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 New World Mobile Holdings Limited, you should at once hand this circular to the purchaser or transferee or to the bank manager, 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 takes no responsibility for the contents of this circular, makes no representation as to its accuracy or completeness and expressly disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this circular.

==> picture [100 x 62] intentionally omitted <==

NEW WORLD MOBILE HOLDINGS LIMITED

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 862)

VERY SUBSTANTIAL ACQUISITION

PROPOSED TRANSFER OF THE ENTIRE INTEREST IN CYBER ON-AIR GROUP LIMITED BY INTERNATIONAL ENTERTAINMENT CORPORATION TO NEW WORLD MOBILE HOLDINGS LIMITED

A notice convening the extraordinary general meeting of New World Mobile Holdings Limited to be held at Room McKinley, Pacific Place Conference Centre, Level 5, One Pacific Place, 88 Queensway, Hong Kong on 18 April 2008 at 11:00 a.m. is set out on pages 172 to 173 of this circular. A form of proxy for use at the meeting is enclosed. Whether or not you intend to attend the meeting, you are requested to complete the accompanying form of proxy in accordance with the instructions printed thereon and return the same to the branch share registrars of New World Mobile Holdings Limited in Hong Kong, Tricor Abacus Limited at 26th Floor, Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong as soon as possible but in any event not less than 48 hours before the time appointed for the holding of the meeting or any adjournment thereof. Completion and return of the form of proxy shall not preclude you from attending and voting in person at the meeting or any adjournment thereof should you so desire.

31 March 2008

	Page
Definitions	1
Letter from the Board 4
Appendix I – Financial information of the Group	10
Appendix II – Financial information of the coAG Group	84
Appendix III – Management discussion and analysis of the coAG Group	138
Appendix IV – Pro forma financial information of the enlarged Group	143
Appendix V – Property valuation of the enlarged Group	153
Appendix VI – General information	166
notice of the eGM 172

Definitions

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

“Acquisition”

the proposed acquisition of the Sale Shares by NWM in accordance with the terms and conditions of the Agreement and the performance of the transactions contemplated under the Agreement

“Agreement”

the conditional sale and purchase agreement dated 27 December 2007 entered into between IEC as vendor and NWM as purchaser in relation to the sale and purchase of the Sale Shares

“Announcement”

the joint announcement dated 2 January 2008 issued by NWM and IEC in relation to, inter alia, the Acquisition

“associates”

has the meaning ascribed to it under the Listing Rules

“Business Day”

a day (excluding Saturday and other general holidays in Hong Kong and any day on which a tropical cyclone warning no. 8 or above or a “black” rainstorm warning signal is hoisted or remains hoisted and in effect between 9:00 a.m. and 12:00 noon and is not lowered or discontinued at or before 12:00 noon) on which licensed banks in Hong Kong are generally open for business

“COAG”

Cyber On-Air Group Limited, a company incorporated in the British Virgin Islands with limited liability and a wholly-owned subsidiary of IEC before Completion

“COAG Group” COAG and its subsidiaries
“Completion” completion of the Acquisition
“connected person(s)” has the meaning ascribed to it under the Listing Rules
“Consideration”
HK$2,000,000, being the consideration for the purchase of the Sale Shares
“Deed” the deed of waiver executed by COAG in favour of IEC dated 27 December 2007 and prior to the signing of the Agreement in respect of the waiver of the Indebtedness
“Director(s)” director(s) of NWM
“EGM”

the extraordinary general meeting of NWM to be convened for the Shareholders to consider and, if thought fit, approve the Acquisition

Definitions

“Enlarged Group”	NWM and its subsidiaries immediately after Completion
“Group”	NWM and its subsidiaries before Completion
“HKFRS”	the Hong Kong Financial Reporting Standards issued by the
	Hong Kong Institute of Certified Public Accountants
“Hong Kong”	the Hong Kong Special Administrative Region of the People’s
	Republic of China
“IEC”	International Entertainment Corporation, a company incorporated
	in the Cayman Islands with limited liability, the issued shares of
	which are listed on the Growth Enterprises Market of the Stock
	Exchange (Stock Code: 8118)
“IEC Director(s)”	director(s) of IEC
“IEC Group”	IEC and its subsidiaries
“Indebtedness”	the indebtedness of HK$7,697,315.02 as at 27 December 2007
	owed by IEC to COAG
“Latest Practicable Date”	27 March 2008, being the latest practicable date prior to the
	printing of this circular for the purpose of ascertaining certain
	information for inclusion in this circular
“Listing Rules”	the Rules Governing the Listing of Securities on the Stock
	Exchange
“NWM” or “Company”	New World Mobile Holdings Limited, a company incorporated
	in the Cayman Islands with limited liability, the issued Shares
	of which are listed on the main board of the Stock Exchange
	(Stock Code: 862 )
“percentage ratios”	has the meaning as defined in Rule 14.07 of the Listing Rules
“PRC”	the People’s Republic of China, excluding Hong Kong, the Macau
	Special Administrative Region and Taiwan
“Sale Shares”	10,000 ordinary shares of HK$0.01 each in the issued share
	capital of COAG, representing the entire issued share capital
	of COAG
“SFO”	Securities and Futures Ordinance (Chapter 571 of the Laws of
	Hong Kong)

	Definitions
“Share(s)”	ordinary share(s) of HK$1.00 each in the share capital of
	NWM
“Shareholder(s)”	holder(s) of the Share(s)
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“HK$”	Hong Kong dollars, the lawful currency of Hong Kong
“%”	per cent.

Letter from the Board

==> picture [101 x 63] intentionally omitted <==

NeW WorLd moBILe hoLdINGS LImIted

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 862)

Executive Directors:

Mr. Lo Lin Shing, Simon (Chairman) Mr. Ho Hau Chong, Norman

Independent non-executive Directors:

Mr. Tsui Hing Chuen, William, JP Mr. Lau Wai Piu Mr. Lee Kee Wai, Frank

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:

Rooms 1502-5 New World Tower I 16-18 Queen’s Road Central Hong Kong

31 March 2008

To the Shareholders and, for information only,
the holder of outstanding share options of NWM

Dear Sir or Madam,

VerY SUBStaNtIaL aCQUISItIoN

ProPoSed traNSfer of the eNtIre INtereSt IN CYBer oN-aIr GroUP LImIted BY INterNatIoNaL eNtertaINmeNt CorPoratIoN to NeW WorLd moBILe hoLdINGS LImIted

INtrodUCtIoN

On 2 January 2008, the Company announced that it had entered into the Agreement whereby IEC conditionally agreed to sell, and the Company conditionally agreed to purchase, the entire issued share capital of COAG for a cash consideration of HK$2,000,000. Immediately after Completion, COAG will cease to be a wholly-owned subsidiary of IEC and will become a wholly-owned subsidiary of the Company. The purpose of this circular is to give you (i) further information regarding the Acquisition; (ii) the notice of the EGM; and (iii) other information required under the Listing Rules.

Letter from the Board

the aGreemeNt

date:

27 December 2007, after trading hour

Parties:

Vendor: IEC Purchaser: NWM

To the best of the Directors’ knowledge, information and belief, having made all reasonable enquiries, IEC and its ultimate beneficial owners are third parties independent of NWM and connected persons of NWM.

assets to be acquired by NWm

Sale Shares, representing the entire issued share capital of COAG.

Consideration

Pursuant to the Agreement, the Consideration in respect of the Sale Shares of HK$2,000,000 shall be paid by NWM to IEC by way of cash upon Completion. NWM intends to fund the Consideration by its internal resources.

The Consideration was arrived at after arm’s length negotiations between IEC and NWM with reference to the net asset value of the assets being acquired, the financial performance of the COAG Group in recent fiscal years and the waiver of the Indebtedness of HK$7,697,315.02. Pursuant to the Deed, in consideration of the sum of HK$1, COAG irrevocably and unconditionally waived the Indebtedness. The Directors (including the independent non-executive Directors) are of the view that the terms and conditions of the Agreement (including the Consideration) are fair and reasonable and are in the interests of the Group and the Shareholders as a whole.

Conditions precedent

Completion is subject to the following conditions:

(i) the obtaining of an ordinary resolution of the Shareholders (other than those who are required to abstain from voting under the Listing Rules) either passed at a general meeting of NWM or by way of a written resolutions approving the entering into of the Agreement and the performance of the transactions contemplated thereunder by NWM;
(ii) all necessary governmental and regulatory (including the Stock Exchange) approvals or consents (or waivers) required by the parties to the Agreement or any of them for the consummation of the transactions contemplated therein having been obtained; and
5 -

Letter from the Board

(iii) all necessary third party approvals or consents (or waivers) required by the parties to the Agreement or any of them for the consummation of the transactions contemplated therein having been obtained.

All the conditions above are not waivable by the parties to the Agreement. On 29 February 2008, IEC and NWM have agreed to extend the long stop date for the fulfillment of the above conditions from 31 March 2008 to 31 May 2008. If the above conditions have not been fulfilled before 31 May 2008 (or such other date as the parties may agree), the Agreement shall have no further force and effect and the parties thereto shall have no liability thereunder.

Completion

Subject to the fulfillment of the conditions set out above, Completion will take place on the third Business Day after such fulfillment (or such other date as the parties to the Agreement may agree).

Immediately after Completion, COAG will cease to be a wholly-owned subsidiary of IEC and will become a wholly-owned subsidiary of NWM.

fINaNCIaL ImPaCt of the aCQUISItIoN

As illustrated in the unaudited pro forma balance sheet of the Enlarged Group as set out in Appendix IV to this circular, the net asset value of the Group (equivalent to total shareholders’ equity) before and after the pro forma adjustments are both HK$50,904,000. The Directors expects that the Acquisition will not have any significant impact on the Group’s net asset value upon Completion. The Directors also believe that there will be no immediate material impact on the earning position of the Group upon Completion. As illustrated in the unaudited pro forma income statement of the Enlarged Group as set out in Appendix IV to the circular, loss for the six months ended 31 December 2007 attributable to equity holders of the Company after the pro forma adjustments is HK$5,066,000 compared to that before pro forma adjustments amounting to HK$5,767,000. It is expected that the Acquisition will have a positive impact on the earnings of the Enlarged Group in the long run.

INformatIoN oN the IeC GroUP

The principal activities of the IEC Group are hotel operations, leasing of properties for casino, ancillary leisure and entertainment operations, provision of network solutions, project services, and the acquisition, financing, production and worldwide licensing of theatrical feature films in a variety of genres and investments in production of television series, music concerts and music records.

INformatIoN oN the CoaG GroUP

COAG is a company incorporated in the British Virgin Islands with limited liability and is an investment holding company. The COAG Group is principally engaged in the provision of network solutions and project services. For network solution, the COAG Group provides total system solution including data networking solution, synchronisation solution, timing solution, wireless local area network solution and network access control solution. For project services, the COAG Group provides infrastructure installation services for customers which include cellular base station and antenna system installation service structural cabling installation service and microwave installation service. COAG has been a wholly-owned subsidiary of IEC for a period of more than 12 months.

Letter from the Board

Set out below is the audited consolidated financial information of the COAG Group for the six months ended 30 September 2007 and for each of the two years ended 31 March 2007 and 2006 prepared in accordance with the HKFRS:

	Six months ended	Year ended	Year ended
	30 September 2007	31 march 2007	31 march 2006
	HK$’000	HK$’000	HK$’000
Turnover	13,087	18,693	16,840
Profit/(loss) before taxation	834	(67 )	(511 )
Profit/(loss) after taxation	701	(327 )	(511 )
	as at 30	as at 31	as at 31
	September 2007	march 2007	march 2006
	HK$’000	HK$’000	HK$’000
Net assets value (including the Indebtedness)	8,069	7,368	7,695

reaSoNS for the aCQUISItIoN

The Group is principally engaged in the provision of Internet content services and telecommunication value-added services in the PRC.

As stated in the 2006/07 annual report of NWM, the mobile internet value added business, being a major revenue generator of the Group’s business, was badly hit by the environmental changes of the PRC’s wireless market. The management did not see a significant improvement to this situation in the near term. Consequently, revenue from this sector is expected to continue to decrease. NWM has been looking for other investment opportunities in order to maximise the return to the Shareholders. The Directors believe that the Acquisition is a viable investment and will broaden the asset and earnings base of the Group. The Directors (including the independent non-executive Directors) also consider that the terms of the Agreement (including the Consideration) are fair and reasonable and on normal commercial terms, and are in the interests of the Group and the Shareholders as a whole.

GeNeraL

Given that the relevant percentage ratio is more than 100%, the Acquisition constitutes a very substantial acquisition for NWM under Chapter 14 of the Listing Rules and is conditional on the approval of the Shareholders pursuant to Rule 14.49 of the Listing Rules, where voting must be taken by poll. IEC and its associates, and any Shareholder who has a material interest in the Acquisition are required to abstain from voting on the proposed resolution approving the Acquisition at the EGM. To the best of the Directors’ knowledge, information and belief, and having made all reasonable enquiries, IEC and its associates did not hold any Shares as at the Latest Practicable Date and no Shareholder has a material interest in the Acquisition.

Letter from the Board

eGm

The EGM will be held at Room McKinley, Pacific Place Conference Centre, Level 5, One Pacific Place, 88 Queensway, Hong Kong on 18 April 2008 at 11:00 a.m. at which an ordinary resolution will be proposed to consider and, if thought fit, approve the Agreement and the transactions contemplated thereunder, where voting must be taken by poll.

A notice convening the EGM is set out on pages 172 to 173 of this circular. A form of proxy for use by the Shareholders at the EGM is enclosed. Whether or not you intend to attend the EGM, you are requested to complete the accompanying form of proxy in accordance with the instructions printed thereon and return the same to the branch share registrars of NWM in Hong Kong, Tricor Abacus Limited at 26th Floor, Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong as soon as possible but in any event not less than 48 hours before the time appointed for the holding of the EGM or any adjournment thereof. Completion and return of the form of proxy shall not preclude you from attending and voting in person at the EGM or any adjournment thereof should you so desire.

ProCedUreS to demaNd a PoLL at GeNeraL meetING

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

(a) by the chairman of such meeting; or
(b) by at least three Shareholders present in person or in the case of a Shareholder being a corporation by its duly authorised representative or by proxy for the time being entitled to vote at the meeting; or
(c) by a Shareholder or Shareholders present in person or in the case of a Shareholder being a corporation by its duly authorised representative or by proxy and representing not less than one-tenth of the total voting rights of all Shareholders having the right to vote at the meeting; or
(d) by a Shareholder or Shareholders present in person or in the case of a Shareholder being a corporation by its duly authorised representative or by proxy and holding Shares conferring a right to vote at the meeting being Shares on which an aggregate sum has been paid up equal to not less than one-tenth of the total sum paid up on all the Shares conferring that right; or
(e) if required by the Listing Rules, by any Director or Directors who, individually or collectively, hold proxies in respect of shares representing five per cent. (5%) or more of the total voting rights at such meeting.
8 -

Letter from the Board

reCommeNdatIoNS

The Directors (including the independent non-executive Directors) consider that the terms of the Agreement (including the Consideration) are fair and reasonable and on normal commercial terms and the Acquisition is in the interests of the Group and the Shareholders as a whole. Accordingly, the Directors recommend the Shareholders to vote in favour of the resolution to be proposed at the EGM to approve the Acquisition.

addItIoNaL INformatIoN

Your attention is drawn to certain financial information relating to the Group, the COAG Group, the Enlarged Group and other information set out in the appendices to this circular.

Yours faithfully,

For and on behalf of the Board of

New World mobile holdings Limited tang Chi Kei

Company Secretary

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

1. SUMMARy OF FINANCIAL INFORMATION

Set out below is a summary of the audited consolidated income statement and financial position data of the Group for the year ended 30 June 2005 as extracted from the annual report of the Company for the year ended 30 June 2006, and that for each of the years ended 30 June 2006 and 2007 as extracted from the annual report of the Company for the year ended 30 June 2007. The relevant auditor’s reports for the years ended 30 June 2007, 30 June 2006 and 30 June 2005 did not contain any qualification. The summary of the unaudited condensed consolidated income statement data of the Group for the six months ended 31 December 2006 and the six months ended 31 December 2007 as extracted from the interim report of the Company for the six months ended 31 December 2007 is also set out below.

			Results of the Group	Results of the Group	Results of the Group
							for the six months ended
	for the year ended 30 June						31 December
	2005		2006		2007		2006		2007
	HK$’000		HK$’000		HK$’000	HK$’000			HK$’000
	(Restated)						(Unaudited)
Turnover	4,261		16,515		14,155		9,483		318
Income tax expenses	(51 )		–		–		–		–
(Loss)/profit from
continuing operations	(47,092	)	(133,567 )		293,053		(8,143 )		(5,767 )
Profit from discontinued operations	36,693		1,045,209		–		–		–
(Loss)/profit attributable to
shareholders	(10,399 )		911,642		293,053		(8,143 )		(5,767 )

Dividend	–		–		117,230		–		–

(Loss)/earning per share
Basic	(HK$0.13 )		HK$10.08		HK$3.03	(HK$0.09 )			(HK$0.06 )
Diluted	N/A		N/A		HK$3.03		N/A		(HK$0.06 )

Dividend per share	–		–		HK$1.2		–		–

				Assets and liabilities of the Group
									as at
					as at 30 June			31 December
			2005		2006		2007		2007
			HK$’000		HK$’000	HK$’000			HK$’000
			(Restated)						(Unaudited)
Total assets			1,641,567		2,296,386		64,418		55,356
Total liabilities			(2,671,498 )		(2,393,675 )		(8,732 )		(4,452 )
Total net (liabilities)/assets			(1,029,931 )		(97,289 )		55,686		50,904

In the financial year ended 30 June 2006, the Group adopted certain new/revised standards and interpretations of HKFRS issued by the Hong Kong Institute of Certified Public Accountants. The 2005 figures have been restated as required in accordance with these new/revised standards and interpretations.

10 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Also, during the financial year ended 30 June 2006, the Group disposed of its entire interests in New World PCS Limited pursuant to a merger agreement. The results of New World PCS Limited attributable to the Group are presented above as profit from discontinued operations.

For details, please refer to the audited financial statements of the Company for the year ended 30 June 2006.

2. AUDITED FINANCIAL STATEMENTS FOR THE yEAR ENDED 30 JUNE 2007

The following are the audited consolidated income statement of the Group for the year ended 30 June 2007, the audited consolidated balance sheet of the Group and the audited balance sheet of the Company as at 30 June 2007, the audited consolidated statement of changes in equity of the Group and the audited consolidated cash flow statement of the Group for the year ended 30 June 2007, together with accompanying notes to the financial statements extracted from the annual report of the Company for the year ended 30 June 2007.

Consolidated Income Statement

Note
Continuing operations:
Turnover
6
Cost of sales
Gross profit
Other revenue
9
Other net gains/(losses)
10
Selling expenses
Administrative expenses
Operating profit/(loss) before finance costs
11
Finance costs
12
Operating profit/(loss)
Share of results of associated companies
22
Profit/(loss) before income tax
Income tax expense
16
Profit/(loss) from continuing operations
Discontinued operations:
Profit from discontinued operations
8
Profit attributable to equity holders of the Company
Earnings/(loss) per share attributable to the
equity holders of the Company during the year
Basic earnings/(loss) per share
– Continuing operations
17
– Discontinued operations
17
Diluted earnings per share
17

year ended 30 June
2007
2006
HK$’000
HK$’000
14,155
16,515
(5,590 )
(4,842 )
8,565
11,673
1,770
823
312,480
(65,436 )
(7,234 )
(9,775 )
(31,515 )
(35,797 )
284,066
(98,512 )
(53,590 )
(62,786 )
230,476
(161,298 )
62,577
27,731
293,053
(133,567 )
–
–
293,053
(133,567 )
–
1,045,209
293,053
911,642
HK$3.03
(HK$1.48 )
–
HK$11.56
HK$3.03
HK$10.08
HK$3.03
N/A

11 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Consolidated Balance Sheet

Note
ASSETS
Non-current assets
Property, plant and equipment
20
Investments in associated companies
22
Intangible assets
23
Deferred taxation
24
Current assets
Trade receivables
25
Prepayments, deposits and other receivables
Amount due from an associated company
Amount due from a related company
26
Cash and bank balances
27
Total assets
EQUITy
Capital and reserves attributable
to the Company’s equity holders
Share capital
29
Other reserves
30
Accumulated losses
Total equity/(total equity holders’ deficit)

As at 30 June
2007
2006
HK$’000
HK$’000
5,383
6,183
–
2,142,737
–
–
–
–
5,383
2,148,920
---------------- ----------------
1,185
4,266
1,556
1,368
–
113,328
813
813
55,481
27,691
59,035
147,466
---------------- ----------------
64,418
2,296,386
97,692
16,154
12,901
(82,905 )
(54,907 )
(30,538 )
55,686
(97,289 )
---------------- ----------------

12 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Note LIABILITIES Non-current liabilities Loans from a fellow subsidiary 31 Promissory note issued to a fellow subsidiary 31 Convertible bond 31 Subscription note 31 Current liabilities Trade payables 28 Accrued charges, other payables, deposits received and deferred income Amounts due to fellow subsidiaries Amount due to an associated company Total liabilities Total equity and liabilities Net current assets Total assets less current liabilities	As at 30 June 2007 2006 HK$’000 HK$’000 – 278,024 – 886,749 – 28,261 – 1,178,008 – 2,371,042 ---------------- ---------------- 190 809 8,542 15,779 – 420 – 5,625 8,732 22,633 ---------------- ---------------- 8,732 2,393,675 ---------------- ---------------- 64,418 2,296,386 50,303 124,833 55,686 2,273,753	As at 30 June 2007 2006 HK$’000 HK$’000 – 278,024 – 886,749 – 28,261 – 1,178,008 – 2,371,042 ---------------- ---------------- 190 809 8,542 15,779 – 420 – 5,625 8,732 22,633 ---------------- ---------------- 8,732 2,393,675 ---------------- ---------------- 64,418 2,296,386 50,303 124,833 55,686 2,273,753
		2,371,042 ---------------- 809 15,779 420 5,625
		22,633 ----------------
		2,393,675 ----------------
		2,296,386

		124,833

		2,273,753

13 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Balance Sheet

Note ASSETS Non-current assets Property, plant and equipment 20 Investments in subsidiaries 21 Current assets Amount due from an associated company Amount due from a related company 26 Prepayments, deposits and other receivables Cash and bank balances 27 Total assets EQUITy Capital and reserves attributable to the Company’s equity holders Share capital 29 Other reserves 30 (Accumulated losses)/retained earnings Total equity LIABILITIES Non-current liabilities Loans from a fellow subsidiary 31 Promissory note issued to a fellow subsidiary 31 Convertible bond 31 Subscription note 31	As at 30 June 2007 2006 HK$’000 HK$’000 – – 47,335 2,497,576 47,335 2,497,576 ---------------- ---------------- – 113,328 225 225 188 87 47,445 10,564 47,858 124,204 ---------------- ---------------- 95,193 2,621,780 97,692 95,336 12,062 124,143 (15,520 ) 16,781 94,234 236,260 ---------------- ---------------- – 278,024 – 886,749 – 28,261 – 1,178,008 – 2,371,042 ---------------- ----------------	As at 30 June 2007 2006 HK$’000 HK$’000 – – 47,335 2,497,576 47,335 2,497,576 ---------------- ---------------- – 113,328 225 225 188 87 47,445 10,564 47,858 124,204 ---------------- ---------------- 95,193 2,621,780 97,692 95,336 12,062 124,143 (15,520 ) 16,781 94,234 236,260 ---------------- ---------------- – 278,024 – 886,749 – 28,261 – 1,178,008 – 2,371,042 ---------------- ----------------
		2,497,576 ---------------- 113,328 225 87 10,564
		124,204 ----------------
		2,621,780

		95,336 124,143 16,781
		236,260 ---------------- 278,024 886,749 28,261 1,178,008
		2,371,042 ----------------

14 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Note Current liabilities Amount due to an associated company Amounts due to fellow subsidiaries Accrued charges and other payables Total liabilities Total equity and liabilities Net current assets Total assets less current liabilities	As at 30 June 2007 2006 HK$’000 HK$’000 – 5,625 – 420 959 8,433 959 14,478 ---------------- ---------------- 959 2,385,520 ---------------- ---------------- 95,193 2,621,780 46,899 109,726 94,234 2,607,302	As at 30 June 2007 2006 HK$’000 HK$’000 – 5,625 – 420 959 8,433 959 14,478 ---------------- ---------------- 959 2,385,520 ---------------- ---------------- 95,193 2,621,780 46,899 109,726 94,234 2,607,302
		14,478 ----------------
		2,385,520 ----------------
		2,621,780

		109,726

		2,607,302

15 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Consolidated Cash Flow Statement

Notes
Cash flows from operating activities
Net cash used in operations
32
Interest paid
Net cash used in continuing operations
Net cash generated from discontinued operations
Net cash (used in)/generated
from operating activities
Cash flows from investing activities
Purchase of property, plant and equipment
Acquisition of subsidiaries, net of cash acquired
Proceeds from disposal of a subsidiary
22 & 31
Acquisition of associated company
33
Proceeds from disposal of subsidiaries
34
Dividend received from an associated company
22
Repayment of amount due from
an associated company
Proceeds from sale of property,
plant and equipment
Interest received
9
Net cash generated from/(used in)
continuing operations
Net cash used in discontinued operations
Net cash generated from/(used in)
investing activities
Cash flows from financing activities
Proceeds from issuance of ordinary shares
Dividend paid to Company’s equity holders
18
Proceeds from loans from a fellow subsidiary
Net cash (used in)/generated from
continuing operations
Repayment of bank loan and amount
due to ultimate holding company of
discontinued operations
Net cash (used in)/generated
from financing activities

year ended 30 June
2007
2006
HK$’000
HK$’000
(39,888 )
(26,304 )
(119,973 )
(16,108 )
(159,861 )
(42,412 )
–
131,421
(159,861 )
89,009
---------------- ----------------
(792 )
(86 )
–
9,896
169,547
–
–
(276,384 )
–
384
17,228
7,523
113,328
–
24
–
1,770
823
301,105
(257,844 )
–
(96,302 )
301,105
(354,146 )
---------------- ----------------
2,970
–
(117,230 )
–
–
278,024
(114,260 )
278,024
–
(102,500 )
(114,260 )
175,524
---------------- ----------------

16 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Note Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents as at the beginning of the year Effect of foreign exchange rate changes Cash and cash equivalents as at the end of the year Analysis of cash and cash equivalents: Cash and bank balances Less: Cash and bank balances with original maturities of more than three months 27	year ended 30 June 2007 2006 HK$’000 HK$’000 26,984 (89,613 ) 26,921 116,534 747 – 54,652 26,921 55,481 27,691 (829 ) (770 ) 54,652 26,921

17 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Consolidated Statement of Changes in Equity

At 1 July 2005 Issue of shares Disposal of subsidiaries Profit for the year At 30 June 2006 Issue of shares Currency translation differences Reversal of reserve due to early extinguishment of subscription note and convertible bond upon the Disposal_(Note 22) Transfer(Notes 29 and 30(a)) Dividend paid(Note 18)_ Profit for the year At 30 June 2007	Share capital HK$’000 300 16,154 (300 ) – 16,154 2,356 – – 79,182 – – 97,692	Other reserves HK$’000 (88,051 ) 4,846 300 – (82,905 ) 614 839 (26,657 ) 121,010 – – 12,901	Accumulated losses HK$’000 (942,180 ) – – 911,642 (30,538 ) – – – (200,192 ) (117,230 ) 293,053 (54,907 )	Total HK$’000 (1,029,931 ) 21,000 – 911,642 (97,289 ) 2,970 839 (26,657 ) – (117,230 ) 293,053 55,686

18 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to the Financial Statements

1 GENERAL INFORMATION

New World Mobile Holdings Limited (the “Company”) and its subsidiaries (hereinafter collectively referred to as the “Group”) are principally engaged in technology related business including mobile Internet services in Mainland China.

The Company is a limited liability company incorporated in the Cayman Islands. The address of its registered office is P.O. Box 309, Ugland House, South Church Street, George Town, Grand Cayman, Cayman Islands, British West Indies.

The Company is listed on the Stock Exchange of Hong Kong Limited (the “Stock Exchange”).

The consolidated financial statements are presented in thousands of units of Hong Kong dollars (HK$’000), unless otherwise stated. The consolidated financial statements have been approved for issue by the Board of Directors on 10 October 2007.

2 BASIS OF PREPARATION

The consolidated financial statements have been prepared in accordance with Hong Kong Financial Reporting Standards (“HKFRS”). The consolidated financial statements have been prepared under the historical cost convention.

The preparation of financial statements in conformity with HKFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements, are disclosed in Note 5.

3 PRINCIPAL ACCOUNTING POLICIES

The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.

(a) The adoption of new/revised HKFRS

For the year ended 30 June 2007, the Group adopted the below new standards, amendments to published standards and interpretations of HKFRS, which are relevant to its operations.

HKAS 21 (Amendment) The Effects of Changes in Foreign Exchange Rates – Net Investment in a Foreign Operation HKAS 39 (Amendments) Cash Flow Hedge Accounting of Forecast Intragroup Transactions and The Fair Value Option HKAS 39 and HKFRS 4 Financial Instruments: Recognition and (Amendments) Measurement and Insurance Contracts – Financial Guarantee Contracts HKFRS – INT 4 Determining whether an Arrangement contains a Lease HK (IFRIC) – INT 8 Scope of HKFRS 2 HK (IFRIC) – INT 9 Reassessment of Embedded Derivatives

19 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

The adoption of amendments to HKAS 21, 39, HKFRS 4, HKFRS Interpretation 4 and HK(IFRIC) Interpretation 8 and 9 did not result in substantial changes to the Group’s accounting policies. In summary:

The amendment to HKAS 21 relates to circumstances under which loans from fellow subsidiaries can be regarded as part of net investment in a foreign operation, hence the exchange differences arising on those loans should be recorded directly.

The amendments to HKAS 39 and HKFRS 4 on financial guarantee contracts introduce a requirement to recognise the fair value of financial guarantee issued under HKAS 39, unless the entity has previously asserted that it regards such contracts as insurance contracts.

The amendment to HKAS 39 on cash flow hedge accounting of forecast intragroup transactions specifically permits hedge accounting to be adopted in consolidated financial statements in respect of the foreign exchange risk of a highly probable forecast intragroup transaction, but only if the transaction is denominated in a currency other than the functional currency of the entity entering into that transaction and if the foreign currency risk will affect consolidated profit or loss.

The amendment to HKAS 39 on the fair value option restricts the circumstances under which the fair value option in HKAS 39 can be taken advantage of, compared to the original HKAS 39.

HKFRS – INT 4 looks at the question as to whether certain supply arrangements contain in substance a lease that should be recognised by both the lessor and lessee in accordance with HKAS 17 “Leases”.

HK (IFRIC) – INT 8 requires consideration of transactions involving the issuance of equity instruments – where the identifiable consideration received is less than the fair value of the equity instruments issued – to establish whether or not they fall within the scope of HKFRS 2.

HK (IFRIC) – INT 9, requires an entity to assess whether an embedded derivative is required to be separated from the host contract and accounted for as a derivative when the entity first becomes a party to the contract. Subsequent reassessment is prohibited unless there is a change in the terms of the contract that significantly modifies the cash flows that otherwise would be required under the contract, in which case reassessment is required.

Certain new standards, amendments and interpretations to existing standards have been published but are not effective for current financial year and have not been early adopted, are as follows:

HKAS 1 (Amendment) Presentation of Financial Statements – Capital Disclosures[1] HKAS 23 (Revised) Borrowing Costs[2] HKFRS 7 Financial Instruments: Disclosures[1] HKFRS 8 Operating Segments[2] HK (IFRIC) – INT 10 Interim Financial Reporting and Impairment[3] HK (IFRIC) – INT 11 HKFRS 2 – Group and Treasury Share Transactions[4] HK (IFRIC) – INT 12 Service Concession Arrangements[5]

1 Effective for annual periods beginning on or after 1 January 2007.

2 Effective for annual periods beginning on or after 1 January 2009.

3 Effective for annual periods beginning on or after 1 November 2006.

4 Effective for annual periods beginning on or after 1 March 2007.

5 Effective for annual periods beginning on or after 1 January 2008.

The Group has already commenced an assessment of the impact of the new standards, amendments or interpretations to existing standards but is not yet in a position to state whether these new standards, amendments or interpretations to existing standards would have a significant impact to its results of operations and financial position.

20 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

(b) Group accounting

(i) Consolidation

The consolidated financial statements of the Group include the financial statements of the Company and all its direct and indirect subsidiaries made up to 30 June.

To comply with the Chinese laws and regulations that prohibit or restrict foreign ownership of companies that provide wireless value-added telecommunications services (the “VAS”), which includes wireless Internet services and Internet content services, the Group conducts substantially all of its VAS operations through 上海易圖通信息技術有限公司, 南京逆火軟件有限公司 and 北京新世界科技發展有限公司 and its subsidiaries (collectively the “Variable Interest Entities”). They are legally owned by certain citizens of the People’s Republic of China (the “PRC”) or the PRC local company whose equity interest are beneficially owned by citizens of the PRC (collectively “the Registered Shareholders”).

Certain contractual arrangements have been made among Shanghai New Era Link Telecom Technology Co., Ltd (“Shg TDT”), a subsidiary of the Company, the Variable Interest Entities and the Registered Shareholders so that the decision–making rights and operating and financing activities of these Variable Interest Entities are ultimately controlled by Shg TDT. Shg TDT is also entitled to all of the operating profits and residual benefits generated by the Variable Interest Entities under these arrangements. In particular, the Registered Shareholders are required under their contractual arrangements with the Group to transfer these interests in the Variable Interest Entities to Shg TDT or Shg TDT‘s designee upon Shg TDT’s request at a pre-agreed nominal consideration.

The Group has granted loans to the Registered Shareholders to finance their investments in the Variable Interest Entities. The direct equity interest in the Variable Interest Entities has been pledged as collateral for the loans.

As a result, the Variable Interest Entities are accounted for as subsidiaries of the Group for accounting purposes.

Subsidiaries are all entities (including special purpose entities) over which the Group has the power to govern the financial and operating policies generally accompanying a shareholding of more than one half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity.

Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases.

The purchase method of accounting is used to account for the acquisition of subsidiaries by the Group. The cost of an acquisition is measured as the fair values of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any minority interest. The excess of the cost of acquisition over the fair value of the Group’s share of the identifiable net assets acquired is recorded as goodwill. If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognised directly in the income statement.

Inter-company transactions, balances and unrealised gains on transactions between group companies are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.

21 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

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.

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.

(ii) Associated companies

Associates are all entities over which the Group has significant influence but not control, generally accompanying a shareholding of between 20% and 50% of the voting rights. Investments in associates are accounted for using the equity method of accounting and are initially recognised at cost. The Group’s investments in associates includes goodwill (net of any accumulated impairment loss) identified on acquisition.

The Group’s share of its associates’ post-acquisition profits or losses is recognised in the income statement, and its share of post-acquisition movements in reserves is recognised in reserves. The cumulative post-acquisition movements are adjusted against the carrying amount of the investment. When the Group’s share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the associate.

Unrealised gains on transactions between the Group and its associates are eliminated to the extent of the Group’s interest in the associates. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of associates have been changed where necessary to ensure consistency with the policies adopted by the Group.

(iii) Goodwill

Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the net identifiable assets of the acquired subsidiary or associated company at the date of acquisition. Goodwill on acquisitions of subsidiaries is included in intangible assets. Goodwill on acquisitions of associated companies is included in investments in associated companies. Goodwill is tested annually for impairment and carried at cost less accumulated impairment losses. Impairment losses on goodwill are not reversed. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold. Goodwill is allocated to cash-generating units for the purpose of impairment testing.

(c) Property, plant and equipment

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

Property, plant and equipment 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%

22 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Building situated in leasehold land are depreciated over the shorter of the unexpired term of lease and their estimated useful lives, being no more than 50 years after the date of completion.

Historical costs of property, plant and equipment include expenditures that are directly attributable to the acquisition of the assets. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. All other repairs and maintenance are expensed in the income statement during the financial period in which they are incurred.

Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised within other net gains/(losses), in the income statement.

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date.

An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount.

(d) Impairment of assets

Assets that have an indefinite useful life are not subject to amortisation, which are at least tested annually for impairment and are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units).

(e) Trade and other receivables

Trade and other receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. A provision for impairment of trade and other receivables is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of receivables. The amount of the provision is the difference between the assets’ carrying amount and the present value of estimated future cash flows, discounted at the effective interest rate. The amount of the provision is recognised in the income statement within administrative expenses.

(f) 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 in hand and deposits held at call with banks.

(g) Provisions

Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events; it is more likely than not that an outflow of resources will be required to settle the obligation; and the amount has been reliably estimated.

Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small.

23 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

(h) Share capital

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares are shown in equity as a deduction, net of tax, from the proceeds.

(i) 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 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 Group’s contribution to the defined contribution retirement schemes are expensed as incurred and are reduced by contributions forfeited by those employees who leave the scheme prior to vesting fully in the contributions.

(iii) Bonus

Provisions for bonus due wholly within twelve months after balance sheet date are recognised when the 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.

(iv) Share-based compensation

The Group operates an equity-settled, share-based compensation plan. The fair value of the employee services received in exchange for the grant of the options is recognised as an expense. The total amount to be expensed over the vesting period is determined by reference to the fair value of the options granted, excluding the impact of any non-market vesting conditions (for example, profitability and sales growth targets). Non-market vesting conditions are included in assumptions about the number of options that are expected to become exercisable. At each balance sheet date, the entity revises its estimates of the number of options that are expected to become exercisable. It recognises the impact of the revision of original estimates, if any, in the income statement, and a corresponding adjustment to equity over the remaining vesting period.

The proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value) and share premium when the options are exercised.

(j) 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 consolidated financial statements. However, if the deferred income tax arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss, it is not accounted for. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.

24 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

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 and associated companies, except where the timing of the reversal of the temporary differences is controlled by the Group and it is probable that the temporary differences will not reverse in the foreseeable future.

(k) Trade payables

Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.

(l) Revenue recognition

The Group derives technology related services revenue from the provision of value-added telecommunications services (“VAS”). The Group recognises its revenue net of applicable business taxes and other related taxes. Revenue from the provision of outsourcing services is recognised when services are rendered. Wireless VAS revenue is derived principally from providing mobile phones users with short messaging services, multimedia messaging services and wireless application protocol. These services are substantially billed on a monthly subscription basis or a per message basis (the “Service Fees”). These services are predominately delivered through the platforms of various subsidiaries of China Mobile Communications Corporation and they also collect the Service Fees on behalf of the Group.

Interest income is recognised on a time proportion basis using the effective interest method.

(m) Operating leases

Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are expensed in the income statement on a straight-line basis over the period of the lease.

(n) Segment reporting

A business segment is a group of assets and operations engaged in providing products or services that are subject to risks and returns that are different from those of other business segments. A geographical segment is engaged in providing products or services within a particular economic environment that are subject to risks and returns that are different from those of segments operating in other economic environments.

(o) Foreign currency translation

(i) Functional and presentation currency

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

(ii) Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement.

25 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

(iii) Group companies

The results and financial position of all the Group entities (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

(a) assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet;
(b) income and expenses for each income statement are translated at average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the dates of the transactions); and
(c) all resulting exchange differences are recognised as a separate component of equity.

Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate.

(p) Borrowings

Borrowings are recognised initially at fair value, net of transaction costs incurred. Transaction costs are incremental costs that are directly attributable to the acquisition, issue or disposal of a financial asset or financial liability, including fees and commissions paid to agents, advisers, brokers and dealers, levies by regulatory agencies and securities exchanges, and transfer taxes and duties. Borrowings are subsequently stated at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the income statement over the period of the borrowings using the effective interest method.

Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the balance sheet date.

(q) Dividend distribution

Dividend distribution to the Company’s shareholders is recognised as a liability in the Group’s financial statements in the period in which the dividends are approved by the Company’s shareholders or Directors as appropriate.

4 FINANCIAL RISK MANAGEMENT

4.1 Financial risk factors

The Group’s activities expose it to a variety of financial risks: market risk (including currency risk), credit risk, liquidity risk and cash flow and fair value interest rate risks.

The Group’s risk management program seeks to minimise the potential adverse effects of financial risks on the Group’s performance.

(i) Foreign exchange risk

The Group operates mainly in the PRC and Hong Kong. The exchange rate of Reminbi to HK dollars is subject to the rules and regulations of foreign exchange control promulgated by the PRC government. At present, the Group does not have any financial instruments for hedging purposes.

26 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Foreign exchange risk arises when future commercial transactions, recognised assets and liabilities are denominated in a currency that is not the entity’s functional currency. The executive Directors are responsible for managing the net position in each foreign currency.

(ii) Credit risk

The Group has concentration of credit risk. Sales of services to the top five customers constituted 100% of the Group’s turnover for the year ended 30 June 2007.

The executive Directors consider that the Group’s exposure to bad debts is not significant since the Group primarily trades with reputable and creditworthy customers. In addition, the Group has credit policies in place to ensure that sales of services are made to customers with appropriate credit history. Collection of outstanding receivable balances is closely monitored on an ongoing basis.

(iii) Liquidity risk

The Group monitors current and expected liquidity requirements to ensure sufficient cash are maintained.

(iv) Cash flow and fair value interest rate risks

As the Group has no significant interest-bearing assets, the Group’s income and operating cash flow are substantially independent of changes in market interest rates.

At the year end, the Group had no borrowings.

4.2 Fair value estimation

The nominal value less impairment provision of trade receivables and payables approximates their fair values.

5 CRITICAL ACCOUNTING ESTIMATES AND ASSUMPTIONS

Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial period are discussed below.

(a) Useful lives of property, plant and equipment

In accordance with HKAS 16, the Group estimates the useful lives of property, plant and equipment in order to determine the amount of depreciation expenses to be recorded. The useful lives are estimated at the time the asset is acquired based on historical experience, the expected usage and wear and tear of the assets. The Group also performs annual reviews on whether the assumptions made on useful lives continue to be valid. Such reviews take into account the technological changes, prospective economic utilisation and physical condition of the assets concerned.

27 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

(b) Impairment of receivables

The executive Directors determine the provision for impairment of trade and other receivables based on the credit history of its customers and the current market condition. The Group reassess the provision on each of the balance sheet date.

Significant judgement is exercised on the assessment of the collectibility of trade receivables from each customer. In making its judgement, management considers a wide range of factors such as results of follow-up procedures performed by sales personnel, customer payment trends including subsequent payments and customers’ financial position. If the financial conditions of customers of the Group were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required.

6 TURNOvER

The Group is principally engaged in the provision of technology related services. Turnover recognised during the year are as follows:

Technology related services Gross rental income from an investment property	2007 HK$’000 14,155 – 14,155	2006 HK$’000 16,381 134
		16,515

28 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

7 SEGMENT INFORMATION

(a) Primary reporting format – business segments

For the year ended 30 June 2007, the Group only operates in one business segment, which is the technology related business.

The segment results for the year ended 30 June 2007 are as follows:

Turnover Segment results Other revenue Other net gains Operating profit Finance costs Operating profit Share of results of associated companies Profit before income tax expense Income tax expense Profit attributable to equity holders of the Company Other segment information Depreciation Capital expenditures Gain on disposal of a subsidiary Reversal of impairment of trade receivables	Technology related services HK$’000 14,155 (15,279 ) – – – – – 1,170 116 – 1,079	Unallocated HK$’000 – (14,905 ) 1,770 312,480 (53,590 ) 62,577 – 272 676 305,790 –	Total HK$’000 14,155 (30,184 ) 1,770 312,480 284,066 (53,590 ) 230,476 62,577 293,053 – 293,053 1,442 792 305,790 1,079

29 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

The segment results for the year ended 30 June 2006 are as follows:

Turnover Segment results Other revenue Other net (losses)/gains Operating (loss)/profit Finance costs Operating (loss)/profit Share of results of associated companies (Loss)/profit before income tax Income tax expense (Loss)/profit attributable to equity holders of the Company Other segment information Depreciation Capital expenditures Provision for/(reversal of) impairment of – intangible assets – investments in associated companies – trade receivables		Continuing	Discontinued Mobile communications Total services HK$’000 HK$’000 16,515 1,402,827 (33,899 ) 60,706 823 716 (65,436 ) 1,022,979 (98,512 ) 1,084,401 (62,786 ) (34,319 ) (161,298 ) 1,050,082 27,731 – (133,567 ) 1,050,082 – (4,873 ) (133,567 ) 1,045,209 996 198,703 86 97,354 72,959 – (7,523 ) – 215 8,706
	Technology related services HK$’000 16,515 (14,759 ) – (72,959 ) – – – 867 86 72,959 – 215	Unallocated HK$’000 – (19,140 ) 823 7,523 (62,786 ) 27,731 – 129 – – (7,523 ) –

30 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

The segment assets and liabilities as at 30 June 2007 are as follows:

Segment assets Segment liabilities	Technology related services HK$’000 9,050 7,624	Unallocated HK$’000 55,368 1,108	Total HK$’000 64,418

			8,732

The segment assets and liabilities as at 30 June 2006 are as follows:

Segment assets Investments in associated company Segment liabilities	Technology related services HK$’000 11,292 – 6,458	Unallocated HK$’000 142,357 2,142,737 2,387,217	Total HK$’000 153,649 2,142,737

			2,393,675

(b) Secondary reporting format – geographical segments

The Group is operating in two main geographical areas:

Hong Kong: Technology related services for financial year 2007

Mobile communications services, which are classified as discontinued operations, and technology related services for financial year 2006

Mainland China: Technology related services

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

Hong Kong Mainland China	Segment assets As at As at 30 June 30 June 2007 2006 HK$’000 HK$’000 55,318 142,564 9,100 11,085 64,418 153,649	Segment assets As at As at 30 June 30 June 2007 2006 HK$’000 HK$’000 55,318 142,564 9,100 11,085 64,418 153,649
		153,649

31 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Hong Kong – continuing – discontinued Mainland China	Turnover 2007 2006 HK$’000 HK$’000 – – – 1,402,827 14,155 16,515 14,155 1,419,342	Capital expenditure 2007 2006 HK$’000 HK$’000 676 – – 97,354 116 86 792 97,440	Capital expenditure 2007 2006 HK$’000 HK$’000 676 – – 97,354 116 86 792 97,440
			97,440

8 DISCONTINUED OPERATIONS

In prior year, the Group entered into a merger agreement and amendment agreements (collectively the “Merger Agreement”) pursuant to which the Group disposed of its entire interests in New World PCS Holdings Limited (“NWPCS Holdings”) to Telstra CSL Limited which has changed its name to CSL New World Mobility Limited (“CSL NWM”) and made a cash payment of HK$244 million in exchange for the acquisition of 23.6% of the issued share capital of CSL NWM and its subsidiaries (collectively the “CSL NWM Group” representing the enlarged group combining Telstra CSL Limited and its subsidiaries and NWPCS Holdings and its subsidiaries (the “NWPCS Group”)), and an amount due from CSL NWM, the then associated company, of HK$113,328,000. Hence, the NWPCS Group ceased to be subsidiaries of the Group. The Merger Agreement was approved by the shareholders of the Company at the Extraordinary General Meeting on 24 March 2006 and completed on 31 March 2006.

32 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

An analysis of the results and cash flows of the discontinued operations for the financial year 2006 is as follows:

Turnover Cost of sales Gross profit Other revenue Other losses Selling expenses Administrative expenses Operating profit Finance costs Gain on disposal of subsidiaries Profit before income tax Income tax expense Profit from discontinued operations Net cash inflow from operating activities Net cash outflow from investing activities Net cash outflow from financing activities Total net cash outflow 9 OTHER REvENUE Bank interest income 10 OTHER NET GAINS/(LOSSES) Loss on disposal of property, plant and equipment Gain on early extinguishment of non-current liabilities_(Note 22) Gain on disposal of a subsidiary(Note 22)_ Impairment loss on intangible assets Reversal of impairment on investment in an associated company	2007 HK$’000 1,770 2007 HK$’000 (218 ) 6,908 305,790 – – 312,480	2006 HK$’000 1,402,827 (836,095 ) 566,732 716 (545 ) (85,313 ) (420,168 ) 61,422 (34,319 ) 1,022,979 1,050,082 (4,873 ) 1,045,209 131,421 (96,302 ) (102,500 ) (67,381 ) 2006 HK$’000 823 2006 HK$’000 – – – (72,959 ) 7,523 (65,436 )

33 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

11 OPERATING PROFIT/(LOSS)

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

Auditor’s remuneration Depreciation of property, plant and equipment Net exchange (gains)/losses Operating lease rentals for land and buildings Provision for impairment of trade receivables Staff costs, including directors’ emoluments_(Note 13)_ 12 FINANCE COSTS Interest on loans from a fellow subsidiary Interest on promissory note issued to a fellow subsidiary Interest on convertible bond Interest on subscription note 13 STAFF COSTS (INCLUDING DIRECTORS’ EMOLUMENTS) Wages and salaries Bonuses Pension costs – defined contribution plans	2007 HK$’000 700 1,442 (235 ) 1,729 – 16,204 2007 HK$’000 5,544 22,855 443 24,748 53,590 2007 HK$’000 11,514 2,736 1,954 16,204	2006 HK$’000 1,347 996 384 1,021 215 20,213

		2006 HK$’000 3,618 11,499 860 46,809
		62,786

		2006 HK$’000 12,182 6,165 1,866
		20,213

34 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

14 DIRECTORS’ AND SENIOR MANAGEMENT’S EMOLUMENTS

(a) Directors’ emoluments

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

Fees Other emoluments: Salaries and allowances Bonuses Pension costs – defined contribution plans	2007 HK$’000 682 1,954 2,485 131 5,252	2006 HK$’000 780 3,000 6,505 225
		10,510

Note: For the financial year ended 2006, HK$5,786,000 was included in staff costs of loss from continuing operations and included in note 13 presented above. Remaining HK$4,724,000 was included in profit from discontinued operations.

None of the directors of the Company waived any emoluments during the year and prior year.

Details of the emoluments paid and payable to the directors of the Company are as follows:

Name of Director Executive Directors Dr. Wai Fung Man, Norman Dr. Cheng Kar Shun, Henry Mr. Doo Wai Hoi, William,JP Mr. To Hin Tsun, Gerald Mr. Chow Yu Chun, Alexander Mr. Lo Lin Shing, Simon Mr. Ho Hau Chong, Norman Independent Non-Executive Directors Mr. Wei Chi Kuan, Kenny (Resigned on 8 September 2006) Mr. Kwong Che Keung, Gordon Mr. Hui Chiu Chung,JP* Mr. Tsui Hing Chuen, William,JP Mr. Lau Wai Piu Mr. Lee Kee Wai, Frank	Fees HK$’000 30 71 30 30 30 70 70 53 71 71 97 38 21 682	year ended 30 June 2007 Salaries and Pension allowances Bonuses costs HK$’000 HK$’000 HK$’000 1,954 1,775 131 – – – – – – – 355 – – 355 – – – – – – – – – – – – – – – – – – – – – – – – – 1,954 2,485 131	Total HK$’000 3,890 71 30 385 385 70 70 53 71 71 97 38 21
			5,252

35 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Name of Director Executive Directors Dr. Wai Fung Man, Norman Dr. Cheng Kar Shun, Henry Mr. Doo Wai Hoi, William,JP Mr. To Hin Tsun, Gerald Mr. Chow Yu Chun, Alexander Non-Executive Directors Mr. Lo Lin Shing, Simon # Mr. Ho Hau Chong, Norman # Independent Non-Executive Directors Mr. Wei Chi Kuan, Kenny (Resigned on 8 September 2006) Mr. Kwong Che Keung, Gordon Mr. Hui Chiu Chung,JP*	Fees HK$’000 50 120 50 50 50 50 50 120 120 120 780	year ended 30 June 2006 Salaries and Pension allowances Bonuses costs HK$’000 HK$’000 HK$’000 3,000 5,305 225 – – – – – – – 600 – – 600 – – – – – – – – – – – – – – – – 3,000 6,505 225	Total HK$’000 8,580 120 50 650 650 50 50 120 120 120
			10,510

They have resigned as executive Directors or independent non-executive Directors of the Company on 1 February 2007.

Mr. Lo Lin Shing, Simon and Mr Ho Hau Chong, Norman have been re-designated as executive Directors from non-executive Directors of the Company on 1 February 2007.

(b) Five highest paid individuals

The five individuals whose emoluments were the highest in the Group for the year include one (2006: one) director whose emoluments are reflected in the analysis presented above. The emoluments payable to the remaining four (2006: four) individuals during the year are as follows:

Salaries and allowances Bonuses Pension costs – defined contribution plans	2007 HK$’000 1,459 192 75 1,726	2006 HK$’000 4,636 2,188 281
		7,105

36 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

The emoluments of the individuals fell within the following bands:

	Number of individuals
	2007	2006
Emolument bands
Below HK$1,000,000	4	–
HK$1,000,001 to HK$1,500,000	–	2
HK$1,500,001 to HK$2,000,000	–	1
HK$2,000,001 to HK$2,500,000	–	1

15 RETIREMENT BENEFITS

The Group contributes to two defined contribution retirement schemes in Hong Kong 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 Group’s contributions 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 Group’s contributions.

The MPF Scheme has been established under Hong Kong Mandatory Provident Fund Scheme Ordinance in December 2000. The then existing employees of the Group in Hong Kong could elect to join the MPF Scheme, while all new employees joining the 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 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 Group also contributes to employee pension schemes established by municipal government in respect of certain subsidiaries in the PRC.

The aggregate employer’s contributions, net of forfeited contributions, which have been dealt with in the consolidated income statement during the year are as follows:

Gross scheme contributions Less: Forfeited contributions utilised to offset contributions for the year Net scheme contributions Less: Amount included in discontinued operations Net scheme contributions of continuing operations	2007 HK$’000 1,954 – 1,954 – 1,954	2006 HK$’000 6,272 (643 )
		5,629 (3,763 )
		1,866

As at 30 June 2007, no forfeited contributions were available to reduce future contributions (2006: Nil). No contributions were payable by the Group as at 30 June 2007 (2006: Nil).

37 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

16 INCOME TAX EXPENSE

No provision for Hong Kong profits tax and overseas taxation (2006: Nil) has been made for the year as the Company and a number of its subsidiaries have no assessable profit for the year and certain subsidiaries have sufficient tax losses brought forward to offset their estimated assessable profit for the year.

The taxation on the Group’s operating profit/(loss) before share of results of associated companies differs from the theoretical amount that would arise using the taxation rate of the home country of the consolidated entities as follows:

Operating profit/(loss) before share of results of associated companies Calculated at a taxation rate of Notional tax charge/(credit) on operating profit/(loss) Effect of different taxation rates in other countries Income not subject to tax Expenses not deductible for taxation purposes Unrecognised tax losses Income tax expense	2007 HK$’000 230,476 17.5% 40,334 (1,927 ) (55,262 ) 5,531 11,324 –	2006 HK$’000 (161,298 ) 17.5% (28,227 ) (2,195 ) (321 ) 22,840 7,903 –

17 EARNINGS/(LOSS) PER SHARE

The calculations of basic and diluted earnings/(loss) per shares are based on following data:

Profit/(loss) from continuing operations attributable to equity holders Profit from discontinued operations attributable to equity holders for purpose of calculating basic and diluted earnings per share Profit attributable to equity holders Number of shares Weighted average number of ordinary shares in issue for the purpose of calculating basic earnings/(loss) per share Effect of dilutive potential ordinary shares_(Note)_: Share options Weighted average number of ordinary shares in issue for the purpose of calculating diluted earnings per share	2007 HK$’000 293,053 – 293,053 96,692,965 35,951 96,728,916	2006 HK$’000 (133,567 ) 1,045,209 911,642 90,379,272 – 90,379,272

Note: No diluted earnings/(loss) per share are presented for the year ended 30 June 2006 as the conversion of convertible bond, subscription note and exercise of share options would not have dilutive effect on the loss from continuing operations.

38 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

18 DIvIDEND

		2007	2006
		HK$’000	HK$’000
Special dividend of HK$1.2	(2006: Nil) per share	117,230	–

At a meeting held on 4 January 2007, the Directors declared a special dividend of HK$1.2 per ordinary share. The Directors do not propose to declare a final dividend for the year ended 30 June 2007 (2006: Nil).

19 LOSS ATTRIBUTABLE TO EQUITy HOLDERS

The loss attributable to equity holders is dealt with in the financial statements of the Company to the extent of HK$1,109,000 for the year ended 30 June 2007 (2006: HK$145,573,000).

20 PROPERTy, PLANT AND EQUIPMENT

(a) Group

Cost At 1 July 2005 Additions Acquisition of subsidiaries Disposal of subsidiaries Reclassification Disposals At 30 June 2006 Additions Exchange difference Disposals At 30 June 2007	Investment properties HK$’000 – – 3,900 – (3,900 ) – – – – – –	Leasehold buildings HK$’000 – – – – 3,900 – 3,900 – – – 3,900	Computer equipment HK$’000 215,651 4,177 2,118 (216,333 ) (743 ) (2,674 ) 2,196 75 82 (10 ) 2,343	Furniture and fittings HK$’000 21,298 171 232 (21,374 ) (46 ) (41 ) 240 97 21 (210 ) 148	Leasehold improve- ments HK$’000 45,401 1,997 114 (47,328 ) (30 ) (39 ) 115 228 – (343 ) –	Motor vehicles HK$’000 2,096 – 177 (920 ) – (495 ) 858 392 6 (489 ) 767	Digital switching and Testing transmission Construction equipment system in progress HK$’000 HK$’000 HK$’000 28,175 2,197,591 22,798 – 82,307 8,788 – – – (28,175 ) (2,278,842 ) (32,389 ) – 16 803 – (1,072 ) – – – – – – – – – – – – – – – –	Total HK$’000 2,533,010 97,440 6,541 (2,625,361 ) – (4,321 )
								7,309 792 109 (1,052 )
								7,158

39 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Accumulated depreciation At 1 July 2005 Charge for the year Disposals Disposal of subsidiaries Reclassification At 30 June 2006 Charge for the year Disposals Exchange difference At 30 June 2007 Net book value At 30 June 2006 At 30 June 2007	Investment properties HK$’000 – – – – – – – – – – – –	Leasehold buildings HK$’000 – 25 – – – 25 102 – – 127 3,875 3,773	Computer equipment HK$’000 150,136 18,778 (2,654 ) (165,616 ) (38 ) 606 921 (4 ) – 1,523 1,590 820	Furniture and fittings HK$’000 19,496 862 (40 ) (20,256 ) 38 100 106 (137 ) – 69 140 79	Leasehold improve- ments HK$’000 30,814 6,102 (20 ) (36,798 ) – 98 77 (192 ) 17 – 17 –	Motor vehicles HK$’000 1,072 276 (495 ) (556 ) – 297 236 (477 ) – 56 561 711	Digital switching and Testing transmission Construction equipment system in progress HK$’000 HK$’000 HK$’000 27,969 1,235,222 – 150 173,506 – – (231 ) – (28,119 ) (1,408,497 ) – – – – – – – – – – – – – – – – – – – – – – – – –	Total HK$’000 1,464,709 199,699 (3,440 ) (1,659,842 ) –
								1,126 1,442 (810 ) 17
								1,775

								6,183

								5,383

Note: The leasehold buildings are situated on leasehold land in Mainland China held on a medium term lease.

40 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

(b) Company

Leasehold improvement HK$’000 Cost At 1 July 2005 – Disposals – At 30 June 2006 – Additions 228 Disposals (228 ) At 30 June 2007 – --------------- Accumulated depreciation At 1 July 2005 – Disposals – At 30 June 2006 – Charge for the year 77 Disposals (77 ) At 30 June 2007 – --------------- Net book value At 30 June 2006 – At 30 June 2007 – 21 INvESTMENTS IN SUBSIDIARIES Unlisted investments, at costs_(Note a) Amounts due from subsidiaries(Note b)_ Less: Provision for impairment	Computer equipment HK$’000 – – – 10 (10 ) – --------------- – – – 4 (4 ) – --------------- – –	Furniture and Motor fixtures vehicle HK$’000 HK$’000 – 242 – (242 ) – – 91 32 (91 ) (32 ) – – --------------- --------------- – 152 – (152 ) – – 30 32 (30 ) (32 ) – – --------------- --------------- – – – – Company 2007 HK$’000 31,939 322,860 354,799 (307,464 ) 47,335	Furniture and Motor fixtures vehicle HK$’000 HK$’000 – 242 – (242 ) – – 91 32 (91 ) (32 ) – – --------------- --------------- – 152 – (152 ) – – 30 32 (30 ) (32 ) – – --------------- --------------- – – – – Company 2007 HK$’000 31,939 322,860 354,799 (307,464 ) 47,335	Total HK$’000 242 (242 ) – 361 (361 ) – --------------- 152 (152 ) – 143 (143 ) – --------------- – – 2006 HK$’000 31,939 2,753,071 2,785,010 (287,434 ) 2,497,576

		----

		----

41 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes:

(a) Particulars of the principal subsidiaries of the Company are as follows:

		Particulars
	Place of	of issued	Interest	Interest
	incorporation	share/	held by	held by
	and	registered	the	the
Name	operation	capital	Company	Group	Principal activities
Jetco Technologies Limited	Hong Kong	1,250,000	–	100%	Investment holding
		Ordinary shares
		of HK$1 each
上海易圖通信息	The PRC	Registered capital	–	80%	Provision of
技術有限公司		of Renminbi			Internet content
		(“RMB”)			services and
		10,000,000			telecommu-
		nication value-
					added services
					in the PRC

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

22 INvESTMENTS IN ASSOCIATED COMPANIES

At beginning of the year Acquisition of associated companies Share of results of associated companies – Profit before income tax – Income tax expense Reversal of impairment loss_(Note a) Dividend income(Note a) Disposal of associated companies(Note b)_ At end of the year	Group 2007 2006 HK$’000 HK$’000 2,142,737 – – 2,115,006 78,434 34,952 (15,857 ) (7,221 ) – 7,523 2,205,314 2,150,260 (17,228 ) (7,523 ) (2,188,086 ) – – 2,142,737

42 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes:

(a) During the year, the Group received dividend income of HK$17,228,000 from an associated company, CSL NWM, in which the Company indirectly held 23.6% interest of its issued share capital. The associated company was disposed of on 4 January 2007.

In prior year, the Group received dividend income of HK$7,523,000 from an associated company, Han International Consulting Company Limited, in which the Company held 30% interest of its issued share capital. Hence, the provision for impairment of the investment in an associated company was reversed by HK$7,523,000. The associated company was subsequently dissolved in January 2006.

(b) On 4 January 2007, the Company completed the disposal of associated companies through the disposal of entire issued share capital of Upper Start Holdings Limited (“Upper Start”), the wholly owned subsidiary which holds 23.6% interest in the CSL NWM Group (the “Disposal”), at the consideration of HK$2,500 million to New World Development Limited (“NWD”).

The consideration of the Disposal was satisfied by way of set-off against a sum equivalent to the aggregate amounts due to fellow subsidiaries, owing under the subscription note, the convertible bond, the promissory note and the loans from the group companies of NWD, which resulting in full discharge of the subscription note, the convertible bond, the promissory note and the loans; and the remaining amount of HK$169,547,000 (Note 31) was settled in cash upon the completion of Disposal. The disposal resulted in a gain on disposal of a subsidiary, net of the related legal and professional fees of HK$6,124,000, of HK$305,790,000 (Note 10). The early extinguishment of the subscription note and convertible bond upon the Disposal resulted in a gain of HK$6,908,000 (Note 10) and a reversal of convertible bond reserve of HK$26,657,000 (Note 30(a)).

23 INTANGIBLE ASSETS

At 1 July 2005 Acquisition of subsidiaries Impairment loss_(Note)_ At 30 June 2006 and 2007	Licence HK$’000 – 1,470 (1,470 ) –	Group Goodwill HK$’000 65,964 5,525 (71,489 ) –	Total HK$’000 65,964 6,995 (72,959 ) –

Note: In prior year, the impairment loss was provided for the licence for the operation of a music website. As at 30 June 2006, the carrying amounts of the assets of the business unit were less than the recoverable amount of the business unit, which was determined based on value-in-use calculations using cash flow projections covering a 5-year period based on annual revenue growth rate ranging from 0% to 20% and discount rate of 5%. Hence, impairment loss was provided for the goodwill.

43 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

24 DEFERRED TAXATION

Deferred taxation are calculated in full on temporary differences under the liability method using a principal taxation rate of 17.5%.

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

At beginning of the year Deferred taxation charged to consolidated income statement_(Note 8)_ Disposal of subsidiaries At end of the year	Group 2007 2006 HK$’000 HK$’000 – 167,472 – (4,873 ) – (162,599 ) – –

Deferred income tax assets are recognised for tax losses carry forwards to the extent that realisation of the related tax benefit through the future taxable profits is probable. As at 30 June 2007, the Group has unrecognised tax losses of HK$270,091,000 (2006: HK$257,767,000) to carry forward against future taxable income. Except for tax losses of HK$84,343,000 (2006: HK$90,091,000) expiring within 5 years, the balance has no expiry date. These tax losses have not been recognised due to uncertainty of their future recoverability.

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

Deferred tax assets At 1 July 2005 Charged to consolidated income statement Disposal of subsidiaries At 30 June 2006 and at 30 June 2007 Deferred tax liabilities At 1 July 2005 Credited to consolidated income statement Disposal of subsidiaries	Provision HK$’000 2,076 (24 ) (2,052 ) –	Group Tax losses HK$’000 260,663 (22,446 ) (238,217 ) –	Total HK$’000 262,739 (22,470 ) (240,269 ) – Group Accelerated tax depreciation HK$’000 95,267 (17,597 ) (77,670 )

At 30 June 2006 and at 30 June 2007 –

44 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

25 TRADE RECEIvABLES

Trade receivables Less: Provision for impairment of trade receivables Trade receivables – net	Group 2007 2006 HK$’000 HK$’000 7,382 10,629 (6,197 ) (6,363 ) 1,185 4,266	Group 2007 2006 HK$’000 HK$’000 7,382 10,629 (6,197 ) (6,363 ) 1,185 4,266
		4,266

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

1 – 30 days 31 – 60 days 61 – 90 days Over 90 days	Group 2007 2006 HK$’000 HK$’000 137 2,483 245 1,648 329 112 474 23 1,185 4,266	Group 2007 2006 HK$’000 HK$’000 137 2,483 245 1,648 329 112 474 23 1,185 4,266
		4,266

The Group’ sales are made to several major customers and there is concentration of credit risks. Collections of outstanding receivable balances are closely monitored on an ongoing basis to minimise such credit risk.

The Group has recognised a write back of provision of HK$1,079,000 (2006: HK$215,000) upon the settlement of trade receivables previously provided for. These amounts have been included in administrative expenses in the consolidated income statement.

The carrying amount of trade receivables approximates its fair value.

26 AMOUNT DUE FROM A RELATED COMPANy – GROUP AND COMPANy

It is unsecured, interest free and repayable on demand.

Mr. Lo Lin Shing, Simon, a director of the Company, is also a director of the related company.

45 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

27 CASH AND BANK BALANCES

Balance with original maturities of three months or less_(Note a) Balances with original maturities of more than three months(Note b)_	Group 2007 2006 HK$’000 HK$’000 54,652 26,921 829 770 55,481 27,691	Company 2007 2006 HK$’000 HK$’000 47,445 10,564 – – 47,445 10,564	Company 2007 2006 HK$’000 HK$’000 47,445 10,564 – – 47,445 10,564
			10,564

Notes:

(a) Included in the cash and bank balances of the Group as at 30 June 2007 included balances with the PRC banks totalling HK$1,568,000 (30 June 2006: HK$804,000) which were denominated in RMB. The remittance of these balances outside the PRC is subject to foreign exchange control rules and regulations of the PRC.
The weighted average effective interest rate on short-term bank deposits was 4.02% (2006: 4.11%) per annum. The maturity days of the short-term bank deposit was ranging from one week to one month.
(b) As at 30 June 2007, bank balances denominated in RMB of certain subsidiaries of the Group in the amount of approximately HK$829,000 (2006: HK$770,000) have been frozen under the PRC court order in relation to claims filed against the subsidiaries.

28 TRADE PAyABLES

The aging analysis of the trade payables is as follows:

1 – 30 days 31 – 60 days 61 – 90 days Over 90 days	Group 2007 2006 HK$’000 HK$’000 55 80 – 120 – 172 135 437 190 809	Group 2007 2006 HK$’000 HK$’000 55 80 – 120 – 172 135 437 190 809
		809

The carrying amount of trade payables approximates its fair value.

46 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

29 SHARE CAPITAL

At 1 July 2005 Issue of new ordinary shares Disposal of subsidiaries At 30 June 2006 Issue of new ordinary shares_(Note a) Transfer from accumulated losses(Note b) At 30 June 2007 Authorised: At 1 July 2005, 30 June 2006 and 2007 Issued and fully paid: At 1 July 2005 Issue of new ordinary shares At 30 June 2006 Issue of new ordinary shares(Note a)_ At 30 June 2007	Group HK$’000 300 16,154 (300 ) 16,154 2,356 79,182 97,692 Company Ordinary shares of HK$1.00 each No. of shares HK$’000 2,000,000,000 2,000,000 79,182,223 79,182 16,153,846 16,154 95,336,069 95,336 2,356,000 2,356 97,692,069 97,692

Notes:

(a) Share option schemes

At an extraordinary general meeting of the Company held on 28 May 2002, the shareholders of the Company approved the termination of the share option scheme adopted by the Company on 11 September 1998 (the “1998 Share Option Scheme”) and the adoption of a new share option scheme (the “2002 Share Option Scheme”) in compliance with the requirements of the Rules Governing the Listing of Securities on the Stock Exchanges (the “Listing Rules”). Upon termination of the 1998 Share Option Scheme, no further options could be granted under the 1998 Share Option Scheme. However, the outstanding share options granted there under would continue to be valid and exercisable in accordance with the provisions of the 1998 Share Option Scheme.

The 2002 Share Option Scheme is valid and effective for a period of 10 years commencing on 28 May 2002. The total number of shares issued and to be issued upon exercise of the options granted to each participant (including both exercised and outstanding options) in any 12-month period must not exceed 1% of the shares in issue from time to time unless separately approved by the shareholders in general meeting.

47 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

An option may be exercised in accordance with the terms of the 2002 Share Option Scheme at any time during the period as the board of directors at their absolute discretion determine and in any event such period shall not be more than 10 years from the date upon which the offer of the option is made to the grantee. The directors may, if consider appropriate, determine the minimum period for which an option must be held before it can be exercised.

Upon acceptance of the offer for an option, the grantee shall pay HK$1.00 as consideration for the grant. The subscription price of a share in respect of any option granted shall be determined by the board of directors at their absolute discretion but shall be at least 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 5 business days immediately preceding the date of grant; and (iii) the nominal value of a share.

Movements in the share options are as follows:

Exercise Exercise period price HK$ 1998 Share Option Scheme: At 1 January 2003 Lapsed 15.8.2000 to 14.8.2003 0.284 9.2.2002 to 8.2.2008 2.440 (Note ii) At 31 December 2003 Adjusted_(Note i)_ Lapsed At 30 June 2006 and at 30 June 2007	Number of options 159,900,000 (114,000,000 ) (900,000 ) 45,000,000 (44,352,000 ) (448,000 ) 200,000

Notes:

(i) The number and the exercise price of these share options were adjusted on 28 July 2004 and upon consolidation of the Company’s shares.
(ii) Exercise price has been adjusted from HK$0.150 to HK$2.440.
48 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Exercise Exercise period price HK$ 2002 Share Option Scheme: At 1 January 2003 – – Granted 28.1.2005 to 31.12.2010 1.260 8.4.2005 to 31.12.2010 1.276 At 30 June 2005 Lapsed 28.1.2005 to 31.12.2010 1.260 At 30 June 2006 Exercised 28.1.2005 to 31.12.2010 1.260 Exercised 8.4.2005 to 31.12.2010 1.276 Cancelled 28.1.2005 to 31.12.2010 1.260 At 30 June 2007	Number of options – 2,916,000 78,000
	2,994,000 (78,000 )
	2,916,000 (2,278,000 ) (78,000 ) (482,000 )
	78,000

Share options outstanding at the end of the year have the following expiry date and exercise prices:

Exercise period Exercise price HK$ Directors 9.2.2002 to 8.2.2008 2.440 28.1.2005 to 31.12.2010 1.26 8.4.2005 to 31.12.2010 1.276	As at 30 June 2007 Number of options 200,000 78,000 – 278,000	As at 30 June 2006 Number of options 200,000 2,838,000 78,000
		3,116,000

(b) On 4 January 2007, the Company disposed of the entire issued share capital of Upper Start which holds 23.6% equity interest in the CSL NWM Group and CSL NWM Group ceased to be the associated companies of the Group accordingly. After the Disposal (Note 22), a total of HK$85,784,000 has been transferred from accumulated losses to share capital of HK$79,182,000 and share premium of HK$6,602,000 (Note 30(a)) so as to restate the equity structure of the Group to be consistent with that of the Company.

49 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

30 OTHER RESERvES

(a) Group

At 1 July 2005 Premium on issue of new ordinary shares Disposal of subsidiaries At 30 June 2006 Premium on issue of new ordinary shares Currency translation differences Reversal of reserve due to early extinguishment of subscription note and convertible bond upon the Disposal_(Note 22) Transfer from/(to) accumulated losses(Note)_ At 30 June 2007	Share premium HK$’000 914,792 4,846 (914,792 ) 4,846 614 – – 6,602 12,062	Consolidation reserve HK$’000 (1,115,538 ) – 915,092 (200,446 ) – – – 200,446 –	Convertible bond reserve HK$’000 112,695 – – 112,695 – – (26,657 ) (86,038 ) –	Currency translation reserve HK$’000 – – – – – 839 – – 839	Total HK$’000 (88,051 ) 4,846 300 (82,905 ) 614 839 (26,657 ) 121,010 12,901

Note: Upon the completion of the Disposal on 4 January 2007, the Group has eliminated the consolidation reserve arising from the reverse acquisition completed on 6 July 2004 by transferring it to accumulated losses. Simultaneously, the Group also eliminated convertible bond reserve by transferring it from accumulated losses as full repayments of the convertible bond and subscription note have been made by the Group upon the Disposal.

50 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

(b) Company

At 1 July 2005 Premium on issue of new ordinary shares At 30 June 2006 Premium on issue of new ordinary shares Reversal of reserve due to early extinguishment of subscription note and convertible bond upon the Disposal (Note 22) Transfer to accumulated losses At 30 June 2007	Share premium HK$’000 6,602 4,846 11,448 614 – – 12,062	Convertible bond reserve HK$’000 112,695 – 112,695 – (26,657 ) (86,038 ) –	Total HK$’000 119,297 4,846
			124,143 614 (26,657 ) (86,038 )
			12,062

Note: The share premium, if any, is to be applied as the directors of the Company may consider appropriate, subject to the compliance with the laws of Cayman Islands.

31 PROMISSORy NOTE ISSUED TO AND LOANS FROM A FELLOw SUBSIDIARy, CONvERTIBLE BOND AND SUBSCRIPTION NOTE – GROUP AND COMPANy

All the amounts have been repaid on 4 January 2007 by way of set-off against the considerations of the Disposal (Note 22).

The carrying values are as follows:

Promissory note and loans Convertible bond Subscription note Less: Consideration Net cash received from the Disposal	Group and 4 January 2007 HK$’000 1,222,488 28,863 1,079,102 2,330,453 2,500,000 169,547	Company 30 June 2006 HK$’000 1,164,773 28,261 1,178,008
		2,371,042

51 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

32 NOTE TO CONSOLIDATED CASH FLOw STATEMENT

Reconciliation of operating profit/(loss) before income tax to net cash used in operations:

Operating profit/(loss) Depreciation Loss on disposal of property, plant and equipment Gain on early extinguishment of non-current liabilities Gain on disposal of a subsidiary Interest income Interest expenses Impairment loss on intangible assets Reversal of impairment of investment in associated company Share of profit from associated companies Operating loss before working capital changes Decrease/(increase) in trade receivables (Increase)/decrease in prepayments, deposits and other receivables Decrease in amounts due from fellow subsidiaries and a related company Decrease in trade payables (Decrease)/increase in accrued charges, other payables, deposits received and deferred income (Increase)/decrease in bank balances with maturities of more than three months Net cash used in operations	2007 HK$’000 293,053 1,442 218 (6,908 ) (311,914 ) (1,770 ) 53,590 – – (62,577 ) (34,866 ) 3,081 (188 ) – (619 ) (7,237 ) (59 ) (39,888 )	2006 HK$’000 (133,567 ) 996 – – – (823 ) 62,786 72,959 (7,523 ) (27,731 ) (32,903 ) (1,252 ) 490 (48 ) (393 ) 7,785 17 (26,304 )

52 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

33 ACQUISITION OF CSL NwM GROUP ON 31 MARCH 2006

As mentioned in Note 8, the Group completed the acquisition of 23.6% of the CSL NWM Group on 31 March 2006. As a consequence, the CSL NWM Group had become associated companies of the Group.

Details of net assets acquired and goodwill were as follows:

Purchase consideration:
Carrying amounts of 23.6% of net assets of the NWPCS Group at the date of disposal
Fair value of 76.4% of net assets of the NWPCS Group at the date of acquisition
Amount due from an associated company
Sales consideration of disposal of the NWPCS Group
Cash consideration
Professional fee incurred for the acquisition
Fair values of share of net assets acquired – shown as below
Goodwill

HK$’000
219,237
1,732,713
(113,328 )
1,838,622
244,024
32,360
2,115,006
(1,107,071 )
1,007,935

The fair values and carrying amounts of the share of assets and liabilities of the CSL NWM Group at the date of acquisition were as follows:

Non-current assets Current assets Non-current liabilities Current liabilities Net assets of the CSL NWM Group Share of 23.6% of the net assets Cash consideration Professional fee paid for the acquisition Cash outflow on acquisition	Fair values HK$’000 6,736,856 600,566 (838,348 ) (1,808,097 ) 4,690,977 1,107,071	Carrying amounts HK$’000 7,512,480 598,743 (959,348 ) (1,808,097 ) 5,343,778 1,261,132 244,024 32,360 276,384

53 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

34 DISPOSAL OF SUBSIDIARIES

(a) As mentioned in Note 8, the Group disposed of its interests in the NWPCS Group on 31 March 2006.

Details of net assets disposed of and gain on the disposal were as follows:

Sales consideration:
Investments in associated companies
Amount due from an associated company
Total sales consideration
Net book values of net assets disposed of
Gain on disposal of subsidiaries
The assets and liabilities disposed of at the date of disposal were as follows:
Property, plant and equipment
Deferred taxation
Rental and other deposits
Amount due from the immediate holding company
Amount due from fellow subsidiaries
Inventories
Trade receivables
Prepayment, other receivables, rental and other deposits
Bank overdraft
Trade payables
Other payables and accruals
Amount due to a related company
Asset retirement obligations

HK$’000
1,838,622
113,328
1,951,950
(928,971 )
1,022,979
HK$’000
965,519
162,599
5,949
5,625
1,784
25,594
107,035
69,949
(384 )
(73,251 )
(334,709 )
(40 )
(6,699 )
928,971

54 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

(b) As mentioned in Note 22, the Group disposed of its interests in Upper Start on 4 January 2007.

Details of net assets disposed of and gain on the disposal were as follows:

Sales consideration Net book values of net assets disposed of Legal and professional fees incurred for the Disposal Gain on disposal of a subsidiary The assets disposed of at the date of disposal were as follows: Investments in associated companies	HK$’000 2,500,000 (2,188,086 ) (6,124 )
	305,790

	2,188,086

35 OPERATING LEASE COMMITMENTS

At 30 June 2007, the Group had total future aggregate minimum lease payments under non-cancellable operating leases which expire as follows:

Land and buildings No later than 1 year Later than 1 year and no later than 5 years	2007 HK$’000 352 – 352	2006 HK$’000 873 368
		1,241

55 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

36 RELATED PARTy TRANSACTIONS

The Group is controlled by Moral Glory International Limited (incorporated in the British Virgin Islands), which owns 56.66% of the Company’s shares. The remaining 43.34% of the shares are widely held. In the opinion of the Directors, the ultimate holding company of the Company is Moral Glory International Limited (incorporated in the British Virgin Islands).

(a) The continuing and discontinued operations of the Group undertook the following material transactions with related parties, which were carried out in the normal course of the business, during the year:

		2007	2006
	Note	HK$’000	HK$’000
Purchases from fellow subsidiaries	(a)	–	(25,853 )
Purchases of property, plant and equipment
from a related company	(b)	–	(1,615 )
Service fee income from fellow subsidiaries	(c)	–	3,443
Rental expenses paid/payable to fellow subsidiaries	(d)	(382 )	(14,469 )
Loan interest paid/payable to a fellow subsidiary	(e)	(5,544 )	(34,190 )
Interest paid/payable for the promissory note
issued to a fellow subsidiary	(e)	(22,855 )	(11,499 )
Interest paid/payable for the subscription note
to an immediate holding company	(f)	(24,748 )	(9,000 )
Interest paid/payable for the convertible bond
to a fellow subsidiary	(g)	(443 )	(849 )
Reimbursement of office administrative expenses
and fee charged from a related company	(h)	–	(6,636 )

Notes:

(a) Purchases were conducted in the normal course of business which were subject to the contract terms as negotiated by the parties involved.
(b) Purchases were conducted in the normal course of business which were subject to the contract terms as negotiated by the parties involved. Certain directors of the Company were also directors of the related company.
(c) Service fee was subject to the terms of the contracts entered by the parties involved.
(d) Rental expenses were charged at a fixed monthly fee subject to the terms of the contract signed by the parties involved.
(e) The interest was charged at 0.65% above HIBOR per annum.
(f) Interest charged was charged at 0.75% per annum.
(g) Interest charged was charged at 3% per annum and was payable semi-annually in arrears.
(h) The reimbursement of office administrative expenses were charged on actual cost basis at a mark-up of 15%.
56 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

(b) Year end balances with related parties are as follows:

Receivable from a related company Mongolia Energy Corporation (Greater China) Ltd Receivable from an associated company CSL NWM Payables to a fellow subsidiaries Loans from a fellow subsidiary Promissory note issued to a fellow subsidiary Convertible bond Subscription note Amounts to fellow subsidiaries Payable to an associated company NWPCS Holdings	2007 HK$’000 813 – – – – – – –	2006 HK$’000 813

		113,328

		278,024 886,749 28,261 1,178,008 420

		5,625

A related company is a company owned by a Director and a substantial shareholder of the Company.

The balances with related parties are unsecured, interest free and repayable on demand.

Salaries and other short-term employee benefits Post-employment benefits	2007 HK$’000 5,074 – 5,074	2006 HK$’000 17,747 506
		18,253

57 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

3. UNAUDITED CONSOLIDATED FINANCIAL INFORMATION OF THE GROUP FOR THE SIX MONTHS ENDED 31 DECEMBER 2007

The following are the unaudited condensed consolidated income statement of the Group for the six months ended 31 December 2007, the unaudited condensed consolidated balance sheet of the Group as at 31 December 2007, the unaudited condensed consolidated statements of changes in equity of the Group and the unaudited condensed consolidated cash flow statements of the Group for the six months ended 31 December 2007, together with accompanying notes to the condensed financial consolidated interim financial information extracted from the interim report of the Company for the six months ended 31 December 2007.

CONDENSED CONSOLIDATED INCOME STATEMENT

Note
Turnover
3
Cost of sales
Gross (loss)/profit
Other incomes
4
Selling expenses
Administrative expenses
Operating loss before finance costs
5
Finance costs
6
Operating loss
Share of results of associated companies
Loss before income tax
Income tax expense
7
Loss attributable to
equity holders of the Company
Loss per share for loss attributable to
the equity holders of the Company
– basic
8
– diluted
8

Unaudited
Six months ended
31 December
2007
2006
HK$’000
HK$’000
318
9,483
(677 )
(5,277 )
(359 )
4,206
927
1,371
(68 )
(2,120 )
(6,267 )
(21,414 )
(5,767 )
(17,957 )
–
(52,763 )
(5,767 )
(70,720 )
–
62,577
(5,767 )
(8,143 )
–
–
(5,767 )
(8,143 )
(HK$0.06 )
(HK$0.09 )
(HK$0.06 )
N/A

58 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

CONDENSED CONSOLIDATED BALANCE SHEET

Note ASSETS Non-current assets Property, plant and equipment 9 Investments in associated companies 10 Current assets Trade receivables 11 Prepayments and other receivables Amount due from a related company Cash and bank balances Total assets EQUITY Capital and reserves attributable to the equity holders of the Company Share capital 13 Other reserves Accumulated losses Total equity LIABILITIES Current liabilities Trade payables 12 Accrued charges, other payables, deposits received and deferred income Total liabilities Total equity and liabilities Net current assets Total assets less current liabilities	Unaudited As at 31 December 2007 HK$’000 4,835 – 4,835 42 1,025 813 48,641 50,521 55,356 97,692 13,886 (60,674 ) 50,904 155 4,297 4,452 55,356 46,069 50,904	Audited As at 30 June 2007 HK$’000 5,383 – 5,383 1,185 1,556 813 55,481 59,035 64,418 97,692 12,901 (54,907 ) 55,686 190 8,542 8,732 64,418 50,303 55,686

59 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

CONDENSED CONSOLIDATED CASH FLOw STATEMENT

Net cash outflow from operating activities Net cash (outflow)/inflow from investing activities Net cash inflow/(outflow) from financing activities Net decrease in cash and cash equivalents Cash and cash equivalents at the beginning of the period Cash and cash equivalents at the end of the period Analysis of cash and cash equivalents: Cash and bank balances Less: Restricted bank balances	Unaudited Six months ended 31 December 2007 2006 HK$’000 HK$’000 (4,648 ) (43,766 ) ---------------- ---------------- (1,363 ) 130,769 ---------------- ---------------- – (95,007 ) ---------------- ---------------- (6,011 ) (8,004 ) 54,652 26,921 48,641 18,917 48,641 19,718 – (801 ) 48,641 18,917

60 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITy

Balance at 1 July 2007 Loss for the period Currency translation differences Balance at 31 December 2007 Note Balance at 1 July 2006 Loss for the period Proceeds from shares issued 13 Currency translation differences Balance at 31 December 2006	Unaudited Six months ended 31 December 2007 Share Other Accumulated Capital reserves losses HK$’000 HK$’000 HK$’000 97,692 12,901 (54,907 ) – – (5,767 ) – 985 – 97,692 13,886 (60,674 ) Unaudited Six months ended 31 December 2006 Share Other Accumulated Capital reserves losses HK$’000 HK$’000 HK$’000 16,154 (82,905 ) (30,538 ) – – (8,143 ) 2,356 614 – – 442 – 18,510 (81,849 ) (38,681 )	Total HK$’000 55,686 (5,767 ) 985 50,904 Total HK$’000 (97,289 ) (8,143 ) 2,970 442 (102,020 )

61 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION:

1. GENERAL INFORMATION

The Company is a limited liability company incorporated in the Cayman Islands. The principal place of business of the Company is Room 1502-5, 15/F, New World Tower 1, 16-18 Queen’s Road Central, Hong Kong.

The Company is listed on the Stock Exchange of Hong Kong Limited.

2. BASIS OF PREPARATION AND ACCOUNTING POLICIES

The condensed consolidated interim accounts (the “Interim Accounts”) for the six months ended 31 December 2007 has been prepared in accordance with Hong Kong Accounting Standard (“HKAS”) 34 “Interim Financial Reporting”, issued by the Hong Kong Institute of Certified Public Accountants (“HKICPA”). The Interim Accounts should be read in conjunction with the annual financial statements for the year ended 30 June 2007.

The accounting policies and basis of preparation used in the preparation of the Interim Accounts are consistent with those used in the annual financial statements for the year ended 30 June 2007.

The HKICPA has issued a number of new and revised HKFRSs and HKASs (collectively the “new HKFRSs”) which are effective for accounting periods beginning on or after 1 January 2007. The adoption of these new and revised HKFRSs has no material impact on the results and financial position of the Group.

The Group has not early adopted the following new HKFRSs that have been issued but are not yet effective. The Directors anticipated that these new HKFRSs are either irrelevant to the Group’s operation or adoption of which will not have material impact on the results and the financial position of the Group.

HKAS 1 (Revised) Presentation of Financial Statements[1] HKAS 23 (Revised) Borrowing Costs[1] HKFRS 8 Operating Segments[1] HK (IFRIC) – INT 12 Service concession arrangements[2] HK (IFRIC) – INT 13 Customer loyalty programmes[3] HK (IFRIC) – INT 14 HKAS 19 – The limit on a defined benefit asset, minimum funding requirements and their interaction[2]

1 Effective for annual periods beginning on or after 1 January 2009.

2 Effective for annual periods beginning on or after 1 January 2008.

3 Effective for annual periods beginning on or after 1 July 2008.

62 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

3. TURNOvER AND SEGMENT INFORMATION

Primary reporting format – business segments

The segment results for the period ended 31 December 2007

Turnover Segment results Other incomes Operating loss Finance costs Loss before income tax expense Income tax expense Loss attributable to equity holders of the Company Other segment information Depreciation Capital expenditures	Technology related services HK$’000 318 (4,718 ) 7 – – 588 436	Unallocated items HK$’000 – (1,976 ) 920 – – 55 –	Total HK$’000 318 (6,694 ) 927 (5,767 ) – (5,767 ) – (5,767) 643 436

Unallocated items represent corporate expenses.

63 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

The segment results for the period ended 31 December 2006

Turnover Segment results Other incomes Operating loss before finance costs Finance costs Operating loss Share of results of associated companies Loss before income tax expense Income tax expense Loss attributable to equity holders of the Company Other segment information Depreciation Capital expenditures Unallocated items represent corporate expenses.	Technology related services HK$’000 9,483 (5,952 ) 786 – – 563 35	Unallocated items HK$’000 – (13,376 ) 585 (52,763 ) 62,577 196 361	Total HK$’000 9,483

			(19,328 ) 1,371
			(17,957 ) (52,763 )
			(70,720 ) 62,577
			(8,143 ) –
			(8,143)

			759 396

The segment assets and liabilities as at 31 December 2007 are as follows:

Segment assets Segment liabilities	Technology related services HK$’000 6,937 3,111	Unallocated items HK$’000 48,419 1,341	Total HK$’000 55,356

			4,452

64 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

The segment assets and liabilities as at 30 June 2007 are as follows:

Segment assets Segment liabilities	Technology related services HK$’000 9,050 7,624	Unallocated items HK$’000 55,368 1,108	Total HK$’000 64,418 8,732

Segment assets consist primarily of tangible assets and receivables. They exclude cash and cash equivalents for the corporate use.

Segment liabilities comprise operating liabilities.

Secondary reporting format – geographical segments

The Group is operating in two main geographical areas:

Hong Kong:	Technology related services
Mainland China:	Technology related services

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

Hong Kong Mainland China Hong Kong Mainland China	Segment assets As at As at 31 December 30 June 2007 2007 HK$’000 HK$’000 48,680 55,318 6,676 9,100 55,356 64,418 Turnover Capital expenditure Six months ended Six months ended 31 December 31 December 2007 2006 2007 2006 HK$’000 HK$’000 HK$’000 HK$’000 – – – 361 318 9,483 436 35 318 9,483 436 396	assets As at 30 June 2007 HK$’000 55,318 9,100	assets As at 30 June 2007 HK$’000 55,318 9,100
		64,418

			396

65 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

4. OTHER INCOMES

Bank interest income Recovery of bad debt Others	Six months ended 31 December 2007 2006 HK$’000 HK$’000 927 597 – 769 – 5 927 1,371	Six months ended 31 December 2007 2006 HK$’000 HK$’000 927 597 – 769 – 5 927 1,371
		1,371

5. OPERATING LOSS BEFORE FINANCE COSTS

The following items have been charged to the operating loss before finance costs during the period:

	Six months ended
	31 December
	2007	2006
	HK$’000	HK$’000
Auditors’ remuneration
– audit services	450	453
– non-audit services	100	200
Depreciation of property, plant and equipment	643	759
Provision for impairment of trade receivable	401	–
Staff costs, including directors’ emoluments	5,180	10,868

6. FINANCE COSTS

Interest on loans from a fellow subsidiary Interest on promissory note issued to a fellow subsidiary Interest on convertible bond Interest on subscription note	Six months ended 31 December 2007 2006 HK$’000 HK$’000 – 5,476 – 22,501 – 436 – 24,350 – 52,763	Six months ended 31 December 2007 2006 HK$’000 HK$’000 – 5,476 – 22,501 – 436 – 24,350 – 52,763
		52,763

7. INCOME TAX EXPENSE

Taxation on profits in Mainland China has been calculated on the estimated assessable profits at tax rates ranging from 15% to 33% (2006: 15% to 33%). Hong Kong profits tax has been calculated at 17.5% (2006: 17.5%).

No provision for Mainland China taxation and Hong Kong profits tax has been made for the period as the Company and a number of its subsidiaries have no estimated assessable profit for the period and certain subsidiaries have sufficient tax losses brought forward to offset their estimated assessable profits for the period.

66 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Share of taxation of associated companies for the six months ended 31 December 2006 of HK$15,857,000 is included in the consolidated income statement as share of results of associated companies.

8. LOSS PER SHARE

The calculations of basic and diluted loss per share are based on the following data:

Loss attributable to equity holders Number of shares Weighted average number of ordinary shares in issue for calculation of basic loss per share_(Note)_ Effect of dilutive potential ordinary shares: Share options Weighted average number of ordinary shares in issue for diluted loss per share	Six months ended 31 December 2007 2006 HK$’000 HK$’000 5,767 8,143 97,692,069 95,510,118 179,466 – 97,871,535 95,510,118	Six months ended 31 December 2007 2006 HK$’000 HK$’000 5,767 8,143 97,692,069 95,510,118 179,466 – 97,871,535 95,510,118

		95,510,118 –
		95,510,118

Note:

No diluted loss per share is presented for the six months ended 31 December 2006 as the conversion of convertible bond, subscription note and exercise of outstanding share options would not have dilutive effect on the loss attributable to equity holders.

9. CAPITAL EXPENDITURE

Six months ended 31 December 2006 Opening net book amount at 1 July 2006 Additions Disposals Translation difference Depreciation and amortisation Closing net book amount at 31 December 2006 Six months ended 31 December 2007 Opening net book amount at 1 July 2007 Additions Disposals Depreciation	HK$’000 6,183 396 (7 ) 57 (759 )
	5,870

	5,383 436 (341 ) (643 )

4,835

Closing net book amount at 31 December 2007

67 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

10. INvESTMENTS IN ASSOCIATED COMPANIES

Six months ended 31 December 2006 Balance at 1 July 2006 Share of results of associated companies Dividend received Balance at 31 December 2006 Six months ended 31 December 2007 Balance at 1 July 2007 Share of results of associated companies Dividend received Balance at 31 December 2007	HK$’000 2,142,737 62,577 (17,228
	2,188,086

	– – –
	–

11. TRADE RECEIvABLES

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

1 – 30 days 31 – 60 days 61 – 90 days Over 90 days	As at 31 December 2007 HK$’000 27 10 1 4 42	As at 30 June 2007 HK$’000 137 245 329 474
		1,185

12. TRADE PAyABLES

The ageing analysis of trade payables was as follows:

1 – 30 days 31 – 60 days 61 – 90 days Over 90 days	As at 31 December 2007 HK$’000 13 14 29 99 155	As at 30 June 2007 HK$’000 55 – – 135
		190

68 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

13. SHARE CAPITAL

Authorised: At 30 June 2007 and 31 December 2007 Issued and fully paid: Balance at 1 July 2007 and 31 December 2007 Balance at 1 July 2006 Issue of shares_(note)_ Balance at 31 December 2006	The Company Ordinary shares of HK$1.00 each No. of shares HK$’000 2,000,000,000 2,000,000 97,692,069 97,692 95,336,069 95,336 2,356,000 2,356 97,692,069 97,692	The Company Ordinary shares of HK$1.00 each No. of shares HK$’000 2,000,000,000 2,000,000 97,692,069 97,692 95,336,069 95,336 2,356,000 2,356 97,692,069 97,692

		97,692

		95,336 2,356
		97,692

Note:

On 28 November 2006, 156,000 ordinary shares of HK$1.00 each were issued at HK$1.26 each upon the exercise of share options. On 30 November 2006, 482,000 ordinary shares of HK$1.00 each were issued at HK$1.26 each upon the exercise of share options. On 4 December 2006, 1,640,000 and 78,000 ordinary shares were issued at HK$1.26 each and HK$1.276 each respectively upon exercise of share options.

14. CAPITAL COMMITMENTS

As at 31 December 2007, there was no material capital commitment (At 30 June 2007: Nil).

15. RELATED PARTy TRANSACTIONS

(a) The Group undertook the following material transactions with related parties, which were carried out in the normal course of the business during the period:

	Six months ended 31 December	Six months ended 31 December
	2007	2006
	HK$’000	HK$’000
Rental expenses paid to fellow subsidiaries	–	(375 )
Loan interest paid/payable to a fellow subsidiary	–	(5,476 )
Loan interest paid/payable to a fellow subsidiary
for the promissory note	–	(22,501 )
Interest paid/payable for the convertible bond
to a fellow subsidiary	–	(428 )
Interest paid/payable for the subscription note
to a fellow subsidiary	–	(4,537 )

69 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

(b) Period/year end balances with related party are as follows:

	At 31 December	At 30 June
	2007	2007
	HK$’000	HK$’000
Receivable from a related company
Mongolia Energy Corporation (Greater China) Limited	813	813

A related company is a company deemed control by a Director and a substantial shareholder of the Company.

The balance with related party is unsecured, interest free and repayable on demand.

(c) Key management compensation of the Group for the period is as follows:

	Six months ended 31 December	Six months ended 31 December
	2007	2006
	HK$’000	HK$’000
Salaries and other short-term employee benefits	591	3,860

16. SUBSEQUENT EvENTS

(a) On 27 December 2007, the Company and International Entertainment Corporation (“IEC”) entered into the conditional sale and purchase agreement (the “Transaction”) in relation to the sale and purchase of the entire issued share capital of Cyber On-Air Group Limited (“COAG”) in which the Company has conditionally agreed to purchase and IEC agreed to sell the entire issued share capital of COAG at cash consideration of HK$2,000,000. The COAG Group is principally engaged in the provision of network solutions and project services. The Transaction is subject to the fulfillment of certain conditions and has not been completed as at the date of this results announcement.
(b) On 4 December 2007, the Company has entered into placing agreement with Tai Fook Securities Company Limited (“Placing Agent”) to place 12,000,000 shares of the Company at HK$6.00 each per share. The Placing Agent informed the Company that there was no placee has been identified due to the volatile stock market situation. The placing has not become unconditional on 31 January 2008 and accordingly the placing agreement was automatically lapsed on the same day.
70 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

4. MANAGEMENT DIsCUssION AND ANALysIs OF THE GROUP

The following discussion on the Group’s performance for the year ended 30 June 2005 was extracted from the Company’s 2004/2005 annual report. The financial data mentioned herein included both the continuing operations of the Group and the discontinued operations relating to the Group’s previous investment in New World PCS Limited which was disposed of in 2006.

For the year ended 30 June 2005

Change of Financial year End

Since the acquisition of New World PCS Limited and its subsidiaries (the “NWPCS Group”) on 6 July 2004, the Group mainly engaged in offering a host of quality mobile communications services in Hong Kong, including voice services and customized data services tailored to the specific needs of individual customer groups, via advanced mobile technologies.

The acquisition of the NWPCS Group constituted a reverse acquisition from accounting perspective and therefore the comparative financial information presented in these accounts represented that of the NWPCS Group, which had a financial year end date of 30 June.

In order to conform to the financial year end date of New World Development Company Limited (“NWD”), its holding company, and the NWPCS Group, the Company changed its financial year end date from 31 December to 30 June. Accordingly, the financial period of the Company under review in the annual report for the year ended 30 June 2005 covered eighteen months from 1 January 2004 to 30 June 2005.

Summary of the financial review representing the Group’s result covered the period from 1 July 2004 to 30 June 2005.

Financial Review

For the year ended 30 June 2005, the Group’s consolidated turnover slightly increased by HK$10 million to approximately HK$1,709 million (2003/04: HK$1,699 million). The turnover of the Group was mainly contributed by mobile communications services revenue and sale of handsets and accessories.

Mobile communications services revenue for the year amounted to approximately HK$1,318 million (2003/04: HK$1,442 million), representing 8.6% decrease. The decline was mainly attributable to aggressive price promotions offered by the mobile service operators and severe competition on tariff. As a result, the post-paid average revenue per user (“ARPU”) dropped from HK$180 in last year to HK$170 in current year. However, the Group continued to excel in customer servicing and providing mobile users with pioneering data services to maintain its competitiveness during the year. The Group was successful in maintaining the churn rate at 3.6% (2003/04: 3.3%).

Revenue from sale of mobile handsets and accessories for the year was approximately HK$386 million, representing 50% surge as compared with HK$257 million for last year. This

71 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

was achieved by offering various “free handset” promotional offers and a wide range of handset models with advance features to our customers during the year.

The cost of goods sold and services provided was approximately HK$866 million, representing an increase of HK$93 million as compared with last year (2003/04: HK$773 million). The increase was a direct result of the corresponding increase in handset sales.

The gross profit margin of the Group was 49% for current year (2003/04: 54%). The decrease was mainly due to relatively low gross profit margin of mobile handsets and accessories sales and the decline of ARPU.

The Group continued to enhance operating efficiency, resulting in a lower operating expense, excluding depreciation and amortisation charge (“OPEX”). The OPEX was reduced by 5.6% to HK$441 million (2003/04: HK$467 million).

The Group’s earning before interest, tax, depreciation and amortisation (“EBITDA”) for the current year dropped to HK$403 million (2003/04: HK$459 million).

Finance costs for the year increased to HK$30 million (2003/04: HK$7 million). The increase was mainly due to the interest payments by the Group for a loan from a fellow subsidiary, a subscription note (the “Subscription Note”) which arose as a result of the acquisition of the NWPCS Group and a convertible bond (“Convertible Bond”). Increase in HIBOR was also a substantial factor for the increase in finance costs.

As a result of the combined effects of the above, the Group’s profit attributable to Shareholders dropped to HK$93 million (2003/04: HK$164 million).

Capital structure, Liquidity and Financial Resources

In order to finance the acquisition of the NWPCS Group, the Company issued new Shares and the Subscription Note at the consideration of HK$50 million and HK$1,200 million, respectively, in July 2004.

Apart from the Subscription Note, the total borrowings of the Group as at 30 June 2005 was approximately HK$1,009 million (30 June 2004: HK$2,164 million) which mainly comprised a loan from New World Finance Company Limited (“NWF”) of HK$878 million, the Convertible Bond of HK$28 million, and a bank loan of HK$103 million. All these borrowings were denominated in Hong Kong dollars and borne interest at HIBOR + 0.65%, 3% and HIBOR + 0.65%, respectively.

The loan from NWF was repayable on demand after 29 September 2006. The maturity date for the Convertible Bond was in November 2007. The bank loan outstanding was scheduled to be fully repaid in October 2005.

As most of the borrowings of the Group including the Subscription Note as at 30 June 2005 were regarded as shareholders’ loans, the gearing ratio of the Group calculated thereon was considered to be misleading and so not presented in the annual report.

72 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

As at 30 June 2005, the Group’s cash and bank balances amounted to approximately HK$117 million (30 June 2004: HK$94 million).

The Group’s net cash inflow from operating activities reduced by HK$14 million to HK$396 million (2003/04: HK$410 million).

As at 30 June 2005, none of the assets held by the Group were pledged to other parties (30 June 2004: Nil).

Capital expenditure of the Group amounted to HK$141 million for the year (2003/04: HK$154 million). Capital expenditure was mainly for the ongoing enhancements in the service quality, coverage of the mobile network, and purchase of hardware and software for multimedia services provisioning.

The Group adopted a conservative and balanced treasury policy. Any surplus funds placed as deposit with banks in Hong Kong were maintained in Hong Kong dollars.

The functional currency of the Group is Hong Kong dollar. The Group’s business transactions, monetary assets and liabilities are mainly denominated in Hong Kong dollar. The Group does not therefore have any significant exposure to foreign currency gains and losses. It is the Group’s treasury policy to manage its foreign currency exposure whenever its financial impact is material to the Group. The Group does not conduct any foreign currency speculative activities.

As at 30 June 2005, the Group had obtained bank guarantees in lieu of deposits of HK$9 million (30 June 2004: HK$9 million) in aggregate.

Employees and Remuneration Policy

As at 30 June 2005, the Group had a total of 662 employees (30 June 2004: 706). The Group’s remuneration policy is to pay salaries that are competitive in the industry, in a way that will be motivational, fair and equitable, and that are dependent on individual and company performance. Apart from salaries, the Group also provides other fringe benefits to employees, which include provident fund schemes, medical insurance and bonus on performance basis.

73 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

For the year ended 30 June 2006

Disposal of the NWPCs Group and acquisition of the CsL NWM Group

On 8 December 2005, the Group entered into a merger agreement (the “Merger Agreement”) to dispose of the NWPCS Group and make a cash payment of HK$244.024 million, in exchange for an equity holding of 23.6% of the issued share capital of CSL New World Mobility Limited (“CSL NWM”) and an amount due from CSL NWM of HK$113.328 million. The merger executed pursuant to the Merger Agreement was completed on 31 March 2006. As a result, the NWPCS Group, which is engaged in mobile communications business, ceased to be subsidiaries of the Group; while CSL NWM and its subsidiaries (the “CSL NWM Group”) comprising the NWPCS Group and CSL NWM (formerly known as Telstra CSL Limited) and its subsidiaries became associated companies of the Group. The application of Hong Kong Financial Reporting Standard No. 5 Non-current Assets Held for Sale and Discontinued Operations has resulted in a change in the presentation of the results and cash flows of the NWPCS Group in current and prior years but has not impacted prior year’s consolidated balance sheet. In the consolidated income statement, a single amount comprising the results of the NWPCS Group, of which an analysis of the results is set out in note 8 to the consolidated financial statements, and gain on disposal of the NWPCS Group constituting discontinued operations is presented whereas the net cash flows of the NWPCS Group attributable to operating, investing and financing activities are also disclosed in the consolidated cash flow statement.

Acquisition of New World CyberBase solutions (BVI) Limited and its subsidiaries (collectively the “NWCs Group”)

On 21 October 2005, the Group acquired from New World CyberBase Limited (“NWC”) the NWCS Group and NWC’s interests in the loans to the NWCS Group for an aggregate consideration of HK$21 million. The NWCS Group is engaged in the provision of technology related services, mainly mobile Internet services and wireless application protocol (“WAP”) services, in the PRC. The consideration was satisfied by the issue of 16,153,846 new Shares at HK$1.3 each.

Financial Review

The Group recorded a profit attributable to Shareholders of HK$911.6 million for the current year, as compared to a loss attributable to Shareholders of HK$10.4 million in the previous year. The profit of this year mainly arose from the profit of HK$1,045.2 million (2005: HK$36.7 million) from discontinued operations of mobile communications services, slightly offset by the loss of HK$133.6 million (2005: loss of HK$47.1 million) from continuing operations.

Profit from discontinued operations comprised after-tax profit of HK$22.2 million of the NWPCS Group for the nine months ended 31 March 2006 (year ended 30 June 2005: HK$36.7 million) and the gain of HK$1,023.0 million on disposal of the NWPCS Group.

74 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Loss from continuing operations was attributed to the loss of HK$87.4 million of the technology related business, finance costs of HK$62.8 million and other corporate expenses, slightly alleviated by the Group’s share of results of the CSL NWM Group.

The loss of HK$87.4 million of the technology related business comprised impairment losses on intangible assets of HK$73.0 million. The impairment losses on intangible assets were provided for goodwill of HK$66.0 million arising from the reverse acquisition by the Group of the NWPCS Group in July 2004 which was re-allocated to the Group’s new continuing operations in technology related services, goodwill of HK$5.5 million arising from the acquisition of the NWCS Group and a licence of HK$1.5 million. The continuing operations recorded a turnover of HK$16.5 million from the technology related business for the post-acquisition period from 21 October 2005 to 30 June 2006, as compared to HK$4.3 million from logistics services in the previous year. WAP services had become the key growth driver contributing to improvement in turnover. On 30 June 2006, there were more than 270,000 monthly subscribers, over 90% of them were multimedia messaging services (“MMS”) and WAP subscribers. During the period under review, product development teams in Shanghai and Guangzhou, the PRC had developed more than 100 new MMS, WAP and short messaging services.

Finance costs of continuing operations for the current year was HK$62.8 million, an increase of HK$18.1 million from HK$44.7 million for the same period last year. The increase was mainly due to interest expenses of HK$11.5 million on a new promissory note issued to a fellow subsidiary in March 2006 to replace loans and accrued interest expenses of a total of HK$886.7 million of the NWPCS Group for which the related interest expenses incurred before the replacement were deducted from the profit from discontinued operations, and interest expenses of HK$3.6 million on new loans of HK$278.0 million drawn from the fellow subsidiary in March and June 2006.

The CSL NWM Group is a major mobile telecommunications network operator in Hong Kong, providing 2G and 3G services under three brands: “One2Free”, “1010” and “New World Mobility”. On 30 June 2006, there were over 2.6 million subscribers to its services. The Group’s share of 23.6% of the results of the CSL NWM Group for the three months from 1 April 2006 to 30 June 2006 amounted to HK$27.7 million.

Capital structure, Liquidity and Finance Resources

As at 30 June 2006, the total borrowings of the Group amounted to HK$2,371.0 million (30 June 2005: HK$2,043.5 million) which comprised the Subscription Note of HK$1,178.0 million, the Convertible Bond of HK$28.3 million, a promissory note of HK$886.7 million issued to NWF and loans of HK$278.0 million from NWF. The promissory note was issued to settle debts of the NWPCS Group before disposal of the NWPCS Group to CSL NWM. Loans of HK$278.0 million were obtained to finance the acquisition of the CSL NWM Group and meet requirements on the Group’s working capital. These borrowings were denominated in Hong Kong dollars, and borne interest rates of 0.75%, 3%, 0.65% above HIBOR and 0.65% above HIBOR per annum respectively.

75 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

The maturity date of the Convertible Bond was extended to 1 November 2007. The promissory note was repayable on demand after eighteen months from its date of issue of 30 March 2006. Loans of HK$244.02 million and HK$34.0 million from NWF were repayable upon demand after eighteen months from 31 March 2006 and after 28 August 2007 respectively.

Since most of the borrowings of the Group were considered as shareholders’ loans, the gearing ratio of the Group calculated thereon was considered misleading and therefore, not presented.

As at 30 June 2006, the Group’s cash and bank balances were of HK$27.7 million (30 June 2005: HK$116.5 million). The reduction was mainly the result of the disposal of the NWPCS Group. The Group had undrawn loan facility of HK$36.0 million as at 30 June 2006.

Total capital expenditure of the Group was HK$97.4 million for the year (2005: HK$140.8 million), which was mainly spent on the NWPCS Group’s mobile communications business.

The key operations of the Group are located in Hong Kong and the PRC. Therefore, the assets and liabilities of the Group are mainly denominated in either Hong Kong dollars or Renminbi (“RMB”). Since no significant exposure to foreign currency gains and losses are expected, the Group does not conduct any foreign currency hedging activities.

There were no material contingent liabilities as at 30 June 2006 (30 June 2005: bank guarantees in lieu of deposits of HK$9 million).

Employees and Remuneration Policy

As at 30 June 2006, the Group had a total of 143 employees (30 June 2005: 662). The reduction in number of employees was mainly due to the disposal of the NWPCS Group. The Group’s remuneration policy is to pay salaries competitive in the industry, in a way that is motivational, fair and equitable. The salaries are also dependent on individual and company’s performance. Apart from salaries, the Group also provides other fringe benefits to employees, which include provident fund schemes, medical insurance and bonus on performance basis.

Outlook

According to the June 2006 report by China Internet Information Centre, there were over 123 million Internet users in the PRC, a 19.4% growth from the previous year. The Ministry of Information Industry also expected the number of mobile phone users to reach 440 million at the end of 2006. Judging from the trend of growth of both Internet and mobile phone users, there would be ample room for growth for value added services.

In July 2006, a major mobile operator partner implemented new control policies for value added service providers. It was expected that the improvement of the mobile Internet business would be slowed down due to the implementation of these new measures. The Group would re-align the strategic imperatives of the business to minimise the impact while capturing the growth opportunities in the explosive market potential in the long-term.

76 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

The Group was determined to carry on its expansion into the mobile Internet services area, with a focus on music and city infotainment services. In the music sector, the Group would continue its effort in building a platform for local music talents to create and publicise their works. Currently a platform had been created for music lovers to enjoy pop music as well as new local music. In addition to forming partnership with international record labels, building alliances with music industry players was essential to the Group’s business expansion. Therefore, the Group had established strategic alliances with over 15 local record labels. Continuous alliance formation would be an important component to the Group’s success in the coming years.

In 2006, the Group had re-launched ChinaQuest.com, a web-based city infotainment service, with a powerful search engine. The partnership with China Telecom’s yellow page had not only enabled the Group to increase the spectrum of services, but also contributed to the enrichment of the city information content. Currently the Group had rolled out city information content services in 12 cities. In 2007, the Group would expand the city infotainment service in these cities and into other untapped markets.

In 2006, the Group had strengthened the base to its mobile Internet platform. Building on this foundation, the Group would seek to secure greater market share in 2007. One of the key strategic directions for the provision of services in 2007 was to increase user interactivities by implementing Web 2.0 applications in both the Internet and WAP services. The Group believed that success in enhancing customer satisfaction in and fondness to its services would result in continuous growth of the technology related business of the Group.

The Group’s investment in the mobile communications business through its equity holding of 23.6% of the CSL NWM Group would also continue to generate profit to the Group.

For the year ended 30 June 2007

Business Review

The Company’s mobile value added business had been negatively impacted by the environmental changes of the PRC’s wireless market. Throughout the year, mobile operators continued to tighten control policy on service providers (“SP”). The last major announcement of China Mobile in May 2007 announced a policy on WAP service fee notification, was yet another example which negatively impacted the SP industry. The SP business, being a major revenue generator of the Group’s business, was badly hit. Management did not see a significant improvement to this situation in the near term and revenue from this sector was expected to continue to decrease.

Since the end of 2006, management had taken measures to minimize the potential exposure of the business risks from the SP sector, and had shifted to focus on building up two web-based businesses.

77 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Firstly, management shifted to focus on expanding the service offering of web based city infotainment service (Chinaquest). Among many new services that were launched this year, there was a major focus in a commercial based yellow page service called, Enterprise Blog Show (“EBS” or “商博秀”). The revenue of this service line was targeted to replace the shortfall from the SP sector starting in next financial year.

In order to improve the service’s brand awareness, the Group announced a change of Chinaquest’s website address to www.52tong.com and a change of the logo design to a more lively brand design concept in November 2006.

As at the end of 2006, the first major step to expand the service offerings was the launch of a classified advertisement channel focus on providing a platform for individuals to advertise their own information to the public.

By April 2007, a second major service was the launch of EBS, a service targeting commercial market. It was a WEB2.0 platform for commercial customers to advertise their company information to visitors of Chinaquest. Management aimed to launch the service over 50 cities nationwide by the end of 2007. The significant of this service was the birth of a new business model for the Group. The plan to expand throughout the nation would be conducted through establishing local channel partners.

Looking at a 400 million population market size, the wireless value-added market continues to be an important market for the business. In May 2007, the Group launched the Chinaquest WAP service 2.0 – the wireless portal service of Chinaquest. A product that was integrated with the website services. Fully showing the tight integration of Mobile Internet services, enabling users to use Chinaquest service at the desktop and while on the move.

Secondly, in the music entertainment sector, www.hanyin.com, the music entertainment business reached over 218,000 registered users. The Group secured relationship with over 50 local and international record companies with a total of over 2,000 artists. In addition, the Group directly signed song distribution rights with 40 artists and had been promoting their work in both the mobile and Internet environment. At the end of 2006, the music blog channel was re-vamped, now providing 15 different music and entertainment categories of related blog contents, spreading from song of local talents and popular artists from Hong Kong and Taiwan. When the service was re-launched in November 2006, it soon became one of the major key drivers of the sites traffic growth.

Financial Review

1. Results analysis

The mobile value added business had throughout the year been negatively impacted by the market environment and the tightening policy control of the mobile operators. Accordingly, the year-of-year turnover was dropped approximately 14.0% to HK$14.2 million (2006: HK$16.5 million).

78 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

On 4 January 2007, the Company completed the disposal of an associated company through the disposal of entire issued share capital of Upper Start Holdings Limited (“Upper Start”) which holds 23.6% interest in the CSL NWM Group (the “Disposal”) at the consideration of HK$2,500 million to NWD. The share of the profits of the associated company immediately prior to the Disposal was HK$62.6 million (2006: HK$27.7 million). The resulting one-off gain from the Disposal was HK$305.8 million.

The profit attributable to the Shareholders for the year ended 30 June 2007 was HK$293.1 million (2006: HK$911.6 million). The drop was due to the inclusion of profit from discontinued operations of HK$1,045.2 million in last year.

2. Liquidity and financial resources

As at 30 June 2007, the equity holders’ fund of the Group amounted to HK$55.7 million (2006: deficit of HK$97.3 million) and the net asset value per Share was HK$0.57 (2006: net liability value per Share HK$1.02). Upon completion of the Disposal, a partial of the consideration from the Disposal was satisfied by way of full discharge against a sum owing under the Subscription Note, the Convertible Bond, the promissory note and the loans from a then fellow subsidiary. As at 30 June 2007, the Group had no bank or other borrowings (2006: HK$2,371.0 million) and the Group’s cash level was recorded at HK$55.5 million (2006: HK$27.7 million). With abundant cash balances and no gearing, the Group had sufficient liquidity and financial resources to meet the operational and investment needs.

3. Financial risk management

The key operations of the Group are located in Hong Kong and the PRC. Therefore, the Group’s assets and liabilities are mainly denominated in either Hong Kong dollars or RMB. The Group does not conduct any foreign currency hedging activities since no significant exposure to foreign currency risks are expected.

4. Pledge of assets

As at the balance sheet date, bank balances denominated in RMB of certain subsidiaries of the Group in the amount of HK$829,000 (2006: HK$770,000) had been frozen under the PRC court order in relation to claims filed against the subsidiaries.

5. Contingent liabilities

The Group had no material contingent liabilities as at 30 June 2007.

79 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Future Outlook

The future of the Group is to create and build a media platform, enabling commercial customers to showcase their content to mobile and Internet users in the PRC. Management would continue to enhance the service offerings in both city infotainment and music entertainment sectors. It is important to continue to build the brand and customer base. Lastly, the management team would aim to quickly secure the sales network in key cities throughout the nation.

Human Resources

As at 30 June 2007, the Group had a total of 79 full-time employees (2006: 143) in Hong Kong and the PRC. Remuneration packages are structured to take into account the level and composition of pay and the general market conditions in the respective geographical locations and businesses in which the Group operates. The remuneration policies of the Group are reviewed on periodic basis. Apart from retirement schemes, year-end bonuses and share options are awarded to the employees according to the assessment of individual performance and industry practice. Appropriate training programs are also offered for staff training and development.

For the period ended 31 December 2007

Business Review

For the last six months the wireless value added services regulatory environment and telecom operators policies continues to tighten causing the overall business environment of the Service Provider (“SP”) to be affected greatly. Thus our SP business continues to slow down and the scale of the operation has been restructured accordingly.

As at end of this reporting period, the Chinaquest commercial business (a business unit to offer web based city infotainment service) signed up 10 distributors covering over 20 China cities. Although sign up rate of distributors is positive, however due to fierce competition and slow take up rate of end users, the business have not been able to deliver results as planned.

In response to the current tough business environment, management in the last three months has continued to downsize the operations to control costs further. We are also in the process of seeking new business opportunities and sourcing other acquisition that may help the business positively. For instance, the Group signed an agreement on December 27, 2007 to purchase the entire issued share capital of Cyber On-Air Group Limited and its subsidiaries (“COAG”) for a cash consideration of HK$2 million. COAG is principally engaged in the provision of network solutions and project services.

80 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Financial Review

1. Results analysis

As stated in the 2006/07 annual report, the Company’s mobile value added business had been negatively impacted by the environmental changes of China’s wireless market and the management did not foresee any significant improvement in the near term. For the six months period ended 31 December 2007, the turnover was dropped approximately 96.8% to HK$0.3 million (2006: HK$9.5 million). The significant shrinkage in the turnover was directly attributable to the continue downturn in the mobile value added business. During this difficult period, the Group conducted effective measures in controlling costs. The operating loss before finance costs was trimmed to HK$5.8 million (2006: HK$18.0 million). No finance costs were incurred for the six months reporting period because the Group has no gearing and owned sufficient financial resources to support its continuing operations. (2006: HK$52.8 million).

The loss attributable to the shareholders of the Company for the period ended 31 December 2007 was HK$5.8 million (2006: HK$8.1 million). One of the key contributors to the improvement was the reduction of selling and administrative expenses.

2. Liquidity and financial resources

As at 31 December 2007, the capital and reserves attributable to the equity holders of the Company was HK$50.9 million (At 30 June 2007: HK$55.7 million) and the net asset value per share was HK$0.52 (At 30 June 2007: HK$0.57). As at 31 December 2007, the Group had no bank or other borrowings (At 30 June 2007: Nil) and the Group’s cash balances was HK$48.6 million (At 30 June 2007: HK$55.5 million). With abundant cash balances and no gearing, the Group has sufficient liquidity and financial resources to meet the daily operational needs and investment opportunities (if any).

3. Financial risk management

The key operations of the Group are located in Hong Kong and the Mainland China. Therefore, the Group’s assets and liabilities are mainly denominated in either Hong Kong dollars, United States dollars or Renminbi (RMB). The Group does not conduct any foreign currency hedging activities since no significant exposure to foreign currency risks are expected.

4. Pledge of assets

As at 31 December 2007, no assets are under pledge (At 30 June 2007: bank balances denominated in RMB of certain subsidiaries of the Group in the amount of HK$0.8 million have been frozen under the PRC court order in relation to claims filed against these subsidiaries).

5. Contingent liabilities

The Group has no material contingent liabilities as at 31 December 2007 and 30 June

81 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Outlook

As a continuous effort, the Board will conduct a detailed review of its business portfolio and strategies with an aim to deploy the Group’s resources in an optimal way. It may lead to scale down or adjust area of operations where appropriate.

As an investment holding company, the Group will actively look into other new business opportunities in order to broaden its revenue basis. During the reporting period, the Group has entered into an agreement to acquire a company engaged in the provision of network solutions and project services. Barring for unforeseen circumstances, the acquisition will be completed in the second half of this financial year.

5. FINANCIAL AND TRADING PROsPECTs OF THE ENLARGED GROUP

The NWM Group is principally engaged in the provision of Internet content services and telecommunication value-added services in the PRC. Upon completion of the Acquisition, the Group will diversify its business to the provision of network solutions and project services.

The Directors are of the view that the Group would benefit from the COAG Group’s robust growth potential. Besides, profit from the COAG Group would contribute to the Group’s financial performance and dividend received (if any) from the COAG Group would strengthen the Group’s cash flow.

Looking ahead, the Group will endeavor to make more investment decisions with a prudent manner in order to develop a diversified business portfolio. The Group currently has sufficient financial resources and will make full use of this advantage to continue to identify quality investment opportunities.

6. INDEBTEDNEss OF THE ENLARGED GROUP

At the close of business on 31 January 2008, being the latest practicable date for the preparation of this indebtedness statement prior to the printing of this circular, apart from the intra-group liabilities, the Enlarged Group did not have any outstanding mortgages, charges, debentures, loan capital or overdrafts, or other similar indebtedness, finance lease or hire purchase commitments, liabilities under acceptances or acceptance credits or any guarantees or other material contingent liabilities as at the close of business on 31 January 2008.

82 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

7. WORkING CAPITAL OF THE ENLARGED GROUP

The Board is of the opinion that after taking into account the Enlarged Group’s internal resources, operating cash flow and available banking facilities, the Enlarged Group has sufficient working capital for its present requirements, that is for at least the next twelve months from the date of this circular.

8. MATERIAL ADVERsE CHANGE

As set out in the Interim Report of the Company for the six months ended 31 December 2007, the wireless value added services regulatory requirement and telecom operators policies continue to tighten causing the overall business environment of the Service Provider (“SP”) to be affected greatly. Thus the SP business of the Group continues to slow down and the scale of operation has been restructured accordingly. Apart from that, the Directors are not aware of any material adverse change in the financial or trading position or prospects of the Group since 30 June 2007, the date to which the latest published audited financial statements of the Company were made up.

83 -

FinAnciAl inFormAtion oF the coAG Group

Appendix ii

The following is the text of a report prepared for the purpose of inclusion in this circular, received from PriceWaterHouseCoopers, Certified Public Accountants, Hong Kong.

PricewaterhouseCoopers 22/F, Prince’s Building Central, Hong Kong

31 March 2008

The Directors

New World Mobile Holdings Limited

Dear Sirs,

We set out below our report on the financial information (the “Financial Information”) of Cyber On-Air Group Limited (the “Target Company”) and its subsidiaries (together, the “Target Group”) set out in Sections I to III below, for inclusion in the circular of New World Mobile Holdings Limited (the “Company”) dated 31 March 2008 (the “Circular”) in connection with the proposed transfer of the entire interest in the Target Company by International Entertainment Corporation to the Company. The Financial Information comprises the consolidated balance sheets of the Target Company as at 31 March 2005, 2006 and 2007 and 30 September 2007, the balance sheets of the Target Company as at 31 March 2005, 2006 and 2007 and 30 September 2007, and the consolidated income statements, the consolidated statements of changes in equity and the consolidated cash flow statements of the Target Company for each of the years ended 31 March 2005, 2006 and 2007 and the six months ended 30 September 2006 and 2007 (the “Relevant Periods”), and a summary of significant accounting policies and other explanatory notes.

The Target Company was incorporated in the British Virgin Islands on 15 December 2000 as a limited liability company under the International Business Companies Act of the British Virgin Islands.

As of the date of this report, the Target Company has direct and indirect interests in the subsidiaries as set out in Note 30(a) of Section II below. All of these companies are private companies.

All companies comprising the Target Group, except for 上海創博數碼科技有限公司 and 廣州創博數碼科技有限公司,which were established in the People’s Republic of China (the “PRC”), have adopted 31 March as their financial year end date and their financial statements were prepared in accordance with Hong Kong Financial Reporting Standards (“HKFRSs”) issued by the Hong Kong Institute of Certified Public Accountants (the “HKICPA”). 上海創博數碼科技有限公司 and 廣州創博數碼科技有限公司 have adopted 31 December as their financial year end date and their statutory financial statements were prepared in accordance with the relevant accounting principles and financial regulations applicable to enterprises established in the PRC. The audited financial statements for each of the years ended 31 March 2005, 2006 and 2007 of the subsidiaries of the Target Company, which are not audited by PricewaterhouseCoopers but by other auditors, are set out in Note 30(b) of Section II below.

84 -

FinAnciAl inFormAtion oF the coAG Group

Appendix ii

For the purpose of this report, the directors of the Target Company have prepared the consolidated financial statements of the Target Company for the Relevant Periods in accordance with HKFRSs (the “Underlying Financial Statements”). We have audited the Underlying Financial Statements for each of the years ended 31 March 2005, 2006 and 2007 and the six months ended 30 September 2007 in accordance with Hong Kong Standards on Auditing.

The Financial Information has been prepared based on the Underlying Financial Statements with no adjustment made thereon.

directors’ responsibility

The directors of the Target Company during the Relevant Periods are responsible for the preparation and the true and fair presentation of the Underlying Financial Statements in accordance with HKFRSs. The directors of the Company are responsible for the preparation and the true and fair presentation of the Financial Information in accordance with HKFRSs. This responsibility includes designing, implementing and maintaining internal control relevant to the preparation and the true and fair presentation of the Underlying Financial Statements and Financial Information that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

reportinG AccountAnt’s responsibility

For the financial information for each of the years ended 31 March 2005, 2006 and 2007 and the six months ended 30 September 2007, our responsibility is to express an opinion on the financial information based on our examination and to report our opinion to you. We have examined the Underlying Financial Statements and carried out such additional procedures as are necessary in accordance with the Auditing Guideline 3.340 “Prospectuses and the Reporting Accountant” issued by the HKICPA.

For the financial information for the six months ended 30 September 2006, it is our responsibility to form an independent conclusion, based on our review, on the financial information and to report our conclusion to you. We conducted our review on the financial information in accordance with Statement of Auditing Standards 700 “Engagements to review interim financial reports” issued by the HKICPA. A review consists principally of making enquires to management of the Target Group and the Group and applying analytical procedures to the financial information and based thereon, assessing whether the accounting policies and presentation have been consistently applied unless otherwise disclosed. A review excludes audit procedures such as tests of controls and verification of assets, liabilities and transactions. It is substantially less in scope than an audit and therefore provides a lower level of assurance than an audit. Accordingly, we do not express an audit opinion on the financial information for the six months ended 30 September 2006.

opinion And review conclusion

In our opinion, the financial information of the Target Group for each of the years ended 31 March 2005, 2006 and 2007 and the six months ended 30 September 2007, for the purpose of this report, gives a true and fair view of the state of affairs of the Target Company and of the Target Group as at 31 March 2005, 2006 and 2007 and 30 September 2007 and of the Target Group’s results and cash flows for the years and period then ended.

85 -

FinAnciAl inFormAtion oF the coAG Group

Appendix ii

On the basis of our review which does not constitute an audit, for the purpose of this report, we are not aware of any material modifications that should be made to the financial information for the six months ended 30 September 2006.

i FinAnciAl inFormAtion oF the tArGet Group

The following is the Financial Information of the Target Group as at 31 March 2005, 2006 and 2007 and 30 September 2007 and for each of the years ended 31 March 2005, 2006 and 2007 and the six months ended 30 September 2006 and 2007.

consolidAted bAlAnce sheets

Note Assets non-current assets Property, plant and equipment 6 current assets Inventories 7 Trade receivables 8 Other receivables, deposits and prepayments 9 Amount due from ultimate holding company 10 Amounts due from fellow subsidiaries 10 Amounts due from related companies 10 Tax recoverable Restricted cash 11 Cash and cash equivalents 12 total assets eQuity capital and reserves attributable to the target company’s equity holders Share capital 15 Retained earnings total equity	As 2005 HK$’000 468 1,873 4,880 109 7,338 20,660 558 – 1,000 848 37,266 37,734 – 8,206 8,206	As at 30 at 31 march september 2006 2007 2007 HK$’000 HK$’000 HK$’000 287 166 310 655 1,581 3,112 1,690 5,176 5,199 142 283 398 7,919 7,710 7,710 20,773 – 10 459 447 447 52 33 33 1,000 1,000 1,000 1,932 1,475 3,598 34,622 17,705 21,507 34,909 17,871 21,817 – – – 7,695 7,368 8,069 7,695 7,368 8,069	As at 30 at 31 march september 2006 2007 2007 HK$’000 HK$’000 HK$’000 287 166 310 655 1,581 3,112 1,690 5,176 5,199 142 283 398 7,919 7,710 7,710 20,773 – 10 459 447 447 52 33 33 1,000 1,000 1,000 1,932 1,475 3,598 34,622 17,705 21,507 34,909 17,871 21,817 – – – 7,695 7,368 8,069 7,695 7,368 8,069
		2006 HK$’000 287 655 1,690 142 7,919 20,773 459 52 1,000 1,932 34,622 34,909 – 7,695 7,695
			3,112 5,199 398 7,710 10 447 33 1,000 3,598
			21,507

			21,817

			– 8,069
			8,069

86 -

FinAnciAl inFormAtion oF the coAG Group

Appendix ii

Note liAbilities current liabilities Trade payables 13 Other payables and accruals Amounts due to directors 10 Amount due to ultimate holding company 10 Amounts due to fellow subsidiaries 10 Amounts due to related companies 10 Current income tax liabilities Loans from directors 14 Loan from a fellow subsidiary 14 Loans from related companies 14 Loans from a third party 14 total liabilities total equity and liabilities net current assets total assets less current liabilities	As 2005 HK$’000 5,658 3,126 222 12 56 1,427 1,527 3,044 – 11,082 3,374 29,528 37,734 7,738 8,206	As at 30 at 31 march september 2006 2007 2007 HK$’000 HK$’000 HK$’000 3,770 5,237 5,569 1,924 2,287 3,541 333 – – 12 12 12 56 54 54 2,219 1,253 1,279 1,400 1,660 1,793 3,044 – – – – 1,500 11,082 – – 3,374 – – 27,214 10,503 13,748 34,909 17,871 21,817 7,408 7,202 7,759 7,695 7,368 8,069	As at 30 at 31 march september 2006 2007 2007 HK$’000 HK$’000 HK$’000 3,770 5,237 5,569 1,924 2,287 3,541 333 – – 12 12 12 56 54 54 2,219 1,253 1,279 1,400 1,660 1,793 3,044 – – – – 1,500 11,082 – – 3,374 – – 27,214 10,503 13,748 34,909 17,871 21,817 7,408 7,202 7,759 7,695 7,368 8,069
		2006 HK$’000 3,770 1,924 333 12 56 2,219 1,400 3,044 – 11,082 3,374 27,214 34,909 7,408 7,695
			13,748

			21,817

			7,759

			8,069

87 -

FinAnciAl inFormAtion oF the coAG Group

Appendix ii

compAny bAlAnce sheets

Note Assets non-current assets Investments in subsidiaries 30(a) current assets Loan to a subsidiary 30(c) total assets eQuity capital and reserves attributable to the target company’s equity holders Share capital 15 Accumulated losses 28 total equity holders’ deficit liAbilities current liabilities Amount due to ultimate holding company 10 Amounts due to subsidiaries 10 Loans from directors 14 Loans from related companies 14 Loans from a third party 14 total liabilities total equity and liabilities net current liabilities total assets less current liabilities	As 2005 HK$’000 – 8,000 8,000 – (39 ) (39 ) 9 30 3,044 1,582 3,374 8,039 8,000 (39 ) (39 )	As at 30 at 31 march september 2006 2007 2007 HK$’000 HK$’000 HK$’000 – – – 8,000 – – 8,000 – – – – – (44 ) (49 ) (49) (44 ) (49 ) (49) 9 9 9 35 40 40 3,044 – – 1,582 – – 3,374 – – 8,044 49 49 8,000 – – (44 ) (49 ) (49 ) (44 ) (49 ) (49 )
		2006 HK$’000 – 8,000 8,000 – (44 ) (44 ) 9 35 3,044 1,582 3,374 8,044 8,000 (44 ) (44 )

88 -

FinAnciAl inFormAtion oF the coAG Group

Appendix ii

consolidAted income stAtements

Note Revenue 5 Cost of sales 16 Gross profit Other income 19 Distribution costs 16 Administrative expenses 16 Profit/(loss) from operations Finance costs 20 (Loss)/profit before income tax Income tax expenses 21 (Loss)/profit for the year/period attributable to equity holders of the Target Company	six months ended year ended 31 march 30 september 2005 2006 2007 2006 2007 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 (Unaudited) 15,932 16,840 18,693 8,138 13,087 (10,680 ) (11,909 ) (12,797 ) (6,073 ) (9,873) 5,252 4,931 5,896 2,065 3,214 26 85 93 38 78 (59 ) (167 ) (66 ) (18 ) (60 ) (4,639 ) (4,682 ) (5,585 ) (2,171 ) (2,398) 580 167 338 (86 ) 834 (672 ) (678 ) (405 ) (348 ) – (92 ) (511 ) (67 ) (434 ) 834 (1,407 ) – (260 ) – (133) (1,499 ) (511 ) (327 ) (434 ) 701	six months ended year ended 31 march 30 september 2005 2006 2007 2006 2007 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 (Unaudited) 15,932 16,840 18,693 8,138 13,087 (10,680 ) (11,909 ) (12,797 ) (6,073 ) (9,873) 5,252 4,931 5,896 2,065 3,214 26 85 93 38 78 (59 ) (167 ) (66 ) (18 ) (60 ) (4,639 ) (4,682 ) (5,585 ) (2,171 ) (2,398) 580 167 338 (86 ) 834 (672 ) (678 ) (405 ) (348 ) – (92 ) (511 ) (67 ) (434 ) 834 (1,407 ) – (260 ) – (133) (1,499 ) (511 ) (327 ) (434 ) 701
	2005 HK$’000 15,932 (10,680 ) 5,252 26 (59 ) (4,639 ) 580 (672 ) (92 ) (1,407 ) (1,499 )	2006 HK$’000 16,840 (11,909 ) 4,931 85 (167 ) (4,682 ) 167 (678 ) (511 ) – (511 )

89 -

FinAnciAl inFormAtion oF the coAG Group

Appendix ii

consolidAted stAtements oF chAnGes in eQuity

balance at 1 April 2004 Loss for the year balance at 31 march 2005 Loss for the year balance at 31 march 2006 Loss for the year balance at 31 march 2007 Profit for the period balance at 30 september 2007 For the six months ended 30 september 2006 (unaudited) balance at 1 April 2006 Loss for the period balance at 30 september 2006	Attributable to the equity holders of the target company share retained capital earnings total HK$’000 HK$’000 HK$’000 – 9,705 9,705 – (1,499 ) (1,499 ) – 8,206 8,206 – (511 ) (511 ) – 7,695 7,695 – (327 ) (327 ) – 7,368 7,368 – 701 701 – 8,069 8,069 7,695 7,695 – (434 ) (434 ) – 7,261 7,261

90 -

FinAnciAl inFormAtion oF the coAG Group

Appendix ii

consolidAted cAsh Flow stAtements

Note cash flows from operating activities Cash generated from/(used in) operations 24(a) Interest paid Income tax refund/(paid) net cash generated from/(used in) operating activities cash flows from investing activities Purchase of property, plant and equipment Proceeds from sale of property, plant and equipment Interest received net cash (used in)/generated from investing activities cash flows from financing activities Proceeds from loan from a fellow subsidiary Proceeds from loan from a related company net cash generated from financing activities 24(c) increase/(decrease) in cash and cash equivalents Cash and cash equivalents and bank overdrafts at the beginning of year/period cash and cash equivalents at the end of year/period	year 2005 HK$’000 1,100 (21 ) 77 1,156 (329 ) 1 3 (325 ) – 500 500 1,331 (483 ) 848	six months ended ended 31 march 30 september 2006 2007 2006 2007 HK$’000 HK$’000 HK$’000 HK$’000 (Unaudited) 1,236 (523 ) (598 ) 820 – – – – (179 ) 19 – – 1,057 (504 ) (598 ) 820 (87 ) (32 ) (26 ) (245 ) 67 15 – – 47 64 33 48 27 47 7 (197) – – – 1,500 – – – – – – – 1,500 1,084 (457 ) (591 ) 2,123 848 1,932 1,932 1,475 1,932 1,475 1,341 3,598

91 -

FinAnciAl inFormAtion oF the coAG Group

Appendix ii

ii notes to the FinAnciAl inFormAtion

1 GenerAl inFormAtion

The Target Company was incorporated in the British Virgin Islands on 15 December 2000 as a limited liability company. The address of its registered office is P.O. Box 957, Offshore Incorporations Centre, Road Town, Tortola, the British Virgin Islands.

The immediate holding company and the ultimate holding company of the Target Company during the Relevant Periods is International Entertainment Corporation (“IEC”), a company incorporated in Cayman Islands and listed on the Growth Enterprise Market of The Stock Exchange of Hong Kong Limited.

The Target Company is an investment holding company. Its subsidiaries are principally engaged in the provision of network solutions and project services. For network solutions, the Target Group provides total system solutions including data networking, synchronisation, timing, wireless local area network and network access control. For project services, the Target Group primarily provides infrastructure installation services which include cellular base station and antenna system installation service, structural cabling installation service and microwave installation service.

2 summAry oF siGniFicAnt AccountinG policies

The Financial Information has been prepared in accordance with HKFRSs under the historical cost convention. These policies are consistent with those adopted by the Company and have been consistently applied throughout the Relevant Periods.

The preparation of the Financial Information in conformity with HKFRSs requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Target Company’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the Financial Information, are disclosed in Note 4 of this section.

The following new standards, amendments and interpretations to the existing standards are not yet effective and have not been early adopted by the Target Group:

HKAS 1 (Revised), Presentation of Financial Statements, effective for annual periods beginning on or after 1 January 2009. The Target Group will assess the impact and apply the standard for the annual periods beginning 1 January 2009 where applicable;
HKAS 23 (Revised), Borrowing Costs, effective for annual periods beginning on or after 1 January 2009. Management does not expect the amendment to be relevant to the Target Group;
HKFRS 8, Operating Segments, effective for annual periods beginning on or after 1 January 2009. HKFRS 8 requires identification of operating segments on the basis of internal reports that are regularly reviewed by the entity’s chief operating decision maker in order to allocate resource to segments and assess its performance. The Target Group will assess the impact and apply the standard for the annual periods beginning 1 January 2009 where applicable;
HK(IFRIC)-Int 12, Service Concession Arrangements, effective for annual periods beginning on or after 1 January 2008. Management does not expect the interpretation to be relevant to the Target Group;
92 -

FinAnciAl inFormAtion oF the coAG Group

Appendix ii

HK(IFRIC)-Int 13, Customer Loyalty Programmes, effective for annual periods beginning on or after 1 July 2008. Management does not expect the interpretation to be relevant to the Target Group;
HK(IFRIC)-Int 14, The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction, effective for annual periods beginning on or after 1 January 2008. Management does not expect the interpretation to be relevant to the Target Group.

(a) subsidiaries

Subsidiaries are all entities (including special purpose entities) over which the Target Group has the power to govern the financial and operating policies generally accompanying a shareholding of more than one half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Target Group controls another entity.

Subsidiaries are fully consolidated from the date on which control is transferred to the Target Group. They are de-consolidated from the date that control ceases.

Inter-company transactions, balances and unrealised gains on transactions between companies comprising the Target Group are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Target Group.

In the Target Company’s balance sheets the investments in subsidiaries are stated at cost less provision for impairment losses (Note 2(e)). The results of subsidiaries are accounted by the Target Company on the basis of dividend received and receivable.

(b) segment reporting

(c) Foreign currency translation

(i) Functional and presentation currency

Items included in the financial statements of each of the Target Group’s entities are measured using the currency of the primary economic environment in which the entity operates (the “functional currency”). The Financial Information is presented in Hong Kong dollars (“HK$”), which is the Target Company’s functional and presentation currency.

(ii) Transactions and balances

93 -

FinAnciAl inFormAtion oF the coAG Group

Appendix ii

(iii) Group companies

The results and financial position of all entities of the Target Group (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet;
income and expenses for each income statement are translated at average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the dates of the transactions); and
all resulting exchange differences are recognised as a separate component of equity.

On consolidation, exchange differences arising from the translation of the net investment in foreign operations, and of borrowings, are taken to shareholders’ equity. When a foreign operation is partially disposed of or sold, exchange differences that were recorded in equity are recognised in the consolidated income statement as part of the gain or loss on sale.

(d) property, plant and equipment

Property, plant and equipment are stated at historical cost less accumulated depreciation and accumulated impairment losses, if any. Historical cost includes expenditure that is directly attributable to the acquisition of the items.

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

Depreciation on property, plant and equipment is calculated using the straight-line method to allocate their costs to their residual values over their estimated useful lives, as follows:

Leasehold improvements over the shorter of their useful lives or lease terms Furniture, fixtures and equipment 5 years Computer hardware 3 – 5 years

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date.

An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount.

Gains and losses on disposals are determined by comparing proceeds with the carrying amount and are recognised within other income, in the consolidated income statements.

94 -

FinAnciAl inFormAtion oF the coAG Group

Appendix ii

(e) impairment of investments in subsidiaries and non-financial assets

Assets that have an indefinite useful life or have not yet available for use are not subject to amortisation and are tested annually for impairment. Assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). Non-financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of the impairment at each reporting date.

(f) Financial assets – trade and other receivables

The Target Group’s financial assets comprise trade and other receivables.

Trade and other receivables are recognised initially at fair value, and subsequently measured at amortised cost using the effective interest method, less provision for impairment. A provision for impairment of trade and other receivables is established when there is objective evidence that the Target Group will not be able to collect all amounts due according to the original terms of receivables. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation, and default or delinquency in payments are considered indicators that the trade receivable is impaired. The amount of the provision is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. The carrying amount of the assets is reduced through the use of an allowance account, and the amount of the loss is recognised in the consolidated income statements within administrative expenses. When a trade receivable is uncollectible, it is written off against the allowance account for trade receivables. Subsequent recoveries of amounts previously written off are credited against administrative expenses in the consolidated income statements.

(g) inventories

Inventories are stated at the lower of cost and net realisable value. Cost is calculated using the first-in, first-out method. The cost of finished goods and work in progress comprises raw material, direct labour and those overheads that have been incurred in bringing the inventories to their present location and condition. Net realisable value is the estimated selling price in the ordinary course of business, less applicable variable selling and distribution costs.

(h) cash and cash equivalents

Cash and cash equivalents include cash in hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of within three months.

(i) share capital

Ordinary shares are classified as equity.

(j) trade payables

Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.

95 -

FinAnciAl inFormAtion oF the coAG Group

Appendix ii

(k) borrowings

Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the consolidated income statement over the period of the borrowings using the effective interest method.

Borrowings are classified as current liabilities unless the Target Group has an unconditional right to defer settlement of the liability for at least twelve months after the balance sheet date.

(l) current and deferred income tax

The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the countries where the Target Company and its subsidiaries operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations where applicable tax regulation is subject to interpretation and establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.

Deferred income tax 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 financial statements. However, if the deferred income tax arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss, it is not accounted for. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.

Deferred income 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 income tax is provided on temporary differences arising on investments in subsidiaries, 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.

(m) employee benefits

(i) Pension obligations

The companies comprising the Target Group which are established in the PRC make contributions based on certain percentage of the salaries of the employees to a defined contribution retirement benefit plan organised by relevant government authorities on a monthly basis. The government authorities undertake to assume the retirement benefit obligations payable to all existing and future retired employees under these plans and the Target Group has no further obligation for post-retirement benefits beyond the contributions made.

The companies comprising the Target Group which are operated in Hong Kong operate defined contribution plans, the assets of which are generally held in a separate trustee-administered funds. These companies pay fixed contribution into such defined contribution plans and have no legal or constructive obligations to pay further contributions if the funds do not hold sufficient assets to pay all employees the benefits relating to employees’ services in the current and prior periods.

Contributions to these defined contributions plans are expensed as incurred.

96 -

FinAnciAl inFormAtion oF the coAG Group

Appendix ii

(ii) Employee leave entitlement

(iii) Bonus entitlement

Provisions for bonus payment are recognised when the Target 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.

(n) provisions

Provisions are recognised when the Target 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 the amount has been reliably estimated.

Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to passage of time is recognised as an interest expense.

(o) revenue recognition

Revenue comprises the fair value of the consideration received or receivable for the sale of goods and services in the ordinary course of the Target Group’s activities. Revenue derived from network solutions and project service contracts is recognised on stage of completion method, measured by reference to the agreed milestones of work performed and is shown after eliminating sales within the Target Group.

The Target Group recognises revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the entity and specific criteria have been met for each of the Target Group’s activities as described below. The Target Group bases its estimates on historical results, taking into consideration the type of customer, the type of transaction and the specifics of each arrangement.

Warranty and maintenance service income is recognised over the relevant contract period on straightline

basis.

Interest income is recognised on a time-proportion basis using the effective interest method.

97 -

FinAnciAl inFormAtion oF the coAG Group

Appendix ii

(p) operating leases

Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to the consolidated income statement on the straight-line basis over the period of the lease.

(q) dividend distribution

Dividend distribution to the Target Company’s shareholders is recognised as a liability in the Target Group’s Financial Information in the period in which the dividends are approved by the Target Company’s shareholders.

3 FinAnciAl risk mAnAGement

(a) Financial risk factors

The Target Group’s activities expose it to a variety of financial risks: credit risk, interest rate risk, liquidity risk and foreign currency risk. The Target Group’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Target Group’s financial performance.

(i) Credit risk

The Target Group and Target Company has no significant concentration of credit risk. The fair values of cash and cash equivalents, short-term bank deposits with original terms of less than three months, restricted cash, trade and other receivables, amounts due from ultimate holding company, subsidiary, fellow subsidiaries and related companies represent the Target Group’s maximum exposure in relation to financial assets.

The Target Group has policies to limit the amount of credit exposure to any customers, to ensure that sales of products or services are made to customers with an appropriate credit history and to perform periodic credit evaluations of its customers. The Target Group’s historical experience in collection of trade and other receivables, amounts due from ultimate holding company, subsidiary, fellow subsidiaries and related companies falls within the recorded allowances.

The credit quality of financial assets that are neither past due nor impaired can be assessed by reference to the counter party’s default history. The current portion trade receivables which are not impaired are analysed below:

trade receivables New customers (less than 12 months) Existing customers (more than 12 months) with no defaults in the past	As at 31 march	As at 31 march	As at 30 september 2007 2007 HK$’000 HK$’000 244 227 2,714 2,745 2,958 2,972	As at 30 september 2007 2007 HK$’000 HK$’000 244 227 2,714 2,745 2,958 2,972
	2005 HK$’000 1,250 2,360 3,610	2006 HK$’000 60 980 1,040
				2,972

98 -

FinAnciAl inFormAtion oF the coAG Group

Appendix ii

(ii) Liquidity risk

Prudent liquidity risk management includes maintaining sufficient cash from operating activities and the availability of funding through an adequate amount of committed credit facilities. The Target Group aims to maintain flexibility in funding by keeping committed credit lines available.

The Target Group’s and Target Company’s financial liabilities were current in nature and repayable on demand, therefore the contractual undiscounted cash flows of the Target Group’s and Target Company’s financial liabilities were less than one year at the respective balance sheets dates throughout the Relevant Periods.

Borrowing facilities available Borrowing facilities utilised Undrawn borrowing facilities	As at 31 march	As at 31 march	As at 30 september 2007 2007 HK$’000 HK$’000 1,000 1,000 – – 1,000 1,000	As at 30 september 2007 2007 HK$’000 HK$’000 1,000 1,000 – – 1,000 1,000
	2005 HK$’000 1,000 – 1,000	2006 HK$’000 1,000 – 1,000
				1,000

(iii) Interest rate risk

The Target Group’s income and operating cash flows are substantially independent of changes in market interest rates as the Target Group has no significant interest-bearing assets. The Target Group’s exposures to changes in interest rates are mainly attributable to its borrowings.

Borrowings at variable rates expose the Target Group to cash flow interest-rate risk. Borrowings at fixed rates expose the Target Group to fair value interest-rate risk. Details of the Target Group’s borrowings have been disclosed in Note 14 of this section.

The Target Group has not used any interest rate swaps to hedge its exposure to interest rate risk.

The Target Group analyses its interest rate exposure on a dynamic basis. Various scenarios are simulated taking into consideration of refinancing, renewal of existing positions and alternative financing. Based on these scenarios, the Target Group calculates the impact on profit and loss of a defined interest rate shift. For each simulation, the same interest rate shift is used. The scenarios are run only for liabilities that represent the major interest-bearing positions.

Based on the simulations performed, the impact on profit or loss of a 50 basis-point shift would be a maximum increase/decrease of HK$72,000, HK$72,000, HK$42,000, HK$36,000 and nil for the years ended 31 March 2005, 2006 and 2007 and six months ended 30 September 2006 and 2007, respectively.

(iv) Foreign currency risk

The Target Group is exposed to foreign currency risk arising from Renminbi (“RMB”) currency exposures. Foreign exchange risk arises from future commercial transactions, recognised assets and liabilities and net investments in foreign operations. In addition, the conversion of RMB into foreign currencies is subject to the rules and regulations of foreign exchange control promulgated by the PRC government. This currency exposure is managed primarily through sourcing raw material denominated in the same currency.

99 -

FinAnciAl inFormAtion oF the coAG Group

Appendix ii

Certain of the assets of the Target Group are principally denominated in United States Dollar (“US$”). HK$ is pegged to US$, and thus foreign exchange exposure is considered as minimal. The Target Group currently does not have a foreign currency hedging policy.

Prior to the revaluation of RMB in July 2005, foreign exchange exposure with respect to RMB is considered as minimal. During the years ended 31 March 2006 and 2007 and the six months ended 30 September 2007, if HK$ had strengthened/weakened by 5% against the RMB, with all other variable held constant, post-tax profit for the year/period would have been approximately HK$2,000, HK$52,000 and HK$3,000, respectively, higher or lower. At 31 March 2006 and 2007 and 30 September 2007, if HK$ had strengthened/weakened by 5% against the RMB, equity would have been approximately HK$22,000, HK$87,000 and HK$73,000, respectively, lower or higher.

(b) capital risk management

The capital structure of the Target Group consists of owner’s equity and debts, which include borrowings from directors, a fellow subsidiary, related companies and a third party, amounts due to directors, ultimate holding company, fellow subsidiaries and related companies, time deposit, bank balances and cash and equity attributable to equity holders of the Target Company, comprising issued capital and retained earnings respectively.

The Target Group’s objectives when managing capital are to finance its operations with its own capital and to safeguard the Target Group’s ability to continue as a going concern in order to provide returns for shareholders.

The directors of the Target Company review the capital structure on an annual basis. As a part of this review, the directors of the Target Company consider the cost of capital and other sources of funds other than issuance of shares, including borrowings from directors, fellow subsidiaries and related companies and a third party. Based on the recommendation of the directors of the Target Company, the Target Group will balance its overall capital structure through raising or repayment of borrowings.

Where the capital level exceeds the working capital requirement, the Target Group may adjust the amount of dividends paid to shareholders to reduce the working capital level.

The capital structure of the Target Group at 31 March 2005, 2006 and 2007 and 30 September 2007 were as follows:

Cash and cash equivalents Restricted cash Loans from directors Loan from a fellow subsidiary Loans from related companies Loans from a third party Amounts due to directors Amount due to ultimate holding company Amounts due to fellow subsidiaries Amounts due to related companies Equity attributable to the Target Company’s equity holders	As at 31 march	As at 31 march	As at 30 september 2007 2007 HK$’000 HK$’000 1,475 3,598 1,000 1,000 – – – 1,500 – – – – – – 12 12 54 54 1,253 1,279 7,368 8,069 11,162 15,512	As at 30 september 2007 2007 HK$’000 HK$’000 1,475 3,598 1,000 1,000 – – – 1,500 – – – – – – 12 12 54 54 1,253 1,279 7,368 8,069 11,162 15,512
	2005 HK$’000 848 1,000 3,044 – 11,082 3,374 222 12 56 1,427 8,206 29,271	2006 HK$’000 1,932 1,000 3,044 – 11,082 3,374 333 12 56 2,219 7,695 30,747
				15,512

100 -

FinAnciAl inFormAtion oF the coAG Group

Appendix ii

The Target Group is not subject to any externally imposed capital requirements. The Target Group’s overall strategy remains unchanged throughout the Relevant Periods.

(c) Fair value estimation

The carrying amounts of the Target Group’s financial assets including cash and cash equivalents, restricted cash, trade and other receivables, amounts due from ultimate holding company, fellow subsidiaries and related companies; and financial liabilities including trade and other payables, amounts due to ultimate holding company, fellow subsidiaries and related companies and loans from directors, a fellow subsidiary, related parties and a third party, approximate their fair values due to their short maturities. The face values less any estimated credit adjustments for financial assets and liabilities with a maturity of less than one year are assumed to approximate their fair values.

4 criticAl AccountinG estimAtes And judGements

The Target Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates or assumptions that have a significant risk of causing material adjustments to the carrying amounts of assets and liabilities within the next financial year are discussed below.

estimated impairment of receivables

The Target Group records impairment of receivables based on an assessment of the recoverability of trade and other receivables, amounts due from ultimate holding company, fellow subsidiaries and related companies. Provisions for impairment are applied to trade and other receivables, amounts due from ultimate holding company, fellow subsidiaries and related companies where events or changes in circumstances indicate that the balances may not be collectible. Impairment assessment requires the use of judgement and estimates. Where the expectation is different from the original estimate, such difference will impact carrying value of trade and other receivables and impairment charges in the period in which such estimate has been changed.

Allowance for obsolete inventories

The management of the Target Group reviews the inventories listing at each balance sheet date and identifies obsolete and slow moving inventory items which are no longer suitable for use in production. Allowance was made by reference to the latest market value for those inventories identified. In addition, the Target Group carries out an inventory review on a product-by-product basis at balance sheet date and makes the necessary write-down for obsolete items.

101 -

FinAnciAl inFormAtion oF the coAG Group

Appendix ii

5 revenue And seGment inFormAtion

The Group is principally engaged in two business segments, the provision of network solutions and project services.

(a) primary reporting format – business segments

During the Relevant Periods, the Target Group operates in two main business segments:

Network solutions –

Provision of total system solution including data networking solution, synchronisation solution, timing solution, wireless local area network solution and network access control solution.

Project services

Provision of infrastructure installation services which include cellular base station and antenna system installation service, structural cabling installation service and microware installation service.

Other group operations mainly comprise the provision of warranty and maintenance service.

The segment results for the six months ended 30 September 2007 are as follows:

Revenue Segment results Other income Unallocated expenses Finance costs Profit before income tax Income tax expense Profit for the period attributable to equity holders of the Target Company Other segment information Depreciation Capital expenditure	network solutions HK$’000 3,864 876 52 –	project services HK$’000 8,421 1,988 – –	others HK$’000 802 350 49 245	total HK$’000 13,087 3,214 78 (2,458 ) – 834 (133 ) 701 101 245

102 -

FinAnciAl inFormAtion oF the coAG Group

Appendix ii

The segment results for the six months ended 30 September 2006 are as follows:

Revenue Segment results Other income Unallocated expenses Finance costs Loss before income tax Income tax expense Loss for the period attributable to equity holders of the Target Company Other segment information Depreciation Capital expenditure	network solutions HK$’000 (Unaudited) 3,371 565 63 –	project services HK$’000 (Unaudited) 3,972 1,009 – –	others HK$’000 (Unaudited) 795 491 12 26	total HK$’000 (Unaudited) 8,138 2,065 38 (2,189 ) (348 ) (434 ) – (434) 75 26

103 -

FinAnciAl inFormAtion oF the coAG Group

Appendix ii

The segment results for the year ended 31 March 2007 are as follows:

Revenue Segment results Other income Unallocated expenses Finance costs Loss before income tax Income tax expense Loss for the year attributable to equity holders of the Target Company Other segment information Depreciation Capital expenditure Provision for impairment of trade receivables Provision for impairment of amounts due from fellow subsidiaries Provision for impairment of amount due from a related company Provision for impairment of inventories	network solutions HK$’000 7,823 2,269 116 – 32 – – 7	project services HK$’000 9,470 2,640 – – – – – 39	others HK$’000 1,400 987 25 32 – – – –	total HK$’000 18,693 5,896 93 (5,651 ) (405 ) (67 ) (260 ) (327) 141 32 32 1,021 21 46

104 -

FinAnciAl inFormAtion oF the coAG Group

Appendix ii

The segment results for the year ended 31 March 2006 are as follows:

Revenue Segment results Other income Unallocated expenses Finance costs Loss before income tax Income tax expense Loss for the year attributable to equity holders of the Target Company Other segment information Depreciation Capital expenditure	network solutions HK$’000 8,112 2,307 168 –	project services HK$’000 6,797 1,642 – –	others HK$’000 1,931 982 33 87	total HK$’000 16,840 4,931 85 (4,849 ) (678 ) (511 ) – (511) 201 87

105 -

FinAnciAl inFormAtion oF the coAG Group

Appendix ii

The segment results for the year ended 31 March 2005 are as follows:

Revenue Segment results Other income Unallocated expenses Finance costs Loss before income tax Income tax expense Loss for the year attributable to equity holders of the Target Company Other segment information Depreciation Capital expenditure Provision for impairment of inventories	network solutions HK$’000 5,517 1,998 76 – 38	project services HK$’000 8,647 2,299 – – 11	others HK$’000 1,768 955 96 329 –	total HK$’000 15,932 5,252 26 (4,698 ) (672 ) (92 ) (1,407 ) (1,499) 172 329 49

106 -

FinAnciAl inFormAtion oF the coAG Group

Appendix ii

Segment assets consist primarily of property, plant and equipment, inventories, trade and other receivables. Unallocated assets comprise cash and cash equivalents, restricted cash and amounts due from ultimate holding company, fellow subsidiaries and related companies.

Segment liabilities comprise operating liabilities. Unallocated liabilities comprise items such as borrowings.

Capital expenditure comprises additions to property, plant and equipment (Note 6).

The segment assets and liabilities as at 30 September 2007 are as follows:

network project solutions services others HK$’000 HK$’000 HK$’000 Segment assets 4,278 4,231 127 Unallocated assets Segment liabilities 4,439 3,853 424 Unallocated liabilities	total HK$’000 8,636 13,181
	21,817

	8,716 5,032
	13,748

The segment assets and liabilities as at 31 March 2007 are as follows:

network project solutions services others HK$’000 HK$’000 HK$’000 Segment assets 3,376 3,540 – Unallocated assets Segment liabilities 3,380 3,195 675 Unallocated liabilities	total HK$’000 6,916 10,955
	17,871

	7,250 3,253
	10,503

107 -

FinAnciAl inFormAtion oF the coAG Group

Appendix ii

The segment assets and liabilities as at 31 March 2006 are as follows:

network project solutions services others HK$’000 HK$’000 HK$’000 Segment assets 1,040 1,198 423 Unallocated assets Segment liabilities 1,515 2,407 1,006 Unallocated liabilities	total HK$’000 2,661 32,248
	34,909

	4,928 22,286
	27,214

The segment assets and liabilities as at 31 March 2005 are as follows:

network project solutions services others HK$’000 HK$’000 HK$’000 Segment assets 3,927 3,020 244 Unallocated assets Segment liabilities 4,135 3,478 557 Unallocated liabilities	total HK$’000 7,191 30,543
	37,734

	8,170 21,358
	29,528

108 -

FinAnciAl inFormAtion oF the coAG Group

Appendix ii

(b) secondary reporting format – geographical segments

The Target Group is operating in two main geographical areas, Hong Kong and the PRC.

The Target Group’s turnover by geographical location is determined by the country in which the customer is located. There are no sales or other transactions between the geographical segments.

Turnover: Hong Kong PRC	year ended 31 march 2005 2006 2007 HK$’000 HK$’000 HK$’000 14,954 14,670 17,671 978 2,170 1,022 15,932 16,840 18,693	year ended 31 march 2005 2006 2007 HK$’000 HK$’000 HK$’000 14,954 14,670 17,671 978 2,170 1,022 15,932 16,840 18,693	six months ended 30 september	six months ended 30 september
	2005 HK$’000 14,954 978 15,932	2006 HK$’000 14,670 2,170 16,840	2006 HK$’000 (Unaudited) 7,018 1,120 8,138	2007 HK$’000 13,087 –
				13,087

Total assets are allocated based on where the assets are located.

Segment assets consist primarily of property, plant and equipment, inventories and trade and other receivables.

Total assets: Hong Kong PRC	As at 31 march	As at 31 march	As at 30 september 2007 2007 HK$’000 HK$’000 16,778 20,780 1,093 1,037 17,871 21,817	As at 30 september 2007 2007 HK$’000 HK$’000 16,778 20,780 1,093 1,037 17,871 21,817
	2005 HK$’000 33,328 4,406 37,734	2006 HK$’000 32,951 1,958 34,909
				21,817

Capital expenditure is allocated based on where the assets are located and comprises additions to property, plant and equipment.

Capital expenditure: Hong Kong PRC	year ended 31 march 2005 2006 2007 HK$’000 HK$’000 HK$’000 22 78 32 307 9 – 329 87 32	year ended 31 march 2005 2006 2007 HK$’000 HK$’000 HK$’000 22 78 32 307 9 – 329 87 32	six months ended 30 september	six months ended 30 september
	2005 HK$’000 22 307 329	2006 HK$’000 78 9 87	2006 HK$’000 (Unaudited) 26 – 26	2007 HK$’000 245 –
				245

109 -

FinAnciAl inFormAtion oF the coAG Group

Appendix ii

6 property, plAnt And eQuipment – tArGet Group

Furniture, leasehold fixtures and improvements equipment HK$’000 HK$’000 cost As at 1 April 2004 3 3,300 Additions – 329 Disposals – (12 ) As at 31 March 2005 3 3,617 Additions – 87 Disposals – (102 ) As at 31 March 2006 3 3,602 Additions – 32 Disposals (3 ) (641 ) As at 31 March 2007 – 2,993 Additions 79 166 Disposals – (219 ) As at 30 September 2007 79 2,940 depreciation As at 1 April 2004 3 3,003 Charge of the year – 158 Disposals – (12 ) As at 31 March 2005 3 3,149 Charge of the year – 201 Disposals – (35 ) As at 31 March 2006 3 3,315 Charge of the year – 141 Disposals (3 ) (629 ) As at 31 March 2007 – 2,827 Charge of the period 20 81 Disposals – (219 ) As at 30 September 2007 20 2,689 net book amount As at 31 March 2005 – 468 As at 31 March 2006 – 287 As at 31 March 2007 – 166 As at 30 September 2007 59 251	computer hardware HK$’000 1,776 – – 1,776 – – 1,776 – (42 ) 1,734 – – 1,734 1,762 14 – 1,776 – – 1,776 – (42 ) 1,734 – – 1,734 – – – –	total HK$’000 5,079 329 (12 ) 5,396 87 (102 ) 5,381 32 (686 ) 4,727 245 (219 ) 4,753 4,768 172 (12 ) 4,928 201 (35 ) 5,094 141 (674 ) 4,561 101 (219 ) 4,443 468 287 166 310

Depreciation of HK$172,000, HK$201,000, HK$141,000, HK$75,000 (unaudited) and HK$101,000 have been included in administrative expenses for the years ended 31 March 2005, 2006 and 2007 and the six months ended 30 September 2006 and 2007 respectively.

110 -

FinAnciAl inFormAtion oF the coAG Group

Appendix ii

7 inventories – tArGet Group

Raw materials Work in progress Finished goods Less: Provision for obsolete inventories Inventories, net	As at 31 march	As at 31 march	As at 30 september 2007 2007 HK$’000 HK$’000 49 46 750 2,652 2,226 1,855 3,025 4,553 (1,444 ) (1,441 ) 1,581 3,112
	2005 HK$’000 43 1,743 1,485 3,271 (1,398 ) 1,873	2006 HK$’000 49 470 1,534 2,053 (1,398 ) 655

The cost of inventories included in cost of sales during the years ended 31 March 2005, 2006 and 2007 and the six months ended 30 September 2007 amounted to approximately HK$3,520,000, HK$5,806,000, HK$5,555,000 and HK$2,988,000 respectively.

The gross amount of inventories carried at net realisable value amounted to approximately HK$1,398,000, HK$1,398,000, HK$1,444,000 and HK$1,441,000 as at 31 March 2005, 2006 and 2007 and 30 September 2007. Full provision has been made with regard to these balances.

8 trAde receivAbles – tArGet Group

Trade receivables from third parties Trade receivables from related companies Less: provision for impairment of receivables Trade receivables, net	As at 31 march	As at 31 march	As at 30 september 2007 2007 HK$’000 HK$’000 2,261 1,803 2,947 3,428 5,208 5,231 (32 ) (32 ) 5,176 5,199
	2005 HK$’000 3,028 1,852 4,880 – 4,880	2006 HK$’000 1,292 398 1,690 – 1,690

111 -

FinAnciAl inFormAtion oF the coAG Group

Appendix ii

Credit terms granted to customers by the Target Group are generally within three months. The ageing analysis of trade receivables based on due date at respective balance sheet dates is as follows:

As at 31 march	As at 31 march	As at 30 september 2007 2007 HK$’000 HK$’000 2,958 2,972 515 288 779 1,120 956 851 5,208 5,231 4,523 4,105 32 32 653 1,094 5,208 5,231
2005 HK$’000 3,610 354 116 800 4,880 2,597 2,055 228 4,880	2006 HK$’000 1,040 172 214 264 1,690 1,144 483 63 1,690
		5,231

		4,105 32 1,094
		5,231

For the year ended 31 March 2007, trade receivables of HK$32,000 had been impaired and were fully provided for. No impairment of trade receivables was provided for the years ended 31 March 2005 and 2006 and for the six months ended 30 September 2007. The individually impaired receivables mainly relate to smaller customers which were in financial difficulties. The ageing analysis of these non-recoverable receivables based on due date is as follows:

Over 90 days	As at As at 31 march 30 september 2005 2006 2007 2007 HK$’000 HK$’000 HK$’000 HK$’000 – – 32 32

As at 31 March 2005, 2006 and 2007 and 30 September 2007, trade receivables of HK$1,270,000, HK$650,000, HK$2,218,000 and HK$2,227,000 respectively were past due but not impaired. These relate to a number of customers with no history of credit default and they are in continuous trading with the Target Group. The ageing analysis of these trade receivables based on due date is as follows:

31 – 60 days 61 – 90 days Over 90 days	As at 31 march	As at 31 march	As at 30 september 2007 2007 HK$’000 HK$’000 515 288 779 1,120 924 819 2,218 2,227	As at 30 september 2007 2007 HK$’000 HK$’000 515 288 779 1,120 924 819 2,218 2,227
	2005 HK$’000 354 116 800 1,270	2006 HK$’000 172 214 264 650
				2,227

112 -

FinAnciAl inFormAtion oF the coAG Group

Appendix ii

Movements of provision for impairment of trade receivables are as follows:

At beginning of the year/period Provision for impairment of receivables At end of the year/period	As at 31 march	As at 31 march	As at 30 september 2007 2007 HK$’000 HK$’000 – 32 32 – 32 32	As at 30 september 2007 2007 HK$’000 HK$’000 – 32 32 – 32 32
	2005 HK$’000 – – –	2006 HK$’000 – – –
				32

The origination of provision for impaired receivables has been included in administrative expenses in the consolidated income statements (Note 16). Amounts charged to the allowance account are generally written off when there is no expectation of recovering additional cash.

The maximum exposure to credit risk at the reporting date is the fair value of each class of receivable mentioned above. The Target Group does not hold any collateral as security.

9 other receivAbles, deposits And prepAyments – tArGet Group

As at 31 march	As at 31 march	As at 30 september 2007 2007 HK$’000 HK$’000 43 87 130 100 110 211 283 398 283 391 – 7 283 398
2005 HK$’000 10 35 64 109 74 35 109	2006 HK$’000 10 23 109 142 118 24 142
		398

		391 7
		398

The carrying amounts of the Target Group’s other receivables, deposits and prepayments approximate their fair

values.

113 -

FinAnciAl inFormAtion oF the coAG Group

Appendix ii

10 Amounts due From/(to) ultimAte holdinG compAny, subsidiAries, Fellow subsidiAries, relAted compAnies And directors – tArGet Group And tArGet compAny

The amounts due from/(to) ultimate holding company, subsidiaries, fellow subsidiaries, related companies and directors were denominated in HK$ and RMB. The balances are unsecured, interest-free and repayable upon demand. The carrying values of these balances approximate their fair values.

Amounts due from related companies are disclosed as follows:

name of related companies relationship Cyber On-Air (BVI) Limited Common director, (“Cyber BVI”) Mr. Choi Wing Kin (“Mr. Choi”) Mongolia Energy Corporation Common director, (Greater China) Limited Mr. Lo Lin Shing, (formerly known Simon (“Mr. Lo”) as New World CyberBase (Greater China) Limited) (“Mongolia”) New World CyberBase Common director, (Shanghai) Limited Dr. Cheng Kar Shun (“Dr Cheng”) before 4 January 2007; Common director, Mr. Lo on or after 4 January 2007 New World Mobile Holdings Limited Common director, Mr Lo (“NWM”) 上海翰音網絡科技有限公司 Subsidiary of NWM (formerly known as上海創時信息系統有限公司) 上海易圖通信息技術有限公司 Subsidiary of NWM 廣州分公司 Provision for impairment of receivables		target Group	target Group	As at 30 september 2007 HK$’000 21 8 29 10 400 – 468 (21 ) 447
		As at 31 march	2007 HK$’000 21 8 29 10 400 – 468 (21 ) 447
	2005 HK$’000 – – 28 – 530 – 558 – 558	2006 HK$’000 11 – 28 – 405 15 459 – 459

114 -

FinAnciAl inFormAtion oF the coAG Group

Appendix ii

As at 31 March 2007 and 30 September 2007, amounts due from fellow subsidiaries of HK$1,021,000 and amount due from a related company of HK$21,000 had been impaired and were fully provided for. No impairment of amounts due from ultimate holding company, fellow subsidiaries, related companies and directors was provided for 31 March 2005 and 2006.

The information relating to the amounts due from related companies, disclosed pursuant to Section 161B of the Hong Kong Companies Ordinance, is as follows:

name of related companies Cyber BVI Mongolia New World CyberBase (Shanghai) Limited NWM 上海翰音網絡科技有限公司上海易圖通信息技術有限公司廣州分公司	target Group	target Group
	maximum amount outstanding during six months ended year ended 31 march 30 september 2005 2006 2007 2006 2007 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 – 11 21 11 21 – – 8 – 8 28 28 29 29 29 – – 10 – 10 636 543 405 405 400 – 15 15 15 –
		2006 2007 HK$’000 HK$’000 11 21 – 8 29 29 – 10 405 400 15 –

11 restricted cAsh – tArGet Group

Restricted cash denominated in HK$	As at 31 march	As at 31 march	As at 30 september 2007 2007 HK$’000 HK$’000 1,000 1,000
	2005 HK$’000 1,000	2006 HK$’000 1,000

Restricted cash represents mandatory reserve deposits placed in a bank as pledges against facilities granted. The weighted average effective interest rate per annum on restricted cash was 0.35%, 2.75%, 2.6% and 2.7% as at 31 March 2005, 2006 and 2007 and 30 September 2007, respectively.

115 -

FinAnciAl inFormAtion oF the coAG Group

Appendix ii

12 cAsh And cAsh eQuivAlents – tArGet Group

As at 31 march	As at 31 march	As at 30 september 2007 2007 HK$’000 HK$’000 1,475 2,038 – 1,560 1,475 3,598 1,183 2,812 208 172 84 614 1,475 3,598
2005 HK$’000 848 – 848 663 102 83 848	2006 HK$’000 1,932 – 1,932 1,746 66 120 1,932
		3,598

		2,812 172 614
		3,598

The weighted average effective interest rate on short-term bank deposit was 3.75% per annum as at 30 September 2007. The deposit has an average maturity of 7 days as at 30 September 2007.

The Target Group’s cash and bank balances denominated in RMB are deposited with banks in the PRC. The conversion of these RMB denominated balances into foreign currencies is subject to the rules and regulations of foreign exchange control promulgated by the PRC Government.

Cash and cash equivalents include the following for the purposes of the consolidated cash flow statements:

Cash and bank balances	As at As at 31 march 30 september 2005 2006 2007 2007 HK$’000 HK$’000 HK$’000 HK$’000 848 1,932 1,475 3,598

As at 31 March 2005, 2006 and 2007 and 30 September 2007, no bank overdraft had been drawn by the Target Group.

116 -

FinAnciAl inFormAtion oF the coAG Group

Appendix ii

The table below shows the bank deposits balance of the major counterparties as at 31 March 2005, 2006 and 2007 and 30 September 2007.

As at 31 march	As at 31 march	As at 30 september 2007 2007 HK$’000 HK$’000 166 160 79 1,718 – – 1,220 1,712 3 1 1,468 3,591 – – – – 1,468 3,591 7 7 1,475 3,598
2005 HK$’000 20 88 9 705 2 824 13 13 837 11 848	2006 HK$’000 4 58 2 1,818 8 1,890 13 13 1,903 29 1,932
		3,591

		–
		–

		3,591 7
		3,598

Management does not expect any losses from non-performance by these counterparties.

117 -

FinAnciAl inFormAtion oF the coAG Group

Appendix ii

13 trAde pAyAbles – tArGet Group

The aging analysis of trade payables based on due date is as follows:

As at 31 march	As at 31 march	As at 30 september 2007 2007 HK$’000 HK$’000 3,295 4,668 390 233 271 127 1,281 541 5,237 5,569 3,759 4,597 66 65 1,412 907 5,237 5,569
2005 HK$’000 3,242 1,131 543 742 5,658 4,534 110 1,014 5,658	2006 HK$’000 2,513 253 65 939 3,770 3,099 140 531 3,770
		5,569

		4,597 65 907
		5,569

The carrying amounts of the Target Group’s trade payables approximate their fair values.

118 -

FinAnciAl inFormAtion oF the coAG Group

Appendix ii

14 loAns From directors, A Fellow subsidiAry, A third pArty And relAted compAnies – tArGet Group And tArGet compAny

The loans from directors, a fellow subsidiary, a third party and related companies are denominated in HK$. The balances are analysed as follows:

	target Group
interest bearing at non– prime hibor interest per plus 2% bearing annum per annum HK$’000 HK$’000 HK$’000 1,187 – 1,662 81 – 114 1,268 – 1,776 – 1,200 9,100 326 – 456 326 1,200 9,556 1,406 – 1,968 3,000 1,200 13,300 target company interest bearing at hibor non interest plus 2% bearing per annum HK$’000 HK$’000 1,187 1,662 81 114 1,268 1,776 – 800 326 456 326 1,256 1,406 1,968 3,000 5,000	interest bearing at prime hibor per plus 2% annum per annum HK$’000 HK$’000 – 1,662 – 114 – 1,776 1,200 9,100 – 456 1,200 9,556 – 1,968 1,200 13,300 target company	total HK$’000 2,849 195
		3,044
		10,300 782
		11,082
		3,374

		17,500


		total HK$’000 2,849 195
		3,044
		800 782
		1,582
		3,374

		8,000

119 -

FinAnciAl inFormAtion oF the coAG Group

Appendix ii

(a) The amounts as at 31 March 2005 and 2006 were unsecured and repayable on demand. An amount of HK$1,268,000 was interest-free and the remaining amount of HK$1,776,000 borne interest at the Hong Kong Interbank Offered Rate (“HIBOR”) plus 2% per annum.
(b) An amount of HK$800,000 borrowed by the Target Company as at 31 March 2005 and 2006 borne interest at HIBOR plus 2% per annum and was unsecured and repayable on demand.

Another amount of HK$1,200,000 borrowed by other companies comprising the Target Group as at 31 March 2005 and 2006 was guaranteed by IEC and borne interest at the best lending rate (“PRIME”) quoted by The Hongkong and Shanghai Banking Corporation Limited and repayable on 30 June 2006.

The remaining amount of HK$8,300,000 borrowed by other company of comprising the Target Group as at 31 March 2005 and 2006 was guaranteed by IEC and borne interest at HIBOR plus 2% per annum and repayable on 30 June 2006.

Cyber Network is a company in which one of its directors is also a director of the Target Company’s ultimate holding company, IEC.

(c) The loan from Wellington as at 31 March 2005 and 2006 was unsecured and repayable on demand. An amount of HK$326,000 is interest-free and the remaining amount of HK$456,000 borne interest at HIBOR plus 2% per annum.

Wellington is a company in which Mr. Lo, a director of the Company, has a beneficial interest.

(d) The amounts as at 31 March 2005 and 2006 were unsecured and repayable on demand. An amount of HK$1,406,000 was interest-free and the remaining amount of HK$1,968,000 borne interest at HIBOR plus 2% per annum.

Mr. Wong Kwok Kin was the director of the Target Company for the period from 15 December 2000 to 4 December 2001.

balance as at 30 september 2007

The loan of HK$1,500,000 from Lucky Genius Limited, a wholly owned subsidiary of the ultimate holding company, was unsecured, interest-free and repayable on 31 October 2007. The directors of the Target Company confirmed that the outstanding balance as at 30 September 2007 had been fully settled as at the date of this report.

The carrying values of the loans from directors, related companies, a third party and a fellow subsidiary approximate their fair values.

15 shAre cApitAl – tArGet compAny

Authorised: As at 1 April 2004, 31 March 2005, 2006 and 2007 and 30 September 2007 Issued and fully paid: As at 1 April 2004, 31 March 2005, 2006 and 2007 and 30 September 2007	ordinary shares of hk$0.01 each	ordinary shares of hk$0.01 each
	no. of shares 30,000,000 10,000	HK$ 300,000

		100

120 -

FinAnciAl inFormAtion oF the coAG Group

Appendix ii

16 expenses by nAture

Expenses included in cost of sales, distribution costs and administrative expenses are analysed as follows:

year ended 31 march 2005 2006 2007 HK$’000 HK$’000 HK$’000 Auditors’ remuneration 105 80 91 Cost of inventories_(Note 7) 3,520 5,806 5,555 Depreciation of property, plant and equipment(Note 6) 172 201 141 Employee benefit expenses (Note 17) 2,800 3,046 3,045 Legal and professional fees 101 76 50 Management fee(Note 25(b)) 40 480 509 Office expenses 673 415 324 Operating lease rentals in respect of buildings 467 183 171 Provision for impairment of amounts due from fellow subsidiaries(Note 10) – – 1,021 Provision for impairment of amount due from a related company(Note 10) – – 21 Provision for impairment of obsolete inventories(Note 7) 49 – 46 Provision for impairment of trade receivables(Note 8)_ – – 32 Subcontracting fees 7,160 6,103 7,242 Traveling expenses 161 138 82 Other expenses 130 230 118 Total cost of sales, distribution costs and administrative expenses 15,378 16,758 18,448	six months ended 30 september	six months ended 30 september
	2006 HK$’000 (Unaudited) 48 2,806 75 1,456 15 240 161 99 – – – – 3,267 42 53 8,262	2007 HK$’000 47 2,988 101 1,695 15 26 190 263 – – – – 6,885 30 91
		12,331

121 -

FinAnciAl inFormAtion oF the coAG Group

Appendix ii

17 employee beneFit expenses (includinG directors’ emoluments)

Wages, salaries and bonuses Contributions to pension schemes (a) Welfare and allowance Sales commission paid to employees Severance payments	year ended 31 march 2005 2006 2007 HK$’000 HK$’000 HK$’000 2,356 2,565 2,731 212 194 192 56 40 37 176 244 85 – 3 – 2,800 3,046 3,045	year ended 31 march 2005 2006 2007 HK$’000 HK$’000 HK$’000 2,356 2,565 2,731 212 194 192 56 40 37 176 244 85 – 3 – 2,800 3,046 3,045	six months ended 30 september	six months ended 30 september
	2005 HK$’000 2,356 212 56 176 – 2,800	2006 HK$’000 2,565 194 40 244 3 3,046	2006 HK$’000 (Unaudited) 1,285 94 37 40 – 1,456	2007 HK$’000 1,472 78 77 68 –
				1,695

(a) pensions scheme – defined contribution plans

The employees of the Target Group in the PRC participate in defined contribution retirement schemes in accordance with the relevant laws and regulations. Each employee covered by these schemes is entitled, after his/her retirement from the Target Group, to a monthly pension as determined by these schemes. The local government authorities of the PRC are responsible for the pension liabilities to these retired employees. The Target Group made monthly contributions to these schemes at rates ranging from 31% to 44% of the basic salaries of employees during the Relevant Periods.

The Target Group has arranged for its Hong Kong employees to join the mandatory provident scheme (the “MPF Scheme”), under which each company of the Target Group in Hong Kong (the employer) and its employees make monthly contributions to the scheme at 5% of the employees’ earnings as defined under the Mandatory Provident Fund legislation. The contributions from each of the employers and employees are subject to a cap of HK$1,000 per month and thereafter contributions are voluntary. For the Relevant Periods, no contributions were forfeited.

The Target Group has no other obligations for the payment of retirement and other post-retirement benefits of employees or retirees other than the payments mentioned above.

122 -

FinAnciAl inFormAtion oF the coAG Group

Appendix ii

18 emoluments oF directors And senior mAnAGement

(a) directors’ emoluments

The total remuneration of the directors for each of the years ended 31 March 2005, 2006 and 2007 and the six months ended 30 September 2006 and 2007 are approximately HK$363,000, HK$513,000, HK$512,000, HK$246,000 and HK$253,000, respectively.

Details of the directors’ emoluments are as follows:

Fees Salary Discretionary bonuses Other benefits and allowances Employer’s contribution to pension scheme		year ended 31 march	year ended 31 march	2007 HK$’000 – 480 20 – 12 512	six months ended 30 september	six months ended 30 september
		2005 HK$’000 – 280 20 56 7 363	2006 HK$’000 – 480 20 1 12 513		2006 HK$’000 (Unaudited) – 240 – – 6 246	2007 HK$’000 – 247 – – 6
						253

Emoluments of the individuals were within the following band:

HK$ Nil – HK$1,000,000	year ended 31 march 2005 2006 2007 3 3 3	six months ended 30 september
		2006 2007 3 3

123 -

FinAnciAl inFormAtion oF the coAG Group

Appendix ii

(b) Five highest paid individuals

During the years ended 31 March 2005, 2006 and 2007 and the six months ended 30 September 2006 and 2007, the five individuals whose emoluments are the highest in the Target Group include one director only, whose emoluments are reflected in the analysis presented in note (a) above. The emoluments for the remaining individuals during the Relevant Periods are as follows:

Basic salaries, housing allowances, other allowances and benefits in kind Bonuses Contributions to retirement schemes	year ended 31 march 2005 2006 2007 HK$’000 HK$’000 HK$’000 1,171 1,562 1,328 52 61 54 53 58 48 1,276 1,681 1,430	year ended 31 march 2005 2006 2007 HK$’000 HK$’000 HK$’000 1,171 1,562 1,328 52 61 54 53 58 48 1,276 1,681 1,430	six months ended 30 september	six months ended 30 september
	2005 HK$’000 1,171 52 53 1,276	2006 HK$’000 1,562 61 58 1,681	2006 HK$’000 (Unaudited) 778 – 30 808	2007 HK$’000 833 – 30
				863

The emoluments payable to these individuals during the Relevant Periods fell within the following

bands:

Emolument bands HK$ Nil to HK$1,000,000	year ended 31 march 2005 2006 2007 4 4 4	six months ended 30 september
		2006 2007 4 4

(c) During the Relevant Periods, none of the directors of the Target Group waived or agreed to waive any emoluments and no emoluments were paid by the Target Group to any of the directors or the five highest paid individuals as an inducement to join or upon joining the Target Group or as compensation for loss of office.

124 -

FinAnciAl inFormAtion oF the coAG Group

Appendix ii

19 other income, net

year ended 31 march 2005 2006 2007 HK$’000 HK$’000 HK$’000 1 – 3 25 81 88 – 4 2 26 85 93 year ended 31 march 2005 2006 2007 HK$’000 HK$’000 HK$’000 111 111 65 429 456 275 111 111 65 21 – – 672 678 405	year ended 31 march 2005 2006 2007 HK$’000 HK$’000 HK$’000 1 – 3 25 81 88 – 4 2 26 85 93 year ended 31 march 2005 2006 2007 HK$’000 HK$’000 HK$’000 111 111 65 429 456 275 111 111 65 21 – – 672 678 405	six months ended 30 september	six months ended 30 september
		2006 2007 HK$’000 HK$’000 (Unaudited) – – 37 81 1 (3 ) 38 78 six months ended 30 september	2007 HK$’000 – 81 (3 )
			78

2005 HK$’000 111 429 111 21 672	2006 HK$’000 111 456 111 – 678	2006 HK$’000 (Unaudited) 56 236 56 – 348	2007 HK$’000 – – – –
			–

Current income tax – Hong Kong profits tax – PRC enterprise income tax (“EIT”)	year ended 31 march 2005 2006 2007 HK$’000 HK$’000 HK$’000 – – 260 1,407 – – 1,407 – 260	year ended 31 march 2005 2006 2007 HK$’000 HK$’000 HK$’000 – – 260 1,407 – – 1,407 – 260	six months ended 30 september	six months ended 30 september
	2005 HK$’000 – 1,407 1,407	2006 HK$’000 – – –	2006 HK$’000 (Unaudited) – – –	2007 HK$’000 133 –
				133

125 -

FinAnciAl inFormAtion oF the coAG Group

Appendix ii

Provision for EIT is calculated based on the statutory income tax rate of 33% (including State EIT at 30% and local EIT at 3%), after taking into account the relevant applicable tax concessions mentioned below, on the assessable income of each of the PRC subsidiaries of the Target Group during the Relevant Periods as determined in accordance with the relevant PRC income tax rules and regulations.

On 16 March 2007, the National People’s Congress approved the Corporate Income Tax Law of the PRC (the “new EIT Law”), which is effective from 1 January 2008. Under the new EIT Law, the applicable EIT rate of the subsidiaries established in the PRC will be changed since 33% to 25% since 1 January 2008.

The tax of the Target Group’s (loss)/profit before income tax differs from the theoretical amount that would arise using the tax rate of 17.5% in Hong Kong as follows:

year ended 31 march
2005
2006
2007
HK$’000
HK$’000
HK$’000
(Loss)/profit before income tax
(92 )
(511 )
(67 )
Tax calculated at the statutory
rate of 17.5%
(16 )
(89 )
(12 )
Effect of different tax rates applicable
to subsidiaries in the PRC
559
(8 )
(154 )
Income not subject to tax
–
(8 )
(11 )
Expenses not deductible for tax purposes
856
119
71
Utilisation of previously
unrecognised tax losses
(219 )
(14 )
(25 )
Tax losses for which no deferred income
tax asset was recognised
227
–
391
Tax charge
1,407
–
260

six months ended
30 september
2006
2007
HK$’000
HK$’000
(Unaudited)
(434 )
834
(76 )
146
(28 )
(8 )
(6 )
(8 )
61
–
(18 )
–
67
3
–
133

2006
HK$’000
(Unaudited)
(434 )
(76 )
(28 )
(6 )
61
(18 )
67
–

Deferred income tax assets are recognised for tax losses carry forward to the extent that realization of the related tax benefit through the future taxation profits is probable. The Target Group has unrecognised tax losses of approximately HK$26,798,000, HK$26,784,000, HK$25,821,000 and HK$25,751,000 as at 31 March 2005, 2006 and 2007 and 30 September 2007, respectively to carry forward against future taxable income. No deferred tax assets in respect of such losses have been recognised as at 31 March 2005, 2006 and 2007 and 30 September 2007 due to uncertainty of their future recoverability. The tax losses of HK$18,294,000, HK$18,231,000, HK$16,275,000 and HK$16,151,000 as at 31 March 2005, 2006 and 2007 and 30 September 2007, respectively have no expiry period. The remaining tax losses of HK$8,504,000, HK$8,553,000, HK$9,546,000 and HK$9,600,000 as at 31 March 2005, 2006 and 2007 and 30 September 2007, respectively will be expired within five years.

22 eArninGs/(losses) per shAre

No earnings/(losses) per share information is presented as its inclusion, for the purpose of this report, is not considered meaningful.

23 dividends

No dividend has been paid or declared by the Target Company during the Relevant Periods.

126 -

FinAnciAl inFormAtion oF the coAG Group

Appendix ii

24 notes to consolidAted cAsh Flow stAtements

(a) reconciliation of (loss)/profit for the year/period to net cash inflow from operations:

(Loss)/profit for the year/ period Adjustment for: – interest expense – interest income – depreciation of property, plant and equipment – Gain on disposal of property, plant and equipment – provision for obsolete inventories – provision for impairment of trade receivables – provision for impairment of amounts due from fellow subsidiaries – provision for impairment of amounts due from a related company	year ended 31 march 2005 2006 2007 HK$’000 HK$’000 HK$’000 (92 ) (511 ) (67 ) 672 678 405 (3 ) (47 ) (64 ) 172 201 141 (1 ) – (3 ) 49 – 46 – – 32 – – 1,021 – – 21	six months ended 30 september 2006 2007 HK$’000 HK$’000 (Unaudited) (434 ) 834 348 – (33 ) (48 ) 75 101 – – – – – – – – – –

Changes in working capital: – inventories – trade receivables – other receivables, deposits and prepayments – amounts due from ultimate holding company, fellow subsidiaries and related companies – trade payables – other payables and accruals – amounts due to directors, ultimate holding company, fellow subsidiaries and related companies Cash generated from/(used in) operations	year ended 31 march 2005 2006 2007 HK$’000 HK$’000 HK$’000 (841 ) 1,218 (972 ) (921 ) 3,190 (3,518 ) 24 (33 ) (141 ) 654 (818 ) 570 (287 ) (1,888 ) 1,467 1,145 (1,202 ) 363 529 448 176 1,100 1,236 (523 )	year ended 31 march 2005 2006 2007 HK$’000 HK$’000 HK$’000 (841 ) 1,218 (972 ) (921 ) 3,190 (3,518 ) 24 (33 ) (141 ) 654 (818 ) 570 (287 ) (1,888 ) 1,467 1,145 (1,202 ) 363 529 448 176 1,100 1,236 (523 )	six months ended 30 september 2006 2007 HK$’000 HK$’000 (Unaudited) (243 ) (1,531 ) (2,119 ) (23 ) (461 ) (115 ) (1,889 ) (10 ) 1,671 332 1,835 1,254 652 26 (598 ) 820
	2005 HK$’000 (841 ) (921 ) 24 654 (287 ) 1,145 529 1,100	2006 HK$’000 1,218 3,190 (33 ) (818 ) (1,888 ) (1,202 ) 448 1,236	2006 HK$’000 (Unaudited) (243 ) (2,119 ) (461 ) (1,889 ) 1,671 1,835 652 (598 )

127 -

FinAnciAl inFormAtion oF the coAG Group

Appendix ii

(b) proceeds from disposal of property, plant and equipment

In the consolidated cash flow statements, proceeds from disposal of property, plant and equipment comprise:

Net book amount: – Property, plant and equipment Gain on disposal of property, plant and equipment Proceeds from disposal of property, plant and equipment	year ended 31 march 2005 2006 2007 HK$’000 HK$’000 HK$’000 – 67 12 1 – 3 1 67 15	year ended 31 march 2005 2006 2007 HK$’000 HK$’000 HK$’000 – 67 12 1 – 3 1 67 15	six months ended 30 september	six months ended 30 september
	2005 HK$’000 – 1 1	2006 HK$’000 67 – 67	2006 HK$’000 (Unaudited) – – –	2007 HK$’000 – –
				–

(c) Analysis of changes in financing during the year/period

Loans from directors, a fellow subsidiary, related companies and a third party:

Beginning of the year/period Proceeds of borrowings Settlement of borrowings through set off against amounts due from fellow subsidiaries End of the year/period	year ended 31 march 2005 2006 2007 HK$’000 HK$’000 HK$’000 17,000 17,500 17,500 500 – – – – (17,500 ) 17,500 17,500 –	year ended 31 march 2005 2006 2007 HK$’000 HK$’000 HK$’000 17,000 17,500 17,500 500 – – – – (17,500 ) 17,500 17,500 –	six months ended 30 september	six months ended 30 september
	2005 HK$’000 17,000 500 – 17,500	2006 HK$’000 17,500 – – 17,500	2006 HK$’000 (Unaudited) 17,500 – – 17,500	2007 HK$’000 – 1,500 –
				1,500

25 siGniFicAnt relAted pArty trAnsActions

Related parties are those parties that have the ability to control the other party or exercise significant influence in making financial and operating decisions. Parties are also considered to be related if they are subject to common control.

128 -

FinAnciAl inFormAtion oF the coAG Group

Appendix ii

During the Relevant Periods, the Target Group has carried out significant transactions with the following related parties:

(a) name and relationship with related parties

name of related party	principal business activities	relationship with the target Group
Mr. Lo	Not applicable	Executive director of IEC
Dr. Cheng	Not applicable	Executive director and substantial shareholder of IEC
Mr. Choi	Not applicable	Executive director of IEC
Mr. So	Not applicable	Executive director of IEC
AnBo Global Company Limited	Investment holding company	Wholly owned subsidiary of IEC
Cyber Network	Investment holding company	Company controlled by a common director, Mr. Lo
Cyber BVI	Investment holding company	Company controlled by a common director, Mr. Choi
Cyber On-Air Multimedia Limited	Investment holding company	Wholly owned subsidiary of IEC
IEC	Investment holding company	Ultimate holding company of the Target Company
Mongolia	Provision of management services	Company controlled by a common director, Mr. Lo
New World PCS Limited (“NWPCS”)	Provision of telecommunication services	Company controlled by Dr. Cheng
New World CyberBase (Shanghai) Limited	Investment holding company	Company controlled by a common director, Mr. Lo
NWM	Investment holding company	Company controlled by a common director, Mr. Lo
New World Telecommunications	Provision of telecommunication services	Company controlled by Dr. Cheng
Limited (“NWT”)
上海翰音網絡科技有限公司	Investment holding Company	Subsidiary of NWM
上海易圖通信息技術有限公司	Investment holding company	Subsidiary of NWM
廣州分公司
Wellington	Investment holding company	Company controlled by a common director, Mr. Lo
廣東安博信息服務有限公司	Dormant	Subsidiary of IEC
Cyber Awake Limited	Dormant	Subsidiary of IEC

129 -

FinAnciAl inFormAtion oF the coAG Group

Appendix ii

(b) related party transactions

year ended 31 march 2005 2006 2007 HK$’000 HK$’000 HK$’000 4,987 3,267 639 – – – 494 7 – 79 157 126 40 480 509 111 111 65 429 456 275	year ended 31 march 2005 2006 2007 HK$’000 HK$’000 HK$’000 4,987 3,267 639 – – – 494 7 – 79 157 126 40 480 509 111 111 65 429 456 275	six months ended 30 september	six months ended 30 september
2005 HK$’000 4,987 – 494 79 40 111 429	2006 HK$’000 3,267 – 7 157 480 111 456	2006 HK$’000 (Unaudited) 639 – – 85 240 56 236	2007 HK$’000 – 2,245

			– – 26 – –

These transactions were conducted at terms pursuant to agreements entered into between the Target Group and the respective related parties.

Notes:

(i) Mongolia and 上海翰音網絡科技有限公司 provided office space, administrative and management services to the Target Group.
(ii) Details of the interest rates and terms of the loans granted by directors and related companies are disclosed in Note 14.
(iii) Project service income was received from NWPCS/NWT in accordance with terms agreed by both parties.
130 -

FinAnciAl inFormAtion oF the coAG Group

Appendix ii

(c) balances with related parties

As at 31 march	As at 31 march	As at 30 september 2007 2007 HK$’000 HK$’000 7,710 7,710 – – – – – 10 – 10 – – 8 8 29 29 10 10 400 400 – – 447 447 – – – – – – 12 12
2005 HK$’000 7,338 17,906 2,462 292 20,660 – – 28 – 530 – 558 208 14 222 12	2006 HK$’000 7,919 17,947 2,484 342 20,773 11 – 28 – 405 15 459 312 21 333 12

		– – 10
		10

		– 8 29 10 400 –
		447

		– –
		–

		12

131 -

FinAnciAl inFormAtion oF the coAG Group

Appendix ii

As at 31 march	As at 31 march	As at 30 september 2007 2007 HK$’000 HK$’000 42 42 12 12 – – 54 54 1,239 1,265 – – – – 14 14 1,253 1,279
2005 HK$’000 42 12 2 56 644 57 696 30 1,427	2006 HK$’000 42 12 2 56 1,010 86 1,123 – 2,219
		54

		1,265 – – 14
		1,279

(d) loans from directors, a fellow subsidiary and related companies

As at 31 march	As at 31 march	As at 30 september 2007 2007 HK$’000 HK$’000 14,126 – – 1,500 (14,126 ) – – 1,500 1,209 – 275 – (1,484 ) – – – 333 – 65 – (398 ) – – –
2005 HK$’000 13,626 500 – 14,126 324 429 – 753 111 111 – 222	2006 HK$’000 14,126 – – 14,126 753 456 – 1,209 222 111 – 333
		1,500

		– – –
		–

		– – –
		–

132 -

FinAnciAl inFormAtion oF the coAG Group

Appendix ii

The directors of the Target Company confirmed that the outstanding balances as at 30 September 2007 have been fully settled as at the date of this report.

26 commitments

(a) The Target Group did not have any material capital commitments at the respective balance sheet dates.

(b) operating lease commitments

Office buildings Office equipment	As at 31 march	As at 31 march	As at 30 september 2007 2007 HK$’000 HK$’000 993 739 23 3 1,016 742	As at 30 september 2007 2007 HK$’000 HK$’000 993 739 23 3 1,016 742
	2005 HK$’000 38 – 38	2006 HK$’000 40 – 40
				742

The Target Group’s future aggregate minimum lease payments under non-cancellable operating leases are as follows:

Not later than 1 year Later than 1 year and not later than 5 years	As at 31 march	As at 31 march	As at 30 september 2007 2007 HK$’000 HK$’000 534 512 482 230 1,016 742	As at 30 september 2007 2007 HK$’000 HK$’000 534 512 482 230 1,016 742
	2005 HK$’000 38 – 38	2006 HK$’000 40 – 40
				742

27 loss AttributAble to shAreholders

The loss attributable to shareholders is dealt with in the financial statements of the Target Company to the extent of HK$5,000, HK$5,000, HK$5,000, HK$ Nil (unaudited) and HK$ Nil for the years ended 31 March 2005, 2006 and 2007 and the six months ended 30 September 2006 and 2007 respectively.

133 -

FinAnciAl inFormAtion oF the coAG Group

Appendix ii

28 AccumulAted losses – tArGet compAny

Accumulated losses At 1 April 2004 Loss for the year At 31 March 2005 Loss for the year At 31 March 2006 Loss for the year At 31 March 2007 Loss for the period At 30 September 2007 For the six months ended 30 September 2006 (Unaudited) At 1 April 2006 Loss for the period	HK$’000 (34 ) (5) (39 ) (5 ) (44 ) (5 ) (49 ) – (49 ) (44 ) – (44 )

29 continGent liAbilities

During the year ended 31 March 2006, a worker (the “Plaintiff”) filed a statement of claim against Cyber On-Air (Asia) Limited (“COAA”), a wholly owned subsidiary of the Target Company, and New Concept Electronic Engineering Company (“EEC”), a sub-contractor appointed by COAA, alleging that COAA and EEC failed to provide and maintain a safe place of work and consequently he suffered from sustained injury. He claimed for damages of approximately HK$2,070,000 with interest and costs thereof. The directors of the Target Company are of the view that it is not practicable at this stage to determine with certainty the amount of damages to be awarded to the Plaintiff. Accordingly, no provision was made as at 31 March 2006.

During the year ended 31 March 2007, the Plaintiff discontinued the claim against COAA.

134 -

FinAnciAl inFormAtion oF the coAG Group

Appendix ii

30 pArticulArs oF subsidiAries

(a) details of subsidiaries

As of 31 March 2005, 2006 and 2007, 30 September 2007 and at the date of this report, the Target Company has interests in the following subsidiaries:

					effective
	place and				interest held
	date of			issued/registered	by the target		principal activities
name of	incorporation/	kind of	class of	and fully paid	company		and place
subsidiaries	establishment	legal entity	shares held	up capital	directly indirectly		of operation
					%	%
China On-Air Inc.	The British	Limited liability	Ordinary	HK$1	–	100	Investment holding
(note b (iii))	Virgin Islands	company
	14 December 2000
COAA_(note b (i))_	Hong Kong	Limited liability	Ordinary	HK$100	–	100	Sales of telecommunication
	20 September 1994	company		products, provision
			Non-voting	HK$100,000(1)			of network installation
			deferred				and warranty and
							maintenance services
							in Hong Kong
Cyber On-Air Limited	Hong Kong	Limited liability	Ordinary	HK$100	100		Investment holding
(note b (ii))	29 September 1999	company
			Non-voting	HK$10,000,000(1)
			deferred
Cyber On-Air Services	Hong Kong	Limited liability	Ordinary	HK$100	100		Dormant
Limited_(note b (ii))_	23 February 2001	company
Cyber On-Air	The United	Limited liability	Ordinary	US$2	–	100	Dormant
Inc_(note b (iii))_	States of America	company
	14 December 2000
上海創博數碼	PRC	Wholly-owned	–	Registered capital	–	100	Dormant
科技有限公司	1 November 2000	foreign		of US$210,000
(note b (iv))		enterprise
廣州創博數碼	PRC	Wholly-owned	–	Registered capital	–	100	Provision of telecom
科技有限公司	28 February 2001	foreign		of US$210,000			systems installation and
(note b (v))		enterprise					maintenance service in
							the PRC

(1) The deferred shares carry practically no rights to dividends nor to receive notice of nor to attend or vote at any general meeting of the relevant companies nor to participate in any distribution on winding up.

135 -

FinAnciAl inFormAtion oF the coAG Group

Appendix ii

(a) details of subsidiaries

There is no change in the Target Company’s effective interest in each of the subsidiaries above during the Relevant Periods.

Other than the above subsidiaries, the Target Company had interests in the following subsidiaries which were liquidated during the Relevant Periods:

					effective
	place and				interest held
	date of			issued/registered	by the target		principal activities
name of	incorporation/	kind of	class of	and fully paid	company		and place
subsidiaries	establishment	legal entity	shares held	up capital	directly indirectly		of operation
					%	%
Vantage Finance Corporation	The British	Limited liability	Ordinary	HK$10	–	100	Investment holding
(note b (iii))	Virgin Islands	company
	18 December 1998
Newave Technology Inc	The British	Limited liability	Ordinary	HK$1	–	100	Investment holding
(note b (iii))	Virgin Islands	company
	14 December 2000
China On-Air Limited	Hong Kong	Limited	Ordinary	HK$10,000	–	100	Dormant
(note b (vi))	29 September 1999	liability
		company

(b) information of the auditors’ of the subsidiaries:

(i) The statutory financial statements of this company for each of the years ended 31 March 2005, 2006 and 2007 were audited by Deloitte Touche Tohmatsu, Certified Public Accountants, Hong Kong.
(ii) The statutory financial statements of these companies for each of the years ended 31 March 2005 and 2006 were audited by Deloitte Touche Tohmatsu, Certified Public Accountants, Hong Kong. The statutory financial statements of these companies for the year ended 31 March 2007 were audited by Simon Y.P. Chan & Co., Certified Public Accountants, Hong Kong.
(iii) No statutory financial statements of these companies were prepared for the years ended 31 March 2005, 2006 and 2007 as there was no statutory requirement.
136 -

FinAnciAl inFormAtion oF the coAG Group

Appendix ii

(iv) The statutory financial statements of this company for each for the years ended 31 March 2005, 2006 and 2007 were audited by Shanghai Jin Cheng Certified Public Accountants Limited, Certified Public Accountants, the PRC.
(v) The statutory financial statements of this company for each for the years ended 31 March 2005, 2006 and 2007 were audited by Guang Zhou Li Cheng Certified Public Accountants Limited, Certified Public Accountants, the PRC.
(vi) The statutory financial statements of this company for each of the years ended 31 March 2005 and 2006 were audited by Deloitte Touche Tohmatsu, Certified Public Accountants, Hong Kong. The statutory financial statements of this company for the period from 1 April 2006 to 17 November 2006 (date of cessation) were audited by Simon Y.P. Chan & Co., Certified Public Accountants, Hong Kong.

(c) loan to a subsidiary

The loan to a subsidiary was unsecured, interest free, denominated in HK$ and repayable on demand. The fair value of loan to a subsidiary is HK$8,000,000 as at 31 March 2005 and 2006 and was fully settled in November 2006.

The maximum exposure to credit risk at the reporting date is the fair value of the loan mentioned above.

iii subseQuent FinAnciAl stAtements

No audited financial statements have been prepared by the Target Company or any of the companies now comprising the Target Group in respect of any period subsequent to 30 September 2007. No dividend or distribution had been declared, made or paid by the Target Company or companies now comprising the Target Group in respect of any period subsequent to 30 September 2007.

Yours faithfully,

pricewaterhousecoopers Certified Public Accountants Hong Kong

137 -

MAnAgeMent discussion And AnAlysis of the coAg group

Appendix iii

MAnAgeMent discussion And AnAlysis on the coAg group

track record of the coAg group

The table below sets out the income statements of the COAG Group for each of the three years ended 31 March 2007 and the six months ended 30 September 2006 and 2007.

year ended 31
2005
2006
HK$’000
HK$’000
Revenue
15,932
16,840
Cost of sales
(10,680 )
(11,909 )
gross profit
5,252
4,931
Other income
26
85
Distribution costs
(59 )
(167 )
Administrative expenses
(4,639 )
(4,682 )
profit/(loss) from operations
580
167
Finance costs
(672 )
(678 )
(loss)/profit before income tax
(92 )
(511 )
Income tax expenses
(1,407 )
–
(loss)/profit for the
year/period
(1,499 )
(511 )

six months ended
March
30 september
2007
2006
2007
HK$’000
HK$’000
HK$’000
(Unaudited)
18,693
8,138
13,087

(12,797 )
(6,073 )
(9,873 )
5,896
2,065
3,214
93
38
78

(66 )
(18 )
(60 )

(5,585 )
(2,171 )
(2,398 )
338
(86 )
834

(405 )
(348 )
–

(67 )
(434 )
834
(260 )
–
(133 )

(327 )
(434 )
701

overview

Since its establishment, the COAG Group has been and is principally engaged in the provision of wireless, broadband and multimedia enabling and system integration services in the Asia Pacific region through its principal subsidiary, Cyber On-Air (Asia) Limited (“COAA”). The main revenue streams are project services, network solutions and engineering services.

Analysis on the results of operation of the coAg group during the three years ended 31 March 2007 and the six months ended 30 september 2006 and 2007:

138 -

MAnAgeMent discussion And AnAlysis of the coAg group

Appendix iii

turnover

The COAG Group’s business is divided into the following three business segments:

Network solutions

Providing total system solution including data networking solution, synchronization solution, timing solution, wireless local area network solution and network access control solution.

Project services

Providing infrastructure installation services for customers which include cellular base station and antenna system installation service, structural cabling installation service and microwave installation service.
Engineering services – Installation and maintenance of telecommunications products.

The table below sets out the breakdown of the COAG Group’s turnover by business segments for each of the three years ended 31 March 2007 and the six months ended 30 September 2006 and 2007.

Network solutions Project services Engineering services	year ended 31 2005 2006 HK$’000 HK$’000 5,517 8,112 8,647 6,797 1,768 1,931 15,932 16,840	six months ended March 30 september 2007 2006 2007 HK$’000 HK$’000 HK$’000 (Unaudited) 7,823 3,371 3,864 9,470 3,972 8,421 1,400 795 802 18,693 8,138 13,087	six months ended March 30 september 2007 2006 2007 HK$’000 HK$’000 HK$’000 (Unaudited) 7,823 3,371 3,864 9,470 3,972 8,421 1,400 795 802 18,693 8,138 13,087
			13,087

other income

For the years ended 31 March 2005, 2006 and 2007, other income was mainly derived from the bank interest income and sundry income which amounted to HK$26,000, HK$85,000 and HK$93,000 respectively.

Other income increased from HK$38,000 in the six months ended 30 September 2006 to HK$78,000 in the six months ended 30 September 2007. The increase was attributable to both of the increase in bank interest income resulted from the increase in average balance of the COAG Group’s bank deposits and other sundry income.

139 -

MAnAgeMent discussion And AnAlysis of the coAg group

Appendix iii

Administrative expenses

For the years ended 31 March 2005, 2006 and 2007, administrative expenses amounted to HK$4,639,000, HK$4,682,000 and HK$5,585,000 respectively. Administrative expenses mainly comprised staff cost and rental expenses.

Administrative expenses increased from HK$2,171,000 in the six months ended 30 September 2006 to HK$2,398,000 in the six months ended 30 September 2007. The increase was mainly attributed to the increment of staff cost of HK$186,000 in relation to the salary review taken place in April 2007.

finance costs

For the years ended 31 March 2005, 2006 and 2007 and the six months ended 30 September 2006, finance costs amounted to HK$672,000, HK$678,000, HK$405,000 and HK$348,000 respectively, which represented the interest paid on loans from related companies, directors and independent third party. As the interest bearing loans were fully repaid in November 2006, no finance costs were recorded in the six months ended 30 September 2007.

income tax expenses

No provision for taxation was made for the years ended 31 March 2006 and the six months ended 30 September 2006 as the COAG Group had no estimated assessable profits.

Provision for taxation for the year ended 31 March 2005 and 2007 and the six months ended 30 September 2007 amounted to HK$1,407,000, HK$260,000 and HK$133,000 respectively. Such provisions for Hong Kong profits tax were calculated at the rate of 17.5% on the estimated assessable profits for the year/period. Provision for PRC enterprise income tax was calculated based on the statutory income tax rate of 33%.

loss for the year/period

Loss for the year decreased from HK$1,499,000 in the year ended 31 March 2005 to HK$511,000 in the year ended 31 March 2006. The decrease was mainly attributable to no provision of income tax expenses in 2006.

Loss for the year decreased from HK$511,000 in the year ended 31 March 2006 to HK$327,000 in the year ended 31 March 2007. The decrease was mainly attributable to the increase in turnover and improvement in gross profit ratio in 2007 as compared to 2006.

The COAG Group recorded loss attributable to equity holders for the six months ended 30 September 2006 amounted to approximately HK$434,000 and recorded an operating profit for the six months ended 30 September 2007 amounted to HK$701,000. The increase in profits was due to the significant increase in turnover from HK$8,138,000 in the six months ended 30 September 2006 to HK$13,087,000 in the six months ended 30 September 2007.

140 -

MAnAgeMent discussion And AnAlysis of the coAg group

Appendix iii

Analysis on the financial position of the coAg group during the three years ended 31 March 2007 and the six months ended 30 september 2007.

liquidity and financial resources

As at 31 March 2005, the cash and cash equivalents of the COAG Group amounted to HK$848,000. Advances from the ultimate holding company and fellow subsidiaries amounted to HK$7,338,000 and HK$20,660,000 respectively. The advances were unsecured, interest-free and had no fixed term of repayments.

As at 31 March 2006, the cash and cash equivalents of the COAG Group amounted to HK$1,932,000. Advances from the ultimate holding company and fellow subsidiaries amounted to HK$7,919,000 and HK$20,773,000 respectively. The advances were unsecured, interest-free and had no fixed term of repayments.

As at 31 March 2007, the cash and cash equivalents of the COAG Group amounted to HK$1,475,000. Advances from the ultimate holding company amounted to HK$7,710,000. The advances were unsecured, interest-free and had no fixed term of repayments.

As at 30 September 2007, the cash and cash equivalents of the COAG Group amounted to HK$3,598,000. Advances from the ultimate holding companies and fellow subsidiaries amounted to HK$7,710,000 and HK$10,000 respectively. The advances were unsecured, interest-free and had no fixed term of repayments.

charges on assets

As at 31 March 2005, 2006 and 2007 and 30 September 2007, the COAG Group’s bank deposits of HK$1.0 million was pledged to the bank to secure banking facility granted to the COAG Group.

net current assets

The net current assets of the COAG Group amounted to HK$7,738,000, HK$7,408,000, HK$7,202,000 and HK$7,759,000 as at 31 March 2005, 2006 and 2007 and 30 September 2007 respectively.

The current ratio of the COAG Group as at 31 March 2005, 2006 and 2007 and 30 September 2007 were 1.26, 1.27, 1.69 and 1.56 respectively.

Material acquisitions and disposals of subsidiaries and associated companies

The COAG Group made no material acquisition and disposal of subsidiaries and associated companies during the three years ended 31 March 2007 and the six months ended 30 September 2007.

141 -

MAnAgeMent discussion And AnAlysis of the coAg group

Appendix iii

capital structure

There was no change in the equity capital structure of the COAG Group for the three years ended 31 March 2007 and the six months ended 30 September 2007.

exchange risk and hedging

As the majority of the COAG Group’s transactions, assets and liabilities are denominated in Hong Kong dollars, the exchange rate risk of the COAG Group is considered to be minimal.

Accordingly, no financial instruments for hedging purposes were used by the COAG Group for the three years ended 31 March 2007 and the six months ended 30 September 2007.

contingent liabilities

As at 31 March 2006, a worker during the financial year of 2006 filed a writ of summons in the High Count of Hong Kong against COAA and New Concept Electronic Engineering Company (“EEC”), the sub-contractor appointed by COAA, alleging that COAA and EEC failed to provide and maintain a safe place of work thus caused him to suffer from sustained injuries. He claimed for damages of approximately HK$2,070,000 together with interest and costs. The directors of COAG were of the view that it was not practicable to determine with certainty the amount of damages to be awarded to the plaintiff. Accordingly, no provision was made in the financial statements.

As at 31 March 2005 and 2007 and 30 September 2007, the COAG Group did not have any material contingent liabilities.

staff, remuneration policies and retirement benefits

As at 31 March 2005, 2006 and 2007 and 30 September 2007, the COAG Group had 16, 19, 15 and 18 staff respectively. The COAG Group recognised the importance of maintaining good working relationship with its staff and accordingly strived to maintain remunerations at competitive level and in line with the market. According to the relevant rules and regulations in Hong Kong, eligible staff of the COAG Group is required to participate in employee retirement or Mandatory Provident Fund Scheme.

142 -

pro formA finAnciAl informAtion of the enlArged group

Appendix iV

A. unAudited pro formA finAnciAl informAtion of the enlArged group

(a) unaudited pro forma Balance Sheet

The following is an illustrative and unaudited pro forma balance sheet of the Enlarged Group which has been prepared based on the unaudited condensed consolidated balance sheet of the Group as set out in the published interim report of the Group for the six months ended 31 December 2007, after making pro forma adjustments as set out in the notes below.

This unaudited pro forma balance sheet of the Enlarged Group has been prepared to illustrate the effects of the Acquisition, as if the Acquisition had taken place on 31 December 2007. It has been presented in a manner consistent with both the format and accounting policies adopted by the Group. It has been prepared for illustrative purpose only and because of its hypothetical nature, it may not give a true picture of the financial position of the Enlarged Group had the Acquisition been completed on 31 December 2007 or at any future date.

unaudited pro forma balance sheet of the enlarged group

		pro forma	adjustments
		consolidated
		balance sheet			unaudited pro
the group		of coAg			forma balance
	as at 31	as at 30	other		sheet of the
	december	September	pro forma		enlarged
	2007	2007	adjustments		group
	HK$’000	HK$’000	HK$’000		HK$’000
	(Note 1)	(Note 2)		Note
ASSetS
non-current assets
Property, plant and equipment	4,835	310			5,145
Goodwill	–	–	2,924	4	2,924
	4,835	310	2,924		8,069

143 -

pro formA finAnciAl informAtion of the enlArged group

Appendix iV

current assets
Inventories
Trade receivables
Prepayments, deposits and
other receivables
Amount due from ultimate
holding company
Amounts due from fellow
subsidiaries
Amounts due from related
companies
Tax recoverable
Restricted cash
Cash and bank balances
total assets
eQuitY
capital and reserves
attributable to the
company’s equity holders
Share Capital
Other reserves
(Accumulated losses)/
retained earnings
total equity/(total equity
holders’ deficit)

pro forma adjustments
consolidated
balance sheet
unaudited pro
the group
of coAg
forma balance
as at 31
as at 30
other
sheet of the
december
September
pro forma
enlarged
2007
2007
adjustments
group
HK$’000
HK$’000
HK$’000
HK$’000
(Note 1)
(Note 2)
Note
–
3,112
3,112
42
5,199
5,241
1,025
398
1,423
–
7,710
(7,710 )
7
–
–
10
(10 )
8
–
813
447
(414 )
6, 8
846
–
33
33
–
1,000
1,000
48,641
3,598
(3,295 )
3
48,944
50,521
21,507
(11,429 )
60,599
55,356
21,817
(8,505 )
68,668
97,692
–
97,692
13,886
–
13,886
(60,674 )
8,069
(8,069 )
4, 7
(60,674 )
50,904
8,069
(8,069 )
50,904

144 -

pro formA finAnciAl informAtion of the enlArged group

Appendix iV

			pro forma adjustments	pro forma adjustments	pro forma adjustments
			consolidated
			balance sheet				unaudited pro
	the group		of coAg				forma balance
		as at 31	as at 30		other		sheet of the
	december		September		pro forma			enlarged
		2007	2007	adjustments				group
		HK$’000	HK$’000		HK$’000			HK$’000
		(Note 1)	(Note 2)			Note
liABilitieS
current liabilities
Trade payables		155	5,569					5,724
Accrued charges,
other payables, deposits
received and
deferred income		4,297	3,541		(410 ) 6			7,428
Amount due to ultimate
holding company		–	12		(12 ) 7			–
Amounts due to fellow
subsidiaries		–	54		(54 ) 8			–
Amounts due to related
companies		–	1,279		(40 ) 6, 8			1,319
Current income tax liabilities		–	1,793					1,793
Loans from a fellow subsidiary		–	1,500		(1,500 ) 8			–
Loans from a related company		–	–		1,500	8		1,500
		4,452	13,748		(436 )			17,764

total liabilities		4,452	13,748		(436 )			17,764

total equity and liabilities		55,356	21,817		(8,505	)		68,668
net current assets		46,069	7,759		(10,993 )			42,835

total assets less current
liabilities		50,904	8,069		(8,069	)		50,904

145 -

pro formA finAnciAl informAtion of the enlArged group

Appendix iV

Note:

The balances are extracted from the unaudited condensed consolidated balance sheet of the Group as at 31 December 2007 as set out in the interim report of the Group for the six months ended 31 December 2007.
The balances are extracted from the accountant’s report of COAG as set out in appendix II to this circular.
The adjustment represents the cash consideration of HK$2 million and estimated transaction costs of HK$1.295 million in connection of the Acquisition.
Upon completion of the Acquisition, the identifiable assets and liabilities of COAG will be accounted for in the consolidated financial statements of the Enlarged Group at fair value under the purchase method of accounting in accordance with Hong Kong Financial Reporting Standard 3 “Business Combinations” (“HKFRS 3”). For the purpose of the unaudited pro forma balance sheet of the Enlarged Group, the Directors have estimated the fair values of the identifiable assets and liabilities of COAG as at 30 September 2007 with reference to the valuation reports issued by Jones Lang LaSalle Sallmanns and in the opinion that such fair values did not materially differ from the corresponding carrying values. The amount in excess of the consideration over the Group’s share of fair value of the net identifiable assets of COAG is recognised as goodwill.
Since the fair values of the identifiable assets and liabilities of COAG, the consideration and the transaction costs at the date of acquisition may be different from their respective fair values used in the preparation of the above unaudited pro forma balance sheet of the Enlarged Group, the actual amount of goodwill, if any, may be different from the estimated amount shown in this appendix.
The adjustment represents the elimination of balances between the Group and COAG.
The adjustment represents the waiver of balances due from IEC by COAG pursuant to the Deed of Waiver dated 27 December 2007.
The adjustment represents the reclassification of loans from a fellow subsidiary and amounts due from/(to) fellow subsidiaries, to loans from a related company and amounts due from/(to) related companies.
No adjustments have been made to reflect any trading results or other transactions of the Group and COAG entered into subsequent to 31 December 2007 and 30 September 2007 respectively.
146 -

pro formA finAnciAl informAtion of the enlArged group

Appendix iV

(b) unaudited pro forma income Statement

The following is an illustrative and unaudited pro forma income statement of the Enlarged Group which has been prepared based on the unaudited condensed consolidated income statement of the Group as set out in the published interim report of the Group for the six months ended 31 December 2007, after making pro forma adjustments as set out in the notes below.

This unaudited pro forma income statement of the Enlarged Group has been prepared to illustrate the effects of the Acquisition, as if the Acquisition had taken place on 1 July 2007. It has been presented in a manner consistent with both the format and accounting policies adopted by the Group. It has been prepared for illustrative purpose only and because of its hypothetical nature, it may not give a true picture of the results of the Enlarged Group had the Acquisition been completed on 1 July 2007 or at any future date.

pro forma adjustments
consolidated
income
the group
statement of
for the
coAg for the
six months
six months
ended 31
ended 30
december 2007 September 2007
HK$’000
HK$’000
(Note 1)
(Note 2)
Revenue
318
13,087
Cost of sales
(677 )
(9,873 )
Gross (loss)/profit
(359 )
3,214
Other income
927
78
Selling expenses
(68 )
(60 )
Administrative expenses
(6,267 )
(2,398 )

unaudited
pro forma
income
statement
of the
enlarged
group
HK$’000
13,405
(10,550 )
2,855
1,005
(128 )
(8,665 )

147 -

pro formA finAnciAl informAtion of the enlArged group

Appendix iV

pro forma adjustments
consolidated
income
the group
statement of
for the
coAg for the
six months
six months
ended 31
ended 30
december 2007 September 2007
HK$’000
HK$’000
(Note 1)
(Note 2)
Operating (loss)/profit before
finance costs
(5,767 )
834
Finance costs
–
–
(Loss)/profit before income tax
(5,767 )
834
Income tax expense
–
(133 )
(Loss)/profit for the period
attributable to equity
holders of the Company
(5,767 )
701

unaudited
pro forma
income
statement
of the
enlarged
group
HK$’000
(4,933 )
–
(4,933 )
(133 )
(5,066 )

Note:

The balances are extracted from the unaudited condensed consolidated income statement of the Group for the six months ended 31 December 2007 as set out in the interim report of the Group for the six months ended 30 June 2007.
The balances are extracted from the accountant’s report of COAG as set out in appendix II to this circular.
No adjustments have been made to reflect any trading results or other transactions of the Group and COAG entered into subsequent to 31 December 2007 and 30 September 2007 respectively.
148 -

pro formA finAnciAl informAtion of the enlArged group

Appendix iV

(c) unaudited pro forma cash flow Statement

The following is an illustrative and unaudited pro forma cash flow statement of the Enlarged Group which has been prepared based on the unaudited condensed consolidated cash flow statement of the Group as set out in the published interim report of the Group for the six months ended 31 December 2007, after making pro forma adjustments as set out in the notes below.

This unaudited pro forma cash flow statement of the Enlarged Group has been prepared to illustrate the effects of the Acquisition, as if the Acquisition had taken place on 1 July 2007. It has been presented in a manner consistent with both the format and accounting policies adopted by the Group. It has been prepared for illustrative purpose only and because of its hypothetical nature, it may not give a true picture of the results of the Enlarged Group had the Acquisition been completed on 1 July 2007 or at any future date.

the group for the six months ended 31 december 2007 HK$’000 (Note 1) Net cash (used in)/generated from operating activities (4,648 ) Net cash used in investing activities (1.363 )	pro forma adjustments consolidated cash flow statement of coAg for the six months ended 30 other September pro forma 2007 adjustments HK$’000 HK$’000 Note (Note 2) 820 (197 ) (1,820 ) 3	unaudited pro forma consolidated cash fow statement of the enlarged group HK$’000 (3,828 ) (3,380 )

149 -

pro formA finAnciAl informAtion of the enlArged group

Appendix iV

Net cash from financing activities (Decrease)/increase in cash and cash equivalents Cash and cash equivalents as at the beginning of the period cash and cash equivalents as at the end of the period	the group for the year ended 30 June 2007 HK$’000 (Note 1) – (6,011 ) 54,652 48,641	pro forma adjustments consolidated cash flow statement of coAg for the year other ended 31 pro forma march 2007 adjustments HK$’000 HK$’000 Note (Note 2) 1,500 2,123 1,475 (1,475 ) 3 3,598	unaudited pro forma consolidated cash fow statement of the enlarged group HK$’000 1,500 (5,708 ) 54,652 48,944

Note:

The balances are extracted from the unaudited condensed consolidated cash flow statement of the Group for the six months ended 31 December 2007 as set out in the interim report of the Group for the six months ended 31 December 2007.
The balances are extracted from the accountant’s report of COAG as set out in appendix II to this circular.
The adjustment represents the cash consideration of HK$2 million and estimated transaction costs of HK$1.295 million in connection of the Acquisition, net of cash acquired of HK$1.475 million as at 1 April 2007.
No adjustments have been made to reflect any trading results or other transactions of the Group and COAG entered into subsequent to 31 December 2007 and 30 September 2007 respectively.
150 -

pro formA finAnciAl informAtion of the enlArged group

Appendix iV

B. report from AccountAnt on unAudited pro formA finAnciAl informAtion

The following is the text of a report prepared by PricewaterhouseCoopers, Certified Public Accountants, Hong Kong, for inclusion in this circular.

PricewaterhouseCoopers 22/F, Prince’s Building Central, Hong Kong

AccountAnt’S report on unAudited pro formA finAnciAl informAtion to the directorS of neW World moBile holdingS limited

We report on the unaudited pro forma financial information set out on pages 143 to 150 under the heading of “Unaudited Pro Forma Financial Information of the Enlarged Group” (the “Unaudited Pro Forma Financial Information”) in Appendix IV of the circular dated 31 March 2008 (the “Circular”) of New World Mobile Holdings Limited (the “Company”), in connection with the proposed transfer of the entire interest in Cyber On-Air Group Limited by International Entertainment Corporation to the Company (the “Transaction”). The Unaudited Pro Forma Financial Information has been prepared by the directors of the Company, for illustrative purposes only, to provide information about how the Transaction might have affected the relevant financial information of the Company and its subsidiaries (hereinafter collectively referred to as the “Group”). The basis of preparation of the Unaudited Pro Forma Financial Information is set out on pages 143 to 150 of the Circular.

respective responsibilities of directors of the company and the reporting Accountant

It is the responsibility solely of the directors of the Company to prepare the Unaudited Pro Forma Financial Information in accordance with rule 4.29 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Listing Rules”) and Accounting Guideline 7 “Preparation of Pro Forma Financial Information for Inclusion in Investment Circulars” issued by the Hong Kong Institute of Certified Public Accountants (the “HKICPA”).

It is our responsibility to form an opinion, as required by rule 4.29(7) of the Listing Rules, on the Unaudited Pro Forma 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 Pro Forma 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 engagement in accordance with Hong Kong Standard on Investment Circular Reporting Engagements 300 “Accountants’ Reports on Pro Forma Financial Information in Investment

151 -

pro formA finAnciAl informAtion of the enlArged group

Appendix iV

Circulars” issued by the HKICPA. Our work, which involved no independent examination of any of the underlying financial information, consisted primarily of comparing the unaudited condensed consolidated balance sheet of the Group as at 31 December 2007 and the unaudited condensed consolidated income statement and cash flow statement of the Group for the six months ended 31 December 2007 with the unaudited interim condensed consolidated financial statements of the Company for the six months ended 31 December 2007, considering the evidence supporting the adjustments and discussing the Unaudited Pro Forma Financial Information with the directors of the Company.

We planned and performed our work so as to obtain the information and explanations we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the Unaudited Pro Forma Financial Information has been properly compiled by the directors of the Company on the basis stated, that such basis is consistent with the accounting policies of the Group and that the adjustments are appropriate for the purposes of the Unaudited Pro Forma Financial Information as disclosed pursuant to rule 4.29(1) of the Listing Rules.

The Unaudited Pro Forma Financial Information is for illustrative purposes only, based on the judgements and assumptions of the directors of the Company, and, because of its hypothetical nature, does not provide any assurance or indication that any event will take place in the future and may not be indicative of:

the financial position of the Group as at 31 December 2007 or any future date, or
the results and cash flows of the Group for the six months ended 31 December 2007 or any future periods.

opinion

In our opinion:

a) the Unaudited Pro Forma Financial Information has been properly compiled by the directors of the Company on the basis stated;
b) such basis is consistent with the accounting policies of the Group; and
c) the adjustments are appropriate for the purposes of the Unaudited Pro Forma Financial Information as disclosed pursuant to rule 4.29(1) of the Listing Rules.

pricewaterhousecoopers

Certified Public Accountants

Hong Kong, 31 March 2008

152 -

property VAluAtion of the enlArged group

Appendix V

The following is the text of a letter, summary of values and valuation certificates, prepared for the purpose of incorporation in this circular received from RHL Appraisal Ltd., an independent valuer, in connection with its valuation as at 31 December 2007 of the property interests held by the Company.

==> picture [257 x 33] intentionally omitted <==

==> picture [72 x 71] intentionally omitted <==

31 March 2008

the directors

new World Mobile holdings limited

Rooms 1502-5 New World Tower 1, 16-18 Queen’s Road Central, Hong Kong

Dear Sirs,

inStruCtionS

In accordance with instructions from new World Mobile holdings limited (referred to as the “Company”) and its subsidiaries (hereinafter together referred to as the “Group”) to value the property interests located in Hong Kong and the People’s Republic of China (the “PRC”) and property interests leased to be acquired by the Group, we confirm that we have carried out property inspections, made relevant enquiries and searches and obtained such further information as we consider necessary for the purpose of providing you with our opinion of the market values of the property interests as at 31 December 2007 (the “Valuation Date”).

This letter which forms part of our valuation report explains the basis and methodology of valuation, clarifying assumptions, valuation considerations, and limiting conditions of this valuation.

BASiS of VAluAtion

Our valuation of the property interest represents its market value which we would define as intended to mean “the estimated amount for which a property should exchange on the date of valuation between a willing buyer and a willing seller in an arm’s length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently, and without compulsion”.

153 -

property VAluAtion of the enlArged group

Appendix V

property intereStS CAtegoriSAtion

The property interests are categorised as follows:

Group I – Property interests held by the Group for owner occupation in the PRC Group II – Property interests leased by the Enlarged Group in Hong Kong Group III – Property interests leased by the Group in the PRC

MethodS of VAluAtion

For the property interests in Group I which are held by the Group for owner occupation in the PRC, the direct comparison method is adopted where comparison based on prices realised on actual sales and asking prices of comparable properties is made. Comparable properties of similar size, character and location are analysed and carefully weighted against all the respective advantages and disadvantages of each property in order to arrive at a fair comparison of market value.

For the property interests in Group II and Group III which are leased or occupied under agreement by the Group in Hong Kong and the PRC, we have attributed no commercial value to the property interests due to inclusion of non-alienation clause or otherwise due to lack of substantial profit rent or short term nature as at the Valuation Date.

VAluAtion ASSuMptionS

As the property interests are held under long term Land Use Rights Contracts and/or Government Leases, we have assumed that the Group has free and uninterrupted rights to use the property interests for the whole of the unexpired term of their respective Land Use Rights Contracts and/or Government Leases without payment of any substantial sum of taxes or expenses. We have valued the property interests on an open market basis assuming sale with vacant possession.

Our valuations have been made on the assumption that the Group sells the property interests in the open market in their existing states without the benefit of a deferred term contracts, leasebacks, joint ventures, management agreements or any similar arrangements, which could serve to affect the values of the property interests.

No allowance has been made in our report for any charges, mortgages or amounts owing on the property interests valued nor for any expenses or taxation which may be incurred in effecting a sale. Unless otherwise stated, it is assumed that the property interests are free from encumbrances, restrictions and outgoings of an onerous nature, which could affect their values.

VAluAtion ConSiderAtionS

In valuing the property interests, we have complied with all the requirements contained in Chapter 5 and Practice Note 12 to the Rules Governing the Listing of Securities issued by The Stock Exchange of Hong Kong Limited; and the HKIS Valuation Standards on Properties (First Edition 2005) published by the Hong Kong Institute of Surveyors effective from 1 January 2005.

154 -

property VAluAtion of the enlArged group

Appendix V

title inVeStigAtion

We have been shown copies of various documents including State-owned Land Use Rights Certificate, Building Ownership Certificate and tenancy agreement relating to the property interests in the PRC. We also caused searches to be made at the Hong Kong Land Registry in respect of Hong Kong property and have made relevant enquiries. We have not examined the original documents to verify the existing title to the properties in the PRC and Hong Kong and any material encumbrances that might be attached to the properties or any lease amendments. However, we have relied considerably on the advice given by the Company’s PRC legal adviser, 上海市華益律師事務所, on the Group’s title to the property interests in Groups I and III.

liMiting ConditionS

We have relied to a considerable extent on information given by the Group, in particular, but not limited to, the sales records, tenure, planning approvals, statutory notices, easements, particulars of occupancy, floor areas and all other relevant matters.

We have inspected the exterior and, where possible, the interior of the properties. However, no structural survey has been made, but in the course of our inspection, we did not note any serious defects. We are not, however, able to report whether the properties are free of rot, infestation or any other structural defects. No tests were carried out on any of the services.

We have not carried out detailed site measurements to verify the correctness of the site areas in respect of the properties but have assumed that the site areas shown on the documents are correct. All documents have been used as reference only and all dimensions, measurements and areas are approximations. No on-site measurement has been taken.

We have had no reason to doubt the truth and accuracy of the information provided to us by the Group. We have also been advised by the Group that no material factors have been omitted from the information supplied. We consider that we have been provided with sufficient information to reach an informed view, and we have no reason to suspect that any material information has been withheld.

Liability in connection with this valuation report is limited to the client to whom this report is addressed and for the purpose for which it is carried out only. We will accept no liability to any other parties or any other purposes.

This report is to be used only for the purpose stated herein, any use or reliance for any other purpose, by you or third parties, is invalid. No reference to our name or our report in whole or in part, in any document you prepare and/or distribute to third parties may be made without our written consent.

155 -

property VAluAtion of the enlArged group

Appendix V

exChAnge rAte

Unless otherwise stated, all monetary sums stated in this report are in Hong Kong Dollars (“HKD”).

Our valuations are summarised below and the valuation certificates are attached.

Yours faithfully, For and on behalf of rhl Appraisal ltd.

Serena S. W. lau ian K. f. ng FHKIS AAPI RPS(GP) MBA BSc(EstMan) BSc MHKIS MRICS RPS(GP) Managing Director Senior Manager

Ms. Serena S. W. Lau is a Registered Professional Surveyor with over 17 years’ experience in valuation of properties in HKSAR, Macau SAR, mainland China and the Asia Pacific Region. Ms. Lau is an Associate of Australian Property Institute, a Fellow of The Hong Kong Institute of Surveyors as well as a registered real estate appraiser in the PRC.

Mr. Ian K. F. Ng is a Registered Professional Surveyor with over 5 years’ experience in valuation of properties in HKSAR, Macau SAR and mainland China. Mr. Ng is a Professional Member of The Hong Kong Institute of Surveyors as well as a chartered surveyor of The Royal Institution of Chartered Surveyors.

156 -

property VAluAtion of the enlArged group

Appendix V

SuMMAry of VAlueS

group i – property interests held by the group for owner occupation in the prC

			Market value
		in	existing state as at
			31 december 2007
	property		HKD
1.	Unit 1002		4,200,000
	No. A 43 Xizhimen Bei Avenue,
	Haidian District,
	Beijing,
	the PRC
	Sub-total:		4,200,000
group ii – property interests leased by the enlarged group in hong Kong
			Market value
		in	existing state as at
			31 december 2007
	property		HKD
2.	Workshop No. 7 on 6th Floor,	No commercial value
	Kam Hon Industrial Building,
	No. 8 Wang Kwun Road,
	Kowloon,
	Hong Kong
3.	Unit 9 on 3rd Floor,	No commercial value
	Fook Hong Industrial Building,
	No. 19 Sheung Yuet Road,
	Kowloon,
	Hong Kong
	Sub-total:	No commercial value

157 -

property VAluAtion of the enlArged group

Appendix V

group iii – property interests leased by the group in the prC

Market value in existing state as at 31 december 2007 property HKD 4. Unit 3401-3406, No commercial value Building No. 3, No. 200 Zhangheng Road, Zhangjiang Hi-Tech Park, Pudong District, Shanghai, the PRC 5. Unit 2E63, No commercial value Runpeng Building (電務綜合樓), Zhanyi Street, Tianshou Road, Tianhe District, Guangzhou City, Guangdong Province, the PRC 6. Unit 2C65, No commercial value Runpeng Building (電務綜合樓), Zhanyi Street, Tianshou Road, Tianhe District, Guangzhou City, Guangdong Province, the PRC Sub-total: No commercial value grand-total: 4,200,000

158 -

property VAluAtion of the enlArged group

Appendix V

VAluAtion CertifiCAte

group i – property interests held by the group for owner occupation in the prC

property	property	description and tenure	particular of	Market value
			occupancy	in existing state
				as at
				31 december
				2007
				HKD
1.	Unit 1002	The property comprises an	As advised by the	4,200,000
	No. A 43	office unit on level 10 of an 18-	Company, the property
	Xizhimen	storey office building completed	is occupied by the
	Bei Avenue,	in 1997.	Group for office use as
	Haidian		at the Valuation Date.
	District,	The gross floor area of the
	Beijing,	property is approximately
	the PRC	341.26 square metres.
		The land use rights of the
		property were granted for a
		term expiring on 28 September
		2044 for office use.

Notes:

Pursuant to a State-owned Land Use Rights Certificate – 京市海港澳台國用字(2002出)第1630011號 (Jing Shi Hai Gang Ao Tai Guo Yong (2002 Chu) Zi Di No. 1630011) issued by Beijing Municipal Bureau of State Land Resources and Housing Administration dated 11 March 2002, the land use rights of the property were granted to 集高科技有限公司 (Jetco Technologies Limited) (“Jetco”) for a term expiring on 28 September 2044 for office use.
Pursuant to a Building Ownership Certificate – 京房權証市海港澳台字第1630011號 (Jing Fang Quan Zheng Shi Hai Gang Ao Tai Zi Di No. 1630011) issued by Beijing Municipal Bureau of State Land Resources and Housing Administration dated 13 March 2002, the property with a gross floor area of approximately 341.26 square metres is held by Jetco.
Jetco is a wholly-owned subsidiary of the Company.
We have been provided with a legal opinion regarding the property interests by the Group’s legal adviser in the PRC, which contains, inter alia, the following:
i. Jetco legally owns the land use rights and building ownership rights of the property and is entitled to use, occupy, lease, transfer and mortgage the property without payment of any substantial sum of taxes and expenses or land premium ; and
ii. the property is not subject to any mortgage.
159 -

property VAluAtion of the enlArged group

Appendix V

VAluAtion CertifiCAte

group ii – property interests leased by the enlarged group in hong Kong

property	property	description and tenure	particulars of	Market value in
			occupancy	existing state as
				at
				31 december
				2007
				HKD
2.	Workshop No.	The property comprises an	As advised by the	No Commercial
	7 on 6th Floor	industrial unit on the 6th floor	Company, the subject	Value
	Kam Hon	of an 12-storey industrial	property is currently
	Industrial	building (including basement	occupied by the
	Building	floor) completed in 1984.	Enlarged Group for
	No. 8 Wang		industrial uses.
	Kwun Road	The gross floor area of the
	Kowloon	property is approximately 886
	Hong Kong	square feet or thereabouts. The
		saleable area of the property is
	24/10200th	approximately 620 square feet
	shares of	or thereabouts.
	New Kowloon
	Inland Lot No.	The property was leased by
	5858	the Group from an independent
		third party pursuant to a
		tenancy agreement for a term
		of 2 years commencing on 10
		November 2006 and expiring on
		9 November 2008 at a monthly
		rental of HK$4,700 inclusive
		of Government rent, rates and
		management fees but exclusive
		of electricity, telephone charges
		and other outgoings.

Notes:

The registered owner of the property is Chan Yiu Yin vide Memorial No. UB2649557 dated 10 September 1984.
Pursuant to a tenancy agreement entered into between Chan Yiu Yin, which is an independent third party, and Cyber On-Air (Asia) Limited (“COA”) dated 11 November 2006, the property is leased to COA for a term of 2 years commencing on 10 November 2006 and expiring on 9 November 2008. The tenancy is held at a monthly rental of HK$4,700, inclusive of Government rent, rates and management fees but exclusive of electricity and telephone charges and other outgoings.
COA is a wholly-owned subsidiary of the Enlarged Group.
160 -

property VAluAtion of the enlArged group

Appendix V

VAluAtion CertifiCAte

description and tenure

property

Unit 9 on The property comprises an 3rd Floor industrial unit on the 3rd Fook Hong floor of a 14-storey industrial Industrial building (including basement) Building completed in about 1986. No. 19 Sheung Yuet The gross floor area of the Road property is approximately 3,382 Kowloon square feet or thereabouts. Hong Kong The property was leased by

3382/173699th the Group from an independent shares of third party pursuant to a New tenancy agreement for a term Kowloon of 2 years commencing on 19 Inland Lot April 2007 and expiring on No. 5835 18 April 2009 at a monthly rental of HK$37,200 inclusive of Government rent, rates and management fees but exclusive of electricity, telephone charges and other outgoings.

particular of	Market value
occupancy	in existing state
	as at
	31 december
	2007
	HKD
As advised by the	No Commercial
Company, the subject	Value
property is currently
occupied by the
Enlarged Group for
industrial uses.

161 -

property VAluAtion of the enlArged group

Appendix V

Notes:

The registered owner of the property is Deluxe Field Limited vide Memorial No. 07102500200032 dated 28 September 2007.
Immediately before 28 September 2007, the registered owner of the property was Capital Fur Company Limited vide Memorial No. 06121301840017 dated 20 November 2006.
Both Deluxe Field Limited and Capital Fur Company Limited are independent third parties.
Pursuant to a tenancy agreement entered into between Capital Fur Company Limited and Cyber On-Air (Asia) Limited (“COA”) dated 21 March 2007, the property was leased to COA for a term of 2 years commencing on 19 April 2007 and expiring on 18 April 2009 at a monthly rental of HK$37,200 inclusive of Government rent, rates and management fees but exclusive of electricity, telephone charges and other outgoings.
Pursuant to the assignment entered into between Capital Fur Company Limited and Deluxe Field Limited vide Memorial No. 07102500200032 dated 28 September 2007, the property was assigned to Deluxe Field Limited subject to and with the benefit of the existing tenancies and lettings thereof.
By a letter dated 16 October 2007 from C.K. Mok & Co. Solicitors, on behalf of Deluxe Field Limited, COA was notified that the property was assigned to Deluxe Field Limited with effect from 28 September 2007 and the rental commencing from the 19 October 2007 should be directly paid to Deluxe Field Limited.
COA is a wholly-owned subsidiary of the Enlarged Group.
162 -

property VAluAtion of the enlArged group

Appendix V

VAluAtion CertifiCAte

group iii – property interests leased by the group in the prC

property description and tenure particular of Market value occupancy in existing state as at
31 december 2007 HKD
1. Unit 3401The property comprises 6 office As advised by the No commercial 3406, units on level 4 of a 6-storey Company, the subject value Building office building completed in about property is currently No. 3, 2003. occupied by the Group No. 200 for office uses. Zhangheng The gross floor area of the property Road, is approximately 1,304 square Zhangjiang metres. Hi-Tech Park, Pudong The property was leased by the District, Group pursuant to a tenancy Shanghai, agreement for a term of 2 years the PRC commencing on 1 January 2006 and expiring on 31 December 2007 at a daily rent of RMB1.32.

Notes:

Pursuant to the tenancy agreement dated 27 March 2006 entered into between 上海八六三信息安全產業基地有限公司 which is an independent third party and新世界數碼科技(上海)有限公司 (New World CyberBase (Shanghai) Limited) (“NWC (Shanghai)”), the property with a gross floor area of approximately 1,304 square metres was leased to NWC (Shanghai) for a term of 2 years commencing on 1 January 2006 and expiring on 31 December 2007 at a daily rent of RMB1.32.
NWC (Shanghai) is a wholly-owned subsidiary of the Company.
We have been provided with a legal opinion regarding the property interests by the Group’s legal adviser in the PRC, which states, inter alia, that the tenancy agreement mentioned in Note 1 is valid and legally enforceable under the PRC laws.
163 -

property VAluAtion of the enlArged group

Appendix V

VAluAtion CertifiCAte

property description and tenure particular of Market value occupancy in existing state as at
31 december 2007 HKD
1. Unit 2E63, The property comprises an As advised by the No commercial Runpeng office unit on level 2 of an Company, the subject value Building 16-storey office building property is currently (電務綜合樓), completed in about 2005. occupied by the Group Zhanyi Street, for office uses. Tianshou Road, The gross floor area of the Tianhe District, property is approximately Guangzhou 10.5 square metres. City, Guangdong The property was leased Province, by the Group pursuant to a the PRC tenancy agreement for a term of 1 year commencing on 13 June 2007 and expiring on 12 June 2008 at a monthly rent of RMB800.

property

Notes:

Pursuant to the tenancy agreement entered into between 廣州點對點商務有限公司 which is an independent third party and 廣州翰音網絡科技有限公司 (“廣州翰音”) dated 25 June 2007, the property with a gross floor area of approximately 10.5 sq.m. was leased to 廣州翰音 for a term of 1 year commencing from 13 June 2007 and expiring on 12 June 2008 at a monthly rent of RMB800.
廣州翰音 is a wholly-owned subsidiary of the Company.
We have been provided with a legal opinion regarding the property interests by the Group’s legal adviser in the PRC, which states, inter alia, that the tenancy agreement mentioned in Note 1 is valid and legally enforceable under the PRC laws.
164 -

property VAluAtion of the enlArged group

Appendix V

VAluAtion CertifiCAte

description and tenure

property

Unit 2C65, The property comprises an Runpeng Building office unit on level 2 of a (電務綜合樓), 16-storey office building Zhanyi Street, completed in about 2005. Tianshou Road, Tianhe District, The gross floor area of the Guangzhou City, property is approximately Guangdong 10.5 square metres. Province, the PRC The property was leased by the Group pursuant to a tenancy agreement for a term of 1 year commencing on 13 June 2007 and expiring on 12 June 2008 at a monthly rent of RMB800.

particular of	Market value
occupancy	in existing state
	as at
	31 december
	2007
	HKD
As advised by the	No commercial
Company, the subject	value
property is currently
occupied by the Group
for office uses.

Note:

Pursuant to the tenancy agreement entered into between 廣州點對點商務有限公司 which is an independent third party and 上海易圖通信息技術有限公司廣州分公司 (“上海易圖通”) dated 25 June 2007, the property with a gross floor area of approximately 10.5 square metres was leased to 上海易圖通 for a term of 1 year commencing from 13 June 2007 and expiring on 12 June 2008 at a monthly rent of RMB800.
上海易圖通 is a wholly-owned subsidiary of the Company.
We have been provided with a legal opinion regarding the property interests by the Group’s legal adviser in the PRC, which states, inter alia, that the tenancy agreement mentioned in Note 1 is valid and legally enforceable under the PRC laws.
165 -

GenerAl informAtion

Appendix Vi

1. reSponSiBilitY StAtement

This circular includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Group. The Directors collectively and individually accept full responsibility for the accuracy of the information contained in this circular and confirm, having made all reasonable enquiries, that to the best of their knowledge and belief, there are no other facts, the omission of which would make any statement herein misleading.

2. diSCloSUre of intereStS

(a) directors’ interests and short positions in the securities of the Company and its associated corporations

As at the Latest Practicable Date, the interests and short positions of the Directors or chief executive of the Company in the shares, underlying shares or debentures of the Company and its associated corporations (within the meaning of Part XV of the SFO) which were required (i) to be notified to the Company 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 (ii) pursuant to section 352 of the SFO, to be entered in the register referred to therein; or (iii) pursuant to the Mode Code for Securities Transactions by Directors of Listed Issuers contained in the Listing Rules, to be notified to the Company and the Stock Exchange were as follows:

(i) the Company

As at the Latest Practicable Date, the interests of the Directors in the Shares were as follows:

					Approximate
					percentage
					of issued
					capital as at
		number of Shares			the latest
	personal	family	Corporate		practicable
name	interests	interests	interests	total	date
Lo Lin Shing, Simon	200,000	–	55,355,406	55,555,406	56.87
Ho Hau Chong, Norman	78,000	–	–	78,000	0.08

166 -

GenerAl informAtion

Appendix Vi

(ii) the associated corporations of the Company

As at the Latest Practicable Date, none the Directors had any interest in the shares of the associated corporations of the Company.

(iii) interest in underlying shares – share options of the Company

As at the Latest Practicable Date, the following Directors had personal interest in options to subscribe for the Shares granted under the share option schemes of the Company:

	number
	of share
	options as at
	the latest
name of	practicable	date of	exercise	exercise
director	date	grant	price	period
			(HK$)
Lo Lin Shing, Simon	78,000	28-1-2005	1.26	28-1-2005 to
				31-12-2010

As at the Latest Practicable Date, save as disclosed above, none of the Directors or chief executive of the Company had any interest or short positions in the shares, underlying shares or debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) which were required (i) to be notified to the Company 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 (ii) pursuant to section 352 of the SFO, to be entered in the register referred to therein; or (iii) pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers contained in the Listing Rules to be notified to the Company and the Stock Exchange.

(b) persons who have interests or short positions which are discloseable under divisions 2 and 3 of part xV of the Sfo

As at the Latest Practicable Date, so far as was known to the Directors or chief executive of the Company, the following persons (other than the Directors or chief executive of the Company) had an interest or short positions in the Shares or/and underlying Shares which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO or, who were, directly or indirectly, interest in 10% more of the nominal value

167 -

GenerAl informAtion

Appendix Vi

of any class of share capital carrying rights to vote in all circumstances at general meetings of any other members of the Group were as follows:

Interests in the Shares and underlying Shares

			interests in		Approximate
			physically		percentage of
			settled		issued capital
			unlisted		as at the latest
		interests in	equity		practicable
name	Capacity	the Shares	derivatives	total	date
Ku Ming Mei, Rousia	Interest of spouse	55,633,406	–	55,633,406	56.94
Moral Glory
International Limited	Beneficial owner	55,355,406	–	55,355,406	56.66

As at the Latest Practicable Date, save as disclosed above, so far as was known to the Directors, no other person (other than the Directors or chief executive of the Company) had, or was deemed or taken to have an interest or short positions in the Shares or/and underlying Shares which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO or, who were, directly or indirectly, interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any other members of the Group.

Save as stated above, as at the Latest Practicable Date, according to the register of interests required to be kept by the Company under Section 336 of the SFO, no other persons were recorded to hold any long or short positions in the Shares or underlying Shares of the equity derivatives of the Company.

3. SerViCe ContrACtS

As at the Latest Practicable Date, none of the Directors had entered into any service agreement with any member of the Group nor were there any other service agreements proposed which would not expire or be determinable by the Group within one year without payment of compensation (other than statutory compensation).

4. litiGAtion

As at the Latest Practicable Date, none of the members of the Group was engaged in any litigation, claim or arbitration of material importance and there was no litigation, claim or arbitration of material importance known to the Directors to be pending or threatened by or against any member of the Group.

168 -

GenerAl informAtion

Appendix Vi

5. direCtorS’ intereStS in ContrACtS And ASSetS

None of the Directors was materially interested, directly or indirectly, in any contract or arrangement entered into by any member of the Enlarged Group which was subsisting as at the Latest Practicable Date and which was significant in relation to the business of the Enlarged Group taken as a whole.

None of the Directors has or had any direct or indirect interest in any assets which have been acquired or disposed of by or leased to any member of the Enlarged Group or are proposed to be acquired or disposed of by or leased to any member of the Enlarged Group since 30 June 2007, the date to which the latest published audited financial statements of the Group were made up.

6. CompetinG intereStS

As at the Latest Practicable Date, to the best knowledge of the Directors, none of the Directors and their respective associates were considered to have any interests in businesses which compete or are likely to compete, either directly or indirectly, with the business of the Group, other than those businesses where the Directors were appointed as directors to represent the interests of the Group.

7. mAteriAl ContrACtS

The following contracts (being contracts not entered into in the ordinary course of business of the Group) have been entered into by the members of the Group within the two years immediately preceding the date of this circular, and are or may be material:

(a) the loan agreement dated 27 March 2006 entered into between New World Finance Company Limited (“New World Finance”) as lender and the Company as borrower for the advancement of a loan of HK$244,024,000;
(b) the loan agreement dated 30 March 2006 entered into between New World Finance as lender, the Company as borrower and pursuant to which New World Finance agreed to make available to the Company a loan facility or up to HK$900,000,000;
(c) the amendment agreement dated 30 March 2006 entered into between CSL New World Mobility Limited (“CSL NWM”), Telstra Holdings (Bermuda) No. 2 Limited (“Telstra Holdings”), Telstra Corporation Limited, New World Development Company Limited, Upper Start Holdings Limited and the Company in relation to the merger agreement dated 8 December 2005 entered into between CSL NWM, Telstra Holdings and the Company (“Merger Agreement”);
(d) the loan agreement dated 29 May 2006 entered into between the Company as borrower and New World Finance as lender pursuant to which New World Finance agreed to make available to the Company a loan facility of up to HK$70,000,000;
169 -

GenerAl informAtion

Appendix Vi

(e) the amendment agreement dated 25 August 2006 entered into between CSL NWM, Telstra Holdings, Telstra Corporation Limited, Upper Start Holdings Limited, New World PCS Holdings Limited and the Company in relation to the Merger Agreement;
(f) the placing agreement dated 4 December 2007 entered into between the Company and Taifook Securities Company Limited; and
(g) the Agreement.

8. ConSentS And QUAlifiCAtionS

The followings are the names and the qualifications of the professional advisers who have given opinions or advice which are contained or referred to in this circular:–

names	Qualifications
PricewaterhouseCoopers (“PwC”)	Certified Public Accountants
RHL Appraisal Ltd. (“RHL”)	Property valuer

Each of PwC and RHL has given and has not withdrawn their written consent to the issue of this circular, with copies of their letter and/or reports and the references to their names included in the forms and contexts in which they are respectively included.

As at the Latest Practicable Date:–

(a) none of PwC and RHL has any shareholding, directly or indirectly, in any member of the Enlarged Group or any right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any member of the Enlarged Group; and
(b) none of PwC and RHL had any direct or indirect interest in any asset which had been acquired, or disposed of by, or leased to any member of the Group, or was proposed to be acquired, or disposed of by, or leased to any member of the Enlarged Group since 30 June 2007, the date to which the latest published audited financial statements of the Group were made up.

9. miSCellAneoUS

(a) The registered office of the Company is at P.O. Box 309, Ugland House, South Church Street, George Town, Grand Cayman, Cayman Islands, British West India.
(b) The principal place of business of the Company in Hong Kong is at Rooms 1502-5, New World Tower I, 16-18 Queen’s Road Central, Hong Kong.
(c) The company secretary and qualified accountant of the Company is Mr. Tang Chi Kei, CPA.
170 -

GenerAl informAtion

Appendix Vi

(d) The branch share registrars and transfer office of the Company in Hong Kong is Tricor Abacus Limited at 26th Floor, Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong.
(e) In the event of inconsistency, the English texts of this circular and the accompanying form of proxy shall prevail over their respective Chinese texts.

10. doCUmentS AVAilABle for inSpeCtion

Copies of the following documents are available for inspection during normal business hours at the principal place of business of the Company in Hong Kong at Rooms 1502-5, New World Tower I, 16-18 Queen’s Road Central, Hong Kong, up to and including the date of the EGM:

(a) the memorandum and articles of association of the Company;
(b) the accountant’s report from PwC on financial information of the COAG Group for each of the years ended 31 March 2005, 2006 and 2007 and for each of the six months ended 30 September 2006 and 2007, the text of which is set out in appendix II to this circular;
(c) the annual reports of the Company for each of the years ended 30 June 2005, 2006 and 2007 and the interim report of the Company for the six months ended 31 December 2007;
(d) the report from PwC on the unaudited pro forma financial information of the Enlarged Group, the text of which is set out in appendix IV to this circular;
(e) the report on the property valuation of the Enlarged Group from RHL as set out in appendix V to this circular;
(f) the material contracts referred to in the section headed “Material contracts” in this appendix; and
(g) the letters of consent referred to in the section headed “Consents and qualifications” in this appendix.
171 -

notice of egm

==> picture [101 x 63] intentionally omitted <==

neW WoRLD moBiLe HoLDingS LimiteD

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 862)

notice iS HeReBY giVen that an extraordinary general meeting of the members of New World Mobile Holdings Limited (the “Company”) will be held at Room McKinley, Pacific Place Conference Centre, Level 5, One Pacific Place, 88 Queensway, Hong Kong on 18 April 2008 at 11:00 a.m. for the purpose of considering and, if thought fit, passing, with or without modification, the following resolution as ordinary resolution of the Company.

oRDinARY ReSoLUtion

“ tHAt :–

(a) the entering into of the conditional agreement for sale and purchase dated 27 December 2007 (as supplemented by a letter dated 29 February 2008 in relation to the extension of the long stop date for the fulfilment of the conditions set out in the conditional agreement) (the “Agreement”), a copy of which has been produced to the meeting marked “A” and initialled by the Chairman of the meeting for the purpose of identification, between International Entertainment Corporation (“IEC”) as vendor and the Company as purchaser whereby IEC has agreed to sell, and the Company has agreed to purchase, the entire issued share capital of Cyber-On-Air Group Limited beneficially owned by IEC at a consideration of HK$2 million, upon the terms and subject to the conditions therein contained, be and is hereby approved, confirmed and ratified and the performance of the transactions contemplated under the Agreement be and is hereby approved; and
(b) any one director of the Company be and is hereby authorised for and on behalf of the Company to do all acts and things and execute and deliver all documents whether under the common seal of the Company or otherwise as may be necessary, desirable or expedient to carry out or to give effect to any or all transactions contemplated under the Agreement.”

By Order of the Board

new World mobile Holdings Limited tang chi Kei

Company Secretary

Hong Kong, 31 March 2008

172 -

notice of egm

Registered office: Principal place of business P.O. Box 309 in Hong Kong: Ugland House Rooms 1502-5 South Church Street New World Tower I George Town 16-18 Queen’s Road Central Grand Cayman Hong Kong Cayman Islands British West Indies

Notes:

A member of the Company entitled to attend and vote at the meeting is entitled to appoint one or more proxies to attend and vote in his/her/its stead. In the case of a recognised clearing house, it may authorise such other person(s) as it thinks fit to act as its representative(s) at the meeting and vote in its stead. A proxy need not be a member of the Company.
A form of proxy for use at the meeting is enclosed. Whether or not you intend to attend the meeting in person, you are urged to complete and return the form of proxy in accordance with the instructions printed thereon.
To be valid, a form of proxy and the power of attorney or other authority (if any) under which it is signed, or a notarially certified copy thereof, must be deposited at the Company’s branch share registrars in Hong Kong, Tricor Abacus Limited at 26th Floor, Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong, not less than 48 hours before the time appointed for the holding of the meeting or any adjournment thereof.
Completion and return of the form of proxy shall not preclude a member of the Company from attending and voting in person at the meeting or any adjournment thereof or on the poll concerned and, in such event, the instrument appointing a proxy shall be deemed to have been revoked.
Where there are joint holders of any share of the Company, any one of such holders may vote at the meeting, either personally or by proxy, in respect of such share as if he were solely entitled thereto, but if more than one of such holders are present at the meeting personally or by proxy, then the holder whose name stands first on the register of members of the Company in respect of such share shall alone be entitled to vote in respect thereof. Several executors or administrators of a deceased member in whose name any share stands shall for this purpose be deemed joint holders thereof.
173 -

AI assistant

Vision Values Holdings Ltd. — Proxy Solicitation & Information Statement 2008

49521_rns_2008-03-28_1547f11c-e3fa-4983-ab2f-71ce9a3a6d5f.pdf

NEW WORLD MOBILE HOLDINGS LIMITED

VERY SUBSTANTIAL ACQUISITION

contents

Definitions

NeW WorLd moBILe hoLdINGS LImIted

VerY SUBStaNtIaL aCQUISItIoN

ProPoSed traNSfer of the eNtIre INtereSt IN CYBer oN-aIr GroUP LImIted BY INterNatIoNaL eNtertaINmeNt CorPoratIoN to NeW WorLd moBILe hoLdINGS LImIted

INtrodUCtIoN

the aGreemeNt

date:

Parties:

assets to be acquired by NWm

Consideration

Conditions precedent

Completion

fINaNCIaL ImPaCt of the aCQUISItIoN

INformatIoN oN the IeC GroUP

INformatIoN oN the CoaG GroUP

reaSoNS for the aCQUISItIoN

GeNeraL

eGm

ProCedUreS to demaNd a PoLL at GeNeraL meetING

reCommeNdatIoNS

addItIoNaL INformatIoN

1. SUMMARy OF FINANCIAL INFORMATION

2. AUDITED FINANCIAL STATEMENTS FOR THE yEAR ENDED 30 JUNE 2007

Consolidated Income Statement

Consolidated Balance Sheet

Balance Sheet

Consolidated Cash Flow Statement

Consolidated Statement of Changes in Equity

Notes to the Financial Statements

1 GENERAL INFORMATION

2 BASIS OF PREPARATION

3 PRINCIPAL ACCOUNTING POLICIES

(a) The adoption of new/revised HKFRS

(b) Group accounting

(i) Consolidation

(ii) Associated companies

(iii) Goodwill

(c) Property, plant and equipment

(d) Impairment of assets

(e) Trade and other receivables

(f) Cash and cash equivalents

(g) Provisions

(h) Share capital

(i) Employee benefits

(i) Employee leave entitlements

(ii) Pension obligations

(iii) Bonus

(iv) Share-based compensation

(j) Deferred taxation

(k) Trade payables

(l) Revenue recognition

(m) Operating leases

(n) Segment reporting

(o) Foreign currency translation

(i) Functional and presentation currency

(ii) Transactions and balances

(p) Borrowings

(q) Dividend distribution

4 FINANCIAL RISK MANAGEMENT

4.1 Financial risk factors

(iii) Liquidity risk

4.2 Fair value estimation

5 CRITICAL ACCOUNTING ESTIMATES AND ASSUMPTIONS

(a) Useful lives of property, plant and equipment

(b) Impairment of receivables

6 TURNOvER

7 SEGMENT INFORMATION

(a) Primary reporting format – business segments

(b) Secondary reporting format – geographical segments

8 DISCONTINUED OPERATIONS

11 OPERATING PROFIT/(LOSS)

14 DIRECTORS’ AND SENIOR MANAGEMENT’S EMOLUMENTS

(a) Directors’ emoluments

Mr. Lo Lin Shing, Simon and Mr Ho Hau Chong, Norman have been re-designated as executive Directors from non-executive Directors of the Company on 1 February 2007.

Vision Values Holdings Ltd. Proxy Solicitation & Information Statement 2008