Walnut Capital Limited - M&A Activity 2006

THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in doubt as to any aspect of this composite offer document or the offer contained herein, you should consult a licensed securities dealer or registered institution in securities, a bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your shares in Apex Capital Limited, you should at once hand this composite offer document and the accompanying form of acceptance and transfer for the shares of Apex Capital Limited to the purchaser or transferee or to the licensed securities dealer or registered institution in securities or other agent through whom the sale or transfer was effected for transmission to the purchaser or transferee.

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

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(Incorporated in Hong Kong with limited liability)

APEX CAPITAL LIMITED

(Incorporated in Cayman Islands with limited liability) (Stock Code: 905)

COMPOSITE OFFER DOCUMENT RELATING TO AN UNCONDITIONAL MANDATORY GENERAL CASH OFFER BY YU MING INVESTMENT MANAGEMENT LIMITED ON BEHALF OF THE OFFEROR

FOR ALL THE ISSUED SHARES OF APEX CAPITAL LIMITED OF HK$0.025 PER SHARE AT HK$0.0695 PER SHARE (OTHER THAN THOSE SHARES ALREADY OWNED OR AGREED TO BE ACQUIRED BY THE OFFEROR AND PARTIES ACTING IN CONCERT WITH IT)

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Financial Adviser to the Offeror

Yu Ming Investment Management Limited

Joint Financial Advisers to Apex Capital Limited

Kingsway Capital Limited

Independent Financial Adviser to the Independent Board Committee of Apex Capital Limited

A letter from Yu Ming Investment Management Limited containing, among others, details of the terms of the offer is set out on pages 5 to 11 of this composite offer document. A letter from the board of directors of Apex Capital Limited is set out on pages 12 to 15 of this composite offer document. A letter from the independent board committee of Apex Capital Limited to the shareholders (other than the offeror and parties acting in concert with it) is set out on page 16 of this composite offer document. A letter from Partners Capital International Limited containing its opinion and advice to the independent board committee of Apex Capital Limited is set out on pages 17 to 32 of this composite offer document.

The procedure for acceptance and settlement of the offer is set out in Appendix I to this composite offer document and in the accompanying form of acceptance and transfer for the shares of Apex Capital Limited. Acceptance of the offer for the shares of Apex Capital Limited must be received by Secretaries Limited at 26th Floor, Tesbury Centre, 28 Queen’s Road East, Wan Chai, Hong Kong by no later than 4:00 p.m. on 12th December, 2006.

21st November, 2006

CONTENT

	Page
DEFINITIONS.....................................................................................................................	1
EXPECTED TIMETABLE .................................................................................................	4
LETTER FROM YU MING................................................................................................	5
LETTER FROM THE BOARD ..........................................................................................	12
LETTER FROM THE INDEPENDENT BOARD COMMITTEE ...................................	16
LETTER FROM PARTNERS CAPITAL...........................................................................	17
APPENDIX I — FURTHER TERMS OF THE OFFER ...................................................	33
APPENDIX II — FINANCIAL INFORMATION OF APEX...........................................	37
APPENDIX III — VALUATION REPORT ......................................................................	88
APPENDIX IV — GENERAL INFORMATION ..............................................................	93

– i –

DEFINITIONS

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

“acting in concert”	shall have the meaning set out in the Takeovers Code
“Accepting Shareholders”	Shareholders other than the Offeror and parties acting in concert
	with it who accept the Offer
“Ample Capital”	Ample Capital Limited, a licensed corporation permitted to
	engage in type 6 regulated activity under the Securities and
	Futures Ordinance
“Announcement Date”	31st October, 2006, being the date of the joint announcement
	made by the Offeror and Apex in respect of the Offer
“Apex”	Apex Capital Limited (previously known as Haywood
	Investments Limited prior to 23rd June, 2006), a company
	incorporated in the Cayman Islands with limited liability and
	the shares of which are listed on the main board of the Stock
	Exchange with a designated stock code of 905
“Apex Group”	Apex and its subsidiaries
“Board”	board of Directors
“Director(s)”	the director(s) of Apex
“CCASS”	The Central Clearing and Settlement System established and
	operated by HKSCC
“Executive”	the Executive Director of the Corporate Finance Division of
	the Securities and Futures Commission or any of his delegates
“Fong Chi Hou”	a non-executive Director and the vendor of 15,450,000 Shares,
	representing 6.64% of the total issued share capital of Apex,
	under the Sale and Purchase Agreements
“Hong Kong”	the Hong Kong Special Administrative Region of the People’s
	Republic of China
“HKSCC”	Hong Kong Securities Clearing Company Limited
“Hua Yu”	Hua Yu Investment Management Limited, a licensed corporation
	permitted to engage in types 4, 6, 9 regulated activities under
	the Securities and Futures Ordinance and a 91% owned
	subsidiary of Yu Ming and not involved in any role in the Offer

– 1 –

DEFINITIONS

“Independent Board Committee”	an independent committee of the Board comprising Mr. Liu
	Wing Ting, Stephen, Ms. Lam Lin Chu and Ms. Tse Po Chu,
	the independent non-executive Directors and Mr. Wang Yao
	Dong, a non-executive Director, formed for the purpose of
	advising the Independent Shareholders
“Independent Shareholders”	Shareholders other than the Offeror and parties acting in concert
	with it
“Kingsway Capital”	Kingsway Capital Limited, a licensed corporation permitted to
	engage in type 6 regulated activity under the Securities and
	Futures Ordinance
“Latest Practicable Date”	20th November, 2006, being the latest practicable date prior to
	the printing of this composite offer document for ascertaining
	certain information referred to in this composite offer document
“Listing Rules”	the Rules Governing the Listing of Securities on the Stock
	Exchange
“Offer”	the unconditional mandatory general cash offer for all the Shares
	other than those owned or agreed to be acquired by the Offeror
	and parties acting in concert with it
“Offeror”	means “��”(for identification
	purpose, in English, China TianDiXing Logistics Holdings
	Limited), a company incorporated in Hong Kong with limited
	liability
“Offer Price”	The price for each Share of HK$0.0695 under the Offer
“Partners Capital”	Partners Capital International Limited, a licensed corporation
	permitted to engage in types 1 and 6 regulated activities under
	the Securities and Futures Ordinance
“PRC”	The People’s Republic of China
“Registrar”	Secretaries Limited, the Hong Kong branch share registrar and
	transfer office of Apex, with its address at 26th Floor, Tesbury
	Centre, 28 Queen’s Road East, Wanchai, Hong Kong
“RHL”	RHL Appraisal Limited, an independent surveyor and property
	valuer

– 2 –

DEFINITIONS

“Sale Share(s)”	the 132,933,200 Shares representing approximately 55.39% of
	the total issued share capital of Apex acquired by the Offeror at
	HK$0.0695 pursuant to the Sale and Purchase Agreements
“Sale and Purchase Agreements”	the agreements dated 24th October, 2006 for the sale and
	purchase of the 132,933,200 Shares representing approximately
	55.39% of the total issued share capital of Apex at HK$0.0695
	each Share
“Shares”	existing ordinary share(s) of HK$0.025 each in the issued share
	capital of Apex
“Shareholders”	holders of the Shares
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“Takeovers Code”	The Code on Takeovers and Mergers
“Title Documents”	the relevant Share certificate(s) and/or transfer receipt(s) and/
	or any document(s) of title (and/or any satisfactory indemnity
	or indemnities required in respect thereof)
“Vendor A”	Mr. Zhou Chao and Xiyang
“Vendor B”	Mr. Fong Chi Hou
“Vendors”	Vendor A and Vendor B
“Xiyang”	Xiyang International Limited, a limited company incorporated
	in Hong Kong and the vendor of 64,065,600 Shares, representing
	26.69% of the total issued share capital of Apex, under the Sale
	and Purchase Agreements
“Yu Ming”	Yu Ming Investment Management Limited, a licensed
	corporation permitted to engage in types 1, 4, 6, 9 regulated
	activities under the Securities and Futures Ordinance
“Zhou Chao”	an executive Director and the vendor of 53,417,600 Shares,
	representing 22.26% of the total issued share capital of Apex,
	under the Sale and Purchase Agreements
“HK$”	Hong Kong dollars, the lawful currency of Hong Kong

– 3 –

EXPECTED TIMETABLE

Commencement date of the Offer......................................................... Tuesday, 21st November, 2006 Posting of the composite offer document............................................. Tuesday, 21st November, 2006 Latest time and date for acceptance of the Offer ............................................................... 4:00 p.m. on Tuesday, 12th December, 2006

Closing date of the Offer (Note 1) ........................................................ Tuesday, 12th December, 2006

Latest time and date for the announcement

of the result of the Offer on Stock Exchange’s website.......................................................................................... 7:00 p.m. on Tuesday, 12th December, 2006

Announcement in respect of

the closing of the Offer

and acceptances under the Offer .................................................. Wednesday, 13th December, 2006

Latest date for posting of

remittances for the amounts due under the Offer in respect of valid acceptances (Note 2)............................................................................ Friday, 22nd December, 2006

Notes:

The Offer will be closed on Tuesday, 12th December, 2006. The Offeror does not have any intention to extend the closing date of the Offer. The Offeror will issue an announcement on the Stock Exchange’s website by 7:00 p.m. on Tuesday, 12th December, 2006, being the closing date of the Offer, stating the total number of the Shares and rights over the Shares:
a. for which acceptances of the Offer have been received;
b. held, controlled or directed by the Offeror or parties acting in concert with it before the Announcement Date; and
c. acquired or agreed to be acquired during the offer period by the Offeror or any person acting in concert with it.
Remittances in respect of the consideration (after deducting the seller’s ad valorem stamp duty) payable for the Shares under the Offer will be posted to the Accepting Shareholders by ordinary post at their own risk as soon as practicable, but in any event within 10 days from the receipt of duly completed acceptance.
Acceptance of the Offer shall be irrevocable and incapable of being withdrawn.
In the case that the Offeror or Yu Ming fails to publish an announcement in respect of the acceptance of the Offer on the Stock Exchange’s website by 7:00 p.m. on Tuesday, 12th December, 2006, being the closing date of the Offer and in accordance with the Takeovers Code, the Executive may require that the Accepting Shareholders be granted a right of withdrawal, on terms acceptable to the Executive, until such announcement is published.
All references to date and time contained in this composite offer document refer to Hong Kong date and time.

– 4 –

LETTER FROM YU MING

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YU MING INVESTMENT MANAGEMENT LIMITED ��

21st November, 2006

To Shareholders

Dear Sir or Madam,

UNCONDITIONAL MANDATORY GENERAL CASH OFFER BY YU MING INVESTMENT MANAGEMENT LIMITED ON BEHALF OF THE OFFEROR FOR ALL THE ISSUED SHARES OF APEX CAPITAL LIMITED (OTHER THAN THOSE SHARES ALREADY OWNED OR AGREED TO BE ACQUIRED BY THE OFFEROR AND PARTIES ACTING IN CONCERT WITH IT)

INTRODUCTION

On 31st October, 2006, the Offeror and Apex jointly announced that the Sale and Purchase Agreements were entered into between the Offeror and the Vendors for the sale and purchase of a total of 132,933,200 Shares, representing approximately 55.39% of the total issued share capital of Apex. The sale and purchase was completed on 14th November, 2006.

Pursuant to Rule 26.1 of the Takeovers Code, the Offeror is required to make an unconditional mandatory general offer for all the Shares not already owned or agreed to be acquired by the Offeror and parties acting in concert with it.

This letter sets out the detailed terms of the Offer, together with information on the Offeror and the Offeror’s intention regarding Apex. Further details of the Offer are also set out in Appendix I to this composite offer document and in the accompanying form of acceptance and transfer. Your attention is also drawn to the letter from the Board, the letter from the Independent Board Committee and the letter from Partners Capital contained in this composite offer document.

THE OFFER

Terms of the Offer

We are making the Offer for and on behalf of the Offeror, subject to the terms set out in this composite offer document and in the accompanying form of acceptance and transfer for the Offer, to acquire all the Shares not already owned or agreed to be acquired by the Offeror and the parties acting in concert with it on the following basis:

For each Share........................................................................................................ HK$0.0695 in cash

– 5 –

LETTER FROM YU MING

The Offer Price is equal to the price paid by the Offeror for each Sale Share under the Sale and Purchase Agreements.

The Offer Price represents:

i. a discount of approximately 51.06% over the closing price of HK$0.142 per Share as quoted on the Stock Exchange on the Latest Practicable Date;
ii. a discount of approximately 68.41% over the closing price of HK$0.22 per Share as quoted on the Stock Exchange on the Announcement Date;
iii. a discount of approximately 6.08% over the closing price of HK$0.074 per Share as quoted on the Stock Exchange on 24th October, 2006, being the last trading day prior to the suspension of trading in the Shares;
iv. a premium of approximately 75.75% to the unaudited consolidated net asset value per Share of approximately HK$0.04 as at 30th June, 2006 published in the 2006 interim report of Apex.

No extension of offer period and no increase in offer price

The Offer would be open for acceptance until 12th December, 2006, being the 21st day from 21st November, 2006, the date of the despatch of this composite offer document. The Offeror does not have any intention to extend the closing date of the Offer.

The Offer Price will not be further increased and is final.

Consideration

As at the Latest Practicable Date, there were 240,000,000 Shares in issue. At the Offer Price of HK$0.0695 per Share and in the event that the Offer is accepted in full, the aggregate amount payable by the Offeror would be approximately HK$16,680,000, which is financed by the 99.99% beneficial owner of the Offeror, Mr. Mung Kin Keung’s own internal financial resources and is not financed by any borrowing.

Yu Ming is satisfied that financial resources freely available to Mr. Mung Kin Keung are sufficient to acquire the Sale Shares and to implement the Offer in full. An unconditional and irrevocable undertaking from Mr. Mung Kin Keung to finance the Offeror to acquire the Sale Shares and to implement the Offer in full has also been provided to Yu Ming to its satisfaction.

Condition

As the Offeror and parties acting in concert with it acquired more than 50% of the total issued share capital or voting rights of Apex pursuant to the Sale and Purchase Agreements, the Offer is therefore made unconditional on acceptance level.

– 6 –

LETTER FROM YU MING

Effect of accepting the Offer

By accepting the Offer, Shareholders will sell their Shares and all rights attaching to them as at the Announcement Date, including the right to receive all dividends and other distributions, if any, declared, made or paid by Apex on or after the Announcement Date.

The Shares acquired by the Offeror and parties acting in concert with it in pursuance of the Offer will not be transferred, charged or pledged to any other person.

Payment

The Offer is unconditional. Payment in cash in respect of the acceptance of the Offer will be made within 10 days from the receipt of duly completed form of acceptance and transfer.

Stamp Duty

Seller’s ad valorem stamp duty for the Shares registered with Hong Kong branch share register arising in connection with acceptance of the Offer will be payable by each Shareholder at the rate of HK$1 for every HK$1,000 or part thereof of the consideration payable by the Offeror for such Shareholders’ Shares and will be deducted from the cash amount due to such Shareholder under the Offer and paid by the Offeror.

Acceptance Commitment

No irrevocable commitment to accept or reject the Offer has been received by the Offeror or parties acting in concert with it.

INFORMATION OF THE OFFEROR

The Offeror is a company incorporated in Hong Kong on 29th September, 2003 as an investment holding company. Apart from investment in the 132,933,200 Shares, representing 55.39% of the total issued capital of Apex as at the Latest Practicable Date, the Offeror has not been engaged in any other business since its incorporation.

The identity of the ultimate controlling shareholders of the Offeror as at the Latest Practicable Date was as follows:

		% of the total
	Number of shares with	issued shares
Shareholders	voting rights	or voting rights
Mr. Mung Kin Keung	9,999	99.99%
Madam Sin Lai Ni	1	0.01%
Total	10,000	100.00%

Note: Madam Sin Lai Ni is the wife of Mr. Mung Kin Keung, both of whom are the only directors of the Offeror.

– 7 –

LETTER FROM YU MING

Mr. Mung Kin Keung, aged 46 and a permanent resident of Hong Kong, obtained Master of Business Administration from the Asia International Open University (Macau) in 2002. He is the controlling shareholder holding 55% of the total issued share capital of Hong Kong Airlines Limited, a private limited company (previously known as CR Airways Limited prior to 22nd September, 2006) incorporated in Hong Kong on 28th March, 2001. The Hong Kong based airline is designated to operate scheduled flights to the PRC, including Tianjin, Changsha, Guilin, Nanning, Kunming, Haikou and Sanya. At present, Hong Kong Airlines Limited operates 3 Boeing 737-800s. Mr. Mung Kin Keung became the controlling shareholder of Hong Kong Airlines Limited on 7th August, 2006 and its director on 13th August, 2006. Mr. Mung does not participate in the daily operation, but makes key decisions relating to the direction and strategy of the business of Hong Kong Airlines Limited.

Mr. Mung Kin Keung also invests in residential properties in Hong Kong and catering business. Since 1995, he has invested 30% in Asia Pacific Bananaleaf Catering Company Limited, a private company incorporated in British Virgin Islands, which has more than 30 restaurants in 12 major cities of the PRC, Philippines and Indonesia. Mr. Mung does not participate in the daily operation, but makes key decisions relating to the direction and strategy of the business of Asia Pacific Bannaleaf Catering Company Limited.

SHAREHOLDINGS IN APEX

The table below sets out the shareholding structure of Apex as at the Latest Practicable Date:

		As at the date of
	the	Latest Practicable Date
	Number of Shares with	% of the total issued Shares
Shareholders	voting rights	or voting rights
Offeror	132,933,200	55.39%
Parties acting in concert with the Offeror	0	0.00%
Public	107,066,800	44.61%
Total	240,000,000	100.00%

INFORMATION ON APEX

Listed on the Stock Exchange under Chapter 21 of the Listing Rules as an investment company, Apex is principally engaged in acquisition of and disposal of investment in listed and unlisted securities. Hua Yu, the investment manager of Apex, is not involved in any role in the Offer.

INTENTION OF THE OFFEROR

It is the intention of the Offeror that the existing business of Apex in investments, including acquisition and disposal of assets, will remain unchanged. The Offeror has no objection to Apex continuing to carry out its investment activities during the offer period. The Offeror intends to continue to engage Hua Yu as the investment manager of Apex.

– 8 –

LETTER FROM YU MING

As at the Latest Practicable Date, except all the executive Directors, namely Mr. Zhou Chao, Mr. Phang Yul Cher Yeow, Ms. Huang Song and Mr. Chu Kin Wang, Peleus Apex Group did not have any employees. The executive Directors are responsible for all daily operations of Apex, including sourcing of investment opportunities, accounting and daily office administration.

As disclosed in the 2006 Annual Report, Directors’ remuneration is determined by a Remuneration Committee, comprising all independent non-executive Directors and the Chairman of Apex, which meets at least once a year.

The Offeror intends to grow the business of Apex Group in the long term by acquiring investments with good prospects. As the Latest Practicable Date, it has not started to identify any investment for Apex. As an investment manager of Apex, Hua Yu is looking for and will continue to look for investment opportunities with good prospects for Apex.

The Offeror does not intend to avail itself of any powers of compulsory acquisition.

NOMINATION OF NEW DIRECTORS

The Offeror reserves the right to appoint new directors in Apex after the composite offer document is posted. As at the date of this composite offer document, the Offeror has not proposed any director for nomination.

LISTING OF THE SHARES

The Offeror intends that Apex remains listed on the Stock Exchange. The Stock Exchange has stated that if, at the close of the Offer, less than the minimum prescribed percentage applicable to Apex, being 25% of the total Shares, are held by the public, or if the Stock Exchange believes that a false market exists or may exist in the trading of the Shares; or that there are insufficient Shares in public hands to maintain an orderly market, the Stock Exchange will consider exercising its discretion to suspend dealings in the Shares.

The directors of the Offeror have jointly and severally undertaken to the Stock Exchange to take appropriate steps to ensure that sufficient public float exists in the Shares.

PROCEDURES FOR ACCEPTANCES

To accept the Offer, the Accepting Shareholders should complete the accompanying form of acceptance and transfer for the Shares in accordance with the instructions printed thereon, which forms part of the terms of the Offer. The completed form of acceptance and transfer for the Shares should then be forwarded, together with the Title Documents for not less than the number of the Shares tendered under the Offer, by post or by hand, to the Registrar at 26th Floor, Tesbury Centre, 28 Queen’s Road East, Wan Chai, Hong Kong in an envelope marked “APEX OFFER” as soon as possible but in any event not later than 4:00 p.m. on 12th December, 2006. No acknowledgement of receipt of any form of acceptance and transfer, and the Title Documents will be given.

– 9 –

LETTER FROM YU MING

Your attention is drawn to the section headed “FURTHER PROCEDURES FOR ACCEPTANCE OF THE OFFER” as set out in Appendix I to this composite offer document and the accompanying form of acceptance and transfer for the Offer.

SETTLEMENT OF THE OFFER

Provided that the accompanying form of acceptance and transfer for the Shares, together with the Title Documents are valid, complete and in good order and have been received by the Registrar by no later than 4:00 p.m. on 12th December, 2006, a cheque for the amount due to each of the Accepting Shareholders in respect of the Shares tendered under the Offer, less seller’s ad valorem stamp duty payable by them, will be despatched to the Accepting Shareholders by ordinary post at their own risk within 10 days of the date of receipt of duly completed form of acceptance and transfer from the Accepting Shareholders.

The consideration to which any Accepting Shareholder is entitled under the Offer will be paid by the Offeror in full in accordance with the terms of the Offer set out in this composite offer document (including the appendices) and the accompanying form of acceptance and transfer without regard to any other lien, right of set-off, counterclaim or other analogous right to which the Offeror may otherwise be, or claim to be, entitled against such Accepting Shareholder.

NOMINEE REGISTRATION AND DESPATCH OF PAYMENT

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

All documents and remittances will be sent to the Shareholders by ordinary post at their own risk. These documents and remittances will be sent to them at their respective addresses as they appear in the register of members, in case of joint Shareholders whose names appear first in the said register of members, unless otherwise specified in the accompanying forms of acceptance and transfer for the Shares completed and returned by the Accepting Shareholders. None of the Offeror, the parties acting in concert with the Offeror, Yu Ming, Apex, Kingsway Capital, Ample Capital, Partners Capital, the Registrar or any of their respective directors, officers, associates, agents or any other person involved in the Offer will be responsible for any loss or delay in transmission of such documents and remittances or any other liabilities that may arise as a result thereof.

TAXATION

Shareholders are recommended to consult their own professional advisers if they are in any doubt as to the taxation implications of accepting the Offer in respect of their Shares. None of the Offeror, the parties acting in concert with the Offeror, Yu Ming, Apex, Kingsway Capital, Ample Capital, Partners Capital, the Registrar or any of their respective directors, officers, associates, agents or any other person involved in the Offer will be responsible for any taxation effects on any persons as a result of acceptance of the Offer.

– 10 –

LETTER FROM YU MING

GENERAL

Shareholders are advised to read carefully the letter from the Board, the letter from the Independent Board Committee and the letter from Partners Capital as contained in this composite offer document before deciding whether or not to accept the Offer.

Your attention is also drawn to the additional information set out in the accompanying form of acceptance and transfer for the Offer and appendices to this composite offer document.

Yours faithfully. For and on behalf of

YU MING INVESTMENT MANAGEMENT LIMITED Warren Lee

Director

– 11 –

LETTER FROM THE BOARD

APEX CAPITAL LIMITED

(Incorporated in Cayman Islands with limited liability) (Stock Code: 905)

Executive Directors:

Mr. Zhou Chao Ms. Huang Song Mr. Phang Yul Cher Yeow Mr. Chu Kin Wang, Peleus

Registered office:

Ugland House P.O. Box 309 George Town Grand Cayman Cayman Islands

Non-executive Directors:

Mr. Fong Chi Hou Mr. Wang Yao Dong

Independent non-executive Directors:

Mr. Liu Wing Ting, Stephen Ms. Lam Lin Chu Ms. Tse Po Chu

Head office and principal place of business in Hong Kong Rm. 2206, Office Tower Convention Plaza 1 Harbour Road Wanchai Hong Kong

21st November, 2006

To the Shareholders

Dear Sir or Madam,

UNCONDITIONAL MANDATORY GENERAL CASH OFFER BY YU MING INVESTMENT MANAGEMENT LIMITED ON BEHALF OF THE OFFEROR FOR ALL THE ISSUED SHARES OF APEX CAPITAL LIMITED OF HK$0.025 PER SHARE AT HK$0.0695 PER SHARE (OTHER THAN THOSE SHARES ALREADY OWNED OR AGREED TO BE ACQUIRED BY THE OFFEROR AND PARTIES ACTING IN CONCERT WITH IT)

INTRODUCTION

On 31st October, 2006, Apex and the Offeror jointly announced that the Vendors and the Offeror entered into the Sale and Purchase Agreements on 24th October, 2006 pursuant to which the Offeror agreed to purchase and the Vendors agreed to sell a total of 132,933,200 Shares, representing approximately 55.39% of the total issued share capital of Apex as at the Latest Practicable Date. Upon completion of the Sale and Purchase Agreements which took place on 14th November, 2006, the Offeror is required to make an unconditional mandatory general cash offer for all the Shares not already owned or agreed to be acquired by the Offeror and the parties acting in concert with it.

– 12 –

LETTER FROM THE BOARD

Yu Ming is making the Offer on behalf of the Offeror. Details of the Offer are set out in the letter from Yu Ming on pages 5 to 11 of this composite offer document. Further terms of the Offer are set out in the Appendix I to this composite offer document and the accompanying form of acceptance and transfer.

Pursuant to Rule 2.8 of the Takeovers Code, the Independent Board Committee shall comprise all non-executive Directors who have no direct or indirect interest in the Offer (other than as a Shareholder). Given that Mr. Fong Chi Hou, a non-executive Director, is one of the Vendors, he is not considered sufficiently independent to advise the Independent Shareholders in respect of the Offer.

Mr. Wang Yao Dong as a non-executive Director and Mr. Liu Wing Ting, Stephen, Ms. Lam Lin Chu and Ms. Tse Po Chu as independent non-executive Directors have been appointed as members of the Independent Board Committee, having taking into account the advice from Partners Capital, to advise the Independent Shareholders in respect of the Offer. Partners Capital has been appointed as the independent financial adviser to advise the Independent Board Committee and the Independent Shareholders as to (i) the fairness and reasonableness of the Offer and (ii) acceptance of the Offer.

The purpose of this composite offer document is to provide you with, among other things, (i) information on the Apex Group, the Offeror and the Offer and (ii) the letters of advice from the Independent Board Committee and Partners Capital in respect of the Offer.

THE OFFER

Yu Ming is making the Offer on behalf of the Offeror on the following basis:

For each Share........................................................................................................ HK$0.0695 in cash

As stated in the letter from Yu Ming set out on pages 5 to 11 of this composite offer document, the Offer Price will not be further increased and is final.

Further details of the Offer

Further details of the Offer, including terms and procedures for acceptance of the Offer are contained in the letter from Yu Ming set out on pages 5 to 11 of this composite offer document. Further terms of the Offer are set out in the Appendix I to this composite offer document and the accompanying form of acceptance and transfer.

INFORMATION AND INTENTION OF THE OFFEROR

Your attention is drawn to the sections headed “INFORMATION ON THE OFFEROR” and “INTENTION OF THE OFFEROR” in the letter from Yu Ming set out on pages 5 to 11 of this composite offer document.

– 13 –

LETTER FROM THE BOARD

INFORMATION ON APEX

Apex was incorporated in the Cayman Islands with limited liability and an investment company listed on the Stock Exchange pursuant to Chapter 21 of the Listing Rules. It is principally engaged in investing in listed and unlisted securities in Hong Kong and the PRC.

Shareholding structure

The shareholding structure of Apex as at the Latest Practicable Date is set out below.

	As at the	date of the
	Latest Practicable Date
		Percentage of total
Shareholders	Number of Shares	issued shares capital
	Shares	%
The Offeror	132,933,200	55.39
Parties acting in concert with the Offeror	0	0.00
Public	107,066,800	44.61
Total	240,000,000	100.00

As at the Latest Practicable Date, there were 240,000,000 Shares in the total issued share capital of Apex which are fully paid-up and rank equally in all aspects with each other, including in particular as to dividends, voting rights and capital. Furthermore, Apex does not have any derivatives, options, warrants and conversion rights or other similar rights which are convertible or exchangeable to the Shares as at the Latest Practicable Date.

Based on the Offer Price of HK$0.0695 per Share, the entire issued share capital of Apex is valued at HK$16.68 million and the 107,066,800 Shares under the Offer are valued at approximately HK$7.44 million.

MAINTAINING THE LISTING STATUS OF APEX

The Offeror intends to maintain the listing of the Shares on the Stock Exchange. The directors of the Offeror have jointly and severally undertaken to the Stock Exchange to take appropriate steps to ensure that sufficient public float exists in the Shares.

The Stock Exchange has stated that if, at the close of the Offer, less than the minimum prescribed percentage applicable to Apex, being 25% of the total Shares, are held by the public, or if the Stock Exchange believes that a false market exists or may exist in the trading of the Shares, or that there are insufficient Shares in public hands to maintain an orderly market, the Stock Exchange will consider exercising its discretion to suspend dealings in the Shares.

– 14 –

LETTER FROM THE BOARD

RECOMMENDATION

Your attention is drawn to (i) the letter from the Independent Board Committee set out on page 16 of this composite offer document, which contains its recommendation to the Independent Shareholders in respect of the Offer, and (ii) the letter of advice from Partners Capital set out on pages 17 to 32 of this composite offer document, which contains its advice and recommendations to the Independent Board Committee and the Independent Shareholders as to (i) the fairness and reasonableness of the Offer and (ii) acceptance of the Offer. You are also advised to read this composite offer document and the accompanying form of acceptance and transfer.

Yours faithfully, For and on behalf of APEX CAPITAL LIMITED Phang Yul Cher Yeow Executive Director

– 15 –

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

APEX CAPITAL LIMITED

(Incorporated in Cayman Islands with limited liability)

(Stock Code: 905)

21st November, 2006

To Independent Shareholders

Dear Sir or Madam,

UNCONDITIONAL MANDATORY GENERAL CASH OFFER BY YU MING INVESTMENT MANAGEMENT LIMITED ON BEHALF OF THE OFFEROR FOR ALL THE ISSUED SHARES OF APEX CAPITAL LIMITED (OTHER THAN THOSE SHARES ALREADY OWNED OR AGREED TO BE ACQUIRED BY THE OFFEROR AND PARTIES ACTING IN CONCERT WITH IT)

We have been appointed by the Board to form the Independent Board Committee to consider the terms of the Offer and to make recommendations to the Independent Shareholders in connection with the Offer, details of which are set out in the letter from the Board and the letter from Yu Ming in this composite offer document of which this letter forms part.

We have considered whether the Offer is fair and reasonable so far as the Independent Shareholders are concerned. Partners Capital has been appointed as the independent financial adviser to advise us in respect of the above.

We wish to draw your attention to the letter from Yu Ming and the letter from Partners Capital as set out in this composite offer document. Having considered the principal factors and reasons considered by, and the advice of Partners Capital as set out in its letter of advice, we consider that the terms of the Offer are fair and reasonable so far as the Independent Shareholders are concerned. Accordingly, we recommend the Independent Shareholders to accept the Offer.

Yours faithfully. For and on behalf of

APEX CAPITAL LIMITED

Wang Yao Dong Liu Wing Ting, Stephen

Lam Lin Chu Tse Po Chu

– 16 –

LETTER FROM PARTNERS CAPITAL

The following is the text of the letter of advice from Partners Capital to the Independent Board Committee for the purpose of incorporation into the composite offer document.

Partners Capital International Limited Unit 3906, 39/F, COSCO Tower 183 Queen’s Road Central Hong Kong

To the Independent Board Committee

21st November 2006

Dear Sirs,

INTRODUCTION

We refer to our engagement to advise the Independent Board Committee of Apex Capital Limited (the “Company”, together with its subsidiaries, the “Group”) in respect of the terms of the Offer, particulars of which are set out in the composite offer document of the Company (the “Composite Offer Document”) dated 21st November 2006 to the Independent Shareholders, of which this letter forms part. Unless the context requires otherwise, capitalised terms used in this letter shall have the same meanings as ascribed to them under the section headed “Definitions” in the Composite Offer Document.

As set out in the letter from the Board (the “Letter from the Board”), on 24 October 2006, the Sale and Purchase Agreements were entered into between the Offeror and certain substantial Shareholders for the sale and purchase of a total of 132,933,200 Shares, representing approximately 55.39% of the total issued share capital of the Company.

The First Sale and Purchase Agreement was entered into between the Offeror and Vendor A, pursuant to which, Vendor A agreed to sell and the Offeror agreed to acquire all the issued Shares held by Vendor A at HK$0.0695 each, representing 117,483,200 Shares and 48.95% of total issued share capital of the Company. The total consideration for the First Sale and Purchase Agreement is HK$8,165,082.40.

The Second Sale and Purchase Agreement was entered into between the Offeror and Vendor B, pursuant to which, Vendor B agreed to sell and the Offeror agreed to acquire all the issued Shares held by Vendor B at HK$0.0695 each, representing 15,450,000 Shares and 6.44% of total issued share capital of the Company. The total consideration for the Second Sale and Purchase Agreement is HK$1,073,775.00.

– 17 –

LETTER FROM PARTNERS CAPITAL

Upon Completion and as at the Latest Practicable Date, the Offeror and parties acting in concert with it owned in aggregate 132,933,200 Shares, representing approximately 55.39% of the total issued share capital of the Company. Accordingly, Yu Ming, on behalf of the Offeror, is making a mandatory unconditional cash offer for all the issued Shares (other than those already owned by the Offeror and parties acting in concert with it) pursuant to Rule 26.1 of the Takeovers Code on the following basis:

For each Share....................................................................................................... HK$0.0695 in cash

Further terms of the Offer, including the procedures for acceptance, are set out in the Composite Offer Document, in particular in the Letter from the Board, the letter from Yu Ming (the “Letter from Yu Ming”) and Appendix I to the Composite Offer Document.

Partners Capital International Limited is not connected with the directors, chief executive and substantial shareholders of the Company and the Offeror or any of its subsidiaries or their respective associates and therefore is considered suitable to give independent advice to the Independent Board Committee. Apart from normal professional fees payable to Partners Capital International Limited in connection with this appointment, no arrangement exists whereby Partners Capital International Limited will receive any fees or benefits from the Company or the directors, chief executive and substantial shareholders of the Company or any of its subsidiaries or their respective associates.

In formulating our opinion, we have relied on the accuracy of the information and representations contained in the Composite Offer Document and have assumed that all information and representations made or referred to in the Composite Offer Document as provided by the Directors and/or the Offeror were true at the time they were made and continue to be true as at the date of the Composite Offer Document. We have also relied on our discussion with the Directors regarding the Company and the Offer, including the information and representations contained in the Composite Offer Document. We have also assumed that all statements of belief, opinion and intention made by the Directors and the Offeror respectively in the Composite Offer Document were reasonably made after due enquiry. We consider that we have reviewed sufficient information to reach an informed view, to justify our reliance on the accuracy of the information contained in the Composite Offer Document and to provide a reasonable basis for our advice. We have no reason to suspect that any material facts have been omitted or withheld from the information contained or opinions expressed in the Composite Offer Document nor to doubt the truth, accuracy and completeness of the information and representations provided to us by the Directors and the Offeror. We have not, however, conducted an independent indepth investigation into the business and affairs of the Group, the Offeror, the Vendors and their respective associates nor have we carried out any independent verification of the information supplied.

We have not considered the tax implications on the Independent Shareholders of their acceptances or non-acceptances of the Offer since these are particular to their own individual circumstances. In particular, the Independent Shareholders who are resident outside Hong Kong or subject to overseas taxes or Hong Kong taxation on securities dealings should consider their own tax position with regard to the Offer and, if in any doubt, should consult their own professional advisers.

– 18 –

LETTER FROM PARTNERS CAPITAL

THE INDEPENDENT BOARD COMMITTEE

The Board currently consists of four executive Directors, namely Mr. Zhou Chao, Mr. Phang Yul Cher Yeow, Ms. Huang Song and Mr. Chu Kin Wang, Peleus; two non-executive Director, namely Mr. Fong Chi Hou, Mr. Wang Yao Dong; and three independent non-executive Directors, namely Mr. Liu Wing Ting, Stephen, Ms. Lam Lin Chu and Ms. Tse Po Chu.

Mr. Fong Chi Hou, Vendor B of the Second Sale and Purchase Agreement, having conflict of interests in the Offer is not considered sufficiently independent to advise the Shareholders in respect of the Offer. Hence, the Independent Board Committee, comprising three independent non-executive Directors, namely Mr. Liu Wing Ting, Stephen, Ms. Lam Lin Chu and Ms. Tse Po Chu; and one nonexecutive director, namely Mr. Wang Yao Dong, has been formed to advise the Shareholders for consideration of and making recommendations in respect of the terms of the Offer.

We have been appointed by the Independent Board Committee to advise them in respect of the Offer and such appointment has been approved by the Independent Board Committee.

PRINCIPAL FACTORS AND REASONS CONSIDERED

In arriving at our opinion regarding the terms of the Offer, we have considered the following principal factors and reasons:

(i) Financial performance and position of the Company

The Company is an investment company listed on the main board of the Stock Exchange pursuant to chapter 21 of the Listing Rules.

A summary of the audited consolidated results of the Group for the three years ended 31 December 2005, the unaudited consolidated results of the Group for the six months ended 30 June 2006 and the audited consolidated financial statements of the Group for the two years ended 31 December 2005 are set out in the Appendix II to the Composite Offer Document. We analyse the consolidated results of the Group for each of the three years ended 31 December 2005 and for the six months ended 30 June 2006 as follows:

For the year ended 31 December 2003

The Group recorded a turnover of HK$4,000 (2002: HK$876,000) and a net loss of approximately HK$11.8 million (2002: HK$27.2 million). We note that the loss of approximately HK$11.8 million was mainly attributable to the impairment losses of approximately HK$8.8 million in relation to the unlisted equity investment in the PRC and the investments in certain unlisted convertible loan notes and a loss of approximately HK$1.0 million on disposal of listed investments on the Stock Exchange.

– 19 –

LETTER FROM PARTNERS CAPITAL

As at 31 December 2003, the cash balance of the Group amounted to approximately HK$3.1 million (2002: HK$114,000) which accounted for 94.6% of the total current assets of the Group. The Group had no borrowing and hence the gearing ratio (total noncurrent liabilities/total equity) of the Group was nil (2002: nil). Consolidated net asset value per Share was approximately HK$0.09.

For the year ended 31 December 2004

The Group recorded a turnover of HK$49,000 (2003: HK$4,000) and a net loss of approximately HK$7.1 million (2003: HK$11.8 million). We note that such loss was mainly attributable to the impairment losses of approximately HK$3.81 million in relation to a further provision made in respect of the unlisted equity investment in the PRC and the investment in unlisted company principally involved in the insurance brokerage business operated in Hong Kong which has ceased operation on or around December 2004 and administrative expenses of approximately HK$3.44 million.

As at 31 December 2004, the cash balance of the Group amounted to approximately HK$40,000 (2003: HK$3.1 million) which accounted for only 1.3% of the total current assets of the Group. The Group had HK$52,000 finance lease liabilities and hence the gearing ratio (total non-current liabilities/total equity) of the Group was approximately 0.5% (2003: nil). Consolidated net asset value per Share was approximately HK$0.14 (after adjusting for the effect of consolidating every five then existing ordinary Shares of HK$0.01 par value each into two new ordinary Shares of HK$0.025 par value each).

On 29 March 2004 and 4 August 2004, the Company raised net proceeds of approximately HK$3.41 million and net proceeds of approximately HK$2.5 million respectively by issuance of new Shares.

For the year ended 31 December 2005

The Group recorded a turnover of HK$177,000 (2004: HK$49,000) and a net loss of approximately HK$5.2 million (2004: HK$7.1 million). We note that such loss was mainly attributable to the impairment losses totaling HK$2.04 million in relation to a further provision made in respect of the unlisted equity investment in the PRC and administrative expenses of approximately HK$3.54 million.

As at 31 December 2005, the cash balance of the Group amounted to approximately HK$52,000 (2004: HK$40,000) which accounted for only 1.5% of the total current assets of the Company. The Group had HK$2.57 million bank borrowing and hence the gearing ratio (total non-current liabilities/total equity) of the Company was 24.5% (2004: 0.5%). Consolidated net asset value per Share was approximately HK$0.07 (2004: $0.14).

– 20 –

LETTER FROM PARTNERS CAPITAL

On 18 April 2005, the Company raised net proceeds of approximately HK$4.7 million by way of open offer (the “2005 Open Offer”). The net proceeds of approximately HK$4.7 million was intended to be used for investment purpose in accordance with the Company’s investment policy of investing in listed and unlisted companies in Hong Kong and the PRC to achieve medium and term capital appreciation. As confirmed by the Directors, the said proceeds had been fully utilized as at the Latest Practicable Date.

For the six month ended 30 June 2006

The Group recorded an unaudited turnover of approximately HK$11,000 (30 June 2005: HK$67,000) and an unaudited net loss of approximately HK$3.55 million (30 June 2005: HK$1.39 million). The turnover was derived from interest income from banks and dividend income from investing in listed shares in Hong Kong. We note that the drop in interest income, which has been part of turnover of the Group in the past, is mainly due to the decrease in cash level resulting from utilization of funds for acquiring an investment property and 30% equity interest in a company which in turn holds a taxi vehicle and operating license. We also note that the increase in unaudited net loss is mainly due to the increase in finance costs for the acquisition of an investment property in 2005 and a further provision of approximately HK$1.86 million for impairment made in respect of the unlisted equity investment in the PRC.

As at 30 June 2006, the unaudited cash balance of the Group amounted to approximately HK$144,000 (30 June 2005: HK$52,000) which accounted for only 8.37% of the total current assets of the Company. The Group had HK$2.5 million bank borrowing and hence the gearing ratio (total non-current liabilities/ total equity) of the Group was approximately 36.1% (30 June 2005: 24.5%). Consolidated net asset value per Share was approximately HK$0.04 (30 June 2005: $0.07).

As stated in the interim report of the Company for the six months ended 30 June 2006, the investment property acquired by the Group in 2005 is held for long term capital investment purpose. While the taxi and its operating license are held for investment purpose. In addition, we also note that the Directors are reviewing the disposition of an investment whose sole asset is a 21% equity interest in a sino-foreign joint venture in the PRC, which is principally engaged in the manufacturing and trading of building materials and the provision of related consultancy services.

– 21 –

LETTER FROM PARTNERS CAPITAL

Further analysis

Upon review of the latest position of the consolidated balance sheet of the Group, we note that the Group, via Summit Asset Holdings Limited, has acquired a residential property in Hong Kong at a consideration of HK$3,880,000 from an independent third party in September 2005 and the property is held for investment purpose. On 3 August 2005, the Group acquired 30% of the equity interest in Rise Profit Holdings Limited (“RPHL”). RPHL is a company incorporated in Hong Kong with limited liability and the other 70% equity interest is owned by an independent third party. On 15 August 2005, RPHL acquired a taxi vehicle and its licence to operate in Hong Kong at a consideration of HK$3,650,000 from an independent third party. The taxi vehicle and its operating license are held for investment purpose. Since September 2005, the Group has invested in certain listed shares in Hong Kong with a view of gaining good investment returns and yields for Shareholders.

During the financial periods under review, the Group had been loss making. Although the loss making results of the Group had been narrowing during the financial periods under review, the reduction in the net loss attributable to Shareholders was mainly due to the decrease in impairment loss recognized in respect of the unlisted equity investment in the PRC instead of any significant improvement in gross profit contribution. No dividend was ever declared to Shareholders during the financial periods under review.

During the financial periods under review, the turnover of the Group had been minimal and the net cashflow generated from operating activities of the Group had been negative on a consecutive basis. On 23 June 2006, the Company raised net proceeds of approximately HK$4.8 million by way of open offer of issuing 80,000,000 Shares at a price of HK$0.07 per Share (the “2006 Open Offer”). The net proceeds of approximately HK$4.8 million shall be used as to (i) approximately HK$2.3 million for future investment purpose in accordance with the Company’s investment policy of investing in listed and unlisted companies in Hong Kong and the PRC and (ii) approximately HK$2.5 million for the Company’s working capital. As confirmed by the Directors, approximately HK$1 million out of the said proceeds had been utilized as at the Latest Practicable Date.

As far as the financial position is concerned, the net assets of the Group and the net asset value per Share had been on a downward trend from approximately HK$12.3 million (representing approximately HK$0.21 per Share) as at 31 December 2003 to approximately HK$10.5 million (representing approximately HK$0.07 per Share) as at 31 December 2005.

Based on the above analysis, we note that there is a lack of a profitable financial track record of the Group and we consider that there is an uncertainty as to whether the Group’s financial performance could turnaround. In addition, the net asset value per Share had been on a downward trend and we consider that the financial position of the Group will be subject to the fluctuation in market value of, and the exact composition of, the underlying investment portfolio of the Group.

– 22 –

LETTER FROM PARTNERS CAPITAL

(ii) Share price performance and trading liquidity

The Offer Price of HK$0.0695 for each Share is the same as the price payable by the Offeror for each Sale Share under the Sale and Purchase Agreements. The Offer Price represents:

(a) a discount of approximately 6.08% to the closing price of HK$0.074 per Share as quoted on the Stock Exchange on 24 October 2006, being the last trading day prior to the suspension of trading in the Shares (the “Last Trading Day”);
(b) a premium of approximately 11.38% over the average closing price of HK$0.0624 per Share as quoted on the Stock Exchange for the 10 trading days up to and including the Last Trading Day;
(c) a premium of approximately 11.38% over the closing price of HK$0.0624 per Share as quoted on the Stock Exchange for the 30 consecutive trading days up to and including the Last Trading Day;
(d) a premium of approximately 75.75% over the unaudited consolidated net asset value per Share of approximately HK$0.04 as at 30 June 2006 as set out in the interim report of the Company for the six months ended 30 June 2006;
(e) a premium of approximately 57.95% over the unaudited consolidated net asset value per Share of approximately HK$0.044 as at 31 October 2006 as announced by the Company; and
(f) a discount of approximately 51.06% to the closing price of HK$0.142 per Share as quoted on the Stock Exchange on the Latest Practicable Date.

– 23 –

LETTER FROM PARTNERS CAPITAL

Share price performance

For the purpose of further comparing the Offer Price with the market price of the Shares, we plot the closing price level of the Shares traded on the Stock Exchange from 1 October 2005 to 24 October 2006 (being the Last Trading Day) and further up to the Latest Practicable Date (the “Review Period”) as follows:

==> picture [296 x 184] intentionally omitted <==

Source: Infocast

During the Review Period, the lowest closing price was HK$0.046 per Share recorded on 17 July 2006 and 18 July 2006 and the highest closing price was HK$0.22 per Share recorded on 31 October 2006. The trading of the Shares was suspended on 25 October 2006 pending the publication of the announcement in relation to the Offer and the trading of the Shares resumed on 31 October 2006, being the Announcement Date. The Offer Price represents a premium of approximately 51.1% over the lowest closing price per Share and a discount of approximately 68.4% to the highest closing price per share during the Review Period. The Offer Price also represents a discount of approximately 51.06% to the closing price of the Shares of HK$0.142 on the Latest Practicable Date.

We also note that the closing price of the Shares had dropped from HK$0.083 per Share to HK$0.064 per Share on the date of resumption of the Shares after the Company announced the 2006 Open Offer on 2 May 2006. Although the price per Share had rebounded to HK$0.08 per Share on 4 May 2006, it eventually dropped to the lowest price of $0.047 per Share as at 24 May 2006. Since then and at most of the time, the Shares have been trading below the Offer Price (i.e. HK$0.0695) up to the Last Trading Day (i.e. 24 October 2006).

– 24 –

LETTER FROM PARTNERS CAPITAL

We also note that the closing price of the Shares rose substantially from HK$0.074 per Share on the Last Trading Day to HK$0.22 per Share on the Announcement Date. As at the Latest Practicable Date, the closing price of the Shares was HK$0.142. The surge in the price of the Shares might reflect the market response on the Offer but it is uncertain that the trading prices of the Shares can be sustainable at such level in the long term. Independent Shareholders should note that if the net proceeds of sale of the Shares in the open market would exceed the amount receivable under the Offer prior to the close of the Offer, Independent Shareholders who wish to realize all or part of their holdings of the Shares should sell such Shares in the open market.

• Liquidity

For the purpose of assessing the trading liquidity of the Shares, the following chart shows the daily trading volume of the Shares during the Review Period:

==> picture [297 x 184] intentionally omitted <==

Source: Infocast

– 25 –

LETTER FROM PARTNERS CAPITAL

							Percentage of	Percentage of
							average daily
				Number of	Percentage of		turnover over
				trading	average daily		total	number of
				days with no	turnover over		Shares held by
	Highest daily	Lowest daily	Average daily	turnover	total	number of	independent
Month	turnover	turnover	turnover	(in days)	Shares in issue		Shareholders
	(in number	(in number	(in number	(note)		(%)		(%)
	of Shares)	of Shares)	of Shares)
2005
October	3,000,000	0	425,000	16		0.177		0.397
November	5,400,000	0	375,455	16		0.156		0.351
December	380,000	0	24,000	18		0.010		0.022
2006
January	1,880,000	0	412,632	11		0.172		0.385
February	200,000	0	29,000	16		0.012		0.027
March	620,000	0	77,391	15		0.032		0.072
April_(Note 2)_	180,000	0	45,000	3		0.019		0.042
May	4,720,000	0	928,600	3		0.387		0.867
June	1,300,000	0	189,564	11		0.079		0.177
July	1,360,000	0	188,952	7		0.079		0.176
August	2,140,000	0	321,739	14		0.134		0.301
September	220,000	0	26,857	17		0.011		0.025
October	14,395,200	0	1,032,376	9		0.430		0.964
November	4,528,000	60,000	1,129,300	0		0.471		1.055
(From 1
November
to the
Latest
Practicable
Date)

Source: Infocast

Notes:

Based on the total number of Shares held by independent Shareholders of 107,066,800 Shares as at the Latest Practicable Date.
Trading of Shares was suspended during the period from 10 April 2006 to 28 April 2006.

– 26 –

LETTER FROM PARTNERS CAPITAL

During the Review Period, no trading of the Shares was recorded on 156 trading days on the Stock Exchange. As illustrated in the table above, the trading volume of the Shares during the Review Period has been very thin. During the period from 1 October 2005 to the Last Trading Day, the highest daily average trading volume amounted to 928,600 Shares recorded in May 2006, only representing approximately 0.58% to the total number of issued Shares and approximately 0.868% to the number of Shares held by the independent Shareholders respectively. However, during the period from the Announcement Date to the Latest Practicable Date, the trading volume of the Shares became relatively higher. Despite the relatively higher trading volume during the period from the Announcement Date to the Latest Practicable Date, we consider the liquidity of the Shares was thin during most of the time of the Review Period.

(iii) Net Assets

We consider that it is common to value an investment company principally engaged in acquisition of and disposal of investment in listed and unlisted securities by reference to its net asset value. For comparison purpose, we have identified 24 companies listed on the main board of the Stock Exchange pursuant to chapter 21 of the Listing Rules (the “Comparables”) and we have reviewed and tabulated below the premium/ (discounts) of the closing share prices of the Comparables as at the Last Trading Day over/ (to) their respective net asset values as reported as at 31 October 2006. To the best of our knowledge, the table below would represent an exhaustive list of all the investment companies (after inclusion of the Company) listed on the Stock Exchange.

							Premium/
							(discount) of the
							closing
						Latest published	share price on
		Closing				net assets/ (liability)	the Last Trading
		share price				value per share on	Day over/(to)
		as at the				or before the	the latest published
	Stock	Last Trading	Market	Price-earnings		Last Trading	net asset value
Company name	Code	Day	Capitalisation	multiple	Dividend vield	Day	per share
		(HK$)	(HK$ million)	(times)	(%)	(HK$)	(%)
China Assets (Holdings)	170	4.91	368.3	3.4	0.0	12.477_(note 1)_	(60.65)
Limited
China Financial Industry	1227	0.092	5.5	N/A	0.0	0.01	820.0
Investment Fund Limited
China Investment Fund	612	0.14	67.2	N/A	0.0	0.12	16.67
Company Limited
China Merchants China Direct	133	9.79	1,342.2	22.0	0.0	11.26	(13.06)
Investments Limited
China Treasure (Greater China)	810	0.40	49.4	N/A	0.0	0.5075	(21.18)
Investments Limited
Concepta Investments Limited	1140	0.25	25.0	3.2	0.0	0.57	(56.14)
Earnest Investments Holdings	339	0.102	8.3	N/A	0.0	0.3883	(73.73)
Limited
Everest International Investments	204	0.048	20.2	N/A	0.0	0.05	(4.00)
Limited
Garron International Limited	1226	0.275	7.7	6.5	0.0	0.514	(46.50)
Golden 21 Investment Holdings	2312	1.05	110.7	N/A	0.0	0.34	208.82
Limited
Grand Investment International	1160	0.93	67.0	15.3	21.5_(note 2)_	0.86	8.14
Limited
Harmony Asset Limited	428	0.84	122.7	5.3	3.6	1.28	(34.38)

– 27 –

LETTER FROM PARTNERS CAPITAL

							Premium/
							(discount) of the
							closing
						Latest published	share price on
		Closing				net asset	the Last Trading
		share price				value per share on	Day over/(to)
		as at the				or before the	the latest published
	Stock	Last Trading	Market	Price-earnings		Last Trading	net asset value
Company name	Code	Day	Capitalisation	multiple	Dividend vield	Day	per share
		(HK$)	(HK$ million)	(times)	(%)	(HK$)	(%)
Incutech Investments Holdings
Limited	356	1.06	76.3	N/A	0.0	0.97	8.83
New Capital International
Investment Limited	1062	0.207	129.0	N/A	0.0	0.259	(20.08)
Prime Investments Holdings Limited	721	N/A_(note 3)_	15.6	N/A	0.0	(0.08)	N/A
Prosperity Investment Holdings
Limited	310	0.14	60.5	N/A	0.0	0.61	(77.05)
Radford Capital Investmen
Limited	901	0.106	79.5	N/A	0.0	0.202	(47.52)
Shanghai International Shanghai
Growth Investment Limited	770	15.60_(note)_	138.8	11.0	60.0	23.088_(note)_	(32.43)
Sino Katalytics Investment
Corporation	2324	0.38	95.8	6.3	0.0	0.400	(5.00)
Sino Technology Investments
Company Limited	1217	0.036	10.8	N/A	0.0	0.0493	(26.98)
UBA Investments Limited	768	0.075	79.5	22.7	0.0	0.119	(36.97)
Unity Investments Holdings
Limited	913	0.053	59.5	N/A	0.0	0.19	(72.11)
Value Partners China Greenchip
Fund Limited	1186	26.50	813.6	8.2	0.0	28.4949	(70.00)
Yu Ming Investments Limited	666	0.37	625.7	4.3	5.4	0.52	(28.85)
			Maximum	22.7	60.0	Maximum	820.0
			Minimum	3.2	0.0	Minimum	(77.05)
			Mean	11.8	1.4	Mean	17.34
			Median	8.2	0.0	Median	(26.98)
The Company	905	0.074	17.8	N/A	0.0	0.046	60.87
Offer Price of
HK$0.0695 per
Share		0.0695	16.7	N/A	0.0	0.046	51.09

Source: www.hkex.com.hk

Notes:

the shares of Shanghai International Shanghai Growth Investment Limited are traded in US dollars and the net asset value per share of China Assets (Holdings) Limited and Shanghai International Shanghai Growth Investment Limited were reported in US dollars. For the purpose of comparison, US dollar is converted into Hong Kong dollar at a rate of 1 US dollar: HK$7.8.
Grand Investment International Limited declared a dividend by way of bonus issue of HK$0.20 per share for every five existing shares hold.
The trading of the shares of Prime Investments Holdings Limited has been suspended since 14 February 2005. The closing price per share of Prime Investments Holdings Limited immediately before its suspension was HK$0.325.

– 28 –

LETTER FROM PARTNERS CAPITAL

The premium/(discounts) of the closing share price on the Last Trading Day over/(to) the net asset value per share of the Comparables range from a premium of approximately 820.0% to a discount of 77.05%. Upon comparison, we note that the premium of the Offer Price over the net asset value per Share as at 30 September 2006 (being the latest published net asset value per Share prior to the Last Trading Day) of approximately 51.09% falls within the range of the Comparables and lies well above the mean and median of the Comparables (both of which are at a discount level).

As advised by the Directors, Apex is restricted from buying or selling commodities, commodity contracts or precious metals, except that it may purchase and sell futures contracts on stock indices and securities which are secured by commodities or precious metals. In addition, Apex may not engage in transactions in options and futures except for hedging purposes. In general, to the best knowledge of us and the Directors, all the Comparables have similar restrictions on the type of investments can be made.

Based on the above and from the perspective of assessment of the Offer Price with respect to the net asset value with reference to the Comparables, we consider that the Offer Price is fair and reasonable so far as the Shareholders are concerned.

(iv) Price-earnings multiple

Price-earnings multiple is one of the most commonly used benchmarks, taking into account the nature of business, for valuing a company. 11 companies out of the Comparables recorded profits for their respective latest financial year. The historical price-earnings multiples of these 11 Comparables ranged from 3.2 times to 22.7 times. However, the Group has been loss making for the three years ended 31 December 2005 and the six months ended 30 June 2006. Accordingly, it would not be feasible and meaningful to assess the Offer Price using the priceearnings multiple approach.

(v) Dividend vield

We note that only four companies out of the Comparables paid out dividends for their respective latest financial year. The dividend yields of these four Comparables range from 3.6% to 60%. However, the Group has not paid out any dividend for the year ended 31 December 2005. Accordingly, it would not be meaningful to assess the Offer Price using the dividend yield approach.

– 29 –

LETTER FROM PARTNERS CAPITAL

(vi) Precedent case of general offer in respect of investment company listed on the main board of Stock Exchange pursuant to Chapter 21 of the Listing Rules.

For illustration purposes, we have identified one precedent case of general offer in respect of investment company listed on the main board of Stock Exchange pursuant to Chapter 21 of the Listing Rules during the past two years, details of such precedent case are set out below. To the best of our knowledge, the table below would represent an exhaustive list of all the cases of general offer in respect of an investment company listed on the main board of Stock Exchange pursuant to Chapter 21 of the Listing Rules during the past two years.

							Premium/
							(discount) of the
							closing share
							price on the last
					Premium/		trading day over/
				Closing share	(discount) of		(to) the then
				price as at the	the offer price	Latest published	latest published
				last trading day	over/(to) the	net assets value	net asset value
				before the date of	closing share	per share on or	per share on or
				the relevant	price on the	before the last	before the last
Date	Company name	Stock Code	Offer price	announcement	last trading day	trading day	trading day
				(HK$)	(%)	(HK$)	(%)
August 2005	China	612	0.1625	0.149	9.06	0.142	14.44
	Investment			(i.e. 25
	Fund Company			July 2005)
	Limited
October 2006	The Company	905	0.0695	0.074	(6.08)	0.046	51.09

Independent Shareholders should note that the above precedent case was more than one year ago where the composition of investment portfolios of each of China Investment Fund Company Limited and the Company, overall market sentiment, investors’ perception towards investment companies and the conditions of the economy in Hong Kong and the PRC may not be directly comparable to the existing state when the Offer was made. Accordingly, we consider that it is not possible to draw any decisive conclusion solely based on the information above and Independent Shareholders should exercise caution in interpreting the information set out in the above table.

(vii) Intention of the Offeror regarding the future prospects of the Group

As set out in the Letter from Yu Ming, it is the intention of the Offeror that the existing principal activities of the Company in investments will remain unchanged. The Offeror has no objection to the Company continuing to carry out its investment activities during the Offer period. The Offeror intends to continue to engage Hua Yu as the investment manager of the Company.

As further set out in the Letter from Yu Ming, the Offeror reserves the right to appoint new directors in the Company after the Composite Offer Document is posted. As at the Latest Practicable Date, the Offeror has not identified any director for nomination. Further announcements will be made if the Offeror nominates any new Director(s).

– 30 –

LETTER FROM PARTNERS CAPITAL

Information of the Offeror and biography of Mr. Mung Kin Keung (“Mr. Mung”) are set out in the Letter from Yu Ming of the Composite Offer Document. We note that, although Mr. Mung does not hold any directorship in company listed on the main board of the Stock Exchange, Mr. Mung is equipped with extensive experience in various fields including airlines and catering businesses in Asia and has investments in residential properties in Hong Kong. Given that there has not been any nomination to sthe composition of the Board and change in appointment of the investment manager of the Company , we consider that there should not be any material changes on the business operations and the listing status of the Company immediately following the close of the Offer.

RECOMMENDATION

Having considered the principal factors set out above, in particular, the following:

(i) given the lack of a profitable financial track record of the Group, there is an uncertainty as to whether the Group’s financial performance could turnaround, which should be subject to the fluctuation in the market value of, and the exact composition of, the underlying investment portfolio of the Group;
(ii) it is justifiable for the Offeror, after taking into account the consecutive losses of the Group, to negotiate and bargain for a lower consideration for the acquisition of the Sale Shares which resulted in a mild discount of the Offer Price when compared to the market price of the Shares prior to the Announcement Date (i.e. the Offer Price represents a discount of approximately 6.08% to the closing price of HK$0.074 per Share as quoted on the Stock Exchange on the Last Trading Day;
(iii) given the Offer Price represents a premium of 11.38% over the average closing price for the 10 trading days and 30 trading days up to and including the Last Trading Day respectively and on 186 trading days out of 266 trading days under the Review Periods, the Share were traded below the Offer Price;
(iv) given the premium of the Offer Price over the latest published unaudited net asset value prior to the Last Trading Day of approximately 57.95% falls within the range of the Comparables and lies above the mean and median of the Comparables; and
(v) it was highly difficult for the independent Shareholders to trade the Shares as the Shares were very thinly traded on the Stock Exchange during the Review Period (within which no trading of the Shares was recorded on a total of 156 trading days out of a total of 266 trading days),

we consider that the Offer is fair and reasonable so far as the Shareholders are concerned, and accordingly, we recommend the Independent Board Committee to recommend the Shareholders to accept the Offer.

– 31 –

LETTER FROM PARTNERS CAPITAL

However, Independent Shareholders should note that the Shares had been trading above the Offer Price after the Announcement Date and are reminded that they should carefully and closely monitor the market price of the Shares during the Offer period and consider selling their Shares in the open market during the Offer period, rather than accepting the Offer, if the net proceeds from the sales of such Shares in the open market would exceed the net amount receivable under the Offer.

For those Independent Shareholders who wish to retain part or all of their shareholding in the Company should note that the Group’s financial performance had been loss making over the three years ended 31 December 2005. There is still uncertainty as to whether future prospects of the Group will be improved after the close of the Offer. Accordingly, those Independent Shareholders should carefully consider the future intentions of the Offeror regarding the Group after the close of the Offer, details of which are set out in the Letter from Yu Ming.

Independent Shareholders should also note the possibility that the consistently thin trading volume of the Shares prior to the Announcement Date (as recorded during the Review Period) may render the Independent Shareholders difficult to dispose of their Shares in the market after the close of the Offer without exerting downward pressure on the price of the Shares. We note that the trading volume of the Shares surge after the Announcement Date but it is uncertain that such high level of trading volume is sustainable in the long term. Independent Shareholders who believe that they will be unable to sell the Shares in the market at a price higher than the Offer Price because of their size of the shareholding may consider the Offer as an alternative exit of their investments.

In any case, Shareholders should read carefully the procedures for accepting the Offer as detailed in the Composite Offer Document and are strongly advised that the decision to realize or to hold their investment in the Shares is subject to individual circumstances and investment objectives.

Yours faithfully, For and on behalf of PARTNERS CAPITAL INTERNATIONAL LIMITED Alan Fung Harry Yu Managing Director Executive Director

– 32 –

FURTHER TERMS OF THE OFFER

APPENDIX I

FURTHER PROCEDURES FOR ACCEPTANCE OF THE OFFER

a) If the Title Documents in respect of your Shares is/are in your name, and you wish to accept the Offer whether in full or in respect of part of your holding(s) of your Shares, you must send the duly completed form of acceptance and transfer together with the Title Documents to the Registrar.
b) If the Title Documents in respect of your Shares is/are in the name of a nominee company or some name other than your own, and you wish to accept the Offer whether in full or in respect of part of your holding(s) of your Shares, you must either:
i. instruct the nominee company, or other nominee, with instructions authorising it to accept the Offer on your behalf and requesting it to deliver the duly completed form of acceptance and transfer together with the Title Documents to the Registrar; or
ii. arrange for the Shares to be registered in your name through the Registrar and send the duly completed form of acceptance and transfer together with the Title Documents to the Registrar; or
iii. if your Shares have been lodged with your licensed securities dealer/registered institution in securities/custodian bank through CCASS, instruct your licensed securities dealer/ registered institution in securities/custodian bank to authorise HKSCC Nominees Limited to accept the Offer on your behalf on or before the deadline set out by HKSCC Nominees Limited, in this case, on 11th December, 2006 which is one business day before the latest date on which acceptances of the Offer must be received by the Registrar.
iv. In order to meet the deadline set by HKSCC Nominees Limited, you should check with your licensed securities dealer/registered institution in securities/custodian bank for the timing on the processing of your instruction, and submit your instruction to your licensed securities dealer/registered institution in securities/custodian bank as required by them; or
v. if your Shares have been lodged with your Investor Participant’s Account maintained with CCASS, authorise your instruction via the CCASS Phone System or CCASS Internet System not later than one business day (in this case, on 11th December, 2006) before the latest date on which acceptance of the Offer must be received by the Registrar.
c) If the Title Documents in respect of your Shares is/are not readily available and/or is/are lost and you wish to accept the Offer in respect of your Shares, the accompanying form of acceptance and transfer should nevertheless be completed and delivered to the Registrar, together with a letter stating that you have lost one or more of your Title Documents or that it is/they are not readily available. If you find such document(s) or if it/they become(s) available, the Title Documents should be forwarded to the Registrar as soon as possible thereafter. If you have lost your Share certificate(s), you should also write to the Registrar for a letter of indemnity which, when completed in accordance with the instructions given, should be returned to the Registrar.

– 33 –

APPENDIX I

FURTHER TERMS OF THE OFFER

d) If you have lodged (a) transfer(s) of any of your Shares for registration in your name and have not yet received your Share certificate(s), and you wish to accept the Offer in respect of your Shares, you should nevertheless complete the accompanying form of acceptance and transfer and deliver it/them to the Registrar, together with the transfer receipt(s) duly signed by yourself. Such action will be deemed to be an irrevocable authority to Yu Ming and/or the Offeror or their respective agent(s) to collect from Apex or the Registrar on your behalf the relevant Share certificate(s) when issued and to deliver such certificate(s) when issued to the Registrar and to authorise and instruct the Registrar to hold such certificate(s), subject to the terms of the Offer, as if it was/they were delivered to the Registrar with the duly completed form of acceptance and transfer.
e) Acceptance of the Offer will be treated as valid only if the completed form of acceptance and transfer is received by the Registrar no later than 4:00 p.m. on 12th December, 2006 and is:
i. accompanied by the Title Documents and, if the Share certificate(s) is/are not in your name, such other documents (e.g. a duly stamped transfer of the relevant Share(s) in blank or in your favour executed by the registered holder) in order to establish your right to become the registered holder of the relevant Share(s); or
ii. from a registered Shareholder or his/her personal representatives (but only up to the amount of the registered holding and only to the extent that the acceptance relates to the Shares other than those taken into account in the sub-paragraphs i and iii of this paragraph (e)); or
iii. certified by the Registrar or the Stock Exchange.
f) If the form of acceptance and transfer is executed by a person other than the registered Shareholder, appropriate evidence of authority (for instance, grant of probate or certified copy of a power of attorney) to the satisfaction of the Registrar must be produced.
g) Seller’s ad valorem stamp duty for transfer of Shares registered on the Registrar arising in connection with acceptance of the Offer will be payable by each Accepting Shareholder at the rate of HK$1 for every HK$1,000 (or part thereof) of the greater of (i) the consideration payable by the Offeror in respect of the relevant acceptance; and (ii) the value of the Shares, and will be deducted from the amount payable to the Accepting Shareholders. The Offeror will arrange payment of the seller’s ad valorem stamp duty on behalf of the Accepting Shareholders and will pay the buyer’s ad valorem stamp duty in respect of Shares accepted under the Offer.
h) No acknowledgment of receipt of any form of acceptance and transfer, and the Title Documents will be given.
i) The address of the Registrar (Secretaries Limited) is at 26th Floor, Tesbury Centre, 28 Queen’s Road East, Wan Chai, Hong Kong.

– 34 –

FURTHER TERMS OF THE OFFER

APPENDIX I

ACCEPTANCE PERIOD, REVISIONS AND EXTENSIONS

The Offer Price and all other terms mentioned in this composite offer document and the accompanying form of acceptance and transfer are final and are not subject to revision by the Offeror.

The closing date of the Offer, being 12th December, 2006, is final and is not subject to revision by the Offeror. The Offer will expire at 4:00 p.m. on 12th December, 2006.

RIGHT OF WITHDRAWAL

As the Offer is unconditional as to the acceptances, the Accepting Shareholders are not entitled to withdraw his acceptance once they deliver the duly completed form of acceptance and transfer together with the Title Documents to the Registrar.

If the Offeror is unable to comply with the requirements set out in the paragraph headed “ANNOUNCEMENTS” in this Appendix, the Executive may require that the Shareholders who have tendered acceptances to the Registrar be granted a right of withdrawal on terms that are acceptable to the Executive.

ANNOUNCEMENTS

The Offeror must publish an announcement on the Stock Exchange’s website by 7:00 p.m. on 12th December, 2006, being the closing date of the Offer, stating the acceptance results of the Offer. Such announcement must be published as a paid announcement in at least one leading English language newspaper and one leading Chinese language newspaper, which are published daily and circulated generally in Hong Kong on 13th December, 2006.

The announcement must state the following:

a) the total number of Shares and rights over Shares for which acceptances of the Offer have been received;
b) the total number of Shares and rights over Shares held, controlled or directed by the Offeror or persons acting in concert with it before the offer period; and
c) the total number of Shares and rights over Shares acquired or agreed to be acquired during the offer period by the Offeror or any persons acting in concert with it.

The announcement must specify the percentages of the issued share capital of Apex and the percentages of voting rights of Apex represented by these numbers of Shares.

In computing the total number of Shares represented by acceptances, only valid acceptances in complete and good order and which have been received by the Registrar no later than 4:00 p.m. on 12th December, 2006, being the latest time and date for acceptance of the Offer, shall be included.

– 35 –

FURTHER TERMS OF THE OFFER

APPENDIX I

GENERAL

All communications, notices, form of acceptance and transfer, certificates, transfer receipts and other documents of title or of indemnity or of any other nature to be delivered by or sent to or from the Shareholders will be delivered by or sent to or from them, or their designated agents, at their own risk, and neither of the Offeror nor Yu Ming accepts any liability for any loss or any other liabilities whatsoever which may arise as a result.

Acceptance of the Offer by any person or persons will be deemed to constitute a warranty by such person or persons to the Offeror that the Shares tendered under the Offer are sold by such person or persons free from all liens, charges, claims, equities, encumbrances, rights of pre-emption and any other third party rights of any nature and together with all rights attaching to them, including the rights to receive dividends if any, declared, made or paid by Apex on the Announcement Date.

Acceptance of the Offer by any nominee will be deemed to constitute a warranty by such nominee to the Offeror that the number of Shares in respect of which it is indicated in the form of acceptance the aggregate number of Shares held by such nominee for such beneficial owners who accept the Offer.

The provisions set out in the form of acceptance and transfer form part of the terms of the Offer.

The accidental omission to despatch this composite offer document and/or the accompanying form of acceptance and transfer or either of them to any person to whom the Offer is made shall not invalidate the Offer in any way.

The Offer and all acceptances will be governed by and construed in accordance with the laws of Hong Kong.

Due execution of a form of acceptance and transfer will constitute an authority to the Offeror or its agents to complete and execute on behalf of the person accepting the Offer, and to do any other act that may be necessary or expedient for the purpose of vesting in the Offeror, or such other person as it may direct.

The laws of the relevant jurisdictions may affect the making of the Offer to certain persons not residing in Hong Kong. Overseas Shareholders should inform themselves about and observe any applicable legal requirements. It is the responsibility of any person outside Hong Kong wishing to accept the Offer to satisfy himself as to the full observance of the laws of the relevant territory in connection therewith, including the obtaining of any governmental or other consent which may be required or the compliance with other necessary formalities and payment of any transfer or other taxes due in respect of such jurisdiction.

The Offer is made in accordance with the Takeovers Code.

The English text of this composite offer document and of the accompanying form of acceptance and transfer shall prevail over the Chinese text.

– 36 –

FINANCIAL INFORMATION OF APEX

APPENDIX II

THREE-YEAR FINANCIAL SUMMARY

Set out below is a summary of the consolidated profit and loss accounts of Apex for each of the 3 years ended 31st December, 2005 which is extracted from the audited financial statements of Apex for the relevant financial years (the auditors’ reports in respect of which contain no qualification). Grant Thornton is the auditor of Apex for the year ended 31st December, 2005, 31st December, 2004 and 31st December, 2003.

There has not been any material change to the accounting policy of Apex that would make Apex’s financial information for the 3 years ended 31st December, 2005 not comparable. However, as of 1st January, 2005, the Apex Group has adopted the new or revised standards and interpretations of Hong Kong Financial Reporting Standards (“HKFRS”) issued by the Hong Kong Institute of Certified Public Accountants (“HKICPA”). The adoption of the new or revised standards and interpretations of HKFRS (“new HKFRS”) did not result in any material changes to the Apex’s financial statements for the year ended 31st December, 2004, further details of which are set out in note 3 to the Apex’s financial statements for the year ended 31st December, 2005 set out in this appendix for further information. The Directors confirm that the adoption of the new HKFRS did not result in any material changes to the financial information for the year ended 31st December, 2003 which was prepared under the then accounting standards issued by the HKICPA. The financial information for the 3 years ended 31st December 2005 presented below is comparable despite the adoption of the new HKFRS.

– 37 –

FINANCIAL INFORMATION OF APEX

APPENDIX II

Consolidated Income Statement

For the year ended 31st December 2005

Notes Revenue 6 Other income Administrative expenses Other operating expenses Impairment loss recognised in respect of available-for-sale financial assets/investments in securities 7 Loss on disposal of listed investment Loss from operations 8 Finance costs 9 Loss before income tax Income tax expense 11 Loss for the year attributable to equity holders of the Company 12 Loss per share for loss attributable to the equity holders of the Company during the year 13 Basic Diluted	2005 HK$’000 177 295 (3,538) (114) (2,043) — (5,223) (25) (5,248) — (5,248) (HK$0.04) N/A	2004 HK$’000 49 102 (3,443) — (3,808) — (7,100) (7) (7,107) — (7,107) (HK$0.10) N/A	2003 HK$’000 4 280 (2,269) — (8,800) (1,014) (11,799) (61) (11,860) 52 (11,808) (HK$0.21) N/A

Apex and its subsidiaries did not record any extraordinary/exceptional items and minority interests for each of the 3 years ended 31st December, 2005.

Apex did not declare any dividend for each of the 3 years ended 31st December, 2005.

The notes to the above consolidated income statement are only applicable for the 2 years ended 31st December, 2005.

– 38 –

FINANCIAL INFORMATION OF APEX

APPENDIX II

AUDITED ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER, 2005

Set out below are the audited consolidated balance sheet and balance sheet of Apex as at 31st December, 2004 and 31st December, 2005 and consolidated statement of changes in equity and consolidated cash flow statement of Apex for the 2 years ended 31st December, 2005 together with the relevant notes as extracted from the annual report of Apex for the year ended 31st December, 2005 (the auditors’ reports in respect of which contain no qualification).

Consolidated Balance Sheet

As at 31st December 2005

Notes Assets and Liabilities Non-current assets Property, plant and equipment 14(a) Investment property 15 Available-for-sale financial assets 17 Investments in securities 17 Current assets Prepayment, deposits paid and other receivables Pledged deposit Cash at banks Financial assets at fair value through profit or loss 18 Total assets Current liabilities Other payables Borrowings 19 Amounts due to directors 20 Net current assets Total assets less current liabilities Non-current liabilities Borrowings 19 Net assets EQUITY Share capital 21 Reserves 23 Total equity Net asset value per share 25	2005 HK$’000 219 3,860 6,874 — 10,953 209 — 52 3,096 3,357 14,310 640 121 500 1,261 2,096 13,049 2,565 10,484 4,000 6,484 10,484 HK$0.07	2004 HK$’000 227 — — 9,464
		9,691 1,956 1,000 40 —
		2,996
		12,687
		1,326 14 205
		1,545
		1,451
		11,142
		52
		11,090
		2,000 9,090
		11,090

		HK$0.14

– 39 –

FINANCIAL INFORMATION OF APEX

APPENDIX II

Balance Sheet

As at 31st December, 2005 Notes Assets and Liabilities Non-current assets Property, plant and equipment 14(b) Interests in subsidiaries 16 Investments in securities 17 Current assets Prepayment, deposits paid and other receivables Cash at banks Financial assets at fair value through profit or loss 18 Total assets Current liabilities Other payables Borrowings 19 Amounts due to directors 20 Net current liabilities Total assets less current liabilities Non-current liabilities Borrowings 19 Net assets EQUITY Share capital 21 Reserves 24 Total equity	2005 HK$’000 219 11,698 — 11,917 201 34 496 731 12,648 560 — 500 1,060 (329) 11,588 — 11,588 4,000 7,588 11,588	2004 HK$’000 227 11,115 47 11,389 1,206 38 — 1,244 12,633 1,245 14 205 1,464 (220) 11,169 52 11,117 2,000 9,117 11,117

– 40 –

FINANCIAL INFORMATION OF APEX

APPENDIX II

Consolidated Statement of Changes in Equity

For the year ended 31st December, 2005

At 1 January, 2004
Unrealised loss arising on revaluation
of investments not recognised
in the consolidated income
statement — net expense recognised
directly in equity
Loss for the year
Total recognised expenses for the year
Shares issued at premium
(note 21(a) & (b))
Share issue expenses
At 31 December, 2004 and
1 January, 2005
Transfer to income statement on
disposal of available-for-sale
financial assets — net expense
recognised directly in equity
Loss for the year
Total recognised expenses for the year
Shares issued at premium_(note 21(d))_
Shares issue expenses
At 31 December, 2005

Equity attributable to equity holders of the Company
Investment
Share
Share
revaluation
Accumulated
capital
premium
reserve
losses
Total equity
HK$’000
HK$’000
HK$’000
HK$’000
HK$’000
1,440
101,127
53
(90,276)
12,344
—
—
(6)
—
(6)
—
—
—
(7,107)
(7,107)
—
—
(6)
(7,107)
(7,113)
560
5,731
—
—
6,291
—
(432)
—
—
(432)
2,000
106,426
47
(97,383)
11,090
—
—
(47)
—
(47)
—
—
—
(5,248)
(5,248)
—
—
(47)
(5,248)
(5,295)
2,000
3,200
—
—
5,200
—
(511)
—
—
(511)
4,000
109,115
—
(102,631)
10,484

– 41 –

FINANCIAL INFORMATION OF APEX

APPENDIX II

Consolidated Cash Flow Statement

For the year ended 31st December, 2005

Notes Cash flow from operating activities Loss before income tax Adjustments for: Depreciation Finance costs Loss on disposal of property, plant and equipment Impairment loss recognised in respect of available-for-sale financial assets/investments in securities Operating loss before working capital changes Increase in financial assets at fair value through profit or loss Decrease/(Increase) in prepayment, deposits paid and other receivables (Decrease)/Increase in other payables Increase/(Decrease) in amounts due to directors Cash used in operations Interest paid Net cash used in operating activities Cash flow from investing activities Acquisition of a subsidiary 29 Purchases of investments in available-for-sale financial assets/investments in securities Proceeds from sale of available-for-sale financial assets Purchases of property, plant and equipment Proceeds from disposal of property, plant and equipment Net cash generated from/(used in) investing activities Cash flow from financing activities Net proceeds from issue of shares Capital element of finance lease payments Interest element of finance lease payments Decrease/(Increase) in pledged deposit Net cash from financing activities Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at 1 January, Cash and cash equivalents at 31 December,	2005 HK$’000 (5,248) 234 25 62 2,043 (2,884) (3,096) 1,977 (2,093) 295 (5,801) (25) (5,826) 3 — 500 (1,258) 970 215 4,689 (66) — 1,000 5,623 12 40 52	2004 HK$’000 (7,107) 35 7 10 3,808 (3,247) — (1,780) 1,004 (125) (4,148) (2) (4,150) — (3,564) — (209) 12 (3,761) 5,859 (9) (5) (1,000) 4,845 (3,066) 3,106 40

– 42 –

FINANCIAL INFORMATION OF APEX

APPENDIX II

Notes to the Financial Statements

For the year ended 31st December, 2005

1. NATURE OF OPERATIONS

The principal activity of Haywood Investments Limited (the “Company”) is to act as an investment holding company. The principal activities of the Company’s subsidiaries are set out in note 16 to the financial statements. The Group principally invests in listed and unlisted companies in Hong Kong and in other parts of the People’s Republic of China, excluding Hong Kong (the “PRC”) and investment property in Hong Kong.

The investment and acquisition of Summit Asset Holdings Limited (“Summit Asset”) described in note 29 are in line with the Group’s strategy to strengthen the investment portfolio of the Group.

2. GENERAL INFORMATION

The financial statements set out on pages 38 to 42 have been prepared in accordance with Hong Kong Financial Reporting Standards (“HKFRS”) as issued by the Hong Kong Institute of Certified Public Accountants (“HKICPA”), the disclosure requirements of the Hong Kong Companies Ordinance and the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (“Listing Rules”).

The Company was incorporated in the Cayman Islands as an exempted company with limited liability under the Companies Law (Revised) of the Cayman Islands. The Company’s shares are listed on The Stock Exchange of Hong Kong Limited (the “Stock Exchange”). The address of the Company’s registered office is Ugland House, PO Box 309, George Town, Grand Cayman, Cayman Islands and, its principal place of business is Unit 2206, 22nd Floor, Office Tower, Convention Plaza, No. 1 Harbour Road, Hong Kong.

The financial statements for the year ended 31 December, 2005 were approved by the board of directors on 18 April, 2006.

– 43 –

FINANCIAL INFORMATION OF APEX

APPENDIX II

3. ADOPTION OF NEW/REVISED HKFRS

From 1 January, 2005, the Group has adopted the new/revised standards and interpretations of HKFRS, which are relevant to its operations. This includes the following new, revised and renamed standards:

HKAS 1	Presentation of Financial Statements
HKAS 7	Cash Flow Statements
HKAS 8	Accounting Policies, Changes in Accounting Estimates and Errors
HKAS 10	Events after the Balance Sheet Date
HKAS 12	Income Taxes
HKAS 14	Segment Reporting
HKAS 16	Property, Plant and Equipment
HKAS 17	Leases
HKAS 18	Revenue
HKAS 19	Employee Benefits
HKAS 21	The Effects of Changes in Foreign Exchange Rates
HKAS 24	Related Party Disclosures
HKAS 27	Consolidated and Separate Financial Statements
HKAS 32	Financial Instruments: Disclosure and Presentation
HKAS 33	Earnings per Share
HKAS 36	Impairment of Assets
HKAS 37	Provisions, Contingent Liabilities and Contingent Assets
HKAS 38	Intangible Assets
HKAS 39	Financial Instruments: Recognition and Measurement
HKAS 40	Investment Property
HKFRS 2	Share-based Payment
HKFRS 3	Business Combinations
HK(SIC) Int-12	Scope of HKAS-Int 12 Consolidation-Special Purpose Entities
HK(SIC) Int-15	Operating Leases-Incentives
HK(SIC) Int-21	Income Taxes-Recovery of Revalued Non-Depreciable Assets

All the standards have been applied retrospectively except where specific transitional provisions require a different treatment. Significant effects on current, prior or future periods arising from the first-time application of the standards listed above in respect to presentation, recognition and measurement of accounts are described in the following notes:

Adoption of HKAS 32 and HKAS 39

Prior to the adoption of HKAS 39, non-trading securities are measured at fair value. Changes in fair value are dealt with in investment revaluation reserve until the securities are sold or determined to be impaired, at which time the cumulative gain or loss previously recognised in investment revaluation reserve is included in the income statement for that period.

– 44 –

FINANCIAL INFORMATION OF APEX

APPENDIX II

3. ADOPTION OF NEW/REVISED HKFRS (Continued)

Adoption of HKAS 32 and HKAS 39 (Continued)

On the adoption of HKAS 39, the Group classified its investment into available-for sale and measured its financial assets at fair value.

In accordance with the transitional provisions of HKAS 39, it does not permit the recognition, derecognition and measurement of financial assets and liabilities in accordance with the standard on a retrospective basis. Accordingly, the reclassification is made on 1 January, 2005 and the comparative figures have not been restated.

The effect of changes in the accounting policies as a result of adopting HKAS 32 and 39 on the consolidated balance sheet is set out below. There was no effect on the income statement in the current or prior year:

At 1 January, 2005 (Decrease)/increase in assets Investments in securities Available-for-sale financial assets	HK$’000 (9,464) 9,464 —

Other standards adopted

The adoption of other HKASs did not result in significant alterations to the Group’s accounting policies. The specific transitional provisions contained in some of these standards were considered. The adoption of these other standards did not result in any changes to the amounts or disclosures in these financial statements.

New Standards or interpretations that have been issued but are not yet effective

The Group has not early adopted the following standards or interpretations that have been issued but are not yet effective. The adoption of such standards and interpretations will not result in substantial changes to the Group’s accounting policies.

– 45 –

FINANCIAL INFORMATION OF APEX

APPENDIX II

3. ADOPTION OF NEW/REVISED HKFRS (Continued)

New Standards or interpretations that have been issued but are not yet effective (Continued)

HKAS 1 (Amendment) HKAS 19 (Amendment)

HKAS 21 (Amendment)

HKAS 39 (Amendment) HKAS 39 (Amendment) HKAS 39 & HKFRS 4 (Amendment)

HKFRS 1& HKFRS 6 (Amendments)

HKFRS 6 HKFRS 7 HK(IFRIC)-Int 4 HK(IFRIC)-Int 5

HK(IFRIC)-Int 6 HK(IFRIC)-Int 7

Capital Disclosures[1]

Employee Benefits-Actuarial Gains and Losses, Group Plans and Disclosures[2]

The Effects of Changes in Foreign Exchange Rates-Net- Investment in a Foreign Operation[2]

Cash Flow Hedge Accounting of Forecast Intragroup Transactions[2] The Fair Value Option[2]

Financial Instruments: Recognition and Measurement and Insurance Contracts-Financial Guarantee Contracts[2]

First-time Adoption of Hong Kong Financial Reporting Standards and Exploration for and Evaluation of Mineral Resources[2] Exploration for and Evaluation of Mineral Resources[2] Financial Instruments-Disclosures[1] Determining whether an Arrangement contains a Lease[2] Rights to Interests Arising from Decommissioning, Restoration and Environmental Rehabilitation Funds[2]

Liabilities Arising from Participating in a Specific Market-Waste Electrical and Electronic Equipment[3]

Applying the Restatement Approach under HKAS 29 Financial Reporting in Hyperinflationary Economies[4]

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

2 Effective for annual periods beginning on or after 1 January, 2006.

3 Effective for annual periods beginning on or after 1 December, 2005.

4 Effective for annual periods beginning on or after 1 March, 2006.

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Basis of preparation

The significant accounting policies that have been used in the preparation of these financial statements are summarised below.

The financial statements have been prepared on the historical cost basis except for the revaluation of investment properties and certain financial assets and liabilities. The measurement bases are fully described in the accounting policies below.

It should be noted that accounting estimates and assumptions are used in preparation of the financial statements. Although these estimates are based on management’s best knowledge of current events and actions, actual results may ultimately differ from those estimates.

– 46 –

FINANCIAL INFORMATION OF APEX

APPENDIX II

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

(b) Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Company and its subsidiaries made up to 31 December, each year. All material intercompany transactions and balances within the Group are eliminated on consolidation.

(c) Subsidiaries

Subsidiaries are entities (including special purpose entities) over which the Company has the power to control the financial and operating policies. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Company controls another entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Company. They are de-consolidated from the date that control ceases.

Acquired subsidiaries are subject to application of the purchase method. This involves the revaluation at fair value of all identifiable assets and liabilities, including contingent liabilities of the subsidiary, at the acquisition date, regardless of whether or not they were recorded in the financial statements of the subsidiary prior to acquisition. On initial recognition, the assets and liabilities of the subsidiary are included in the consolidated balance sheet at their revalued amounts, which are also used as the bases for subsequent measurement in accordance with the Group’s accounting policies. Goodwill represents the excess of acquisition cost over the fair value of the Group’s share of the net identifiable assets of the acquired subsidiary at the date of acquisition. 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.

In the Company’s balance sheet, subsidiaries are carried at cost less any impairment loss. The results of the subsidiaries are accounted for by the Company on the basis of dividends received and receivable at the balance sheet date.

(d) Property, plant and equipment

(i) Depreciation

Depreciation of property, plant and equipment is calculated using the straight line method to allocate their cost over their estimated useful lives as follows:

Leasehold improvements	50%
Furniture, fixtures and equipment	20%
Motor vehicles	50%

Assets held under finance leases are depreciated over their estimated useful lives or where shorter the term of the lease using the same method as owned assets in the same category.

– 47 –

FINANCIAL INFORMATION OF APEX

APPENDIX II

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

(d) Property, plant and equipment (Continued)

(ii) Measurement bases

Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses. The cost of an asset comprises its purchase price and any directly attributable costs of bringing the assets to the working condition and location for its intended use. Subsequent expenditure relating to property, plant and equipment is added to the carrying amount of the assets if it can be demonstrated that such expenditure has resulted in an increase in the future economic benefits expected to be obtained from the use of the assets. When assets are sold or retired, any gain or loss resulting from their disposal, being the difference between the net disposal proceeds and the carrying amount of the assets, is included in the income statement.

(e) Investment property

On initial recognition, investment property is measured at cost, including any directly attributable expenditure. Subsequent to initial recognition, investment property is stated at fair value. Fair value is determined by directors or external professional valuers, with sufficient experience with respect to both the location and the nature of the investment property. The carrying amounts recognised in the balance sheet reflect the prevailing market conditions at the balance sheet date.

Any gain or loss resulting from either a change in the fair value or the sale of an investment property is immediately recognised in income statement.

(f) Leases

The economic ownership of a leased asset is transferred to the lessee if the lessee bears substantially all the risks and rewards related to the ownership of the leased asset. The related asset is recognised at the time of inception of the lease at the present value of the lease payments plus incidental payments (the “initial value”), if any, to be borne by the lessee. A corresponding amount is recognised as a finance lease liability, irrespective or whether some of these lease payments are payable up-front at the date of inception of the lease.

Subsequent accounting for assets held under finance lease agreement, ie depreciation methods and useful lives corresponds to those applied to comparable acquired assets. The corresponding finance lease liability is reduced by lease payments less finance charges, which are expensed to finance costs.

All other leases are treated as operating leases. Operating lease payments are recognised as an expense on a straight-line basis over the terms of the lease. Affiliated costs, such as maintenance and insurance, are expensed as incurred.

– 48 –

FINANCIAL INFORMATION OF APEX

APPENDIX II

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

(g) Financial assets

In previous year, the Group classified its investments in non-trading securities other than subsidiaries as investment in securities and were stated at fair value at the balance sheet date. Changes in the fair value of individual securities were credited or debited to the investment revaluation reserve until the security was sold, or was determined to be impaired. Upon disposal, the cumulative gain or loss representing the difference between the net sales proceeds and the carrying amount of the relevant security, together with any surplus/ deficit transferred from the investment revaluation reserve, was dealt with in the income statement. Where there is objective evidence that individual investments were impaired, the cumulative loss recorded in the revaluation reserve was taken to the income statement.

From 1 January, 2005 onwards, the Group classifies its financial assets into the following categories: loans and receivables, financial assets at fair value through profit or loss, available-for-sale financial assets and held-to-maturity investments. Financial assets are assigned to the different categories by management on initial recognition, depending on the purpose for which the financial assets were acquired. The designation of financial assets is re-evaluated at every reporting date at which a choice of classification or accounting treatment is available.

All financial assets are recognised on their trade date. All financial assets that are not classified as fair value through profit or loss are initially recognised at fair value, plus transaction costs.

Derecognition of financial assets occurs when the rights to receive cash flows from the investments expire or are transferred and substantially all of the risks and rewards of ownership have been transferred. An assessment for impairment is undertaken at least at each balance sheet date whether or not there is objective evidence that a financial asset or a group of financial assets is impaired.

Financial assets at fair value through profit or loss include financial assets that are either held for trading or are designated by the Group to be carried at fair value through profit or loss on initial recognition.

Subsequent to initial recognition, the financial assets included in this category are measured at fair value with changes in fair value recognised in the income statement. Financial assets originally designated as financial assets at fair value through profit or loss may not subsequently be re-classified.

Available-for-sale financial assets include non-derivative financial assets that are either designated to this category or do not qualify for inclusion in any of the other categories of financial assets. All financial assets within this category are subsequently measured at fair value, unless otherwise disclosed, with changes in value recognised in equity, net of any effects arising from income taxes.

– 49 –

FINANCIAL INFORMATION OF APEX

APPENDIX II

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

(g) Financial assets (Continued)

Upon disposal, the cumulative gain or loss previously recognised in equity is transferred to the income statement. When a decline in the fair value of an available-for-sale financial asset has been recognised directly in equity and there is objective evidence that the asset is impaired, the cumulative loss that had been recognised directly in equity is removed from equity and recognised in the income statement even though the financial asset has not been derecognised. Impairment losses previously recognised in the income statement on equity instruments will not reverse through income statement in subsequent periods. Impairment losses previously recognised in income statement on debt securities are subsequently reversed through income statement if an increase in the fair value of the investment can be objectively related to an event occurring after the recognition of the impairment loss.

For available-for-sale equity investments that do not have a quoted market price in an active market and whose fair value cannot be reliably measured, they are measured at cost less any identified impairment losses at each balance sheet date subsequent to initial recognition. An impairment loss is recognised in income statement when there is objective evidence that the asset is impaired. The amount of the impairment loss is measured as the difference between the carrying amount of the asset and the present value of the estimated future cash flows discounted at the current market rate of return for a similar financial asset. Such impairment loss will not reverse in subsequent periods.

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise when the Group provides money, goods or services directly to a debtor with no intention of trading the receivables. Loans and receivables are initially recognised at fair value and subsequently measured at amortised cost using the effective interest method, less any impairment losses. Any changes in their value are recognised in income statement.

Loans and receivables are provided against when objective evidence is received that the Group will not be able to collect all amounts due to it in accordance with the original terms of the receivables. The amount of the write-down is determined as the difference between the asset’s carrying amount and the present value of estimated future cash flows.

(h) Impairment of assets

Property, plant and equipment and interests in subsidiaries are subject to impairment testing.

For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). As a result, some assets are tested individually for impairment and some are tested at cash-generating unit level.

Individual assets or cash-generating units are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.

– 50 –

FINANCIAL INFORMATION OF APEX

APPENDIX II

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

(h) Impairment of assets (Continued)

An impairment loss is recognised as an expense immediately for the amount by which the asset’s or cashgenerating unit’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of fair value, reflecting market conditions less costs to sell, and value in use based on an internal discounted cash flow evaluation.

An impairment loss is reversed if there has been a change in the estimates used to determine the asset’s recoverable amount and only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.

(i) Income tax

Current income tax assets and/or liabilities comprise those obligations to, or claims from, fiscal authorities relating to the current or prior reporting period, that are unpaid at the balance sheet date. They are calculated according to the tax rates and tax laws applicable to the fiscal periods to which they relate, based on the taxable profit for the year. All changes to current tax assets or liabilities are recognised as a component of tax expense in the income statement.

Deferred income taxes are calculated using the liability method on temporary differences. This involves the comparison of the carrying amounts of assets and liabilities in the consolidated financial statements with their respective tax bases. In addition, tax losses available to be carried forward as well as other income tax credits to the Group are assessed for recognition as deferred tax assets.

Deferred tax liabilities are provided for in full. Deferred tax assets are recognised to the extent that it is probable that they will be able to be offset against future taxable income. Deferred tax assets and liabilities are calculated, without discounting, at tax rates that are expected to apply to their respective period of realisation, provided they are enacted or substantively enacted at the balance sheet date.

Most changes in deferred tax assets or liabilities are recognised as a component of tax expense in the income statement. Only changes in deferred tax assets or liabilities that relate to a change in value of assets or liabilities that is charged directly to equity are charged or credited directly to equity.

(j) Cash and cash equivalents

Cash and cash equivalents include cash at bank and in hand.

– 51 –

FINANCIAL INFORMATION OF APEX

APPENDIX II

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

(k) Share capital

Ordinary shares are classified as equity. Share capital is determined using the nominal value of shares that have been issued.

Any transaction costs associated with the issuing of shares are deducted from the share premium, net of any related income tax benefits to the extent they are incremental costs directly attributable to the equity transaction.

(l) Pension obligations and short term employee benefits

A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity. The Group has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods.

The contributions recognised in respect to defined contribution plans are expensed as they fall due. Liabilities and assets may be recognised if underpayment or prepayment has occurred and are included in current liabilities or current assets as they are normally of a short term nature.

Short-term employee benefits are recognised for the number of paid leave days (usually holiday entitlement) remaining at the balance sheet date. They are included in other payables at the undiscounted amount that the Group expects to pay as a result of the unused entitlement.

(m) Financial liabilities

The Group’s financial liabilities include bank borrowings, other payables, amounts due to directors and finance lease liabilities. They are included in balance sheet line items “Borrowings”, “Other payables” and “Amounts due to directors”.

Financial liabilities are recognised when the Group becomes a party to the contractual agreement of the instrument. All interest related charges are recognised as an expense in “finance cost” in the income statement.

Finance lease liabilities are measured at initial value less the capital element of lease repayments.

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 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.

– 52 –

FINANCIAL INFORMATION OF APEX

APPENDIX II

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

(m) Financial liabilities (Continued)

Other payables are recognised initially at their fair value and subsequently measured at amortised cost, using the effective interest rate method.

(n) Recognition of revenue

Interest income is accrued on a time basis by reference to the principal outstanding and the interest rates applicable.

Dividend income is recognised when the Group’s right as a shareholder to receive payment is established.

(o) Foreign currencies

The financial statements are presented in Hong Kong Dollars (HK$), which is also the functional currency of the Company.

In the separate financial statements of the consolidated entities, foreign currency transactions are translated into the functional currency of the individual entity 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 of monetary assets and liabilities denominated in foreign currencies at year-end exchange rates are recognised in the income statement under “other income” or “other operating expenses”, respectively.

Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing on the date when the fair value was determined and are reported as part of the fair value gain or loss. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.

In the consolidated financial statements, all separate financial statements of subsidiaries, originally presented in a currency different from the Group’s presentation currency, have been converted into Hong Kong dollars. Assets and liabilities have been translated into Hong Kong dollars at the closing rate at the balance sheet date. Income and expenses have been converted into Hong Kong Dollars at the average rates over the reporting period. Any differences arising from this procedure have been dealt with in the currency translation reserve in equity. Goodwill and fair value adjustments arising on the acquisition of a foreign entity have been treated as assets and liabilities of the foreign entity and translated into Hong Kong dollars at the closing rate.

Exchange differences arising from the translation of the net investment in foreign entities, and on borrowings and other currency instruments designated as hedges of such investments, are taken to shareholders’ equity. When a foreign operation is sold, such exchange differences are recognised in the income statement as part of the gain or loss on sale.

– 53 –

FINANCIAL INFORMATION OF APEX

APPENDIX II

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

(p) Segment reporting

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

Unallocated costs represent corporate expenses. Segment assets consist primarily of property, plant and equipment, receivables, investment properties, financial assets at fair value through profit and loss and available-for-sale investments, and mainly exclude cash at banks. Segment liabilities comprise operating liabilities and exclude items such as amount due to directors.

Capital expenditure comprises additions to property, plant and equipment, including additions resulting from acquisitions through purchases of subsidiaries.

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

(q) Critical accounting estimates and judgements

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 year are discussed below:

Investment properties

The investment property of the Group was stated at fair value in accordance with the accounting policy state in note 4(e). The fair value of the investment properties are determined by the directors as set out in note 15. Such valuations were based on certain assumptions, which are subject to uncertainty and might materially differ from the actual results.

In making the judgement, consideration has been given to assumptions that are mainly based on market conditions existing at the balance sheet dates and appropriate capitalisation rates. These estimates are regularly compared to actual market data and actual transactions entered into by the Group.

Impairment of available-for-sale financial assets

The Group follows the guidance of HKAS 39 when determining whether an investment in available-forsale financial assets is other-than-temporarily impaired. This determination requires significant judgement. In making this judgement, the Group evaluates, among other factors, the duration and extent to which the fair value of an investment is less than its cost, and the expected time span the Group will hold on to this investment.

– 54 –

FINANCIAL INFORMATION OF APEX

APPENDIX II

5. SEGMENT INFORMATION

The Group makes investments in Hong Kong and in other parts of the PRC. These geographical markets are the basis on which the Group reports its primary segment information.

Segment information about these geographical markets is presented below:

Revenue — turnover Results Segment results Unallocated corporate expenses Loss from operations Finance costs Loss before income tax Income tax expense Loss for the year Assets Segment assets Unallocated corporate assets Total assets Liabilities Segment liabilities Unallocated corporate liabilities Total liabilities Other information Capital expenditure Depreciation Impairment loss recognised in income statement	Hong Kong 2005 2004 HK$’000 HK$’000 177 49 (352) (3,575) 7,384 3,564 (3,326) (66) 1,258 284 234 35 — 3,064	PRC 2005 2004 HK$’000 HK$’000 — — (2,043) (744) 6,874 8,917 — — — — — — 2,043 744	Total 2005 2004 HK$’000 HK$’000 177 49 (2,395) (4,319) (2,828) (2,781) (5,223) (7,100) (25) (7) (5,248) (7,107) — — (5,248) (7,107) 14,258 12,481 52 206 14,310 12,687 (3,326) (66) (500) (1,531) (3,826) (1,597) 1,258 284 234 35 2,043 3,808

No business segment analysis is presented as less than 10% of the Group’s revenue and contribution to loss from operations is attributable to the investment property.

– 55 –

FINANCIAL INFORMATION OF APEX

APPENDIX II

6. REVENUE AND TURNOVER

Interest income Dividend income	2005 HK$’000 127 50 177	2004 HK$’000 49 —
		49

7. IMPAIRMENT LOSS RECOGNISED IN RESPECT OF AVAILABLE-FOR-SALE FINANCIAL ASSETS/ INVESTMENTS IN SECURITIES

Unlisted equity securities: — Tianjin Standard International Building Materials Industry Co., Ltd �� (“Tianjin Standard”)(note 17(b)(i)) — Koffman Asset Holdings Limited (“Koffman Asset”) (note 17(b)(iii))	2005 HK$’000 2,043 — 2,043	2004 HK$’000 744 3,064
		3,808

– 56 –

FINANCIAL INFORMATION OF APEX

APPENDIX II

8. LOSS FROM OPERATIONS

	2005	2004
	HK$’000	HK$’000
Loss from operations is arrived at after charging/(crediting):
Auditors’ remuneration
— current year	123	197
— overprovision in prior year	(76)	(12)
Depreciation
— owned assets	234	24
— leased assets	—	11
Investment management fee	369	203
Financial assets at fair value through profit or loss
— fair value loss	150	—
— fair value gain	(36)	—
Gain on disposal of financial assets at fair value
through profit or loss	(25)	—
Loss on disposal of property, plant and equipment	62	10
Operating lease charges on office premises	226	446
Retirement benefits scheme contributions	22	43
Staff costs (including directors’ remuneration
_(note 10(a))_but excluding retirement
benefits scheme contributions)	1,155	1,018
Write off of other payables	(240)	(102)

9. FINANCE COSTS

Finance charges on finance leases Interest charges on other loan	2005 HK$’000 25 — 25	2004 HK$’000 5 2
		7

– 57 –

FINANCIAL INFORMATION OF APEX

APPENDIX II

10. DIRECTORS’ AND EMPLOYEES’ REMUNERATION

(a) Remuneration of the directors for the year is as follows:

Retirement Salaries and benefits scheme Fees allowances contributions HK$’000 HK$’000 HK$’000 2005 Executive directors Mr. Tham Ming Yong_(note (i)) 50 — — Mr. Phang Yul Cher Yeow 312 — 8 Mr. Zhou Chao(note (ii)) 280 — — Ms. Huang Song(note (iii)) 60 — — Mr. Chu Kin Wang, Peleus (note (iv)) 113 7 4 Mr. Tai Ah Lam, Michael (note (v)) — — — Non-executive directors Mr. Wong Yao Dong(note (vi)) 10 — — Mr. Fong Chi Hou(note (vi)) — — — Independent non-executive directors Ms. Lam Lin Chu(note (vii)) 45 — — Mr. Liu Wing Ting, Stephen (note (iii)) 60 — — Ms. Tse Po Chu(note (iv)) 35 — — Mr. Wong Wing Hang, Henry (note (viii))_ 30 — — 995 7 12 (i) resigned on 7 July, 2005 (ii) appointed on 1 June, 2005 (iii) appointed on 7 July, 2005 (iv) appointed on 16 September, 2005 (v) resigned on 16 September, 2005 (vi) appointed on 1 November, 2005 (vii) appointed on 4 April, 2005 (viii) resigned on 31 March, 2005	Total HK$’000 50 320 280 60 124 — 10 — 45 60 35 30
	1,014

– 58 –

FINANCIAL INFORMATION OF APEX

APPENDIX II

10. DIRECTORS’ AND EMPLOYEES’ REMUNERATION (Continued)

(a) Remuneration of the directors for the year is as follows: (Continued)

2004 Executive directors Mr. Tham Ming Yong Mr. Phang Yul Cher Yeow Mr. Wong Fong Kim Mr. Tai Ah Lam, Michael Independent non-executive directors Mr. Chang Kin Man Dr. Wong Yun Kuen, Edward Mr. Wong Wing Hang, Henry Mr. Hsieh Dominick	Retirement Salaries and benefits scheme Fees allowances contributions HK$’000 HK$’000 HK$’000 36 58 3 — 182 5 — — — — — — 49 — — 90 — — 42 — — — — — 217 240 8	Total HK$’000 97 187 — — 49 90 42 —
		465

No directors waived or agreed to waive any emoluments in respect of the year (2004: Nil).

No emoluments were paid to the directors as an inducement to join or upon joining the Group or as compensation for loss of office during the year (2004: Nil).

(b) Five highest paid individuals

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

Salaries, allowances and benefits in kind Retirement benefits scheme contributions	2005 HK$’000 71 — 71	2004 HK$’000 344 10
		354

– 59 –

FINANCIAL INFORMATION OF APEX

APPENDIX II

10. DIRECTORS’ AND EMPLOYEES’ REMUNERATION (Continued)

(b) Five highest paid individuals (Continued)

The emoluments of all individuals were within the band ranging from Nil to HK$1,000,000 of the year (2004: Nil).

No emoluments were paid to the highest paid individual (2004: three) as an inducement to join or upon joining the Group or as compensation for loss of office during the year (2004: Nil).

11. INCOME TAX EXPENSE

No Hong Kong Profits Tax has been provided in the financial statements as the Group did not have any assessable profits during the year (2004: Nil).

Reconciliation between accounting loss and tax expense at applicable tax rates is as follows:

Loss before income tax Tax at applicable rate of 17.5% Tax effect of non-deductible expenses Tax losses not recognised as deferred tax asset Income tax expense	2005 HK$’000 (5,248) (918) 468 450 —	2004 HK$’000 (7,107) (1,244) 709 535 —

At 31 December, 2005, a deferred tax asset of approximately HK$2,686,000 (2004: HK$2,236,000) in respect of tax losses available to offset future profits was not recognised in the financial statements as it is not certain that the Group will generate future taxable profits to enable it to utilise such tax losses. This tax loss has no expiry date.

12. LOSS FOR THE YEAR ATTRIBUTABLE TO EQUITY HOLDERS OF THE COMPANY

Of the consolidated loss for the year of HK$5,248,000 (2004: HK$7,107,000), a loss of HK$4,171,000 (2004: HK$7,084,000) has been dealt with in the financial statements of the Company.

13. LOSS PER SHARE

The calculation of the basic loss per share is based on the consolidated loss for the year attributable to the equity holders of the Company of HK$5,248,000 (2004: HK$7,107,000) and on the weighted average number of 136,547,945 (2004: 70,809,180, restated) shares in issue during the year as adjusted for the share consolidation on the basis of every five ordinary shares of the Company of HK$0.01 each into two ordinary shares of HK$0.025 each (note 21(c)).

Diluted loss per share amounts have not been presented because there were no dilutive potential shares.

– 60 –

FINANCIAL INFORMATION OF APEX

APPENDIX II

14. PROPERTY, PLANT AND EQUIPMENT

(a) Group

Furniture, Leasehold fixtures and improvements equipment HK$’000 HK$’000 At 1 January, 2004 Cost — — Accumulated depreciation — — Net book amount — — Year ended 31 December, 2004 At 1 January, 2004 — — Additions 29 255 Disposals — (22) Depreciation (7) (28) At 31 December, 2004 22 205 At 31 December, 2004 Cost 29 231 Accumulated depreciation (7) (26) Net book amount 22 205 Year ended 31 December, 2005 At 1 January, 2005 22 205 Additions 321 97 Disposals (34) (262) Depreciation (107) (23) At 31 December, 2005 202 17 At 31 December, 2005 Cost 302 20 Accumulated depreciation (100) (3) Net book amount 202 17	Motor vehicles HK$’000 — — — — — — — — — — — — 840 (736) (104) — — — —	Total HK$’000 — — — — 284 (22) (35) 227 260 (33) 227 227 1,258 (1,032) (234) 219 322 (103) 219

– 61 –

FINANCIAL INFORMATION OF APEX

APPENDIX II

14. PROPERTY, PLANT AND EQUIPMENT (Continued)

(b) Company

Furniture,
Leasehold
fixtures and
improvements
equipment
HK$’000
HK$’000
At 1 January, 2004
Cost
—
—
Accumulated depreciation
—
—
Net book amount
—
—
Year ended 31 December, 2004
At 1 January, 2004
—
—
Additions
29
255
Disposals
—
(22)
Depreciation
(7)
(28)
At 31 December, 2004
22
205
At 31 December, 2004
Cost
29
231
Accumulated depreciation
(7)
(26)
Net book amount
22
205
Year ended 31 December, 2005
At 1 January, 2005
22
205
Additions
302
20
Disposals
(22)
(205)
Depreciation
(100)
(3)
At 31 December, 2005
202
17
At 31 December, 2005
Cost
302
20
Accumulated depreciation
(100)
(3)
Net book amount
202
17

Total
HK$’000
—
—
—
—
284
(22)
(35)
227
260
(33)
227
227
322
(227)
(103)
219
322
(103)
219

– 62 –

FINANCIAL INFORMATION OF APEX

APPENDIX II

14. PROPERTY, PLANT AND EQUIPMENT (Continued)

(c) At 31 December, 2004, the cost of property, plant and equipment included an amount of HK$80,000 in respect of assets held under finance leases and the related accumulated depreciation amounted to HK$11,000. The finance lease liabilities were fully repaid during the year.

15. INVESTMENT PROPERTY — GROUP

Carrying amount as at 1 January, Additions Carrying amount as at 31 December,	2005 HK$’000 — 3,860 3,860	2004 HK$’000 — —
		—

In the opinion of the directors, the property interests held under operating leases are classified as investment property due to the potential of earning rentals or for capital appreciation or both, rather than for (a) use in the production or supply of goods or services or for administrative purposes; or (b) sale in the ordinary course of business and are measured using the fair value model.

Investment property was revalued on 28 December, 2005 by an independent, professionally qualified valuer, Centraline Surveyors. The valuation (“professional valuation”) was based on current prices in an active market. At 31 December, 2005, investment property was stated at valuation estimated by the directors of the Company with reference to the professional valuation. Investment property is located in Hong Kong and held under a medium term lease.

The investment property has been pledged as security for certain bank borrowings as set out in note 19.

No outgoings was incurred since the acquisition of this investment property.

16. INTERESTS IN SUBSIDIARIES — COMPANY

Unlisted shares, at cost Amounts due from subsidiaries Less: Impairment loss	2005 HK$’000 10 53,774 (42,086) 11,698	2004 HK$’000 — 51,204 (40,089)
		11,115

The amounts due from subsidiaries are unsecured, interest free and have no fixed repayment terms. In the opinion of the directors, no part of the amount will be repayable within one year from the balance sheet date and the balances are therefore shown as non-current.

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FINANCIAL INFORMATION OF APEX

APPENDIX II

16. INTERESTS IN SUBSIDIARIES — COMPANY (Continued)

Particulars of subsidiaries at 31 December, 2005 are as follows:

	Place of	Particulars	Percentage of issued	Percentage of issued
	incorporation/	of issued	capital held		Principal
Name	operations	capital	by the Company		activities
			Directly	Indirectly
Double Dragon Profits	Hong Kong	2 ordinary	100%	—	Provision of
Limited*		shares of			management
		HK$1 each			services
Gold Canal	British Virgin	10 ordinary	—	100%	Investment
International Limited	Islands (“BVI”)	shares of			holding
(“Gold Canal”)		US$1 each
Good Place Investments	Hong Kong	2 ordinary	100%	—	Inactive
Limited*		shares of
		HK$1 each
Mega Way *	Hong Kong	10,000	100%	—	Investment in
		ordinary			Hong Kong
		shares of			listed shares
		HK$1 each
New Portfolio Limited	BVI	1 ordinary	100%	—	Investment
		share of			holding
		US$1 each
Speedy Zone Limited	BVI	1 ordinary	100%	—	Inactive
		shares of
		US$1 each
Summit Asset*	Hong Kong	10 ordinary	100%	—	Properties
		shares of			investment
		HK$1 each

Not audited by Grant Thornton or other Grant Thornton International member firms.

– 64 –

FINANCIAL INFORMATION OF APEX

APPENDIX II

17. AVAILABLE-FOR-SALE FINANCIAL ASSETS/INVESTMENTS IN SECURITIES

Equity securities listed in Hong Kong_(Note 17(a)) Unlisted equity securities (Note 17(b))_	Group 2005 2004 HK$’000 HK$’000 — 47 6,874 9,417 6,874 9,464	Company 2005 2004 HK$’000 HK$’000 — 47 — — — 47	Company 2005 2004 HK$’000 HK$’000 — 47 — — — 47
			47

Particulars of available-for-sale financial assets at 31 December, 2005 are as follows:

(a) Securities listed on the Stock Exchange — Group and Company

				Market
Name of	Place of	Number of		value/
investee company	Incorporation	shares held	Cost	Fair value
			HK$’000	HK$’000
At 31 December, 2004
Riche Multi-Media Holding
Limited	Bermuda	220,000	—	47

The Group’s interest in this company is less than 1% as at 31 December, 2004 and was disposed of during the current year.

(b) Unlisted securities — Group

Name of investee Place of company Note incorporation Tianjin Standard (i) PRC Standard Supplies Limited (“Standard Supplies”) (ii) Hong Kong Koffman Asset (iii) BVI	Cost 2005 2004 HK$’000 HK$’000 17,461 17,461 — 500 3,064 3,064 20,525 21,025	Accumulated impairment losses 2005 2004 HK$’000 HK$’000 (10,587) (8,544) — — (3,064) (3,064) (13,651) (11,608)	Carrying value 2005 2004 HK$’000 HK$’000 6,874 8,917 — 500 — — 6,874 9,417	Carrying value 2005 2004 HK$’000 HK$’000 6,874 8,917 — 500 — — 6,874 9,417
				9,417

– 65 –

FINANCIAL INFORMATION OF APEX

APPENDIX II

17. AVAILABLE-FOR-SALE FINANCIAL ASSETS/INVESTMENTS IN SECURITIES (Continued)

(b) Unlisted securities (Continued)

(i) Pursuant to various agreements entered into in December, 2000, the Group acquired all the issued share capital of Gold Canal for a nominal value, changed the terms of the convertible loan note such that it has become interest-free and has neither fixed repayment terms nor the right to conversion. Gold Canal’s sole asset is a 21% equity interest in Tianjin Standard, which is principally engaged in the manufacture and trading of building materials and the provision of related consultancy services. In the opinion of the directors, since the acquisition of Gold Canal by the Group, the Group has not been in a position to exercise any significant influence over the financial and operating policies of Tianjin Standard due to the lack of representation on the board of directors in Tianjin Standard. Accordingly, Tianjin Standard is accounted for as an unlisted equity security. Based on Tianjin Standard’s audited PRC financial statements for the year ended 31 December, 2005, the company continued to make losses and therefore, an additional impairment charge of HK$2,043,000 (2004: HK$744,000) was made for the year after taking into account the investee’s current year’s results.

At 31 December, 2005, the carrying amount of interests in Tianjin Standard exceeded 10% of total assets of the Group.

(ii) The Group subscribed for 425,000 class “A” shares and 75,000 class “B” shares of Standard Supplies at the consideration of HK$500,000 on 19 October, 2004. The Group owned 25% of Standard Supplies’ shareholding after subscription which is principally involved in the trading of flooring materials in Hong Kong and PRC. In the opinion of the directors, the Group has not been in a position to exercise any significant influence over the financial and operating policies of Standard Supplies. Accordingly, Standard Supplies is accounted for as an unlisted equity security. On 29 July, 2005, the Group disposed its entire interest in this investment to a third party at a consideration of HK$500,000.
(iii) Pursuant to the subscription agreement dated 5 May, 2004, the Group subscribed for 10 new shares of Koffman Asset at the consideration of approximately HK$3,064,000 representing a 9.1% equity interest in that company. The consideration was satisfied by setting off the same against the amount of loan owed by Koffman Professional Insurance Brokerage Limited, a subsidiary of Koffman Asset. Koffman Asset is a company principally involved in an insurance brokerage business which operated in Hong Kong. In 2004, Koffman Asset encountered financial difficulties and ceased operations, and accordingly an impairment charge was made against the full investment cost in 2004.

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FINANCIAL INFORMATION OF APEX

APPENDIX II

18. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS

Group 2005 2004 Notes HK$’000 HK$’000 Securities listed in Hong Kong (a) 2,710 — Unlisted security (b) 386 — 3,096 — (a) Securities listed in Hong Kong Place of Number of Name of incorporation/ units/ investee company registration shares held Note At 31 December, 2005 Debt security The Link REIT (i) Hong Kong 7,500 Unit Trust units authorised under section 104 of the Securities and Futures Ordinance Equity security Midland Holdings (ii) Bermuda 650,000 Limited shares	Company 2005 2004 HK$’000 HK$’000 110 — 386 — 496 — Market value/Fair Cost value HK$’000 HK$’000 74 110 2,750 2,600 2,824 2,710	Company 2005 2004 HK$’000 HK$’000 110 — 386 — 496 — Market value/Fair Cost value HK$’000 HK$’000 74 110 2,750 2,600 2,824 2,710
		—

		Market value/Fair value HK$’000 110 2,600
		2,710

(i) Securities directly held by the Company.
(ii) At 31 December, 2005, the carrying amount of interests in this company exceeded 10% of total assets of the Group.
(iii) The Group’s interests in these investments were less than 1% as at 31 December, 2005.

– 67 –

FINANCIAL INFORMATION OF APEX

APPENDIX II

18. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS (Continued)

(b) Unlisted security

Notes Designated as financial assets at fair value through profit or loss on initial recognition Investment in Rise Profits Holdings Limited (“Rise Profits”) (i) Loan to Rise Profits (ii)	Group and Company 2005 2004 HK$’000 HK$’000 — — 386 — 386 —	Group and Company 2005 2004 HK$’000 HK$’000 — — 386 — 386 —
		—

Notes:

(i) The Group subscribed for 3 ordinary shares of Rise Profits of HK$1 per ordinary share on 21 July, 2005 which represents 30% equity interest in that company. Rise Profits is principally involved in the investment holding of a taxi and its licence in Hong Kong. In the opinion of the directors, Rise Profits is intended to be held temporarily and the directors are actively seeking a buyer to dispose of its entire interest in Rise Profits. In this connection, the investment in Rise Profits is accounted for as an unlisted equity security rather than investment in an associate. With reference to the market price of a taxi and its license quoted by a taxi agent as at 31 December, 2005, the directors considered that the carrying value of this investment approximated its fair value at that date.
(ii) The amount due is unsecured, interest free and has no fixed terms of repayment.

19. BORROWINGS

Non-current Bank borrowings, secured Finance lease liabilities Current Bank borrowings, secured Finance lease liabilities Total borrowings	Group 2005 2004 HK$’000 HK$’000 2,565 — — 52 2,565 52 121 — — 14 121 14 2,686 66	Company 2005 2004 HK$’000 HK$’000 — — — 52 — 52 — — — 14 — 14 — 66	Company 2005 2004 HK$’000 HK$’000 — — — 52 — 52 — — — 14 — 14 — 66
			52
			— 14
			14
			66

– 68 –

FINANCIAL INFORMATION OF APEX

APPENDIX II

19. BORROWINGS (Continued)

Bank borrowings are denominated in Hong Kong Dollar, secured by the investment property of the Group (Note 15) and joint and several guarantee by Mr. Zhou Chao and Ms. Huang Song, directors of the Company, which is at nil consideration, and bear interest at variable interest rate.

Finance lease liabilities are effectively secured as the rights to the leased asset which will revert to the lessor in the event of default.

At 31 December, 2005, the Group’s bank borrowings (excluding finance lease liabilities) were repayable as follows:

Within one year In the second year In the third to fifth year Wholly repayable within 5 years After the fifth year	2005 HK$’000 121 128 446 695 1,991 2,686	2004 HK$’000 — — — — — —

The analysis of the finance lease liabilities is as follows:

Due within one year Due in the second to fifth years Future finance charges on finance leases Present value of finance lease liabilities The present value of finance lease liabilities is as follows: Due within one year Due in the second to fifth years Less: Portion due within one year included under current liabilities Non-current portion included under non-current liabilities	Group and Company 2005 2004 HK$’000 HK$’000 — 20 — 59 — 79 — (13) — 66 — 14 — 52 — 66 — (14) — 52

20. AMOUNTS DUE TO DIRECTORS

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

– 69 –

FINANCIAL INFORMATION OF APEX

APPENDIX II

21. SHARE CAPITAL

2005 Number of shares HK$’000 Authorised: Ordinary shares of HK$0.01 each at 1 January, 200,000,000 2,000 Increase in ordinary shares of HK$0.01 each on 17 March, 2005_(Note 21(c)) 800,000,000 8,000 Consolidation of five ordinary shares of HK$0.01 each to two ordinary shares of HK$0.025 each on 17 March, 2005(Note 21(c)) (600,000,000) — Ordinary shares of HK$0.025 each (2004: HK$0.01) at 31 December, 400,000,000 10,000 Issued and fully paid: Ordinary shares of HK$0.01 each at 1 January, 2004 Shares issued on 29 March, 2004(Note 21(a)) Shares issued on 4 August, 2004(Note 21(b)) Ordinary shares of HK$0.01 each at 31 December, 2004 and 1 January, 2005 Consolidation of five ordinary shares of HK$0.01 each to two ordinary shares of HK$0.025 each on 17 March, 2005(Note 21(c)) Issue of ordinary shares of HK$0.025 each on 18 April, 2005(Note 21(d))_ Ordinary shares of HK$0.025 each at 31 December, 2005	2004 Number of shares HK$’000 200,000,000 2,000 — — — — 200,000,000 2,000 Number of shares HK$’000 144,000,000 1,440 28,800,000 288 27,200,000 272 200,000,000 2,000 (120,000,000) — 80,000,000 2,000 160,000,000 4,000	2004 Number of shares HK$’000 200,000,000 2,000 — — — — 200,000,000 2,000 Number of shares HK$’000 144,000,000 1,440 28,800,000 288 27,200,000 272 200,000,000 2,000 (120,000,000) — 80,000,000 2,000 160,000,000 4,000
		2,000

		HK$’000 1,440 288 272
		2,000 — 2,000
		4,000

– 70 –

FINANCIAL INFORMATION OF APEX

APPENDIX II

21. SHARE CAPITAL (Continued)

(a) On 10 March, 2004, the Company entered into a placing agreement for the placing of 28,800,000 new shares (“Placing Shares”) at a price of HK$0.124 per Placing Share (the “Placement”). The Placing Shares rank pari passu in all respects with the existing issued share capital of the Company.
(b) On 10 June, 2004, the Company entered into a subscription agreement to allot and issue 27,200,000 new shares (“Subscription Shares”) to a subscriber in cash at a subscription price of HK$0.10 per Subscription Share. The Subscription Shares rank pari passu in all respects with the existing issued share capital of the Company.
(c) Pursuant to the shareholders’ approval at the extraordinary general meeting held on 17 March, 2005, the authorised share capital of the Company was increased from HK$2,000,000 divided into 200,000,000 shares of HK$0.01 each to HK$10,000,000 divided into 1,000,000,000 shares of HK$0.01 each by creation of an additional 800,000,000 unissued shares of HK$0.01 each. On the same date, a share consolidation of every five existing ordinary shares of HK$0.01 par value each into two new ordinary shares of HK$0.025 par value each (“New Shares”) was approved. The New Shares rank pari passu in all respects with the then issued share capital of the Company.
(d) On 28 January, 2005, the Company entered into an underwriting agreement for the open offer of 80,000,000 new shares at HK$0.065 per share (“Offer Share”) on the basis of one offer share for every New Share held on record date (“Open Offer”). An ordinary resolution in respect of the Open Offer was passed at the extraordinary general meeting held on 17 March, 2005. The Offer Shares rank pari passu in all respects with the existing share capital of the Company. The Open Offer was completed on 18 April, 2005.

22. SHARE OPTION SCHEME

The Company has adopted a share option scheme (the “Scheme”) on 23 May, 2002. The directors may, at their absolute discretion, make an offer to any participant to take up options. An offer is deemed to have been accepted by the grantee upon the duplicate of the offer letter comprising acceptance of the offer being duly signed by the grantee and paying HK$1 by way of consideration for the grant thereof.

The subscription price for shares in the Company under the Scheme shall be no less than the highest of (i) the closing price of the shares of the Company as stated in the daily quotations sheet of the Stock Exchange on the date on which an option is granted, (ii) the average closing prices of the shares of the Company as stated in the daily quotations sheets of the Stock Exchange for the five business days immediately preceding the date on which an option is granted, and (iii) the nominal value of a share of the Company on the date on which an option is granted.

The total number of shares of the Company which may be issued upon exercise of all options to be granted under the Scheme and any other share option schemes of the Company shall not in aggregate exceed 12,000,000 shares of the Company, being 10% of the total number of shares of the Company in issue as at the date of approval of the Scheme. An option may be exercised during a period to be notified by the directors but may not be exercised after the expiry of 10 years after the date of grant of the option.

– 71 –

FINANCIAL INFORMATION OF APEX

APPENDIX II

22. SHARE OPTION SCHEME (Continued)

The maximum entitlement for any one participant is that the total number of shares issued and to be issued upon exercise of the options granted or to be granted to each participant under the Scheme in any 12-month period must not exceed 1% of the total number of shares in issue of the Company. Any further grant of options in excess of the 1% limit shall be subject to shareholders’ approval in general meeting with such participant and his associates abstaining from voting. The Scheme will remain in force for a period of 10 years from 23 May, 2002.

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

23. RESERVES — GROUP

Share premium Investment revaluation reserve Accumulated losses	2005 HK$’000 109,115 — (102,631) 6,484	2004 HK$’000 106,426 47 (97,383) 9,090

Movements in the Group’s reserves during the year are set out in the consolidated statement of changes in equity of the financial statements.

Under the Companies Law (Revised) of the Cayman Islands, the share premium of the Company is available for distributions or paying dividends to shareholders subject to the provisions of its Memorandum or Articles of Association and provided that immediately following the distribution or dividend the Company is able to pay its debts as they fall due in the ordinary course of business.

The investment revaluation reserve represents the net unrealised gain on revaluation of available-for-sale financial assets/investments in securities at the balance sheet date.

– 72 –

FINANCIAL INFORMATION OF APEX

APPENDIX II

24. RESERVES — COMPANY

At 1 January, 2004 Unrealised loss arising on revaluation of investments — net expense recognised directly in equity Loss for the year Total recognised expenses for the year Shares issued at premium (note 21(a) and (b)) Share issue expenses At 31 December, 2004 and 1 January, 2005 Transfer to income statement on disposal of availablefor- sale financial assets — net expense recognised directly in equity Loss for the year Total recognised expenses for the year Shares issued at premium (note 21(d)) Share issue expenses At 31 December, 2005	Share premium HK$’000 101,127 — — — 5,731 (432) 106,426 — — — 3,200 (511) 109,115	Investment revaluation reserve HK$’000 53 (6) — (6) — — 47 (47) — (47) — — —	Accumulated losses HK$’000 (90,272) — (7,084) (7,084) — — (97,356) — (4,171) (4,171) — — (101,527)	Total HK$’000 10,908 (6) (7,084) (7,090) 5,731 (432) 9,117 (47) (4,171) (4,218) 3,200 (511) 7,588

Details of the share premium account and investment revaluation reserve of the Company are set out in note 23 above.

25. NET ASSET VALUE PER SHARE

The calculation of the net asset value per share is based on the net assets of the Group as at 31 December, 2005 of HK$10,484,000 (2004: HK$11,090,000) and 160,000,000 (2004: 80,000,000, restated) ordinary shares in issue as at that date after adjusting for the effect of the share consolidation as set out in note 21(c).

– 73 –

FINANCIAL INFORMATION OF APEX

APPENDIX II

26. OPERATING LEASE COMMITMENTS

The total future minimum lease payments under non-cancellable operating leases in respect of land and buildings are payable by the Group and the Company as follows:

Within one year In the second to fifth years	Group 2005 2004 HK$’000 HK$’000 476 — 130 — 606 —	Company 2005 2004 HK$’000 HK$’000 368 — 125 — 493 —	Company 2005 2004 HK$’000 HK$’000 368 — 125 — 493 —
			—

The Group leases a number of properties under operating leases. The leases run for an initial period of one to two years, without an option to renew the lease terms at the expiry date or at dates as mutually agreed between the Group and respective landlords. None of the leases include contingent rentals.

27. RELATED PARTY TRANSACTIONS

During the year, the Company had the following related party transactions:

	2005	2004
	HK$’000	HK$’000
Management fee expenses
Haywood Investment Management Limited_(note 27(a))_	—	103
Altus Capital Limited (“Altus”)(note 27(b))	—	100
Hua Yu Investment Management Limited (“Hua Yu”)
(note 27(c))	369	—

Notes:

(a) The management fee was charged in accordance with the management agreement dated 6 July, 1988 (the “Agreement”). Management fees and incentive fees were calculated at 1.5% per annum of the net asset value of the Company at each preceding month end as defined in the Agreement and 10% of the surplus in the net asset value (with appropriate adjustment) over the preceding financial year, respectively, in accordance with the Agreement. The Group entered into an agreement with Haywood Investment Management Limited on 4 March, 2004, whereby both parties had conditionally agreed to terminate the above mentioned agreement.

Haywood Investment Management Limited is a company in which Mr. Wong Fong Kim, a former director of the Company, has a 9% beneficial interest.

– 74 –

FINANCIAL INFORMATION OF APEX

APPENDIX II

27. RELATED PARTY TRANSACTIONS (Continued)

Notes: (Continued)

(b) The Group entered into an agreement with Altus on 4 March, 2004, whereby Altus had agreed to provide investment management services to the Company for a period from the effective date of its appointment until 30 December, 2005.

The investment management fee was calculated at the higher of 1.5% per annum of the net asset value as at the immediately preceding valuation date on the basis of the actual number of days in the relevant calendar month over a year of 365 days or an amount of not less than HK$30,000 per month,

The Group entered into an agreement with Altus during the year, whereby both parties had conditionally agreed to terminate the above mentioned agreement effective on 1 January, 2005.

(c) On 12 May, 2005, the Company entered into new investment management agreement with Hua Yu with effect from 20 May, 2005 to replace Altus.

Investment management fees to Hua Yu are calculated at 0.375% of the net asset value per quarter, subject to a minimum of HK$150,000 per three months.

28. CONTINGENT LIABILITIES

At 31 December, 2005, both the Group and the Company had no material contingent liabilities (2004: Nil).

29. BUSINESS COMBINATIONS

On 27 December, 2005, the Group acquired 100% of the share capital of Summit Asset, a property investment company. If the acquisition had occurred on 1 January, 2005, the Group’s revenue and loss for the year would have been HK$178,000 and HK$5,473,000 respectively. Details of the net assets acquired of Summit Asset is as follows:

Purchase consideration

2005 HK$’000

— Cash paid

– 75 –

FINANCIAL INFORMATION OF APEX

APPENDIX II

29. BUSINESS COMBINATIONS (Continued)

The assets and liabilities arising from the acquisition are as follows:

	Fair value
	and acquiree’s
	carrying amount
	HK$’000
Cash and cash equivalents	3
Investment property	3,860
Other receivables	230
Payables	(1,407)
Borrowings	(2,686)
Net assets acquired	—
Purchase consideration settled in cash	—
Cash and cash equivalents in subsidiary acquired	3
Cash inflow on acquisition	3

30. RISK MANAGEMENT OBJECTIVES AND POLICIES

The Group is exposed to a variety of financial risks which result from both its operating and investing activities. The Group’s risk management is coordinated at its headquarters, in close co-operation with the board of directors, and focuses on actively securing the Group’s short to medium term cash flows by minimising the exposure to financial markets. Long term financial investments are managed to generate lasting returns.

The Group does not actively engage in the trading of financial assets for speculative purposes nor does it write options. The most significant financial risks to which the Group is exposed to are described below.

(a) Foreign currency risk

The Group’s exposure to risk resulting from changes in foreign currency exchange rates is minimal.

(b) Credit risk

Generally, the maximum credit risk exposure of financial assets is the carrying amount of the financial assets as shown on the face of the balance sheet (or in the detailed analysis provided in the notes to the financial statements). Credit risk, therefore, is only disclosed in circumstances where the maximum potential loss differs significantly from the financial asset’s carrying amount.

The Group’s other receivables are actively monitored to avoid significant concentrations of credit risk.

– 76 –

FINANCIAL INFORMATION OF APEX

APPENDIX II

30. RISK MANAGEMENT OBJECTIVES AND POLICIES (Continued)

(c) Cash flow and fair value interest rate risks

The Group has no significant interest-bearing assets. The Group’s interest rate risk arises from long term borrowings. The interest rates and terms of repayment of the borrowings are disclosed in note 19.

(d) Fair value

The fair value of the Group’s financial assets and liabilities are not materially different from their carrying amounts because of the immediate or short term maturity of these financial instruments. The fair value of long-term borrowings is not disclosed because the carrying value is not materially different from the fair value.

– 77 –

FINANCIAL INFORMATION OF APEX

APPENDIX II

SUMMARY OF FINANCIAL INFORMATION

A summary of the results, assets and liabilities of the Group for the last five financial years, is as follows:

Results Turnover Loss from operations Finance costs Loss before taxation Taxation Loss for the year Assets and liabilities Property, plant and equipment Investment property Available-for-sale financial assets Investments in securities Current assets Current liabilities Non-current liabilities Shareholders’ funds	2001 HK$’000 369 (40,621) — (40,621) — (40,621) 2001 HK$’000 243 — — 39,537 4,973 (1,151) — 43,602	Year ended 31 December, 2002 2003 2004 HK$’000 HK$’000 HK$’000 876 4 49 (27,075) (11,799) (7,100) (148) (61) (7) (27,223) (11,860) (7,107) — 52 — (27,223) (11,808) (7,107) As at 31 December, 2002 2003 2004 HK$’000 HK$’000 HK$’000 69 — 227 — — — — — — 23,323 9,714 9,464 2,240 3,282 2,996 (2,801) (652) (1,545) — — (52) 22,831 12,344 11,090	2005 HK$’000 177 (5,223) (25) (5,248) — (5,248) 2005 HK$’000 219 3,860 6,874 — 3,357 (1,261) (2,565) 10,484

– 78 –

FINANCIAL INFORMATION OF APEX

APPENDIX II

UNAUDITED ACCOUNTS FOR THE 6 MONTHS ENDED 30 JUNE, 2006

Set out below are the audited consolidated balance sheet of Apex as at 31st December, 2005 and unaudited consolidated balance sheet of Apex as at 30th June, 2006 and unaudited consolidated income statement, unaudited consolidated statement of changes in equity and unaudited consolidated cash flow statement of Apex for the 6 months ended 30th June, 2006 and for the 6 months ended 30th June, 2005 together with the relevant notes as extracted from the interim report of Apex for the six months ended 30th June, 2006.

Condensed Consolidated Income Statement

For the 6 months ended 30th June, 2006

Notes Revenue 2 Other income Administrative expenses Other operating expenses Impairment loss recognised in respect of available-for-sale financial assets Loss from operations 4 Finance costs Loss before income tax Income tax expense 5 Loss for the period attributable to equity holders of the Company Loss per share — Basic 6 — Diluted	Six months ended 30 June, 2006 2005 HK$’000 HK$’000 (unaudited) (unaudited) 11 67 50 283 (1,688) (1,695) — (33) (1,855) — (3,482) (1,378) (67) (10) (3,549) (1,388) — — (3,549) (1,388) HK$(2.22) cents HK$(1.23) cents N/A N/A

Apex and its subsidiaries did not record any extraordinary/exceptional items and minority interests for the 6 months ended 30th June, 2006 and for the 6 months ended 30th June, 2005.

Apex did not declare any dividend for the 6 months ended 30th June, 2006 and for the 6 months ended 30th June, 2005

– 79 –

FINANCIAL INFORMATION OF APEX

APPENDIX II

Condensed Consolidated Balance Sheet

At 30th June, 2006

Notes Assets and Liabilities Non-current assets Property, plant and equipment 7 Investment property Available-for-sale financial assets Current assets Prepayment, deposits paid and other receivable Cash at banks Financial assets at fair value through profit or loss Total assets Current liabilities Other payables Borrowings Amounts due to directors 8 Net current assets Total assets less current liabilities Non-current liabilities Borrowings Net assets EQUITY Share capital 9 Reserves Total equity Net asset value per share 10	30 June, 31 December, 2006 2005 HK$’000 HK$’000 (unaudited) (audited) 142 219 3,860 3,860 5,019 6,874 9,021 10,953 328 209 144 52 1,248 3,096 1,720 3,357 10,741 14,310 655 640 132 121 515 500 1,302 1,261 418 2,096 9,439 13,049 2,504 2,565 6,935 10,484 4,000 4,000 2,935 6,484 6,935 10,484 HK$0.04 HK$0.07	30 June, 31 December, 2006 2005 HK$’000 HK$’000 (unaudited) (audited) 142 219 3,860 3,860 5,019 6,874 9,021 10,953 328 209 144 52 1,248 3,096 1,720 3,357 10,741 14,310 655 640 132 121 515 500 1,302 1,261 418 2,096 9,439 13,049 2,504 2,565 6,935 10,484 4,000 4,000 2,935 6,484 6,935 10,484 HK$0.04 HK$0.07
		10,953 209 52 3,096
		3,357
		14,310
		640 121 500
		1,261
		2,096
		13,049
		2,565
		10,484

		4,000 6,484
		10,484

		HK$0.07

– 80 –

FINANCIAL INFORMATION OF APEX

APPENDIX II

Condensed Consolidated Statement of Changes in Equity

For the 6 months ended 30th June, 2006

At 1 January, 2005 Unrealised gain arising on revaluation of investments not recognised in the consolidated income statement Provision for available-for-sales financial assets Shares issued at premium Share issue expenses Loss for the period At 30 June, 2005 At 1 January, 2006 Loss for the Review Period At 30 June, 2006	Share capital HK$’000 2,000 — — 2,000 — — 4,000 4,000 — 4,000	Share premium HK$’000 106,426 — — 3,200 (302) — 109,324 109,115 — 109,115	Investment revaluation Accumulated reserve losses HK$’000 HK$’000 47 (97,383) 19 — (1,099) — — — — — — (1,388) (1,033) (98,771) — (102,631) — (3,549) — (106,180)	Total HK$’000 11,090 19 (1,099) 5,200 (302) (1,388) 13,520 10,484 (3,549) 6,935

– 81 –

FINANCIAL INFORMATION OF APEX

APPENDIX II

Condensed Consolidated Cash Flow Statement

For the 6 months ended 30th June, 2006

Net cash used in operating activities Net cash (used in)/generated from financing activities Net cash generated from/(used in) investing activities Net increase in cash at banks Cash balances at banks at beginning of the period Cash balances at banks at end of the period	Six months ended 30 June, 2006 2005 HK$’000 HK$’000 (unaudited) (unaudited) (1,702) (3,365) (50) 5,350 1,844 (855) 92 1,130 52 40 144 1,170

– 82 –

FINANCIAL INFORMATION OF APEX

APPENDIX II

Notes to the Condensed Consolidated Financial Statements

For the year ended 30th June, 2006

1. BASIS OF PREPARATION

The unaudited condensed consolidated financial statements of the Group have been prepared in accordance with the applicable disclosure requirements of Appendix 16 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Listing Rules”) and Hong Kong Accounting Standard (“HKAS”) 34 “Interim Financial Reporting” issued by the Hong Kong Institute of Certified Public Accountants (the “HKICPA”). The condensed consolidated financial statements are unaudited but have been reviewed by the Audit Committee of the Company.

The accounting policies adopted and the basis of preparation used in the preparation of the condensed consolidated financial statement of the group are consistent with those followed in the preparation of the Group’s annual financial statements for the year ended 31 December, 2005, except for the adoption of the amendments and interpretations issued by the HKICPA that are effective for accounting periods beginning on or after 1 January, 2006. The applicable new/revised Hong Kong Financial Reporting Standards (“HKFRSs”) and HKASs (collectively referred to as the “New HKFRSs”) adopted in this interim financial report are set out below:

HKAS 19 ( Amendment) Actuarial Gains and Losses, Group Plans and Disclosures HKAS 21 ( Amendment) Net Investment in a Foreign Operation HKAS 39 ( Amendment) Cash Flow Hedge Accounting of Forecast Intragroup Transactions HKAS 39 ( Amendment) The Fair Value Option HKAS 39 and HKFRS 4 Financial Guarantee Contracts (Amendment)

The adoption of the above new HKFRSs did not result in substantial changes to the Group’s balance sheet and income statement.

No early adoption of the following new standard, interpretations or amendment that have been issued but are not yet effective. The adoption of such new standard, interpretations or amendment will have no material impact on the accounts of the Group and will not result in substantial changes to the Group’s accounting policies.

HKAS 1 (Amendment) Presentation of financial statements: Capital disclosures[1] HKFRS 7 Financial instruments: Disclosures[1] HK(IFRIC)-INT 7 Applying the restatement approach under HKAS 29 Financial Reporting in Hyperinflationary Economies[2] HK(IFRIC)-INT 8 Scope of HKFRS 2[3] HK(IFRIC)-INT 9 Reassessment of embedded derivatives[4]

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

2 Effective for annual periods beginning on or after 1 March, 2006.

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

4 Effective for annual periods beginning on or after 1 June, 2006.

– 83 –

FINANCIAL INFORMATION OF APEX

APPENDIX II

2. REVENUE

Interest income Dividend income	Six months ended 30 June, 2006 2005 HK$’000 HK$’000 (unaudited) (unaudited) 1 67 10 — 11 67	Six months ended 30 June, 2006 2005 HK$’000 HK$’000 (unaudited) (unaudited) 1 67 10 — 11 67
		67

3. SEGMENT INFORMATION

All of the Group’s turnover and contribution to operating results are attributable to its investment activities.

The Group invests in listed and unlisted companies in Hong Kong and in other parts of the People’s Republic of China (the “PRC”). These geographical markets are the basis on which the Group reports its primary segment information. Segment information about these geographical markets is presented below:

Revenue Segment results Unallocated corporate expenses Loss for the period	Hong Kong Six months ended 30 June, 2006 2005 HK$’000 HK$’000 (unaudited) (unaudited) 11 67 (342) (354)	PRC Six months ended 30 June, 2006 2005 HK$’000 HK$’000 (unaudited) (unaudited) — — (1,855) —	Total Six months ended 30 June, 2006 2005 HK$’000 HK$’000 (unaudited) (unaudited) 11 67 (2,197) (354) (1,352) (1,034) (3,549) (1,388)	Total Six months ended 30 June, 2006 2005 HK$’000 HK$’000 (unaudited) (unaudited) 11 67 (2,197) (354) (1,352) (1,034) (3,549) (1,388)

				(354) (1,034)
				(1,388)

– 84 –

FINANCIAL INFORMATION OF APEX

APPENDIX II

4. LOSS FROM OPERATIONS

	Six months ended	30 June,
	2006	2005
	HK$’000	HK$’000
	(unaudited)	(unaudited)
Loss from operations has been
arrived at after charging/(crediting):
Depreciation	77	133
Investment management fees	300	109
Operating lease charges on office premises	92	75
Directors’ remuneration	838	327
Staff costs	—	130
Fair value loss of financial assets at fair value through profit or loss	45	—
Gain on disposal of financial assets at fair value through profit or loss	(50)	—

5. INCOME TAX EXPENSE

No provision for Hong Kong Profits Tax has been made in the financial statements as the Group incurred losses for both periods.

6. LOSS PER SHARE

The calculation of the loss per share is based on the loss for the period of HK$3,549,000 (six months ended 30 June, 2005: loss of HK$1,388,000) and on the weighted average number of 160,000,000 (six months ended 30 June, 2005: 112,707,182) shares in issue.

7. PROPERTY, PLANT AND EQUIPMENT

Net book amounts at beginning of period/year Additions Disposals Depreciation Net book amounts at end of period/year	30 June, 2006 HK$’000 (unaudited) 219 — — (77) 142	31 December, 2005 HK$’000 (audited) 227 1,258 (1,032) (234)
		219

– 85 –

FINANCIAL INFORMATION OF APEX

APPENDIX II

8. AMOUNTS DUE TO DIRECTORS

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

9. SHARE CAPITAL

	Number
	of shares	HK$’000
Authorised:
Ordinary shares of HK$0.025 each
at 30 June, 2006 and 31 December, 2005	400,000,000	10,000
Issued and fully paid:
Ordinary shares of HK$0.025 each
at 30 June, 2006 and 31 December, 2005	160,000,000	4,000

10. NET ASSET VALUE PER SHARE

The calculation of the net asset value per share is based on the net assets of the Group as at 30 June, 2006 of HK$6,935,000 (31 December, 2005: HK$10,484,000) and 160,000,000 (31 December, 2005: 160,000,000) shares in issue.

11. RELATED PARTY TRANSACTION

During the Review Period, the Group had the following significant related party transactions:

	2006	2005
	HK$’000	HK$’000
	(unaudited)	(unaudited)
Investment management fees paid to Hua Yu Investment
Management Limited (“Hua Yu”)	300	69
Altus Capital Limited (“Altus”), the former investment manager	—	40

12. CONTINGENCIES

The Group had no material contingent liabilities at the balance sheet date.

13. POST BALANCE SHEET EVENT

Please refer to “Liquidity and capital resources” paragraph for details of the Open Offer (as defined hereinafter).

– 86 –

FINANCIAL INFORMATION OF APEX

APPENDIX II

INDEBTEDNESS STATEMENT

Borrowings

At the close of business on 30th September, 2006, being the latest practicable date for the purpose of this indebtedness statement prior to the printing of this composite offer document, the Apex Group had a mortgage loan amounting to approximately HK$2,620,000.

Bank borrowings are denominated in Hong Kong Dollar, secured by (i) the investment property of the Apex Group and (ii) jointly and severally guaranteed by Mr. Zhou Chao and Ms. Huang Song, the executive Directors (at nil consideration) and bear interest at variable interest rate of 5.5%per annum as at the Latest Practicable Date.

Contingent liabilities

As at 30th September, 2006, the Apex Group did not have any material contingent liabilities.

Disclaimer

Save as aforesaid in this section headed “INDEBTEDNESS STATEMENT” and apart from intragroup liabilities, no companies within the Apex Group had outstanding as at 30th September, 2006 in respect of any loan capital issued and outstanding or agreed to be issued, bank overdrafts, loans or other similar indebtedness, obligation under finance lease contracts, liabilities under acceptance (other than normal trade bills), acceptance credits, mortgages, charges, finance leases or hire purchase commitments, guarantees or other material contingent liabilities.

MATERIAL CHANGE

Save as disclosed in the 2006 interim report of the Apex Group, in particular, (i) the net proceeds of approximately HK$4.8 million raised by way of an open offer of issuing 80,000,000 shares at a price of HK$0.07 per share on the basis of one share for every two shares in June 2006, and (ii) an impairment in the amount of HK$1,855,000 made for a sino-foreign joint venture in the PRC, as disclosed under the sections headed “Liquidity and Capital Resources” and “Business Review and Outlook” respectively, and the monthly net asset value of the Apex Group as at 31 July, 31 August, 30 September and 31 October 2006 published by Apex, the Board is not aware of any material changes in the financial or trading position or outlook of the Apex Group since 31 December 2005, being the date to which the latest audited financial statements of the Apex Group were made up.

– 87 –

APPENDIX III

VALUATION REPORT

The following is the text of a letter, summary of values and valuation certificate, prepared for the purpose of incorporation in this composite offer document received from RHL, the independent property valuer, in connection with its valuations as at 31st October, 2006 of the property interests held by the Apex and its subsidiaries.

HONG KONG �� Room 1010, Star House Tsimshatsui, Hong Kong �� 1010 �

T +852 2730 6212 F +852 2736 9284 E [email protected] W www.rhl-int.com

21st November, 2006

The Board of Directors Apex Capital Limited Rm. 2206, Office Tower Convention Plaza 1 Harbour Road Wanchai Hong Kong

Dear Sirs,

Re: Flat B on 39th Floor of Block 5, Coastal Skyline, No. 12 Tung Chung Waterfront Road, Tung Chung, Lantau Island, New Territories, Hong Kong (the “property”)

In accordance with your instructions to value the captioned property in which Apex Capital Limited (the “Company”) or its subsidiaries (hereinafter together referred to as the “Group”) have interests in Hong Kong, we confirm that we have carried out an inspection, 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 value of the property as at 31st October, 2006 (the “date of valuation”).

Basis of Valuation

Our valuation of the property represents the 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”.

Valuation Methodology

We have valued the property by the direct comparison approach assuming sale of the property in its existing state with the benefit of immediate vacant possession and by making reference to comparable sale transactions as available in the relevant market.

– 88 –

VALUATION REPORT

APPENDIX III

Our valuation of the market value has been made on the assumption that the property are to be transferred under normal commercial terms without the benefit of a deferred term contract, leaseback, joint venture, management agreement or any similar arrangement, which could serve to affect the value of the property.

Limiting Conditions

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

In valuing the property interest of the Group in Hong Kong held under the Government Lease expiring before 30th June, 1997, we have taken account of the stipulations contained in Annex III of the Joint Declaration of the Government of the United Kingdom and the Government of the People’s Republic of China on the question of Hong Kong and the New Territories Leases (Extension) Ordinance 1988 that such leases have been extended without premium until 30th June, 2047 and that a rent of three per cent of the then rateable value is charged per annum from the date of extension.

In valuing the property, 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; the RICS Appraisal and Valuation Standards (5th Edition) published by The Royal Institution of Chartered Surveyors and effective from May 2003; and the HKIS Valuation Standards on Properties (First Edition 2005) published by The Hong Kong Institute of Surveyors effective from 1st January 2005.

We have relied to a very considerable extent on the information given by the Group and have accepted advice given to us on such matters as tenure, planning approvals, statutory notices, easements, particulars of occupancy, lettings, and all other relevant matters.

We have not been provided with copies of the title documents relating to the property but have caused searches to be made at the Hong Kong Land Registry. However, we have not searched the original documents to verify ownership or to ascertain any amendment.

We have not carried out detailed site measurements to verify the correctness of the site areas in respect of the property but have assumed that the site areas shown on the documents and official site plans handed to us are correct. All documents and contracts have been used as reference only and all dimensions, measurements and areas are approximations.

We have inspected the exterior for the property; 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 property is free of rot, infestation or any other structural defects. No tests were carried out on any of the services.

– 89 –

APPENDIX III

VALUATION REPORT

We have had no reason to doubt the truth and accuracy of the information provided to us by the Group. We have also sought confirmation from 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.

Remarks

As advised by the Group, it will have no potential tax liability if the property is disposed of at the amount of valuation.

The potential tax liability which would arise on the disposal of the property in Hong Kong is stamp duty and property tax. The stamp duty is paid by the purchaser and there is no property tax if the property was to be sold at the amount of valuation, i.e. according to the Land Registry, Apex purchased the property in consideration of $3,880,000 on 30th September, 2006, while our valuation on the property of HK$3,500,000 as at 31st October, 2006 is lower than the purchase cost.

Unless otherwise stated, all monetary sums stated in this report are in Hong Kong Dollars (HK$).

Our valuation certificate is attached herewith for your attention.

Yours faithfully, for and on behalf of RHL Appraisal Ltd. Tse Wai Leung MFin BSc MRICS MHKIS RPS(GP) Director

Tse Wai Leung is a member of the Royal Institution of Chartered Surveyors, a member of The Hong Kong Institute of Surveyors, a Registered Professional Surveyor in General Practice and a qualified real estate appraiser in the PRC. He is on the list of Property Valuers for Undertaking Valuations for Incorporation or Reference in Listing Particulars and Circulars and Valuations in Connection with Takeovers and Mergers of the Hong Kong Institute of Surveyors, Registered Business Valuer under the Hong Kong Business Forum and has over 14 years’ experience in valuation of properties in Hong Kong, in Macau and in the PRC.

– 90 –

VALUATION REPORT

APPENDIX III

VALUATION CERTIFICATE

Property Held by the Group for Investment Purpose

Description and tenure

Property

Flat B on The property comprises a 39th Floor of residential unit on level 39 of a Block 5 50-storey residential block built Coastal Skyline over a single-storey car parking No. 12 podium within a large-scale Tung Chung residential development known Waterfront Road as “Coastal Skyline”. The Tung Chung subject development was Lantau Island completed in about September New Territories 2002. Hong Kong

Market Value in existing state as at Particulars of 31st October 2006 occupancy HK$ The property is currently 3,500,000 vacant.

The gross floor area of the 84/396, property is 1,189 square feet or 430th parts or thereabout. The saleable area of shares of and in the property is 951 square feet Tung Chung Town or thereabout. The bay window Lot No. 4 appurtenant to the property is 47 square feet or thereabout.

The property is held under New Grant No. IS8082 for a term commencing from 26th March 1997 and expiring on 30th June 2047. The current Government Rent payable is an amount equal to 3% of the rateable value for the time being of the property per annum.

– 91 –

VALUATION REPORT

APPENDIX III

Notes:

The registered owner of the property is Summit Asset Holdings Limited vide Memorial No. 05102702100029 dated 30th September 2005. The consideration of the property was HK$3,880,000.
The property is subject to a Mortgage in favour of The Hongkong and Shanghai Banking Corporation Limited vide Memorial No. 05102702100030 dated 30th September 2005. The consideration of the property was all monies.
The property is subject to an Occupation Permit No. PR13/2002 vide Memorial No. IS308998 dated 12th September 2002.
The property is subject to a Principal Deed of Mutual Covenant and Management Agreement in favour of MTR Corporation Limited “Managers” vide Memorial No. IS314903 dated 10th April 2003.
The property is subject to a Sub-deed of Mutual Covenant and Management Agreement in favour of MTR Corporation Limited “Managers” vide Memorial No. IS314904 dated 10th April 2003.

– 92 –

GENERAL INFORMATION

APPENDIX IV

RESPONSIBILITY STATEMENT

This composite offer document includes particulars given in compliance with the Takeovers Code for the purpose of giving information with regard to the Offeror and the Offer.

The directors of the Offeror jointly and severally accept full responsibility for the accuracy of the information contained in this composite offer document (other than those relating to Apex) and confirm, having made all reasonable enquiries, that to the best of their knowledge, opinions expressed in this composite offer document (other than those relating to Apex) have been arrived at after due and careful consideration and there are no other facts not contained in this composite offer document, the omission of which would make any statement in this composite offer document (other than those relating to Apex) misleading.

The Directors jointly and severally accept full responsibility for the accuracy of the information contained in this composite offer document (other than those relating to the Offeror) and confirm, having made all reasonable enquiries, that to the best of their knowledge, opinions expressed in this composite offer document (other than those relating to the Offeror) have been arrived at after due and careful consideration and there are no other facts not contained in this composite offer document, the omission of which would make any statement in this composite offer document (other than those relating to the Offeror) misleading.

MARKET PRICES

The following table shows the closing price on the Stock Exchange of the Shares:

a) on the Latest Practicable Date
b) on the last trading day immediately preceding the Announcement Date; and
c) at the end of each of the calendar months during the period commencing 6 months preceding the Announcement Date and ending on the Latest Practicable Date.

Date	Closing price per Share (HK$)
Latest Practicable Date	0.142
31st October, 2006	0.22
24th October, 2006	0.074
29th September, 2006	0.06
31st August, 2006	0.065
31st July, 2006	0.05
30th June, 2006	0.053
30th May, 2006	0.05
28th April, 2006	0.083

The highest and lowest closing prices of the Shares as quoted on the Stock Exchange during the period commencing 6 months preceding the last trading day prior to the initial announcement in relation to the Offer and ending on the Latest Practicable Date were HK$0.22 per Share on 31st October, 2006 and HK$0.046 per Share on 18th July, 2006 respectively.

– 93 –

GENERAL INFORMATION

APPENDIX IV

DISCLOSURE OF INTERESTS

As at the Latest Practicable Date, the Offeror and parties acting in concert with it beneficially owned Apex as to 132,933,200 Shares, representing 55.39% of total issued share capital of Apex.

Mr. Mung Kin Keung and his wife, Madam Sin Lai Ni are the only 2 directors of the Offeror, both of whom are deemed to indirectly own 132,933,200 Shares, representing 55.39% of the total issued share capital of Apex through controlling the 99.99% and 0.01% of the total issued share capital of the Offeror respectively.

As at the Latest Practicable Date, neither who have irrevocably committed themselves to accept or reject the Offer own any shares, convertible securities, warrants, options and derivatives of Apex.

As at the Latest Practicable Date, neither Apex nor any of its Directors was not interested in any shares, convertible securities, warrants, options and derivatives in the Offeror.

According to the register of interests in long positions and short positions kept by Apex pursuant to Divisions 2 and 3 of Part XV and section 336 of the Securities and Futures Ordinance and so far as the Directors were aware, the following persons had a long position or short position in the Shares, underlying shares or debentures of Apex which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the Securities and Futures Ordinance, or who was interested, directly or indirectly, 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 member of the Apex Group as at the Latest Practicable Date:

Name of Shareholder	Nature of interests	Number of Shares	Percentage
The Offeror	Beneficial interests	132,933,200	55.39%
Mr. Mung Kin Keung	Interests of	132,933,200	55.39%
	controlled corporation

Note

(i) Mr. Mung Kin Keung controlled 99.99% of the total issued share capital of the Offeror as at the Latest Practicable Date.

Save as disclosed above, the directors and chief executive of Apex were not aware of any persons, as at the Latest Practicable Date, who had an interest or short position in the Shares or underlying shares which would fall to be disclosed to Apex and the Stock Exchange under the provisions of Divisions 2 and 3 Part XV of the Securities and Futures Ordinance or, who was, directly or indirectly, interested in 10% or more of the nominal value of the issued share capital carrying rights to vote in all circumstances at general meetings of any member of the Apex Group.

As at the Latest Practicable Date, no subsidiary of Apex, or any pension fund of Apex or of any member of the Apex Group or advisers to Apex as specified in class (2) of the definition of associate under the Takeovers Code (but excluding exempt principal traders) owned or controlled any shares, convertible securities, warrants, options and derivatives of Apex or other securities exchangeable or convertible into the Shares.

– 94 –

GENERAL INFORMATION

APPENDIX IV

As at the Latest Practicable Date, none of the Directors held any kind of shareholdings (including beneficial interests and interests through controlled corporations) in Apex or intend to accept or reject the Offer.

As at the Latest Practicable Date, no shares, convertible securities, warrants, options and derivatives or other securities of Apex exchangeable or convertible into the Shares were managed on discretionary basis by fund managers connected with Apex.

As at the Latest Practicable Date, no person had any arrangement of the kind referred to in Note 8 to Rule 22 of the Takeovers Code with the Offeror or any person acting in concert with it.

As at the Latest Practicable Date, no person had any arrangement of the kind referred to in Note 8 to Rule 22 of the Takeovers Code with Apex or with any person who is an associate of Apex by virtue of classes (1), (2), (3) and (4) of the definition of associate under the Takeovers Code.

DISCLOSURE OF DEALINGS

Offeror

On 24th October, 2006, the Sale and Purchase Agreements were entered into between the Offeror and the Vendors, for the sale and purchase of a total of 132,933,200 Shares, representing approximately 55.39% of the total issued share capital of Apex. Completion of the Sale and Purchase Agreements took place on 14th November, 2006.

Save as disclosed above, neither the Offeror, Mr. Mung Kin Keung and Madam Sin Lai Ni, being the only 2 directors of the Offeror nor any parties acting in concert with the Offeror had dealt in any securities, convertible securities, warrants, options and derivatives of Apex for the 6-month period immediately preceding the Announcement Date and up to and including the Latest Practicable Date.

Directors

None of Apex or its directors held or controlled any interest in the shares of the Offeror as at the Latest Practicable Date.

Save for the 21,355,200, 53,417,600 and 5,150,000 Shares subscribed by Xiyang, Mr. Zhou Chao and Mr. Fong Chi Hou at HK$0.07 per Share respectively on 19th July, 2006 pursuant to the open offer (“Open Offer”) as stated in the prospectus dated 29th June, 2006 and the disposal of all the Shares then held by them pursuant to the Sale and Purchase Agreements, none of the Directors, his concert parties and any of their respective directors had dealt for value in any such securities, convertible securities, warrants, options and derivatives of Apex during the period starting 6 months prior to the Announcement Date and ending on the Latest Practicable Date. Mr. Zhou Chao was the underwriter of the Open Offer.

Save as disclosed in this sub-paragraph headed “Directors”, none of Apex or its directors had dealt in shares, convertible securities, warrants, options and derivatives of the Offeror during the period starting 6 months prior to the Announcement Date and ending on the Latest Practicable Date.

– 95 –

GENERAL INFORMATION

APPENDIX IV

Others

There do not exist between the Offeror, or any person acting in concert with it, and any other person any arrangement involving rights over the Shares, any indemnity arrangement, and any agreement or understanding, formal or informal, of whatever nature, relating to the Shares which may be an inducement to deal or refrain from dealing.

OTHER INTEREST

There is no benefit which will be or to be given to any Director as compensation for loss of office or otherwise in connection with the Offer.

There is no agreement, arrangement or understanding (including any compensation arrangement) between the Offeror and / or any party acting in concert with it and any of the Directors, recent Directors, Shareholders or recent Shareholders having any connection with or dependence upon the Offer.

There is no agreement or arrangement between any Director and any other person, which is conditional on or dependent upon the outcome of the Offer or otherwise connected with to the Offer.

There is no agreement or arrangement to which the Offeror is a party, which relates to the circumstances in which it may or may not invoke or seek to invoke a condition to the Offer.

There is no material contract entered into by the Offeror in which any Director has a material personal interest.

SHARE CAPITAL

(1) Authorised and issued share capital

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

The authorised and issued share capital of Apex as at the Latest follows:	Practicable Date were as
	HK$
Authorised:
400,000,000 Shares of HK$0.025 each	10,000,000
Issued and fully paid up or credited as fully paid up:
240,000,000 Shares of HK$0.025 each	6,000,000

All existing Shares rank equally in all respects, including in particular as to dividend, voting rights and return on capital. The Shares in issue are listed on the Stock Exchange.

– 96 –

GENERAL INFORMATION

APPENDIX IV

No share or loan capital of Apex or any member of the Apex Group has been put under option or agreed conditionally or unconditionally to be put under option and no warrant or conversion right affecting the Shares has been issued or granted or agreed conditionally, or unconditionally to be issued or granted.

No part of the share or loan capital of Apex is listed or dealt in, nor is listing or permission to deal in the share or loan capital of Apex being, or proposed to be, sought on any other stock exchange.

The number of Shares issued or repurchased during the period from 31st December, 2005, being the last financial year of Apex, to the Latest Practicable Date is as follows:

As at 31st December, 2005, the total number issued share capital of Apex was 160,000,000.

Apex completed an open offer on 14th July, 2006 for 80,000,000 new Shares on the basis of one Share for every two Shares held on the 23rd June, 2006. Subsequently, the total issued share capital of Apex was 240,000,000 as at 14th July, 2006.

As at the Latest Practicable Date, the total number issued share capital of Apex was 240,000,000.

(2) Share options

As at the Latest Practicable Date, there was no outstanding option under the share option scheme of Apex adopted on 23 May, 2002.

(3) Convertible securities

As at the Latest Practicable Date, there was no outstanding option, warrants or securities convertible or exchangeable into Shares.

MATERIAL CONTRACTS

The following contracts, not being contracts in the ordinary course of business, have been entered into by members of the Apex Group after the date falling 2 years prior to the Announcement Date and up to the Latest Practicable Date and are or may be material:

(i) the underwriting agreement dated 28th January, 2005 as amended by a supplemental underwriting agreement dated 4th February, 2005 entered into among Apex, Mr. Lee Wing On, Samuel, Kingston Securities Limited and Orient Securities Limited in relation to an open offer of 80,000,000 Shares on the basis of one offer Share for every one Share held as announced by Apex on 7th February, 2005;
(ii) the investment management agreement entered into between Apex and Hua Yu on 12th May, 2005 for the replacement of Altus Capital Limited by Hua Yu as Apex’s investment manager effective from 20th May, 2005 as announced by Apex on 24th May, 2005; and

– 97 –

GENERAL INFORMATION

APPENDIX IV

(iii) the underwriting agreement dated 7th April, 2006 as amended by a supplemental underwriting agreement dated 18th April, 2006 entered into between Apex and Xiyang in relation to the open offer (“Underwriting Agreement”); and
(iv) the novation deed dated 12th May 2006 entered into between Apex, Xiyang and Mr. Zhou Chao pursuant to which all the rights and obligations of Xiyang as the underwriter under the Underwriting Agreement has been novated by Mr. Zhou Chao.

Save as disclosed above, there are no other contracts (not being contracts in the ordinary course of business) being entered into by the members of the Apex Group after the date falling 2 years prior to the Announcement Date and up to the Latest Practicable Date, which are or may be material.

SERVICE CONTRACTS

None of the Directors has service contract(s) with Apex or any of its subsidiaries or associated companies in force (i) which (including both continuous and fixed term contracts) have been entered into or amended within 6 months prior to the Announcement Date; or (ii) which are continuous contracts with a notice of 12 months or more; or (iii) which are fixed term contracts with more than 12 months to run irrespective of the notice period.

LITIGATION

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

CONSENTS

Partners Capital and RHL have given and have not withdrawn their written consent to the issue of this composite offer document with the inclusion therein of their opinion and letters, and the references to their names, opinion or letters in the form and context in which they respectively appear.

DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents are available for inspection from 10:00 a.m. to 5:00 p.m., Monday to Friday at the office of Apex, at Room 2206, 22nd Floor, Office Tower, Convention Plaza, Harbour Road, Wan Chai, Hong Kong and on the website of the Securities and Futures Commission (www.sfc.hk) and Apex (www.apex-cap.com) from 21st November, 2006 to 12th December, 2006.

The memorandum and articles of association of the Offeror;
The memorandum and articles of association of Apex;
The Letter from Yu Ming, the text of which is set out on pages 5 to 11 of this composite offer document;

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GENERAL INFORMATION

APPENDIX IV

The Letter from the Board, the text of which is set out on pages 12 to 15 of this composite offer document;
The letter of recommendation from Independent Board Committee, the text of which is set out on page 16 of this composite offer document;
The letter of recommendation from Partners Capital, the text of which is set out on pages 17 to 32 of this composite offer document;
The valuation report produced by RHL, the text of which is set out in Appendix III to this composite offer document;
The annual report of Apex for the year ended 31st December, 2005;
The annual report of Apex for the year ended 31st December, 2004;
The interim report of Apex for the six months ended 30th June, 2006
The letters of consent referred to in the paragraph headed “CONSENTS” in this appendix;
The material contracts referred to in the paragraph headed “MATERIAL CONTRACTS” in this appendix;

MISCELLANEOUS

The address of Yu Ming is 1001, 10th Floor, AON China Building, 29 Queen’s Road Central, Hong Kong.
The registered office of Apex Capital Limited, is Ugland House, PO Box 309, George Town, Grand Cayman, Cayman Islands and the principal place of business of Apex is Room 2206, 22/ F, Office Tower, Convention Plaza, Harbour Road, Wan Chai Hong Kong.
Both the registered office of the Offeror and the contact address of Mr. Mung Kin Keung and Madam Sin Lai Ni are Room 401-2, 4/F, Wing Tak Commercial Centre, 177-183 Wing Lok Street, Sheung Wan, Hong Kong.
As at the Latest Practicable Date, the board of directors of the Offeror only comprises Mr. Mung Kin Keung and his wife Madam Sin Lai Ni.
As at the Latest Practicable Date, the Board comprises Mr. Zhou Chao, Mr. Phang Yul Cher Yeow, Ms. Huang Song and Mr. Chu Kin Wang Peleus as executive Directors; Mr. Fong Chi Hou and Mr. Wang Yao Dong as non-executive Directors; and Mr. Liu Wing Ting Stephen, Ms. Lam Lin Chu and Ms. Tse Po Chu as independent non-executive Directors.
As at the Latest Practicable Date, the only two shareholders of the Offeror comprise Mr. Mung Kin Keung and his wife Madam Sin Lai Ni.

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AI assistant

Walnut Capital Limited — M&A Activity 2006

49552_rns_2006-11-21_de79615a-d14e-4ed4-8c55-5cfda22e1fd6.pdf

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APEX CAPITAL LIMITED

Financial Adviser to the Offeror

CONTENT

DEFINITIONS

DEFINITIONS

DEFINITIONS

EXPECTED TIMETABLE

Announcement in respect of

LETTER FROM YU MING

UNCONDITIONAL MANDATORY GENERAL CASH OFFER BY YU MING INVESTMENT MANAGEMENT LIMITED ON BEHALF OF THE OFFEROR FOR ALL THE ISSUED SHARES OF APEX CAPITAL LIMITED (OTHER THAN THOSE SHARES ALREADY OWNED OR AGREED TO BE ACQUIRED BY THE OFFEROR AND PARTIES ACTING IN CONCERT WITH IT)

INTRODUCTION

THE OFFER

Terms of the Offer

No extension of offer period and no increase in offer price

Consideration

Condition

Effect of accepting the Offer

Payment

Stamp Duty

Acceptance Commitment

INFORMATION OF THE OFFEROR

LETTER FROM YU MING

SHAREHOLDINGS IN APEX

INFORMATION ON APEX

INTENTION OF THE OFFEROR

LETTER FROM YU MING

NOMINATION OF NEW DIRECTORS

LISTING OF THE SHARES

PROCEDURES FOR ACCEPTANCES

SETTLEMENT OF THE OFFER

NOMINEE REGISTRATION AND DESPATCH OF PAYMENT

TAXATION

GENERAL

LETTER FROM THE BOARD

APEX CAPITAL LIMITED

INTRODUCTION

THE OFFER

Further details of the Offer

INFORMATION AND INTENTION OF THE OFFEROR

LETTER FROM THE BOARD

INFORMATION ON APEX

Shareholding structure

MAINTAINING THE LISTING STATUS OF APEX

RECOMMENDATION

APEX CAPITAL LIMITED

UNCONDITIONAL MANDATORY GENERAL CASH OFFER BY YU MING INVESTMENT MANAGEMENT LIMITED ON BEHALF OF THE OFFEROR FOR ALL THE ISSUED SHARES OF APEX CAPITAL LIMITED (OTHER THAN THOSE SHARES ALREADY OWNED OR AGREED TO BE ACQUIRED BY THE OFFEROR AND PARTIES ACTING IN CONCERT WITH IT)

APEX CAPITAL LIMITED

LETTER FROM PARTNERS CAPITAL

INTRODUCTION

LETTER FROM PARTNERS CAPITAL

THE INDEPENDENT BOARD COMMITTEE

PRINCIPAL FACTORS AND REASONS CONSIDERED

(i) Financial performance and position of the Company

(ii) Share price performance and trading liquidity

•

Liquidity

LETTER FROM PARTNERS CAPITAL

(iii) Net Assets

(iv) Price-earnings multiple

(v) Dividend vield

(vi) Precedent case of general offer in respect of investment company listed on the main board of Stock Exchange pursuant to Chapter 21 of the Listing Rules.

(vii) Intention of the Offeror regarding the future prospects of the Group

LETTER FROM PARTNERS CAPITAL

RECOMMENDATION

FURTHER PROCEDURES FOR ACCEPTANCE OF THE OFFER

APPENDIX I

FURTHER TERMS OF THE OFFER

ACCEPTANCE PERIOD, REVISIONS AND EXTENSIONS

RIGHT OF WITHDRAWAL

ANNOUNCEMENTS

GENERAL

THREE-YEAR FINANCIAL SUMMARY

Consolidated Income Statement

AUDITED ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER, 2005

Consolidated Balance Sheet

Balance Sheet

Walnut Capital Limited M&A Activity 2006

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