaries, allowances and benefits in kind Retirement benefits scheme contributions	Group 2003 2002 HK$’000 HK$’000 220 220 3,335 3,268 36 37 3,591 3,525	Group 2003 2002 HK$’000 HK$’000 220 220 3,335 3,268 36 37 3,591 3,525
		3,525

Directors’ fees disclosed above include HK$220,000 (2002: HK$220,000) paid to the non-executive directors.

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The emoluments of the directors fell within the following bands:

Nil to HK$1,000,000 HK$1,000,001 – HK$1,500,000 HK$1,500,001 – HK$2,000,000	Number of directors 2003 2002 8 9 1 1 1 1 10 11	Number of directors 2003 2002 8 9 1 1 1 1 10 11
		11

There was no arrangement under which a director waived or agreed to waive any emoluments during the year (2002: Nil). During the year, no emoluments were paid by the Group to the directors as an inducement to join or upon joining the Group, or as compensation for loss of office (2002: Nil).

During the year, no share options were granted to the directors in respect of their services to the Group.

(b) Five highest paid individuals’ emoluments

The five individuals whose emoluments were the highest in the Group for the year included two (2002: two) directors whose emoluments are reflected in the analysis presented above. The emoluments payable to the remaining three (2002: three) individuals during the year are as follows:

Salaries, allowances and benefits in kind Retirement benefits scheme contributions	Group 2003 2002 HK$’000 HK$’000 2,574 2,574 24 24 2,598 2,598	Group 2003 2002 HK$’000 HK$’000 2,574 2,574 24 24 2,598 2,598
		2,598

The emoluments of the individuals fell within the following bands:

Nil to HK$1,000,000 HK$1,000,001 – HK$1,500,000	Number of individuals 2003 2002 2 2 1 1 3 3	Number of individuals 2003 2002 2 2 1 1 3 3
		3

During the year, no emoluments were paid by the Group to the five highest paid individuals as an inducement to join or upon joining the Group, or as compensation for loss of office (2002: Nil).

During the year, no share options were granted to non-directors in respect of their services to the Group. For the year ended 31 December 2002, 3,700,000 share options were granted to two of the nondirectors who were also five highest paid individuals in respect of their services to the Group.

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8. Taxation

No provision for Hong Kong profits tax and overseas taxation has been made because there is no estimated assessable profit for the Group.

9. Loss attributable to shareholders

The loss attributable to shareholders is dealt with in the accounts of the Company to the extent of HK$123,649,000 (2002: HK$96,104,000).

10. Loss per share

The calculation of basic loss per share is based on the Group’s loss attributable to shareholders of HK$153,424,000 (2002: HK$89,394,000) and the weighted average of 3,649,692,686 (2002: 3,342,852,413) ordinary shares in issue during the year.

The exercise of share options and convertible bonds would have an anti-dilutive effects on basic loss per share and accordingly no diluted loss per share for the year is presented.

11. Goodwill

Cost At 1 January Acquisition of subsidiaries Acquisition of additional investments in subsidiaries Deemed disposal of subsidiaries Transfer of investments in associated companies At 31 December Accumulated amortisation At 1 January Charge for the year Deemed disposal of subsidiaries Transfer of investments in associated companies Impairment charge At 31 December Net book value At 31 December	2003 HK$’000 105,075 – – – – 105,075 3,632 6,920 – – 94,523 105,075 –	2002 HK$’000 18,175 81,275 26,530 (13,711) (7,194) 105,075 771 3,950 (703) (386) – 3,632 101,443

The goodwill arose from the acquisition of the logistics management business in Mainland China. In the second half of 2003, the operating environment of this business has changed and brought an adverse effect to the operating results. As a result, the directors have undertaken a review of the situation and have concluded that a full provision for impairment of the goodwill should be made and the provision has been recognised in the consolidated profit and loss account.

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12. Property, plant and equipment

(a) Group

Leasehold improvements HK$’000 Cost At 1 January 2003 118 Additions 13 Disposals – Written off – At 31 December 2003 131 Accumulated depreciation At 1 January 2003 24 Charge for the year 30 Disposals – Written off – At 31 December 2003 54 Net book value At 31 December 2003 77 At 31 December 2002 94	Office equipment, Computer furniture equipment and fixtures HK$’000 HK$’000 5,006 1,454 112 416 – (51) (64) (343) 5,054 1,476 1,448 190 1,589 319 – (14) (16) (72) 3,021 423 2,033 1,053 3,558 1,264	Motor vehicles HK$’000 1,174 473 (641) – 1,006 144 102 (71) – 175 831 1,030	Total HK$’000 7,752 1,014 (692) (407) 7,667 1,806 2,040 (85) (88) 3,673 3,994 5,946

The net book value of the Group’s fixed assets held under finance leases at 31 December 2002 amounted to HK$439,000.

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(b) Company

Computer equipment HK$’000 Cost At 1 January 2003 1,341 Additions 20 Disposals – Written off – At 31 December 2003 1,361 Accumulated depreciation At 1 January 2003 373 Charge for the year 414 Disposals – Written off – At 31 December 2003 787 Net book value At 31 December 2003 574 At 31 December 2002 968 13. Investments in subsidiaries Unlisted investments, at cost Amounts due from subsidiaries Amounts due to subsidiaries Less: Provision for impairment in value	Office equipment, furniture and fixtures HK$’000 792 313 – (205) 900 117 177 – (38) 256 644 675	Office equipment, furniture and fixtures HK$’000 792 313 – (205) 900 117 177 – (38) 256 644 675	Motor vehicles Total HK$’000 HK$’000 242 2,375 234 567 (234) (234) – (205) 242 2,503 32 522 64 655 (16) (16) – (38) 80 1,123 162 1,380 210 1,853 Company 2003 2002 HK$’000 HK$’000 10,939 10,939 340,737 329,852 (2,197) (2,085) 349,479 338,706 (212,167) (86,900) 137,312 251,806

The balances with subsidiaries are interest-free.

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Particulars of the principal subsidiaries:

		Particulars of
	Place of incorporation/	issued share/
	registration and	registered	Interest
Name of companies	kind of legal entity	capital	held	Principal activities
Directly held:
Asia Logistics	Hong Kong, limited	Ordinary shares	100%	Provision of
Technologies	liability company	of HK$10,000		management services
(Hong Kong)				and trading of
Limited				listed securities
Asia Logistics	Hong Kong, limited	Ordinary shares	100%	Logistics technology
Technologies	liability company	of HK$2		business
Services Limited
Best Cyber Limited	British Virgin Islands,	Ordinary shares	100%	Investment holding
	limited liability	of US$1
	company
Front Yard Investment	British Virgin Islands,	Ordinary shares	100%	Investment in securities
Limited	limited liability	of US$1
	company
Funcapital Inc.	British Virgin Islands,	Ordinary shares	100%	Investment holding
	limited liability	of US$1
	company
Vision On-Line	British Virgin Islands,	Ordinary shares	100%	Investment holding
Limited	limited liability	of US$1
	company
亞洲物流科技	Mainland China,	Registered capital	100%	Logistics technology
(中國)有限公司	wholly-owned	US$1,400,000		business
	foreign enterprise
Indirectly held:
亞洲物流(天津)	Mainland China,	Registered capital	100%	Logistics management
有限公司	wholly-owned	US$5,000,000		business
	foreign enterprise
Compass E-Commerce	Hong Kong, limited	Ordinary shares	100%	Investment holding
Limited	liability company	of HK$2
Cyber Pilot Limited	British Virgin Islands,	Ordinary shares	100%	Investment holding
	limited liability	of US$2,000
	company
Fusion Tech Holding	British Virgin Islands,	Ordinary shares	100%	Investment holding
Limited	limited liability	of US$100,000
(“Fusion Tech”)	company
北京金柏新干線信息	Mainland China,	Registered capital	100%	Logistics technology
科技有限公司	wholly-owned	HK$10,000,000		business
	foreign enterprise

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14. Investments in associated companies

Share of net assets Goodwill on acquisition of associated companies less amortisation/impairment	Group 2003 2002 HK$’000 HK$’000 64,899 91,571 10,781 17,953 75,680 109,524	Group 2003 2002 HK$’000 HK$’000 64,899 91,571 10,781 17,953 75,680 109,524
		109,524

Particulars of the principal associated companies:

	Place of
	incorporation/	Particulars of	Interest
	registration	issued share/	held	Principal
Name of companies	and operations	registered capital	indirectly	activities
New World CyberBase	Bermuda/	Ordinary shares of	27.48%	Investment holding
Limited	Hong Kong	HK$116,499,223
Han International	British Virgin	Ordinary shares of	30%	Investment holding
Consulting Company	Islands	US$5,000
Limited
漢普管理咨詢	Mainland China	Registered capital	30%	Logistics technology
(中國)有限公司		US$6,000,000		business

New World CyberBase Limited (“NWCB”) is a company incorporated in Bermuda with limited liability and its shares are listed on The Stock Exchange of Hong Kong Limited (the “Stock Exchange”). The directors consider that NWCB is material in the context of the Group’s accounts. Extracts of the unaudited consolidated balance sheet and unaudited consolidated profit and loss account of the NWCB Group, based on the published unaudited interim consolidated accounts of the NWCB Group for the six months ended 30 September 2003, are set out below:

30 Non-current assets Current assets Current liabilities Non-current liabilities Minority interests Net assets	As at September 2003 30 (unaudited) HK$’000 408,316 19,428 (78,356) (112,000) (1,170) 236,218	As at September 2002 (unaudited) HK$’000 427,275 67,588 (90,734 (103,549 (198
		300,382

Contingent liabilities:

Guarantee in respect of credit facilities granted to a former associated company

– 86,000

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	Six months ended	Six months ended
	30 September 2003	30 September 2002
	(unaudited)	(unaudited)
	HK$’000	HK$’000
Turnover	15,777	16,251
(Loss)/profit for the period before minority interests	(18,026)	1,621
Minority interests	149	–
(Loss)/profit attributable to shareholders	(17,877)	1,621

NWCB’s financial year end date is 31 March, which is not coterminous with the Group.

15. Investment in a jointly controlled entity

Share of net assets Particulars of the jointly controlled entity: Place of incorporation/ Particulars of registration issued share/ Name of company and operations registered capital 漢道科技咨詢 Mainland China Registered capital (珠海)有限公司 US$200,000 Investment securities Equity investments listed in Hong Kong, at cost Less: Provision	Group 2003 2002 HK$’000 HK$’000 – 262 Interest held Principal indirectly activities 50% Operation of offshore development centre Group 2003 2002 HK$’000 HK$’000 14,223 14,223 (12,703) (12,703 1,520 1,520	Group 2003 2002 HK$’000 HK$’000 – 262 Interest held Principal indirectly activities 50% Operation of offshore development centre Group 2003 2002 HK$’000 HK$’000 14,223 14,223 (12,703) (12,703 1,520 1,520
		1,520

16. Investment securities

The market values of the Group’s long term listed equity investments at the balance sheet date and at the date of approval of these accounts were approximately HK$5.0 million (2002: HK$1.5 million) and HK$4.5 million (2002: HK$3.3 million) respectively.

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17. Trade receivables

Analysis of aging trade receivables of the Group is as follows:

Current to 90 days 91 to 180 days	Group 2003 2002 HK$’000 HK$’000 3,135 486 1,432 583 4,567 1,069	Group 2003 2002 HK$’000 HK$’000 3,135 486 1,432 583 4,567 1,069
		1,069

The Group normally allows credit terms to customers not exceeding 180 days.

18. Exchangeable notes

In previous years, a wholly-owned subsidiary of the Company subscribed for exchangeable notes of HK$28 million issued by two independent third parties (the “Issuers”).

The exchangeable notes entitled the Group to exchange for a 50% equity interest in a company registered in the People’s Republic of China (“PRC”) and an integrated logistics and supply chain technology services provider in the PRC. The exchangeable notes bore interest at a rate of 3% per annum payable only on the redemption date or maturity date, which was twelve months from the date of the note instrument but was extendable by a further twelve months upon written request by the Issuers.

In April 2003, the subsidiary entered into agreements with the Issuers, pursuant to which the Group gave up the right attached to the notes and the accrued interest, and the Issuers repaid the entire amount to the Group.

19. Trading securities

All trading securities owned by the Group are listed in Hong Kong. The carrying values of the following trading securities at 31 December 2003 individually exceeded 10% of the total assets of the Group. The investments are:

		Particulars
	Place of	of issued	Interest
Name	incorporation	share capital	held	Principal activities
BOC Hong	Hong Kong	10,572,780,266	Less than	Provision of banking and related
Kong		ordinary shares	0.01%	financial services in Hong Kong
(Holdings)		of HK$5.00 each
Limited
Mexan	Bermuda	1,310,925,244	0.56%	Property development and
Limited		ordinary shares of		investments, securities investment
		HK$0.10 each		and trading and investment
				holding

20. Bank balances and cash

Included in the balance of the Group are balances with PRC banks totaling HK$1,809,000 (2002: HK$4,200,000) which are denominated in Renminbi. The expatriation of these balances outside China is subject to foreign exchange control rules and regulations of the PRC.

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21. Amount due to a related company

The amount due to a related company, which is controlled by a director of the Company, is interest-free and has no fixed terms of repayment.

22. Trade payables

The trade payable balances as at 31 December 2002 and 31 December 2003 were aged less than three months.

23. Convertible bonds

In November 2001, the Company issued a HK$39,286,000 convertible bonds (the “Convertible Bond”) to New World CyberBase Nominee Limited (“NWCN”), a company incorporated in the British Virgin Islands and a subsidiary of New World Development Company Limited (“NWD”). NWD is a company incorporated in Hong Kong and whose shares are listed on the Stock Exchange. The Convertible Bond is convertible into shares of the Company at an initial conversion price of HK$0.10 per share (subject to adjustment) at any time from and including the first anniversary of the date of the issue of the Convertible Bond until the maturity date ending on the last business day preceding the third anniversary of the date of the issue of the Convertible Bond (i.e. 1 November 2004). The Convertible Bond bears interest at 3% per annum which accrues on a day-to-day basis on the principal amount of the Convertible Bond outstanding, and is payable semi-annually in arrears. The outstanding principal amount of the Convertible Bond together with interest accrued thereon will be repaid, subject to and in accordance with the terms of the Convertible Bond, on 1 November 2004.

In December 2003, a portion of the Convertible Bond with a principal amount of HK$11,000,000 was converted into 110,000,000 ordinary shares of the Company at the conversion price of HK$0.10 per share. In addition, NWCN has indicated its intention in writing that the maturity date of the Convertible Bond be extended to 1 November 2007. Based on this indication, the Convertible Bond is classified as a non-current liability as at 31 December 2003.

24. Share capital

Authorised: 10,000,000,000 ordinary shares of HK$0.01 each The movements in the share capital were as follows: At 1 January 2002 Subscription for new shares_(Note (a)) Shares issued for acquisition of Fusion Tech(Note (b)) At 31 December 2002 and 1 January 2003 Issuance of new shares upon conversion of Convertible Bond(Note (c))_ At 31 December 2003	2003 HK$’000 100,000 Number of shares in issue 3,182,434,000 159,121,700 300,000,000 3,641,555,700 110,000,000 3,751,555,700	2002 HK$’000 100,000

		Issued share capital HK$’000 31,824 1,591 3,000
		36,415 1,100
		37,515

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Notes:

(a) Pursuant to a subscription agreement dated 21 March 2002 made between Grade Win International Limited and the Company, 159,121,700 new ordinary shares of HK$0.01 each in the capital of the Company were issued on 10 May 2002 at a price of approximately HK$0.1332 per share. A sum of approximately HK$20,000,000, net of share issue expenses, was raised and used by the Group for general working capital purposes. The excess of the proceeds over the nominal value of the shares amounting to HK$19,604,000 was fully credited to the share premium account. These shares rank pari passu with the existing shares.
(b) On 23 October 2002, 300,000,000 new ordinary shares at HK$0.01 each in the capital of the Company were issued at a price of HK$0.15 per share for the acquisition of 45.702% interest in Fusion Tech from Southern Victory Developments Limited. The excess of the proceeds over the nominal value of the shares amounting to HK$20,400,000 was fully credited to the share premium account. These shares rank pari passu with the existing shares.
(c) As disclosed in Note 23, a portion of the Convertible Bond was converted into 110,000,000 ordinary shares in the Company at the conversion price of HK$0.10 per share. The excess of the proceeds over the nominal value of the shares amounting to HK$9,900,000 was fully credited to the share premium account. These shares rank pari passu with the existing shares.

25. Share option schemes

On 28 May 2002, a new share option scheme (the “New Scheme”) was adopted by the Company to replace the share option scheme adopted on 11 September 1998 (the “Old Scheme”). However, the outstanding share options granted under the Old Scheme continue to be valid and exercisable in accordance with the provisions of the Old Scheme.

The total number of shares which may be issued upon exercise of all share options to be granted under the New Scheme and any other schemes must not in aggregate exceed 10% of the shares of the Company (the “Shares”) in issue as at the date of approval of the New Scheme. The total number of shares issued and to be issued upon exercise of share options granted to each eligible participant (including both exercised and outstanding share options) in any 12-month period must not exceed 1% of the Shares in issue from time to time. Any further grant of share options in excess of this limit is subject to shareholders’ approval at a general meeting.

The offer of a grant of share options may be accepted within 21 days from the date of the offer, upon payment of a nominal consideration of HK$1 in total by the grantee. The exercise period of the share options shall be determined by the directors at their absolute discretion, but in any event shall not be more than 10 years from the date of the offer of the share options. The directors may at their absolute discretion impose any vesting period at the time of grant.

The exercise price of the share options is determinable by the directors at their absolute discretion at the time of the grant of the relevant share options, but may not be less than the highest of (i) the closing price of the Shares as stated in the Stock Exchange’s daily quotations sheet on the date of grant; (ii) the average closing price of the Shares as stated in the Stock Exchange’s daily quotations sheets for the five business days immediately preceding the date of grant; and (iii) the nominal value of the Shares on the date of grant.

The New Scheme is valid and effective for a period of 10 years commencing on 28 May 2002. Share options do not confer rights on the holders to dividends or to vote at shareholders’ meetings.

No share options were granted under the New Scheme during the year. At 31 December 2003, the number of shares available for issue under the New Scheme is 334,155,700 shares, representing approximately 8.9% of the issued share capital of the Company as at the date of these accounts.

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The following share options were outstanding under the Old Scheme during the year.

Name or category of Date of Vesting Exercise participant grant period Exercise period price HK$ Directors: Mr. Lo Lin 14 August – 15 August 2000 to 0.284 Shing, 2000 14 August 2003 Simon 8 February 9 February 2002 to 9 February 2002 to 0.150 2002 8 February 2003 8 February 2008 Mr. Chan Ki 14 August – 15 August 2000 to 0.284 2000 14 August 2003 Mr. Chan Wai 8 February 9 February 2002 to 9 February 2002 to 0.150 Keung, Ringo 2002 8 February 2003 8 February 2008 Mr. Yu Ansheng, 8 February 9 February 2002 to 9 February 2002 to 0.150 Ben 2002 8 February 2003 8 February 2008 Employees 8 February 9 February 2002 to 9 February 2002 to 0.150 2002 8 February 2003 8 February 2008 Total		Number of shares subject to options	Number of shares subject to options	Number of shares subject to options
		At 1 January 2003 57,000,000 20,000,000 57,000,000 10,000,000 10,000,000 5,900,000 159,900,000	Exercised during the year – – – – – – –	Lapsed during the year (57,000,000) – (57,000,000) – – (900,000) (114,900,000)	At 31 December 2003 – 20,000,000 – 10,000,000 10,000,000 5,000,000
					45,000,000

Note: The options are vested in tranches during the vesting period .

At 31 December 2003, the Company had 45,000,000 share options outstanding under the Old Scheme. The exercise in full of such share options would, under the present capital structure of the Company, result in the issue of 45,000,000 additional ordinary shares of the Company and additional share capital of HK$450,000 and share premium of HK$6,300,000 (before issue expenses).

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APPENDIX II

26. Reserves

(a) Group

Share premium account Note HK$’000 At 1 January 2003 307,880 Conversion of convertible bonds 24(c) 9,900 Loss for the year – At 31 December 2003 317,780 At 1 January 2002 268,594 Premium on issue of shares 24(a), (b) 40,004 Share issue expenses 24 (718) Loss for the year – At 31 December 2002 307,880 Representing: Company and subsidiaries 317,780 Jointly controlled entity – Associated companies – At 31 December 2003 317,780 Company and subsidiaries 307,880 Jointly controlled entity – Associated companies – At 31 December 2002 307,880	Accumulated losses HK$’000 (93,640) – (153,424) (247,064) (4,246) – – (89,394) (93,640) (195,397) (390) (51,277) (247,064) (76,079) (128) (17,433) (93,640)	Total HK$’000 214,240 9,900 (153,424) 70,716 264,348 40,004 (718) (89,394) 214,240 122,383 (390) (51,277) 70,716 231,801 (128) (17,433) 214,240

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(b) Company

Share premium account Note HK$’000 At 1 January 2003 440,870 Conversion of convertible bonds 24(c) 9,900 Loss for the year – At 31 December 2003 450,770 At 1 January 2002 401,584 Premium on issue of shares 24(a), (b) 40,004 Share issue expenses 24 (718) Loss for the year – At 31 December 2002 440,870	Accumulated losses HK$’000 (233,543) – (123,649) (357,192) (137,439) – – (96,104) (233,543)	Total HK$’000 207,327 9,900 (123,649) 93,578 264,145 40,004 (718) (96,104) 207,327

(c) The share premium account of the Company includes a share premium, arising from the share exchange upon the reorganisation at the time of the listing of the Company’s shares, of approximately HK$132,990,000, which represents the difference between the nominal value of the shares of the Company issued in exchange for the entire issued share capital of Eastern Gold Holdings Limited and the value of the underlying net assets of the subsidiaries at the date they were acquired by the Company on 11 September 1998. Under the Companies Law (2000 Revision) of the Cayman Islands, the share premium account is distributable to the shareholders of the Company, provided that immediately following the date on which the dividends is proposed to be distributed, the Company will be in a position to pay off its debts as they fall due in the ordinary course of business.
(d) The Company’s reserves available for distribution at 31 December 2003 amounted to HK$93,578,000 (2002: HK$207,327,000) which subject to the restrictions stated above.

27. Deferred taxation

At 31 December 2003, the Group has the following unprovided deferred taxation:

Deferred tax liabilities/(assets) Accelerated depreciation allowance Unrealised gain on trading securities Tax losses Provision for obsolete inventories	2003 HK$’000 184 1,093 (10,395) (1,313) (10,431)	2002 HK$’000 242 – (7,920) – (7,678)

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APPENDIX II

28. Consolidated cash flow statement

(a) Reconciliation of loss before taxation to net cash outflow from operations

2003
HK$’000
Loss before taxation
(153,424)
Finance costs
1,171
Share of losses of jointly controlled
entity and associated companies
34,106
Profit on disposal of trading securities
(2,976)
Unrealised gain on trading securities
(6,244)
Depreciation
2,040
Amortisation of goodwill
6,920
Loss on disposal of fixed assets
206
Loss on deemed disposal of subsidiaries
–
Write off of fixed assets
319
Provision for doubtful debts
–
Provision for other receivables
–
Impairment of investment securities
–
Interest income
(454)
Impairment of goodwill
94,523
Provision of obsolete inventories
7,611
Operating loss before working capital changes
(16,202)
Increase in inventories
(353)
Decrease/(increase) in amount due
from a jointly controlled entity
27
(Increase)/decrease in trade receivables
(3,498)
Decrease in prepayments, deposits and other receivables
5,897
Increase in amount due from an associated company
–
(Decrease)/increase in trade payables
(476)
(Decrease)/increase in other payables and accruals
(6,108)
(Decrease)/increase in amounts due to associated companies
(378)
Decrease in amount due to a related company
–
Net cash outflow generated from operations
(21,091)

2002
HK$’000
(92,944)
1,565
18,161
–
–
2,102
3,950
668
1,032
4,508
1,104
6,649
12,703
(2,182)
–
–
(42,684)
(6,293)
(230)
980
8,357
(549)
605
7,964
802
(1)
(31,049)

(b) Major non-cash transactions

During the year, NWCN converted part of Convertible Bond of the principal amount of HK$11,000,000 into 110,000,000 ordinary shares of the Company at the conversion price of HK$0.10 per share.

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FINANCIAL INFORMATION ON THE ALT GROUP

APPENDIX II

(c) Acquisition of subsidiaries

Net liabilities acquired:
Fixed assets
Trade receivables
Prepayments, deposits and other receivables
Cash and cash equivalents
Trade payables
Other payables and accruals
Interest-bearing bank loans
Minority interests
Goodwill on acquisition
Satisfied by:
Cash consideration payable
Reclassification from long term investments
Exercise of exchangeable notes
Analysis of net inflow of cash and cash equivalents
in respect of the acquisition of subsidiaries

Group
2003
2002
HK$’000
HK$’000
–
460
–
890
–
770
–
503
–
(283)
–
(2,710)
–
(2,076)
–
(251)
–
(2,697)
–
81,275
–
78,578
–
18
–
3,000
–
75,560
–
78,578
Group
2003
2002
HK$’000
HK$’000
–
503

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FINANCIAL INFORMATION ON THE ALT GROUP

APPENDIX II

(d) Deemed disposal of investments in subsidiaries

Net assets deemed disposal of:
Fixed assets
Goodwill
Investment in an associated company
Inventories
Trade receivables
Prepayments, deposits and other receivables
Cash and bank balances
Trade payables
Other payables and accruals
Minority interests
Goodwill released on deemed disposal
Loss on deemed disposal of subsidiaries
Transfer to investments in associated companies
Amount due from an associated company
Analysis of net outflow of cash and cash equivalents in
respect of the deemed disposal of investments
in subsidiaries
29.
Commitments
(a)
Capital commitments
Contracted, but not provided for:
Capital contributions payable to
a jointly controlled entity

Group
2003
2002
HK$’000
HK$’000
–
5,349
–
8,742
–
3,835
–
166
–
23,317
–
8,209
–
3,671
–
(789)
–
(17,209)
–
(10,937)
–
24,354
–
4,266
–
(1,032)
–
(27,034)
–
(554)
–
–
Group
2003
2002
HK$’000
HK$’000
–
3,671
Group
2003
2002
HK$’000
HK$’000
–
390

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FINANCIAL INFORMATION ON THE ALT GROUP

APPENDIX II

(b) Operating lease arrangements

At 31 December 2003, the Group had future aggregate minimum lease payments under noncancellable operating leases in respect of land and buildings as follows:

Not later than one year Later than one year and not later than five years	2003 HK$’000 584 82 666	2002 HK$’000 664 120
		784

30. Related party transactions

Significant related party transactions, which are carried out in the normal course of the Group’s business are as follows:

Note Rental and office administrative expenses paid to related companies, a director of which is also a director of the Company (a) Interest paid for the Convertible Bond to NWCN, a director of which is also a director of the Company (b)	2003 HK$’000 654 1,154	2002 HK$’000 1,900 1,179

(a) The amount was charged for the provision of office space and the sharing of office administrative expenses. The directors consider that rental expense was charged with reference to the then market rental and the administrative expenses were reimbursed on an actual cost incurred basis, taking into account the headcount and/or area occupied.
(b) During the year, the Company paid interest of approximately HK$1,154,000 to NWCN, the Convertible Bond holder. The interest was charged at 3% per annum and was payable semi-annually in arrears (Note 23).

31. Subsequent events

On 1 April 2004, the Company made a public announcement (the “Announcement”) jointly with NWD, disclosing the following transactions:

(a) The Company has entered into a sale and purchase agreement on 29 March 2004 with a whollyowned subsidiary of NWD that the Company has agreed, subject to certain conditions as disclosed in the Announcement, to acquire the entire equity interest in New World PCS Holdings Limited (“NWPCS”) at a consideration of HK$1,250,000,000. NWPCS is engaged in the mobile telecommunications business.
(b) The Company has entered into a subscription agreement on 29 March 2004 with another whollyowned subsidiary of NWD, Power Palace Group Limited (“PPG”), that PPG has agreed, subject to certain conditions as disclosed in the Announcement, to subscribe for: (i) 4,166,666,667 shares in the Company at HK$0.012 per share, and (ii) a 3 year convertible note at a principal amount of HK$1,200,000,000.
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FINANCIAL INFORMATION ON THE ALT GROUP

APPENDIX II

(c) The Company has proposed to effect a distribution in specie of the shares in New World CyberBase Limited being held by the Group.
(d) The Company has proposed to apply the amount standing to the credit of the share premium account to set off against the accumulated losses of the Company.
(e) The Company has proposed that the existing authorised share capital be increased from HK$100,000,000 to HK$2,000,000,000 by the creation of additional 190,000,000,000 shares.
(f) The Company has proposed that, subject to the completion of the subscription agreement mentioned in (b) above, every 100 then existing shares of HK$0.01 each in the Company be consolidated into one new consolidated share of HK$1.00.
(g) The Company has proposed that, subject to the completion of the subscription agreement mentioned in (b) above, the Company will change its name to “New World Mobile Holdings Limited（新世界移動控股有限公司）.”

Details and conditions of the above transactions are fully described in the Announcement.

32. Approval of the accounts

The accounts were approved and authorised for issue by the board of directors on 23 April 2004.

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APPENDIX III PROFORMA FINANCIAL INFORMATION ON THE ENLARGED ALT GROUP

1. UNAUDITED PROFORMA CONSOLIDATED STATEMENT OF ASSETS AND LIABILITIES OF THE ENLARGED ALT GROUP AFTER COMPLETION

The following table is an illustrative and unaudited proforma consolidated statement of assets and liabilities of the Enlarged ALT Group as at 31 December 2003 which has been prepared on the basis set out below for the purpose of illustration if Completion had taken place on 31 December 2003.

The unaudited proforma consolidated statement of assets and liabilities is based on the audited consolidated balance sheet of the ALT Group as at 31 December 2003 as extracted from ALT’s annual report for the year ended 31 December 2003, and the audited consolidated balance sheet of the NWPCS Group as at 31 December 2003 as extracted from the accountants’ report on the NWPCS Group as set out in Appendix I to this circular.

The unaudited proforma consolidated statement of assets and liabilities is prepared to provide the unaudited proforma financial information on the Enlarged ALT Group as a result of Completion. As it has been prepared for illustrative purpose only and because of its nature, it may not give a true picture of the financial position of the Enlarged ALT Group at any future date.

Non-current assets Property, plant and equipment Investments in subsidiaries Investments in associated companies Investment securities Goodwill Deferred tax assets Total non-current assets Current assets Inventories Trade receivables Prepayments and other receivables Rental and other deposits Trading securities Amount due from a jointly controlled entity Amount due from an associated company Amounts due from fellow subsidiaries Cash and bank balances Total current assets	The NWPCS Group as at 31 December 2003 HK$’000 1,254,057 – – – – 207,924 1,461,981 17,057 56,904 28,293 49,339 – – – 8,693 62,643 222,929	The ALT Group as at Proforma 31 December Proforma consolidation 2003 adjustments Note adjustments Note (Note 4) HK$’000 HK$’000 HK$’000 3,994 – 1,250,000 1 (1,250,000) 5 75,680 (75,680) 2 1,520 2,480 5 – 10,738 5 – 81,194 – 4,567 1,906 – 26,368 203 1,103 – 25,872 60,019	Proforma consolidated Enlarged ALT Group HK$’000 1,258,051 – – 4,000 10,738 207,924
			1,480,713
			17,057 61,471 30,199 49,339 26,368 203 1,103 8,693 88,515
			282,948

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PROFORMA FINANCIAL INFORMATION ON THE ENLARGED ALT GROUP

APPENDIX III

Current liabilities Trade payables Accrued charges, deposits received and deferred income Amount due to associated companies Amount due to a related company Amount due to the ultimate holding company Promissory note issued to immediate holding company Current portion of long-term liabilities Total current liabilities Net current (liabilities)/assets Total assets less current liabilities Non-current liabilities Other long-term liabilities Convertible bonds Subscription notes Total non-current liabilities Net (liabilities)/assets Shareholders’ (deficit)/equity	The NWPCS Group as at 31 December 2003 HK$’000 (30,966) (316,672) – – (73) (858,000) (270,000) (1,475,711) (1,252,782) 209,199 (1,171,102) – – (1,171,102) (961,903) (961,903)	The ALT Group as at Proforma 31 December Proforma consolidation 2003 adjustments Note adjustments Note (Note 4) HK$’000 HK$’000 HK$’000 (246) (3,650) (424) (376) – 73 3 – 858,000 3 – (4,696) 55,323 136,517 – 191,102 3 (28,286) – (1,200,000) 1 (28,286) 108,231 108,231 1,023,495 1, 2, 3 (1,236,782) 5	Proforma consolidated Enlarged ALT Group HK$’000 (31,212) (320,322) (424) (376) – – (270,000)
			(622,334)
			(339,386)
			1,141,327 (980,000) (28,286) (1,200,000)
			(2,208,286)
			(1,066,959)

			(1,066,959)

Notes:

The adjustment reflects the issuance of the Subscription Shares and the Subscription Note by ALT upon Subscription Completion.
The adjustment reflects the ALT Distribution upon Subscription Completion.
The adjustment reflects the capitalisation of part of the NWD Shareholder’s Loan pursuant to the S&P Agreement such that the Aggregate Liabilities of the NWPCS Group would not exceed HK$1,250 million upon Completion. The amount of the capitalisation shown above is for illustrative purpose only. The actual amount of the capitalisation will depend on the Aggregate Liabilities upon Completion.
151 -

APPENDIX III PROFORMA FINANCIAL INFORMATION ON THE ENLARGED ALT GROUP

Under Generally Accepted Accounting Principles in Hong Kong, the Transactions will be accounted for as a reverse acquisition since the issuance of the Subscription Shares will result in NWD becoming the controlling ALT Shareholder. For accounting purpose, NWPCS was regarded as the acquirer while the ALT Group was deemed to have been acquired by NWPCS as the acquiree. The unaudited proforma consolidated statement of assets and liabilities of the Enlarged ALT Group is prepared as a continuation of the accounts of the NWPCS Group. The assets and liabilities of the NWPCS Group will be recognised and measured in the consolidated balance sheet of the Enlarged ALT Group at their carrying value on the books of the NWPCS Group before the Subscription Completion.

The NWPCS Group will apply the purchase method to account for the acquisition of the ALT Group and NWPCS will be regarded as the continuing reporting entity in the consolidated financial statements of the Enlarged ALT Group. In applying the purchase method, the identifiable assets and liabilities of the ALT Group will be recorded on the balance sheet of the Enlarged ALT Group at their fair values at the date of Completion, and all the capital and reserves of the ALT Group upon Completion will be eliminated as the pre-acquisition reserves of the Enlarged ALT Group. Any goodwill or negative goodwill arising on the Transactions will be determined as the excess or deficit of the purchase consideration deemed to be incurred by the NWPCS Group over the NWPCS Group’s interest in the net fair value of the identifiable assets and liabilities of the ALT Group at the date of Completion. The purchase consideration deemed to be incurred by the NWPCS Group is determined by the total fair value of all the issued shares of ALT at the date of Completion.

For the purpose of calculating the goodwill arising from the Transactions and preparing the unaudited proforma consolidated statement of assets and liabilities of the Enlarged ALT Group after Completion, the total fair value of all the issued Existing ALT Shares is estimated with reference to the weighted average market price per Existing ALT Share from 2 April 2004 (the next working day after the Announcement) to 25 May 2004 (being the latest practicable date for the purpose of preparing the proforma financial information) (the “Estimated Price”). However, in applying the total fair value of all the issued shares of ALT in the calculation of the goodwill at Completion, the market price of ALT shares as at the date of Completion will be used, which may be substantially different from the Estimated Price. Moreover, the fair value of the assets and liabilities of the ALT Group at the date of Completion may also be substantially different from their adjusted book value used in the preparation of the unaudited proforma statement of assets and liabilities above. Accordingly, the actual goodwill arising from the Transactions of the Enlarged ALT Group may be different from that shown above.

The proforma consolidation adjustments reflect (i) the elimination of the share capital and reserves due to the reverse acquisition; (ii) a fair value adjustment on investment securities held by the ALT Group with reference to market value of the investment securities as at 25 May 2004 (being the latest practicable date for the purpose of preparing the proforma financial information); and (iii) goodwill arising from the acquisition of the ALT Group (see Note 4 above).
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APPENDIX III PROFORMA FINANCIAL INFORMATION ON THE ENLARGED ALT GROUP

2. UNAUDITED PROFORMA CONSOLIDATED PROFIT AND LOSS ACCOUNT OF THE ENLARGED ALT GROUP

The following table is an illustrative and unaudited proforma consolidated profit and loss account of the Enlarged ALT Group for the year ended 31 December 2003 which has been prepared on the basis set out below for the purpose of illustration as if Completion had taken place on 1 January 2003.

The unaudited proforma consolidated profit and loss account is based on the audited consolidated profit and loss account of the ALT Group for the year ended 31 December 2003 as extracted from ALT’s annual report for the year ended 31 December 2003, and the audited consolidated profit and loss accounts of the NWPCS Group for the year ended 30 June 2003 and the six months ended 31 December 2002 and 31 December 2003 as extracted from the accountants’ report on the NWPCS Group as set out in Appendix I to this circular.

The unaudited proforma consolidated profit and loss account is prepared to provide the unaudited proforma financial information on the Enlarged ALT Group as a result of Completion. As it has been prepared for illustrative purpose only and because of its nature, it may not give a true picture of the results of the Enlarged ALT Group for any future financial periods.

The
NWPCS
Group for the
year ended 31
December
2003
HK$’000
Turnover
1,668,422
Cost of sales
(713,728)
Gross profit
954,694
Other revenue
180
Other operating income
–
Selling and distribution costs
(109,180)
Administrative expenses
(260,311)
Other operating expenses
(363,925)
Impairment of goodwill
–
Operating profit/(loss)
221,458
Finance costs
(12,407)
Share of losses of:
– Jointly controlled entity
–
– Associated companies
–
Profit/(loss) before taxation
209,051
Taxation
(15,627)
Profit/(loss) attributable
to shareholders
193,424

Proforma
The
consolidated
ALT Group
Enlarged
for the year
ALT Group for
ended 31
Proforma
the year ended
December
consolidation
31 December
2003
adjustments
Note
2003
HK$’000
HK$’000
HK$’000
8,030
1,676,452
(7,477)
(721,205)
553
955,247
454
634
12,223
12,223
(4,290)
(113,470)
(24,260)
(1,074)
1
(285,645)
(8,304)
(372,229)
(94,523)
(94,523)
(118,147)
102,237
(1,171)
(9,000)
2
(22,578)
(262)
(262)
(33,844)
18,223
3
(15,621)
(153,424)
63,776
–
(15,627)
(153,424)
48,149

153 -

PROFORMA FINANCIAL INFORMATION ON THE ENLARGED ALT GROUP

APPENDIX III

Notes:

The adjustment represents the amortisation of estimated goodwill arising from the Transactions. For illustrative purpose, the estimated goodwill is of approximately HK$10,738,000 as set out in section 1 of this Appendix, and assuming a 10-year amortisation period on a straight-line basis.
The adjustment represents interest expenses on the Subscription Note which bears interest at the rate of 0.75% per annum.
The adjustment represents the reversal of share of loss for the year and amortisation charge of goodwill in relation to investment in NWCB Shares as if the ALT Distribution had taken place on 1 January 2003.

3. UNAUDITED PROFORMA CONSOLIDATED CASH FLOW STATEMENT OF THE ENLARGED ALT GROUP

The following table is an illustrative and unaudited proforma consolidated cash flow statement of the Enlarged ALT Group for the year ended 31 December 2003 which has been prepared on the basis set out below for the purpose of illustration as if Completion had taken place on 1 January 2003.

The unaudited proforma consolidated cash flow statement is based on the audited consolidated cash flow statement of the ALT Group for the year ended 31 December 2003 as extracted from ALT’s annual report for the year ended 31 December 2003, and the audited consolidated cash flow statement of the NWPCS Group for the year ended 30 June 2003 and the six months ended 31 December 2002 and 31 December 2003 as extracted from the accountants’ report on the NWPCS Group as set out in Appendix I to this circular.

The unaudited proforma consolidated cash flow statement is prepared to provide the unaudited proforma financial information on the Enlarged ALT Group as a result of Completion. As it has been prepared for illustrative purpose only and because of its nature, it may not give a true picture of the cash flows of the Enlarged ALT Group for any future periods.

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PROFORMA FINANCIAL INFORMATION ON THE ENLARGED ALT GROUP

APPENDIX III

					Proforma
					consolidated
	The		The		Enlarged
	NWPCS Group		ALT Group		ALT Group for
	for the		for the	Proforma	the year ended
	year ended 31		year ended 31	adjustment	31 December
	December 2003	December 2003		(note 1)	2003
	HK$’000		HK$’000	HK$’000	HK$’000
Operating activities
Net cash inflow/(outflow)
generated from operations	422,178		(21,091)		401,087
Interest received	–		556	(556)	–
Interest paid	(12,407)		(1,179)		(13,586)
Interest element on finance
lease rental payments	–		(12)		(12)
Net cash inflow/(outflow) from
operating activities	409,771		(21,726)		387,489
Investing activities
Purchase of fixed assets	(184,784)		(1,014)		(185,798)
Sales of fixed assets	61		401		462
Interest received	180		–	556	736
Purchase of trading securities	–		(24,940)		(24,940)
Proceeds from disposal
of trading securities	–		7,792		7,792
Repayment of exchangeable notes	–		28,000		28,000
Net cash (outflow)/inflow from
investing activities	(184,543)		10,239		(173,748)
Net cash inflow/(outflow)
before financing	225,228		(11,487)		213,741
Financing activities
New loan payable	–		–		–
Repayment of amounts borrowed	(239,546)		–		(239,546)
Capital element of finance
lease rental payments	–		(309)		(309)
Net cash outflow from financing	(239,546)		(309)		(239,855)
Net decrease in cash
and cash equivalents	(14,318)		(11,796)		(26,114)
Cash and cash equivalents
at the beginning of the year	76,961		37,668		114,629
Cash and cash equivalents
at the end of the year	62,643		25,872		88,515

Note:

The adjustment represents a reclassification of the amount of interest received by the ALT Group from operating activities to investing activities for consistency with the presentation of the NWPCS Group.
155 -

APPENDIX III PROFORMA FINANCIAL INFORMATION ON THE ENLARGED ALT GROUP

4. UNAUDITED PROFORMA STATEMENT OF ADJUSTED CONSOLIDATED NET TANGIBLE ASSETS/(LIABILITIES) OF THE ENLARGED ALT GROUP BEFORE AND AFTER COMPLETION

Set out below is an unaudited proforma statement of adjusted consolidated net tangible assets of the ALT Group before Completion based on the audited consolidated net assets of the ALT Group as at 31 December 2003 as set out in Appendix II to this circular and an unaudited proforma statement of adjusted consolidated net tangible assets/(liabilities) of the Enlarged ALT Group after Completion based on the unaudited proforma consolidated statement of assets and liabilities of the Enlarged ALT Group as set out in section 1 of this Appendix:

Unaudited proforma adjusted consolidated Audited Less: net tangible assets consolidated Unamortised of the ALT Group as at net assets goodwill Unaudited 31 December 2003 of the on acquisition consolidated net attributable to each ALT Group of NWCB tangible assets of Consolidated ALT Share as at 31 Shares as at 31 the ALT Group as at before Completion and December 2003 December 2003 31 December 2003 ALT Distribution (Note 1) (Note 1 & 2) HK$’000 HK$’000 HK$’000 HK$ 108,231 (10,781) 97,450 2.60 Unaudited proforma adjusted Unaudited consolidated Unaudited proforma net tangible proforma consolidated liabilities consolidated Less: net tangible attributable net liabilities Estimated liabilities to each of the goodwill of the Consolidated Enlarged ALT arising Enlarged ALT ALT Group after from the Group after Share after Completion Transactions Completion Completion (Note 3) (Note 4) HK$’000 HK$’000 HK$’000 HK$ (1,066,959) (10,738) (1,077,697) (13.61)

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PROFORMA FINANCIAL INFORMATION ON THE ENLARGED ALT GROUP

APPENDIX III

Notes:

The unaudited consolidated net tangible assets of the ALT Group as at 31 December 2003 shown above included the net carrying value of NWCB Shares of approximately HK$64,899,000. The unaudited proforma adjusted consolidated net tangible assets of the ALT Group as at 31 December 2003 after the ALT Distribution but before Completion is approximately HK$32,551,000. The unaudited proforma adjusted consolidated net tangible assets of the ALT Group as at 31 December 2003 after the ALT Distribution but before Completion attributable to each Consolidated ALT Share is HK$0.87.
The number of Consolidated ALT Shares used for the calculation of this figure is 37,515,557 existing Consolidated ALT Shares.
Details of estimated goodwill arising from the Transactions are set out in note 4 of section 1 in this Appendix.
The number of Consolidated ALT Shares used for the calculation of this figure comprises the existing Consolidated ALT Shares and the Subscription Shares.
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APPENDIX III PROFORMA FINANCIAL INFORMATION ON THE ENLARGED ALT GROUP

5. LETTERS FROM REPORTING ACCOUNTANTS

(a) Letter on unaudited proforma consolidated statement of assets and liabilities, consolidated profit and loss account and consolidated cash flow statement of the Enlarged ALT Group

Set out below is the letter from PricewaterhouseCoopers, the reporting accountants of ALT, in respect of the unaudited proforma consolidated statement of assets and liabilities, consolidated profit and loss account and consolidated cash flow statement of the Enlarged ALT Group after Completion as set out in this Appendix.

PricewaterhouseCoopers 22nd Floor Prince’s Building Central Hong Kong Telephone (852) 2289 8888 Facsimile (852) 2810 9888

The Directors

Asia Logistics Technologies Limited

2 June 2004

Dear Sirs

We report on the unaudited proforma financial information, which are consolidated statement of assets and liabilities, consolidated profit and loss account and consolidated cash flow statement of Asia Logistics Technologies Limited (“ALT”), New World PCS Holdings Limited (“NWPCS”) and their subsidiaries (hereinafter collectively referred to as the “Enlarged ALT Group”) set out on pages 150 to 155 in Appendix III of ALT’s circular dated 2 June 2004 (the “Circular”) in connection with the proposed acquisition of the entire interest in NWPCS by ALT pursuant to the sale and purchase agreement dated 29 March 2004 between New World Telephone Holdings Limited and ALT, and the proposed issue of new shares and a convertible note to a wholly-owned subsidiary of New World Development Company Limited by ALT under the subscription agreement dated 29 March 2004 (collectively the “Transactions”). The unaudited proforma financial information has been prepared by the directors of ALT, for illustrative purposes only, to provide information about how the Transactions might have affected the relevant financial information of the Enlarged ALT Group as at 31 December 2003 and for the year then ended.

RESPONSIBILITIES

It is the responsibility of the directors of ALT to prepare the unaudited proforma financial information in accordance with paragraph 4.29 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Listing Rules”).

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APPENDIX III PROFORMA FINANCIAL INFORMATION ON THE ENLARGED ALT GROUP

It is our responsibility to form an opinion, as required by paragraph 4.29 of the Listing Rules, on the unaudited proforma financial information and to report our opinion to you. We do not accept any responsibility for any reports previously given by us on any financial information used in the compilation of the unaudited proforma financial information beyond that owed to those to whom those reports were addressed by us at the dates of their issue.

BASIS OF OPINION

We conducted our work with reference to the Statements of Investment Circular Reporting Standards and Bulletin 1998/8 “Reporting on proforma financial information pursuant to the Listing Rules” issued by the Auditing Practices Board in the United Kingdom, where applicable. Our work, which involved no independent examination of any of the underlying financial information, consisted primarily of comparing the unadjusted financial information with the source documents, considering the evidence supporting the adjustments and discussing the unaudited proforma financial information with the directors of ALT.

Our work does not constitute an audit or review in accordance with Statements of Auditing Standards issued by the Hong Kong Society of Accountants, and accordingly, we do not express any such assurance on the unaudited proforma financial information.

The unaudited proforma financial information has been prepared on the bases set out on pages 150 to 155 of the Circular for illustrative purpose only and, because of its nature, it may not be indicative of:

the financial position of the Enlarged ALT Group at any future date; or
the results and cash flows of the Enlarged ALT Group for any future periods.

OPINION

In our opinion:

a) the unaudited proforma financial information has been properly compiled by the directors of ALT on the basis stated;
b) such basis is consistent with the accounting policies of NWPCS; and
c) the adjustments are appropriate for the purposes of the unaudited proforma financial information as disclosed pursuant to paragraph 4.29 of the Listing Rules.

Yours faithfully

PricewaterhouseCoopers

Certified Public Accountants

Hong Kong

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APPENDIX III PROFORMA FINANCIAL INFORMATION ON THE ENLARGED ALT GROUP

(b) Letter on unaudited proforma statement of adjusted consolidated net tangible assets/(liabilities) of the Enlarged ALT Group before and after Completion.

Set out below is the letter from PricewaterhouseCoopers, the reporting accountants of ALT, in respect of the unaudited proforma statement of adjusted consolidated net tangible assets/ (liabilities) of the Enlarged ALT Group before and after Completion as set out in this Appendix.

PricewaterhouseCoopers 22nd Floor Prince’s Building Central Hong Kong Telephone (852) 2289 8888 Facsimile (852) 2810 9888

The Directors

Asia Logistics Technologies Limited

2 June 2004

Dear Sirs

We report on the unaudited proforma financial information of Asia Logistics Technologies Limited (“ALT”), New World PCS Holdings Limited (“NWPCS”) and their subsidiaries (hereinafter collectively referred to as the “Enlarged ALT Group”) set out on pages 156 to 157 under the headings of unaudited proforma statement of adjusted consolidated net tangible assets/(liabilities) of the Enlarged ALT Group before and after Completion in Appendix III of ALT’s circular dated 2 June 2004 (the “Circular”) in connection with the proposed acquisition of the entire interest in NWPCS by ALT pursuant to the sale and purchase agreement dated 29 March 2004 between New World Telephone Holdings Limited and ALT, and the proposed issue of new shares and a convertible note to a wholly-owned subsidiary of New World Development Company Limited by ALT under the subscription agreement dated 29 March 2004 (collectively the “Transactions”). The unaudited proforma financial information has been prepared by the directors of ALT, for illustrative purposes only, to provide information about how the Transactions might have affected the relevant financial information of the Enlarged ALT Group as at 31 December 2003.

RESPONSIBILITIES

It is the responsibility of the directors of ALT to prepare the unaudited proforma financial information in accordance with paragraph 13 of Appendix 1B and paragraph 4.29 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Listing Rules”).

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APPENDIX III PROFORMA FINANCIAL INFORMATION ON THE ENLARGED ALT GROUP

BASIS OF OPINION

The unaudited proforma financial information has been prepared on the bases set out on pages 156 to 157 of the Circular for illustrative purpose only and, because of its nature, it may not be indicative of the financial position of:

the Enlarged ALT Group had the Transactions completed at 31 December 2003; or
the Enlarged ALT Group at any future date.

OPINION

In our opinion:

a) the unaudited proforma financial information has been properly compiled by the directors of ALT on the basis stated;
b) such basis is consistent with the accounting policies of NWPCS; and
c) the adjustments are appropriate for the purposes of the unaudited proforma financial information as disclosed pursuant to paragraph 4.29 of the Listing Rules.

Yours faithfully

PricewaterhouseCoopers

Certified Public Accountants

Hong Kong

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APPENDIX III PROFORMA FINANCIAL INFORMATION ON THE ENLARGED ALT GROUP

6. INDEBTEDNESS

Borrowings and debt securities

At the close of business on 31 March 2004 (being the latest practical date for the purpose of this indebtedness statement prior to the printing of this circular), the Enlarged ALT Group had outstanding borrowings of approximately HK$2,260,631,000, comprising secured bank loan of approximately HK$440,000,000, unsecured amount due to NWTHL of approximately HK$1,791,592,000, unsecured amount due to NWD of approximately HK$73,000, the ALT Convertible Note with principal value of HK$28,286,000, unsecured amount due to an associated company of approximately HK$304,000 and unsecured amount due to a related company of approximately HK$376,000.

Included in the amount due to NWTHL is a promissory note of HK$858,000,000, which is unsecured, interest free and repayable on demand.

On the business day prior to Completion, if the aggregate total of the amount due to NWTHL, NWD and the secured bank loan exceeds HK$1,250 million, part of the amount due to NWTHL and NWD will be capitalised so that this total upon the Completion does not exceed that amount. After Completion, the uncapitalised portion of the amount due to NWTHL and NWD will be repayable on demand after 18 months from the date of the S&P Agreement.

The ALT Convertible Note was issued by ALT to NWCBN in November 2001, and is convertible at an initial conversion price of HK$0.10 per Existing ALT Share (subject to adjustment) at any time from and including the first anniversary of the date of the issue of the ALT Convertible Note until the maturity date ending on 29 October 2004, being the last business day preceding the third anniversary of the date of the issue of the ALT Convertible Note. The ALT Convertible Note bears interest at 3% per annum. NWCBN has indicated its intention in writing to ALT that the maturity date of the ALT Convertible Note would be extended to 1 November 2007.

Securities and guarantees

The secured bank loan as shown above were secured by certain charged bank accounts of approximately HK$64 million held by the Enlarged ALT Group, the pledge of the entire issued share capital of New World PCS Limited, a wholly-owned subsidiary of the Enlarged ALT Group, and a corporate guarantee from NWD.

Upon Completion, the existing guarantee by NWD on the Enlarged ALT Group’s bank loan will be released. If required by the bank of the repayment of the loan upon such a release of existing guarantee, the bank loan will be repaid by a fresh loan from another subsidiary of NWD to the Enlarged ALT Group. This new loan will be repaid in accordance with the terms and conditions as similar to the existing bank loan.

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Contingent liabilities

At the close of business on 31 March 2004, the Enlarged ALT Group had no material contingent liabilities.

Disclaimer

Saved as referred to as above and apart from intra-group liabilities and normal trade payables, the Enlarged ALT Group did not have, as at the close of business on 31 March 2004, any mortgages, charges, debentures or other loan capital or bank overdrafts, loans or other similar indebtedness or hire purchase commitments or any guarantees or any other material contingent liabilities.

The ALT Board and the NWD Board have confirmed that there has been no material change in the indebtedness and contingent liabilities of the Enlarged ALT Group since 31 March 2004 and up to the Latest Practicable Date.

7. WORKING CAPITAL

The ALT Board is of the opinion that, after taking into account the working capital requirements and the expected cash flows of the ALT Group, and the opinion of the NWPCS Board on the working capital requirements and the expected cash flows of the NWPCS Group, the Enlarged ALT Group will have sufficient working capital for its requirements for the period from 1 April 2004 to 30 June 2005 in the absence of unforeseen circumstances.

8. NO MATERIAL CHANGE

The ALT Board confirmed that there have not been any material changes in the financial or trading position or prospects of the ALT Group since 31 December 2003.

9. FINANCIAL AND TRADING PROSPECTS

In view of the recovery of different economic sectors after the fall-out of Severe Acute Respiratory Syndrome in the region and the favourable trade policy towards Hong Kong through Closer Economic Partnership Arrangement, the ALT Directors are confident that the ALT Group shall be able to benefit from any new opportunities arising in the market.

Logistics consultancy and management solutions

The ALT Group has re-emphasized its focus on the high value-added and high margin sectors of logistics solution services concentrating on logistics consultancy, system planning and implementation services for its customers.

Following the completion of the second phase of the project of Tianjin Zhongxin Pharmaceutical Group Corporation Limited (天津市中新藥業集團股份有限公司）(“Zhongxin Pharmaceutical”) and first phase of the project of EXEL Singapore Pte. Ltd. (“EXEL”), the ALT Group has commenced works on the next phase of both projects:

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The third phase of the Zhongxin Pharmaceutical project covers the development and implementation of Enterprise Resources Planning (ERP) systems for their subsidiaries, and logistics management and distribution systems for their supermarkets and chain stores. These systems will be seamlessly integrated to the ERP system of Zhongxin Pharmaceutical.
In the second phase of the EXEL project, the ALT Group shall modify its logistics solution “Customs Declaration Express” and custom-build an offshore manufacturing logistics solution to help the client to integrate effectively its processes all the way from the procurement of raw materials to customs declarations and product clearance.

The competitive advantages of the ALT Group include its leading logistics technologies such as real-time GPS system, warehouse management system and other supply chain management and e-commerce technologies; and its research capability. The ALT Group’s unmatched competitive advantages and its clear business strategy shall enhance its results and achieve a long term growth in the logistics consultancy and solutions business.

Telecommunications

ALT has entered into the S&P Agreement to acquire the entire issued share capital of NWPCS at a consideration of HK$1,250 million on 29 March 2004 (the “Acquisition”). Details of the proposed Acquisition have been set out in the “Letter from the ALT Board” of this circular.

With a subscriber base of 1.2 million as at December 2003, the NWPCS Group is principally engaged in offering a host of quality mobile services tailored to customer needs via its existing GSM 2.5G network. Since its launch in August 1997, the NWPCS Group has become one of Hong Kong’s fastest growing mobile operators through the provision of a superb mobile network, the introduction of value-added data services, and the marketing of innovative multi-media mobile solutions. The operator has established a strong foothold in the marketplace with a total of 35 retail outlets strategically located in high-traffic areas. Its presence has been accentuated by entering into dealership agreements with various retail chains, which subsequently extended its retail network to over 1,300 sales points throughout Hong Kong.

As a dedicated service provider, the NWPCS Group has made a number of achievements in boosting the usage of mobile data services in Hong Kong throughout the past few years. In 2003, the NWPCS Group introduced TrafficWatcher, the first video-streaming service in town that allows mobile phone users to obtain live broadcast of real-time traffic information. The operator also regrouped its multi-media value-added services under the brand-new service platform M Kee in November 2003, giving customers easy access to their desired service with an icon-based color WAP interface.

The fast-growing operator has also made significant achievements in marketing its brand equity and product innovations. With its relentless marketing effort, the operator has been widely recognized as a solid, vibrant and innovative brand. The most renowned marketing initiative is the brand campaign in 2001 which brought to the NWPCS Group over 18 local and international awards in Hong Kong, Thailand, United Kingdom, the United States and Shanghai.

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NWPCS believes that reliable and innovative data solutions in the next generation of mobile services will bring immense potential for its subscribers. In the future, the NWPCS Group will continue to dedicate research and development of advanced and innovative multi-media mobile solutions in order to fulfill and exceed the expectation of its subscribers.

The ALT Directors are optimistic about the prospects of the NWPCS Group and consider that the Acquisition will provide a solid ground for ALT to invest in mobile telecommunications projects. The ALT Directors also believe that the Acquisition will enlarge the ALT Group’s business scope and broaden its revenue stream. The ALT Directors have proposed upon completion of the Acquisition, to change ALT’s name to “New World Mobile Holdings Limited” and adopt a Chinese name of 「新世界移動控股有限公司」. The change of name shall reflect the business focus of the ALT Group after S&P Completion.

For the financing of the Acquisition, ALT has entered into the Subscription Agreement with PPG on 29 March 2004. Upon Subscription Completion, the NWD Group shall hold majority shareholding interest in ALT. ALT is not only able to raise enough financing for the Acquisition but also broaden its shareholder base. The ALT Group shall benefit from the synergies created from the extensive business exposures of the NWD Group in the sectors of property development, provision of various services including transport and facilities, infrastructure, ports and telecommunications.

Strategic investments

Considering the business focus of the ALT Group in logistics solutions services and mobile telecommunications services, ALT is proposing the ALT Distribution which will (i) provide investors, research analysts and rating agencies with greater clarity on the business and financial position of ALT through segregation of NWCB’s information technology business from its main lines of business; and (ii) offer an opportunity for the ALT Shareholders to realise their investments in the NWCB Shares through direct holding of the NWCB Shares.

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APPENDIX IV

1. RESPONSIBILITY STATEMENTS

This circular includes particulars given in compliance with the Listing Rules and the Takeovers Code for the purpose of giving information with regard to ALT. The ALT Directors collectively and individually accept full responsibility for the accuracy of the information (other than information relating to the NWD Group) contained in this circular and confirm, having made all reasonable enquiries, that to the best of their knowledge and belief, opinions (other than those relating to the NWD Group) expressed in this circular have been arrived at after due and careful consideration and there are no other facts not contained in this circular, the omission of which would make any statement (other than statements relating to the NWD Group) herein misleading.

The directors of NWD jointly and severally accept full responsibility for the accuracy of the information relating to the NWD Group contained in this circular and confirm, having made all reasonable enquiries, that to the best of their knowledge and belief, opinions relating to the NWD Group expressed in this circular have been arrived at after due and careful consideration and there are no other facts relating to the NWD Group not contained in this circular, the omission of which would make any statement relating to the NWD Group therein misleading.

2. DISCLOSURE OF INTERESTS

(a) Interests in ALT and associated corporations

(i) ALT Directors’ interests and short positions in the securities of ALT and its associated corporations

As at the Latest Practicable Date, the interests and short positions of the ALT Directors in the equity or debt securities of ALT and any associated corporations (within the meaning of Part XV of the SFO) which were required to be notified to ALT and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests or short positions which they were deemed or taken to have under such provisions of the SFO) or which were required, pursuant to Section 352 of the SFO, to be entered in the register referred to therein, or which were required pursuant to the Model Code for Securities Transactions by Directors of Listed Companies to be notified to ALT and the Stock Exchange were as follows:

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(aa) Long positions in Existing ALT Shares

					Approximate
					% to total
	Number of Existing ALT Shares			held	issued
Name of	Personal	Family	Corporate		share
ALT Director	interest	interest	interest	Total	capital
Mr. Simon Lo	–	–	1,129,758,000	1,129,758,000	30.11%
			(Note a)
Mr. Chan	–	33,300,000	225,400,000	258,700,000	6.90%
		(Note b)	(Note c)

Notes:

(a) These shares are held by Golden Infinity Co., Ltd. which is wholly owned by Mr. Simon Lo. Accordingly, Mr. Simon Lo is deemed to be interested in 1,129,758,000 shares held by Golden Infinity Co., Ltd. under the SFO.
(b) These shares are held by Full Smart Development Limited, which is wholly owned by Ms. Fong Wai Na, the spouse of Mr. Chan. Accordingly, Mr. Chan is deemed to be interested in 33,300,000 shares held by Full Smart Development Limited under the SFO.
(c) These shares are held by Silver Valley Limited which is wholly owned by Mr. Chan. Accordingly, Mr. Chan is deemed to be interested in 225,400,000 shares held by Silver Valley Limited under the SFO.

Long positions in underlying shares of ALT

Pursuant to the share option scheme adopted by ALT on 11 September 1998, certain ALT Directors were granted ALT Share Options to subscribe for the Existing ALT Shares.

As at the Latest Practicable Date, the interests of ALT Directors in the underlying shares of ALT were as follows:

		Approximate %
Name of ALT	Number of	to total issued
Director	underlying shares	share capital
Mr. Simon Lo	20,000,000	0.53%
Mr. Chan Wai Keung, Ringo	10,000,000	0.27%
Mr. Yu Ansheng, Ben	10,000,000	0.27%

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(bb) Interests or short positions in the shares of associated corporations

As at the Latest Practicable Date, none of the ALT Directors had interests or short positions in any equity or debt securities of any associated corporations (within the meaning of Part XV of the SFO) of ALT which were required to be notified to ALT and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests or short positions which they were taken or deemed to have under such provisions of the SFO) or which were required, pursuant to Section 352 of the SFO, to be entered in the register referred to therein or which were required pursuant to the Model Code for Securities Transactions by Directors of Listed Companies to be notified to ALT and the Stock Exchange.

(ii) ALT Directors’ rights to acquire Existing ALT Shares

As at the Latest Practicable Date, there were outstanding ALT Share Options granted to the ALT Directors to subscribe for 40,000,000 Existing ALT Shares.

(iii) Shareholders’ interests and short positions in the shares and underlying shares of ALT

As at the Latest Practicable Date, so far as is known to, or can be ascertained after reasonable enquiry by, the ALT Directors or chief executive of ALT, the following persons had an interest or short position in the shares and underlying shares of ALT which would fall to be disclosed to ALT under the provisions of Divisions 2 and 3 of Part XV of the SFO, or were expected, directly or indirectly, to be interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of ALT or any other member of the ALT Group or had any options in respect of such capital:

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Long positions in the Existing ALT Shares

		Number of	Approximate %
		Existing ALT	to total issued
Name	Capacity	Shares	share capital
Golden Infinity Co., Ltd.	Beneficial owner	1,129,758,000	30.11%
		(Note a)
Ms. Ku Ming Mei, Rouisa	Interest of spouse	1,129,758,000	30.11%
		(Note b)
Silver Valley Limited	Beneficial owner	225,400,000	6.01%
		(Note c)
Ms. Fong Wai Na	Interest of a controlled	258,700,000	6.90%
	corporation and	(Note d)
	interest of spouse
NWCBN	Beneficial owner	210,000,000	5.60%
PPG	Beneficial owner	4,166,666,667	111.07%
		(Note e)
NWTHL	Interest of a controlled	4,376,666,667	116.66%
	corporation	(Note f)
NWD	Interest of a controlled	4,376,666,667	116.66%
	corporation	(Note f)
Chow Tai Fook	Interest of a controlled	4,376,666,667	116.66%
Enterprises Limited	corporation	(Note f)

Notes:

(a) Golden Infinity Co., Ltd. is wholly owned by Mr. Simon Lo, an ALT Director.
(b) These shares represent the interests held by Golden Infinity Co., Ltd.. Ms. Ku Ming Mei, Rouisa is the spouse of Mr. Simon Lo, an ALT Director and accordingly, she is deemed to be interested in 1,129,758,000 shares held by Golden Infinity Co., Ltd. under the SFO.
(c) Silver Valley Limited is wholly owned by Mr. Chan, an ALT Director.
(d) These shares represent the aggregate interests in 225,400,000 shares held by Silver Valley Limited and 33,300,000 shares held by Full Smart Development Limited. Ms. Fong Wai Na is the spouse of Mr. Chan and the beneficial owner of the entire issued share capital of Full Smart Development Limited. Accordingly, Ms. Fong Wai Na is deemed to be interested in 225,400,000 shares held by Silver Valley Limited and 33,300,000 shares held by Full Smart Development Limited under the SFO.
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(e) These shares represent the Subscription Shares to be issued pursuant to the Subscription Agreement.
(f) Each of NWCBN and PPG is a wholly-owned subsidiary of NWTHL, which is in turn a wholly-owned subsidiary of NWD. Chow Tai Fook Enterprises Limited and its subsidiaries owned a total of 35.26% equity interests in NWD. Accordingly, NWTHL, NWD and Chow Tai Fook Enterprises Limited are deemed to be interested in the shares held/to be held by NWCBN and PPG under the SFO.

Long positions in the underlying shares of ALT

		Category of	Number of
Name	Capacity	equity derivatives	underlying shares
Ms. Ku Ming Mei,	Interest of spouse	Unlisted, physically	20,000,000
Rouisa		settled	(Note a)
NWCBN	Beneficial owner	Unlisted, physically	282,860,000
		settled
PPG	Beneficial owner	Unlisted, physically	100,000,000,000
		settled	(Note b)
NWTHL	Interest of a	Unlisted, physically	100,282,860,000
	controlled	settled	(Note c)
	corporation
NWD	Interest of a	Unlisted, physically	100,282,860,000
	controlled	settled	(Note c)
	corporation
Chow Tai Fook	Interest of a	Unlisted, physically	100,282,860,000
Enterprises	controlled	settled	(Note c)
Limited	corporation

Notes:

(a) These underlying shares represent the interest of Mr. Simon Lo, who is the spouse of Ms. Ku Ming Mei, Rouisa, in the ALT Share Options.
(b) These underlying shares represent the Conversion Shares which may be issued upon conversion of the Subscription Note to be issued pursuant to the Subscription Agreement.
(c) Each of NWCBN and PPG is a wholly-owned subsidiary of NWTHL, which is in turn a wholly-owned subsidiary of NWD. Chow Tai Fook Enterprises Limited and its subsidiaries owned a total of 35.26% equity interests in NWD. Accordingly, NWTHL, NWD and Chow Tai Fook Enterprises Limited are deemed to be interested in the underlying shares held/to be held by NWCBN and PPG under the SFO.
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(iv) As at the Latest Practicable Date, none of PPG, its directors and any of the parties acting in concert with PPG held any Existing ALT Shares (so far as PPG is aware) save for (aa) 210,000,000 Existing ALT Shares held by the NWD Group; and (bb) 1,129,758,000 Existing ALT Shares held by a company wholly owned by Mr. Simon Lo.
(v) Others

As at the Latest Practicable Date,

(aa) none of the subsidiaries of ALT, any pension funds of ALT or any of its subsidiaries, Tai Fook Capital, Commerzbank, Access Capital and any other advisers to ALT as specified in class (2) of the definition of “associate” under the Takeovers Code had any interest in any shares, convertible securities, warrants, options or derivatives which carry voting rights of ALT;
(bb) no person had any arrangement of the kind referred to in Note 8 to Rule 22 of the Takeovers Code with ALT or any person who is an associate of ALT by virtue of classes (1), (2), (3) and (4) of the definition of “associate” under the Takeovers Code, PPG or with any party acting in concert with PPG;
(cc) no shareholding in ALT was managed on a discretionary basis by fund managers connected with ALT;
(dd) none of the ALT Directors intended to accept or reject any offers for their beneficial interests in the securities of ALT; and
(ee) no persons have irrevocably committed themselves to accept or reject any offers for the securities for ALT.

(b) Dealings in Existing ALT Shares

(i) ALT Directors

Save for (i) the allotment and issue of 110,000,000 Existing ALT Shares to NWCBN upon conversion of part of the ALT Convertible Note on 5 December 2003; and (ii) the disposal of 250,000, 1,500,000 and 5,850,000 Existing ALT Shares on 15 October 2003, 17 and 18 February 2004 respectively by a company wholly owned by Ms. Fong Wai Na, the spouse of Mr. Chan, an ALT Director, none of the ALT Directors or parties acting in concert with any of them had dealt in any shares, convertible securities, warrants, options or derivatives which carry voting rights of ALT during the period from 2 October 2003 (being the date six months prior to the date of the Announcement) up to and including the Latest Practicable Date (the “Relevant Period”).

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(ii) PPG and its directors and any party acting in concert with it

During the Relevant Period, save for the allotment and issue of 110,000,000 Existing ALT Shares to NWCBN upon conversion of part of the ALT Convertible Note on 5 December 2003 and other than pursuant to the Transactions, none of PPG, its directors and (so far as PPG is aware) any party acting in concert with it had dealt for value in any Existing ALT Shares any party acting in concert with it.

(iii) Miscellaneous

During the Relevant Period, none of the subsidiaries of ALT, any pension funds of ALT or of any of its subsidiaries, PricewaterhouseCoopers, Tai Fook Capital, Commerzbank and Access Capital had dealt for value in any Existing ALT Shares.

(c) Interests and dealings in the securities issued by PPG

None of the ALT Directors or ALT had any interest in any securities issued by PPG nor had any of them dealt for value in any such securities during the Relevant Period.

(d) Miscellaneous disclosures of interests

(i) As at the Latest Practicable Date, there was no agreement, arrangement or understanding (including any compensation arrangement) exists between PPG or any party acting with concert with it and any of the ALT Directors, recent ALT Directors, ALT Shareholders or recent ALT Shareholders having any connection with or dependence upon the outcome of the Whitewash Waiver.
(ii) As at the Latest Practicable Date, there was no agreement or arrangement between any ALT Director and any other person which is conditional on or dependent upon the outcome of the Whitewash Waiver or otherwise connected therewith.
(iii) As at the Latest Practicable Date, ALT had not been informed and was not aware of any person who has committed to vote for or against the Whitewash Waiver.
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3. MARKET PRICES

(a) The Existing ALT Shares are traded on the Stock Exchange. The table below shows the closing prices of the Existing ALT Shares on the Stock Exchange on (i) the last trading day of each of the six full calendar months immediately preceding 1 April 2004, the date of the Announcement; (ii) 25 March 2004, being the last trading day immediately prior to the date of the Announcement; and (iii) the Latest Practicable Date:

Date	Closing Price
	HK$
30 September 2003	0.053
31 October 2003	0.052
28 November 2003	0.045
31 December 2003	0.042
30 January 2004	0.045
27 February 2004	0.051
25 March 2004	0.044
Latest Practicable Date	0.022

(b) The highest and lowest closing prices for the Existing ALT Shares recorded on the Stock Exchange during the period between 2 October 2003 (being the date six months prior to the date of the Announcement) and the Latest Practicable Date were HK$0.070 on 17 February 2004 and HK$0.014 on 17 May 2004 respectively.

4. MATERIAL CONTRACTS

The following contracts (not being contracts entered into in the ordinary course of business carried on or intended to be carried on by the ALT Group) have been entered into by the ALT Group within the two years prior to 1 April 2004 (the date of the Announcement), and between 1 April 2004 up to and including the Latest Practicable Date and are or may be material:

(a) a deed of covenant dated 10 May 2002 made by Vision On-Line Limited (“Vision On-Line”, a wholly-owned subsidiary of ALT), Starling Technology Limited (“Starling”) and UF International Holdings Limited (“UF”) as the covenantors in favour of Lenovo Group Limited (“Legend”, formerly known as Legend Group Limited and Legend Holdings Limited) and acknowledged by Han International Consulting Company Limited (“Han”) in respect of the covenant to compensate Legend for any claims and liability arisen pursuant to a subscription agreement entered into between, inter alia, Vision On-Line, Legend, Starling, UF and Han dated 21 March 2002;
(b) a shareholders’ agreement dated 10 May 2002 entered into between, inter alia, Vision OnLine, Legend, Starling, UF and ALT in respect of the regulation of the shareholders’ rights and responsibilities towards Han and its subsidiaries;
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(c) a series of revolving loan agreements entered into between ALT as lender and Tai Fook Finance Company Limited (“TF Finance”) as borrower dated 30 April 2002, 31 May 2002, 28 June 2002, 3 July 2002, 2 August 2002 and 2 September 2002 pursuant to which ALT advanced a loan with initial principal amount of HK$40,507,596.50 to TF Finance;
(d) a sale and purchase agreement dated 5 September 2002 entered into between Southern Victory Developments Limited (“Southern Victory”) as vendor and ALT as purchaser pursuant to which Southern Victory agreed to sell and ALT agreed to purchase 45,702 shares of US$1.00 each, representing 45.702% of the issued share capital of Fusion Tech Holding Limited (“Fusion Tech”), at a consideration of HK$45,400,000.00, which was satisfied by the payment of HK$400,000.00 in cash and HK$45,000,000.00 by the allotment and issue of 300,000,000 Existing ALT Shares at a price of HK$0.15 each, and pursuant to the aforesaid sale and purchase agreement, a termination agreement dated 16 October 2002 in respect of the termination of the shareholders’ agreement relating to the operation of Fusion Tech and an escrow agreement dated 23 October 2002 in respect of the escrow arrangement for the consideration shares issued;
(e) a subscription agreement dated 19 September 2002 entered into between Fine Tune Company Limited (“Fine Tune”) as issuer, Mr. Ng Chun Ping, Brendan (“Mr. Ng”) as guarantor and Digital Spirit Limited (“Digital Spirit”), a wholly-owned subsidiary of ALT, as investor pursuant to which Fine Tune agreed to issue and Digital Spirit agreed to subscribe for exchangeable notes of HK$14,000,000.00 (“FT Notes”), exchangeable for 25% of the issued share capital (“FT Exchangeable Shares”) of Eastern Info Limited (“Eastern Info”), subject to the terms and conditions contained therein, and pursuant to the aforesaid subscription agreement, a share charge dated 24 September 2002 in respect of the FT Exchangeable Shares as the security of the FT Notes in favour of Digital Spirit, a note instrument dated 24 September 2002 in respect of the issue of the FT Notes and an assignment of debts dated 24 September 2002 in respect of the assignment of any debts owed by Eastern Info to Fine Tune to Digital Spirit;
(f) a subscription agreement dated 19 September 2002 entered into between Westwood Technology Company Limited (“Westwood”) as issuer, Mr. Ng as guarantor and Digital Spirit as investor pursuant to which Westwood agreed to issue and Digital Spirit agreed to subscribe for exchangeable notes of HK$14,000,000.00 (“WD Notes”), exchangeable for 25% of the issued share capital (“WD Exchangeable Shares”) of Eastern Info, subject to the terms and conditions contained therein, and pursuant to the aforesaid subscription agreement, a share charge dated 24 September 2002 in respect of the WD Exchangeable Shares as the security of the WD Notes in favour of Digital Spirit, a note instrument dated 24 September 2002 in respect of the issue of the WD Notes and an assignment of debts dated 24 September 2002 in respect of the assignment of any debts owed by Eastern Info to Westwood to Digital Spirit;
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(g) a loan agreement dated 23 September 2002 entered into between Linlock Limited as borrower, Rich Information Limited (“Rich Information”), a wholly-owned subsidiary of ALT, as lender and Mr. Su Ching Yun as guarantor pursuant to which Rich Information agreed to make available to Linlock Limited a loan facility of up to HK$10,000,000 subject to and upon the terms and conditions contained therein;
(h) a loan agreement dated 6 January 2003 entered into between Linlock Limited as borrower, Rich Information as lender and Mr. Su Ching Yun as guarantor pursuant to which Rich Information agreed to make available to Linlock Limited a loan facility of up to HK$10,000,000 subject to and upon the terms and conditions contained therein;
(i) a loan agreement dated 30 April 2003 entered into between First Rate Profits Limited as borrower and ALT as lender pursuant to which ALT agreed to make available to First Rate Profits Limited a loan facility of up to HK$10,000,000 subject to and upon the terms and conditions contained therein;
(j) a deed of release dated 25 August 2003 made by Digital Spirit in favour of Fine Tune and Mr. Ng pursuant to which Digital Spirit agreed, in consideration of the full repayment of the principal amount of the exchangeable notes of HK$14,000,000.00, to release and discharge the obligations and liabilities of Fine Tune and Mr. Ng under the subscription agreement, the note instrument, the debt assignment and the share charge as mentioned in (e) above;
(k) a deed of release dated 25 August 2003 made by Digital Spirit in favour of Westwood and Mr. Ng pursuant to which Digital Spirit agreed, in consideration of the full repayment of the principal amount of the exchangeable notes of HK$14,000,000.00, to release and discharge the obligations and liabilities of Westwood and Mr. Ng under the subscription agreement, the note instrument, the debt assignment and the share charge as mentioned in (f) above;
(l) the S&P Agreement; and
(m) the Subscription Agreement.

5. SERVICE CONTRACTS

None of the ALT Directors had as at the Latest Practicable Date or proposes to have a service agreement with any member of the ALT Group or associated companies of ALT in force which has or will have more than 12 months to run and there are no service contracts for ALT Directors which have been entered into for the replacement of a prior contract or amended, within six months before the date of the Announcement.

None of the directors or proposed directors of the Enlarged ALT Group had as at the Latest Practicable Date any existing or proposed service contracts with any member of the Enlarged ALT Group (excluding contracts expiring or determinable by the employer within one year without payment of compensation (other than statutory compensation)).

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6. ALT DIRECTORS’ INTEREST IN ASSETS AND CONTRACTS

None of the ALT Directors has any direct or indirect interest in any assets which have, since 31 December 2003, being the date of the latest published audited accounts of the ALT Group, been acquired or disposed of by or leased to, or are proposed to be acquired or disposed of by or leased to any member of the ALT Group.

None of the ALT Directors was materially interested in any contract which was subsisting as at the Latest Practicable Date and which was significant in relation to the business of the ALT Group taken as a whole.

7. MATERIAL LITIGATION

As at the Latest Practicable Date, no member of the ALT Group was engaged in any litigation or arbitration of material importance and there is no litigation or claims of material importance known to the ALT Directors to be pending or threatened by or against any member of the ALT Group.

8. QUALIFICATIONS OF EXPERTS

The following is the qualifications of the experts who have given opinions or advice which are contained in this circular:

Name	Qualification
PricewaterhouseCoopers	Certified Public Accountants
Commerzbank AG, Hong Kong Branch	A licensed bank under the Banking Ordinance
	(Chapter 155 of the Laws of Hong Kong)
Access Capital Limited	A deemed licensed corporation under the SFO

As at the Latest Practicable Date, none of PricewaterhouseCoopers, Commerzbank and Access Capital is beneficially interested in the share capital of any member of the ALT Group, nor has any right to subscribe or to nominate persons to subscribe for securities in any member of the ALT Group, nor did it have any interest, either direct or indirect, in any assets of the ALT Group which have been, since 31 December 2003 (being the date to which the latest published audited consolidated accounts of the ALT Group were made up), acquired or disposed of by or leased to, or are proposed to be acquired or disposed of by or leased to, any member of the ALT Group.

9. CONSENT

Each of PricewaterhouseCoopers, Commerzbank and Access Capital has given and has not withdrawn its written consent to the issue of this circular with the inclusion therein of its letter and/or references to its name, in the form and context in which it appears.

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GENERAL INFORMATION

APPENDIX IV

10. MISCELLANEOUS

(a) The secretary of ALT is Ms. Tsang Yuet Kwai, ACS, ACIS . The qualified accountant of ALT is Mr. Chui Kark Ming, AHKSA.
(b) The registered office of ALT is at P.O. Box 309 , Ugland House , South Church Street , George Town, Grand Cayman, Cayman Islands , British West Indies and its principal place of business in Hong Kong is at 21st Floor , Asia Orient Tower , Town Place, 33 Lockhart Road, Wanchai, Hong Kong.
(c) The controlling shareholder of PPG is NWD. The executive directors of NWD are Dato’ Dr. Cheng Yu-Tung (Chairman) , Dr. Cheng Kar-Shun, Henry (Managing Director) , Dr. Sin WaiKin, David and Mr. Liang Chong-Hou, David.
(d) Tai Fook Capital is the financial adviser to ALT and its registered office is at 25th Floor, New World Tower, 16-18 Queen’s Road Central, Hong Kong.
(e) Commerzbank is one of the joint independent financial advisers to the Independent Director and the Independent ALT Shareholders, and its registered office is at 21st Floor, The Hong Kong Club Building, 3A Chater Road, Central, Hong Kong.

Access Capital is one of the joint independent financial advisers to the Independent Director and the Independent ALT Shareholders, and its registered office is at Suite 606, 6th Floor, Bank of America Tower, 12 Harcourt Road, Central, Hong Kong.

(f) In the event of inconsistency, the English text of this circular and the form of proxy accompanying this circular shall prevail over the Chinese text.

11. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be available for inspection at the office of ALT at 21st Floor, Asia Orient Tower, Town Place, 33 Lockhart Road, Wanchai, Hong Kong during normal business hours on any Business Day until Friday, 25 June 2004:

(a) The memorandum and articles of association of ALT.
(b) The memorandum and articles of association of PPG.
(c) The accountants’ report of the NWPCS Group for each of the three years ended 30 June 2003 and the six months ended 31 December 2003, the text of which is set out in Appendix I to this circular.
(d) The annual reports of ALT for each of the three years ended 31 December 2003.
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GENERAL INFORMATION

APPENDIX IV

(e) The letters from PricewaterhouseCoopers, the text of which is set out on pages 158 to 161 of this circular.
(f) The letter from the Independent Director to the Independent ALT Shareholders, the holder of the ALT Convertible Note and the holders of the ALT Share Options, the text of which is set out on pages 50 to 51 of this circular.
(g) The letter from Commerzbank and Access Capital to the Independent Director and the Independent ALT Shareholders, the text of which is set out on pages 52 to 77 of this circular.
(h) The letters of consent as referred to in the section headed “Consent” of this Appendix.
(i) The material contracts as referred to in the section headed “Material contracts” of this Appendix.
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NOTICE OF EGM

ASIA LOGISTICS TECHNOLOGIES LIMITED 亞洲物流科技有限公司 *

(Incorporated in the Cayman Islands with limited liability)

NOTICE IS HEREBY GIVEN that an extraordinary general meeting (the “meeting”) of the shareholders of Asia Logistics Technologies Limited (the “Company”) will be held at 11:00 a.m. on Friday, 25 June 2004 at Room Elbrus, Pacific Place Conference Centre, Level 5, One Pacific Place, 88 Queensway, Hong Kong for the purpose of considering and, if thought fit, passing, with or without modifications, the following resolutions of the Company:

ORDINARY RESOLUTIONS

“ THAT:
- (a) subject to the fulfilment of the conditions in respect of the Subscription (as defined below) as set out in the Company’s circular dated 2 June 2004 (the “Circular”), a copy of which has been tabled at the meeting and marked “A” and signed for the purpose of identification by the Chairman of the meeting:
  - (i) the subscription (the “Subscription”) of (a) 4,166,666,667 new ordinary shares of HK$0.01 each in the Company (the “Subscription Shares”); and (b) a convertible note (the “Subscription Note”) with a face value of HK$1,200 million convertible into new ordinary shares of the Company (the “Conversion Shares”), by Power Palace Group Limited (“PPG”) pursuant to a subscription agreement (the “Subscription Agreement”) dated 29 March 2004 entered into between the Company and PPG, a copy of which has been produced and marked “B” and signed by the Chairman of the meeting for the purpose of identification, be and is hereby approved and the signing of the Subscription Agreement by Mr. Lo Lin Shing, Simon, a director of the Company, be and is hereby approved, confirmed and ratified;
  - (ii) the terms of the Subscription Note, a copy of which has been produced and marked “C” and signed by the Chairman of the meeting for the purpose of identification, be and is hereby approved; and
  - (iii) the issue and allotment of the Subscription Shares, the issue of the Subscription Note and the issue of any Conversion Shares which may fall to be issued upon the conversion of the Subscription Note be and are hereby approved and the directors of the Company be and are hereby authorised to issue the Subscription
For identification purposes only
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NOTICE OF EGM

Shares, the Subscription Note and any Conversion Shares which may fall to be issued upon the conversion of the Subscription Note and to sign or execute such other documents or agreements or deeds on behalf of the Company and to do such other things and to take all such actions as they consider necessary or desirable for the purposes of giving effect to the Subscription Agreement; and

(b) subject to completion of the Subscription Agreement taking place:
- (i) the authorised share capital of the Company be and is hereby increased on the day next following the date of completion of the Subscription Agreement from HK$100,000,000 to HK$2,000,000,000 by creating 190,000,000,000 shares of HK$0.01 each or (if the ordinary resolution numbered 4 as set out in the notice convening the meeting at which this resolution is proposed is passed) 1,900,000,000 shares of HK$1.00 each;
- (ii) and conditional upon the passing of the special resolution numbered 5 as set out in the notice convening the meeting at which this resolution is proposed) the distribution of a total of 1,600,419,388 ordinary shares of HK$0.02 each in New World CyberBase Limited by way of a distribution in specie utilising the credit arising from the ALT Capital Reduction as defined in the Circular to the shareholders of the Company whose names appear in the register of members of the Company at the close of business on 25 June 2004 be and is hereby approved; and
- (iii) the directors of the Company be and are hereby authorised generally to do all things appropriate to effect and implement the foregoing.”
“ THAT subject to the passing of the ordinary resolution numbered 1 as set out in the notice convening the meeting at which this resolution is proposed and the fulfilment of the other conditions in respect of the Acquisition (as defined below) as set out in the Circular (as defined in the ordinary resolution numbered 1 as set out in the notice convening the meeting at which this resolution is proposed):
(a) the acquisition (the “Acquisition”) by the Company of the entire issued share capital of New World PCS Holdings Limited from New World Telephone Holdings Limited (“NWTHL”) pursuant to a sale and purchase agreement dated 29 March 2004 (the “Acquisition Agreement”) entered into between NWTHL as vendor and the Company as purchaser, a copy of which has been produced to the meeting and marked “D” and signed for the purpose of identification by the Chairman of the meeting, be and is hereby approved and the signing of the Acquisition Agreement by Mr. Lo Lin Shing, Simon, a director of the Company, be and is hereby approved, confirmed and ratified; and
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NOTICE OF EGM

(b) the directors of the Company be and are hereby authorised to sign or execute such other documents or agreements or deeds on behalf of the Company and to do such things and to make all such actions as they consider necessary or desirable for the purposes of giving effect to the Acquisition.”
“ THAT subject to the passing of the ordinary resolution numbered 1 as set out in the notice (“Notice”) convening the meeting at which this resolution is proposed, the waiver to be granted by the Securities and Futures Commission to PPG (as defined in the ordinary resolution numbered 1 as set out in the Notice) together with parties acting in concert with it, pursuant to Note 1 of the Notes on Dispensations from Rule 26 of the Hong Kong Code on Takeovers and Mergers, waiving any obligation on the part of PPG and parties acting in concert with it to make mandatory general offers for all the securities of the Company other than those already owned or agreed to be acquired by PPG and parties acting in concert with it, as a result of the issue and allotment of the Subscription Shares (as defined in the ordinary resolution numbered 1 as set out in the Notice), be and is hereby approved.”
“ THAT conditional upon: (a) the completion of the Subscription Agreement (as defined in the ordinary resolution numbered 1 as set out in the notice (the “Notice”) convening the meeting at which this resolution is proposed); and (b) the Listing Committee of The Stock Exchange of Hong Kong Limited granting the listing of and permission to deal in the shares of HK$1.00 each in the Company to be created under the Share Consolidation (as defined below) with effect from 9:30 a.m. on the earlier of: (i) the business day next following the date of completion of the Subscription Agreement (as defined in the ordinary resolution numbered 1 as set out in the Notice); or (ii) such other date as any director of the Company may agree with PPG (as defined in the ordinary resolution numbered 1 as set out in the Notice):
(A) every 100 existing issued or unissued shares of the Company be and are hereby consolidated (the “Share Consolidation”) into one consolidated share of HK$1.00 (“Consolidated ALT Share”) provided that any fractional entitlements to a Consolidated ALT Share shall be aggregated and sold, the proceeds of which to be retained for the benefit of the Company;
(B) the directors of the Company be and are hereby authorised generally to do all things appropriate to effect and implement the foregoing.”

SPECIAL RESOLUTIONS

“ THAT the amount standing to the credit of the share premium account of the Company on the date on which this resolution is passed be and is hereby reduced and cancelled and applied by the directors of the Company in accordance with the articles of association of the Company and all applicable laws in the manner referred to as the ALT Capital Reduction described in the Circular (as defined in the ordinary resolution numbered 1 as set out in the
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NOTICE OF EGM

notice convening the meeting at which this resolution is proposed) and the directors of the Company be and are hereby authorised generally to do all things appropriate to effect and implement the ALT Capital Reduction.”

“ THAT subject to and conditional upon the completion of the Acquisition Agreement (as defined in the ordinary resolution numbered 2 as set out in the notice convening the meeting at which this resolution is proposed), the English name of the Company be changed to “New World Mobile Holdings Limited” and a new Chinese name of 「新世界移動控股有限公司」be adopted by the Company as part of the registered name of the Company.”

By Order of the Board Tsang Yuet Kwai Company Secretary

Hong Kong, 2 June 2004

Principal place of business in Hong Kong:

21st Floor

Asia Orient Tower Town Place 33 Lockhart Road Wanchai Hong Kong

Notes:

A form of proxy for use at the meeting is enclosed herewith.
The instrument appointing a proxy shall be in writing under the hand of the appointor or of his/her attorney duly authorised in writing or, if the appointor is a corporation, either under its seal or under the hand of any officer, attorney or other person authorised to sign the same.
Any member entitled to attend and vote at the meeting is entitled to appoint one or more than one proxy to attend and vote instead of him/her. A proxy need not be a member of the Company.
In order to be valid, the form of proxy, together with the power of attorney or other authority (if any) under which it is signed, or a notarially certified copy of such power or authority, must be lodged with the branch share registrars of the Company in Hong Kong, Abacus Share Registrars Limited, at Ground Floor, Bank of East Asia Harbour View Centre, 56 Gloucester Road, Wanchai, Hong Kong, not less than 48 hours before the time appointed for holding the meeting or any adjourned meeting thereof (as the case may be).
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NOTICE OF EGM

Completion and return of the form of proxy will not preclude members from attending and voting in person at the meeting or at any adjourned meeting thereof (as the case may be) should they so wish, and in such event, the form of proxy shall be deemed to be revoked.
Where there are joint registered holders of any ordinary share in the Company, any one of such joint holders may vote, either in person or by proxy, in respect of such share as if he/she were solely entitled thereto, but if more than one of such joint holders are present at the meeting, the more senior shall alone be entitled to vote, whether in person or by proxy. For this purpose, seniority shall be determined by the order in which the names stand on the register of members of the Company in respect of the joint holding.
In accordance with Rule 2.9 of the Hong Kong Code on Takeovers and Mergers, ordinary resolution numbered 3 will be determined by way of poll.
The register of members of the Company will be closed from Wednesday, 23 June 2004 to Friday, 25 June 2004, both dates inclusive, during which period no transfer of shares will be registered. In order to determine the entitlement to attend and vote at the meeting, all transfer documents accompanied by the relevant share certificates must be lodged with the branch share registrars of the Company in Hong Kong, Abacus Share Registrars Limited, at Ground Floor, Bank of East Asia Harbour View Centre, 56 Gloucester Road, Wanchai, Hong Kong no later than 4:00 p.m. on Monday, 21 June 2004.
183 -

AI assistant

Vision Values Holdings Ltd. — Proxy Solicitation & Information Statement 2004

49521_rns_2004-06-02_9a4db9b2-1b15-4fae-849b-6806427afe35.pdf

**ASIA LOGISTICS TECHNOLOGIES LIMITED 亞洲物流科技有限公司 ***

MAJOR AND CONNECTED TRANSACTIONS

Financial adviser

COMMERZBANK

CONTENTS

DEFINITIONS

DEFINITIONS

EXPECTED TIMETABLE

**ASIA LOGISTICS TECHNOLOGIES LIMITED 亞洲物流科技有限公司 ***

MAJOR AND CONNECTED TRANSACTIONS

(1) PROPOSED ACQUISITION OF THE ENTIRE INTEREST IN NEW WORLD PCS HOLDINGS LIMITED;

1. INTRODUCTION

2. THE S&P AGREEMENT

Date:

Parties:

Assets to be acquired by ALT:

Consideration:

Treatment of the NWD Shareholder’s Loan and the Bank Loans:

ALT Board’s view:

Conditions precedent:

S&P Completion:

3. THE SUBSCRIPTION AGREEMENT

A. THE SUBSCRIPTION SHARES AND THE SUBSCRIPTION NOTE:

Date:

Parties:

The subscriptions:

The Subscription Shares:

The Subscription Note:

Issuer:

Noteholder:

Maturity date and early redemption:

Coupon:

Conversion rights:

Ranking of the Consolidated ALT Shares to be issued upon conversion:

Conversion price:

Voting:

Transferability:

Listing:

B. ALT BOARD’S VIEW:

C. CONDITIONS PRECEDENT:

D. SUBSCRIPTION COMPLETION:

E. SHAREHOLDING AND GROUP STRUCTURES:

As at the Latest Practicable Date:

(i) Regarding ALT and NWPCS:

(ii) Regarding NWCB:

4. ALT DISTRIBUTION, ALT CAPITAL REDUCTION, ALT SHARE INCREASE AND ALT SHARE CONSOLIDATION

A. ALT DISTRIBUTION:

FOR 10 CONSOLIDATED ALT SHARES

(OR 1,000 EXISTING ALT SHARES) HELD . . . . . . . . . . . . . . . . . . . . . . . 426 NWCB SHARES

Reasons for distribution in specie of NWCB Shares:

B. ALT CAPITAL REDUCTION AND ALT SHARE INCREASE:

Reasons for the ALT Capital Reduction:

C. ALT SHARE CONSOLIDATION:

Reasons for the ALT Share Consolidation:

D. CONDITIONS OF THE ALT DISTRIBUTION, THE ALT CAPITAL REDUCTION, THE ALT SHARE INCREASE AND THE ALT SHARE CONSOLIDATION:

5. PROPOSED CHANGE OF NAME OF ALT

6. TAKEOVERS CODE IMPLICATIONS OF THE TRANSACTIONS

7. INFORMATION ON THE ALT GROUP AND THE NWCB GROUP

8. REASONS FOR AND BENEFITS OF THE TRANSACTIONS

9. TRADING ARRANGEMENT AND FREE EXCHANGE OF NEW SHARE CERTIFICATES

10. CONTINUING CONNECTED TRANSACTIONS

A. LEASING AND LICENSING OF PROPERTIES AND SHARING OF COMMON FACILITIES

(i) Leasing and licensing of properties – payments by the NWPCS Group

1.

B. LICENSING OF CELL SITES

C. INTERCONNECTION, TRANSMISSION, TRAFFIC ROUTING AND OTHER RELATED SERVICES

D. DEALERSHIP, VALUE TRANSFER ARRANGEMENT AND PROVISION OF MISCELLANEOUS SERVICES

(i) Dealership, value transfer arrangement and provision of miscellaneous services – payments by the NWPCS Group

(ii) Dealership – receipts by the NWPCS Group

11. AMOUNTS OF CONTINUING CONNECTED TRANSACTIONS

LETTER FROM THE ALT BOARD

12. EGM

13. RECOMMENDATION

14. ADDITIONAL INFORMATION

LETTER FROM THE ALT BOARD

Registered Office:

(1) PROPOSED SUBSCRIPTION OF NEW SHARES AND A CONVERTIBLE NOTE TO BE ISSUED BY ASIA LOGISTICS TECHNOLOGIES LIMITED;

Vision Values Holdings Ltd. Proxy Solicitation & Information Statement 2004

ASIA LOGISTICS TECHNOLOGIES LIMITED 亞洲物流科技有限公司 *

ASIA LOGISTICS TECHNOLOGIES LIMITED 亞洲物流科技有限公司 *

ASIA LOGISTICS TECHNOLOGIES LIMITED 亞洲物流科技有限公司 *