Wang On Group Limited

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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

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

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

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( )[*]

(Incorporated in Bermuda with limited liability)

(Stock Code: 1222)

DISCLOSEABLE AND POSSIBLE MAJOR TRANSACTION – DISPOSAL OF PROPERTIES

Financial adviser

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A notice convening a special general meeting of Wang On Group Limited to be held at 3503, 35/F., Two International Finance Centre, 8 Finance Street, Central, Hong Kong on 9 December 2005 at 9:30 a.m. is set out on pages 76 and 77 of this circular. A form of proxy for use in the special general meeting is enclosed. Whether or not you propose to attend the special general meeting, you are requested to complete and return the accompanying form of proxy in accordance with the instructions printed thereon as soon as possible and in any event not less than 48 hours before the time appointed for the holding of the special general meeting or any adjourned meeting thereof. Completion and return of the form of proxy will not preclude you from attending and voting in person at the special general meeting or any adjourned meeting thereof should you so wish.

For identification purpose only

23 November 2005

CONTENTS

		Page
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	. . . . . . . . . . . . . . . . . .	1
Letter from the Board
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	. . . . . . . . . . . . . . . . . .	3
Information on Milan Place (Previously known as Wealthy Terrace) . . . . . . . . .		4
Reasons and benefits for the Disposal of the Properties.	. . . . . . . . . . . . . . . . . .	5
Use of proceeds from the Sale of the Properties . . . . . .	. . . . . . . . . . . . . . . . . .	5
Implications of the Listing Rules . . . . . . . . . . . . . . . . .	. . . . . . . . . . . . . . . . . .	6
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	. . . . . . . . . . . . . . . . . .	7
Voting on poll . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	. . . . . . . . . . . . . . . . . .	8
Recommendation . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	. . . . . . . . . . . . . . . . . .	8
Additional information . . . . . . . . . . . . . . . . . . . . . . . . .	. . . . . . . . . . . . . . . . . .	8
Appendix I – Financial information on the Group	. . . . . . . . . . . . . . . . .	9
Appendix II – Valuation report on the Properties	. . . . . . . . . . . . . . . . . .	65
Appendix III – General information . . . . . . . . . . . .	. . . . . . . . . . . . . . . . . .	68
Notice of SGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	. . . . . . . . . . . . . . . . . .	76

−i −

DEFINITIONS

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

“Announcement”	the Company’s announcement dated 7 November 2005 in
	relation to the Disposals and a possible major transaction
	arising from the future disposals of the remaining units in
	Milan Place
“associates”	has the meaning ascribed thereto in the Listing Rules
“Board”	the board of Directors
“Company”	Wang On Group Limited, a company incorporated in
	Bermuda with limited liability and the shares of which
	are listed on the Stock Exchange
“connected person”	has the meaning ascribed to it under the Listing Rules
“Directors”	the directors of the Company
“Disposals”	the disposals of the properties pursuant to the Provisional
	Agreements
“Group”	the Company and its subsidiaries
“Hong Kong”	the Hong Kong Special Administrative Region of the
	People’s Republic of China
“Independent Property Agent”	The property agency firm independent of and not
	connected with the Company, any of the Directors, chief
	executive or substantial shareholders of the Company or
	any of its subsidiaries or their respective associates, as
	defined in the Listing Rules
“Independent Third Party(ies)”	independent third party(ies) who, to the best of
	knowledge, information and belief having made all
	reasonable enquiry of the Directors, are not connected
	with any of the Directors, chief executive or substantial
	shareholders of the Company or any of its subsidiaries or
	their respective associates, as defined in the Listing Rules
“Latest Practicable Date”	21 November 2005, being the latest practicable date for
	ascertaining certain information for inclusion in this
	circular

−1 −

DEFINITIONS

“Listing Rules”	the Rules Governing the Listing of Securities on The
	Stock Exchange of Hong Kong Limited
“Milan Place”	a 18-storey building, amongst which 16 storeys
	comprising of 48 units are currently offered for sale for
	residential purpose and 2 storeys with 9 shop lots are
	currently offered for sale and rental for commercial
	purposes
“Properties”	the 48 residential units and 9 shop lots in Milan Place
“Provisional Agreements”	The provisional sale and purchase agreements entered
	into between Hanwin Investment Limited and Lica
	Parking Company Limited and the Independent Third
	Parties in relation to the disposals of 26 residential units
	and 3 shop lots in Milan Place respectively
“SGM”	special general meeting to be convened on 9 December
	2005 by the Company to seek prior approval from the
	Shareholders in respect of such possible major
	transaction arising from the future disposal of the
	remaining units of Milan Place
“Shareholders”	shareholders of the Company
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“WYT”	Wai Yuen Tong Medicine Holdings Limited, a company
	incorporated in Bermuda with limited liability and the
	shares of which are listed on the Stock Exchange (Stock
	Code: 897)
“HK$”	Hong Kong dollars, the lawful currency of Hong Kong
“sq.ft.”	square feet

−2 −

LETTER FROM THE BOARD

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WANG ON GROUP LIMITED

( )[*]

(Incorporated in Bermuda with limited liability)

(Stock Code: 1222)

Executive Directors:

Mr. Tang Ching Ho (Chairman) Ms. Yau Yuk Yin (Deputy Chairman) Mr. Chan Chun Hong, Thomas (Managing Director)

Independent non-executive Directors: Dr. Lee Peng Fei, Allen, CBE, JP Mr. Wong Chun, Justein, MBE, JP Dr. Siu Yim Kwan, Sidney, S.B.St.J. Mr. Siu Kam Chau

Registered office: Clarendon House 2 Church Street 41 Cedar Avenue Hamilton HM 11 Bermuda

Head office and principal place of business: 5th Floor Wai Yuen Tong Medicine Building 9 Wang Kwong Road Kowloon Bay Kowloon Hong Kong

23 November 2005

To the Shareholders

Dear Sir or Madam,

DISCLOSEABLE AND POSSIBLE MAJOR TRANSACTION – DISPOSAL OF PROPERTIES

INTRODUCTION

The Group is currently offering for sale of 48 residential units and 9 shop lots (having various tenancy agreements with monthly rental of approximately HK$0.3 million) in Milan Place, which is a 18-storey building located at No. 58, Yen Chow Street, Kowloon, Hong Kong.

Since 21 September 2005, the Group has commenced sale of the Properties through the Independent Property Agent. Hanwin Investment Limited and Lica Parking Company Limited, each being an indirect wholly-owned subsidiary of the Company, have respectively since 21

For identification purpose only

−3 −

LETTER FROM THE BOARD

September 2005 and 5 October 2005, entered into various Provisional Agreements with purchasers who are Independent Third Parties for their purchases of 26 residential units and 3 shop lots in the Milan Place from the Group. The Disposals contemplated under the Provisional Agreements in aggregate constituted a discloseable transaction under Chapter 14 of the Listing Rules.

The Group intends to sell the remaining units of Milan Place to Independent Third Parties which, in aggregate with the Disposals, may constitute a major transaction under Chapter 14 of the Listing Rules.

A SGM will be convened by the Company to seek prior approval from the Shareholders for a period of 12 months from the date of SGM for the sale of the remaining units of Milan Place to the Independent Third Parties only to the extent that any further sale of the remaining units of Milan Place in aggregate with the Disposals constitutes major transaction under Chapter 14 of the Listing Rules.

The purpose of this circular is to provide you with, among others, details of the Disposals, a valuation report of the Properties by an independent property valuer and a notice of the SGM proposing a resolution in respect of seeking prior approval from the Shareholders for the possible major transaction arising from the future disposal of the remaining units in Milan Place.

INFORMATION ON MILAN PLACE (PREVIOUSLY KNOWN AS WEALTHY TERRACE)

Milan Place, located at No. 58, Yen Chow Street, Kowloon, Hong Kong, is a 18-storey building, in which (i) 16 storeys comprising 48 units are currently offered for sale for residential purpose; and (ii) 2 storeys with 9 shop lots having various tenancy agreements with monthly rental of approximately HK$0.3 million are currently offered for sale for commercial purposes. The aggregate site area and a total floor area of the Properties are approximately 3,300 sq.ft. and approximately 30,000 sq.ft. respectively.

The Properties were acquired by the Group and such acquisition was completed in July 2005 for a consideration of HK$110 million, details of which were set out in the Company’s announcement and circular dated 22 March 2005 and 13 April 2005 respectively.

The unaudited net book value of the Properties as at 30 September 2005 was approximately HK$115.7 million.

In view of the improvement of the property market, the Group has commenced the sale of the Properties since 21 September 2005. Since then, 26 residential units and 3 shop lots in the Milan Place have been sold to Independent Third Parties. It is anticipated that the remaining units of the Properties will be sold in light of the sentiment of the property market.

−4 −

LETTER FROM THE BOARD

To the best of the Director’s knowledge, information and belief having made all reasonable enquiry, the purchasers of the 26 residential units and 3 shop lots in Milan Place and their respective ultimate beneficial owners are Independent Third Parties.

REASONS AND BENEFITS FOR THE DISPOSAL OF THE PROPERTIES

The Group is principally engaged in property development, property investment, management and sub-licensing of Chinese wet markets, shopping centres and car parks and retail business. It also has interests in the pharmaceutical business through its investments in WYT, a company listed on The Stock Exchange of Hong Kong Limited.

Having regard to the recent improvement in the Hong Kong economy and the property market, the Directors consider that (i) the terms of the Disposals; and (ii) the Disposals and the timing of the sale of the remaining units in Milan Place are fair and reasonable and are in the best interest of the Company and its shareholders as a whole.

It is expected that further renovation costs, marketing costs and professional fees amounting to approximately HK$7.3 million will be incurred before completion of the sale of the Properties, resulting in a total cost of HK$123 million. Assuming that the whole of the Properties is sold at the fair value of HK$138 million, the possible potential gain before tax arising from the sale of the Properties is expected to be approximately HK$15 million, representing the excess over the total costs of HK$123 million. Such an expected gain to the Group from the sale of the Properties will be booked in the Group’s financial year in which the Disposals are completed.

The Directors consider that the sale of the whole Properties will bring an increase in the earnings of the Group by the aforementioned possible potential gain on the disposals without significant influences to assets and liabilities of the Group.

USE OF PROCEEDS FROM THE SALE OF THE PROPERTIES

The estimated gross proceeds from the Disposals and the proposed disposal of the remaining units of the Properties of approximately HK$138 million are intended to be applied (i) as to HK$59.4 million for full repayment of the bank loans secured by the Properties; and (ii) as to the remaining balance of HK$78.6 million for the Group’s working capital. As at the Latest Practicable Date, the aggregate amount of the bank loan secured by the Properties was approximately HK$59.4 million and the interest accrued thereto was approximately HK$0.5 million.

−5 −

LETTER FROM THE BOARD

IMPLICATIONS OF THE LISTING RULES

Discloseable transaction

Since September 2005, the Group has commenced sale of the Properties through the Independent Property Agent. Hanwin Investment Limited and Lica Parking Company Limited, each being an indirect wholly-owned subsidiary of the Company, have respectively since 21 September 2005 and 5 October 2005, entered into various Provisional Agreements with purchasers who are Independent Third Parties for their purchase of 26 residential units (one of which was entered into on 10 November 2005 after the date of the Announcement) and 3 shop lots in the Milan Place from the Group at the aggregate consideration of HK$62,242,360, of which HK$3,786,118 was received as deposit, the balance of HK$58,456,242 shall be received on completion of each individual transaction.

The Disposals contemplated under the Provisional Agreements in aggregate constitute a discloseable transaction under Chapter 14 of the Listing Rules.

Possible major transaction

The Group intends to sell the remaining units in Milan Place (i.e. 22 residential units and 6 shop lots) to Independent Third Parties with reference to the prevailing market price. The consideration will be determined on an arm’s length basis. It is estimated that the gross proceeds arising from the sale of the remaining properties in Milan Place in aggregate with the Disposals will amount to approximately HK$138 million, which may constitute a major transaction under Chapter 14 of the Listing Rules. Any major transaction of the Company must be made conditional on approval by the Shareholders under Rules 14.40 to 14.47 of the Listing Rules.

The Directors presently believe that it is unlikely that potential purchasers would be willing to commit to purchase part or whole of the remaining units in Milan Place from the Group conditional upon the Company having obtained the Shareholders’ approval. The Board is also of the view that the disposal(s) of the remaining units in Milan Place conditional upon such Shareholders’ approval will greatly reduce the interest of any potential purchasers and also undermine the bargaining power of the Group in terms of selling price, which is not in the best interests of the Company and the Shareholders as a whole. Therefore, the Company proposes to seek prior approval from the Shareholders for a period of 12 months from the date of SGM for the sale of the remaining units of Milan Place to the Independent Third Party(ies) only to the extent that any further sale of the remaining units of Milan Place in aggregate with the Disposals constitutes major transactions under Chapter 14 of the Listing Rules.

−6 −

LETTER FROM THE BOARD

In case that any further sale of the remaining units in Milan Place in aggregate with the Disposals have constituted major transaction under Chapter 14 of the Listing Rules, the sale of the remaining units in Milan Place (which consist of 22 residential units and 6 shop lots as at the Latest Practicable Date) to that extent will be conditional upon:

(a) the passing of the ordinary resolution by the Shareholders at the SGM to be convened by the Company to seek prior approval from the Shareholders in respect of such possible major transaction arising from the future disposals of the remaining units of Milan Place;
(b) the sale of the remaining units in Milan Place will be made to Independent Third Parties and such sale will be conducted by the Independent Property Agent;
(c) the aggregate selling price of the remaining units in Milan Place will not be less than HK$77 million (equivalent to the average gross floor price of approximately HK$5,300 per sq.ft. (Note)) (which are by reference to recent sale of the properties in the nearby areas and are comparable to the relevant selling prices of the sold units in Milan Place under the Provisional Agreements); and
(d) a valuation of the Properties performed by an independent property valuer (as set out in Appendix II of this circular for convening the SGM).
Note: The average floor price per sq.ft. represents the proceeds per sq.ft. to be received from the purchasers by the Company. Similar to the sold units in Milan Place, such average price per sq.ft. does not include any renovation cost and discount to be borne by the Company.

In the event that the sales of the remaining units in Milan Place in aggregate with the Disposals constitute a major transaction under Chapter 14 of the Listing Rules within the period of 12 months from the date of the SGM, a further announcement will be made by the Company regarding, among other things, the aggregate sale price of the units sold.

In the event that the sale of the remaining units in Milan Place has not yet constituted a major transaction under Chapter 14 of the Listing Rules after the expiration of 12-month period from the date of the SGM, and that the Group will thereafter continue with the sale of such remaining units in Milan Place, where any such further sale in aggregate with units sold within a 12-month period before the date of such further sales will constitute a notifiable transaction under Chapter 14 of the Listing Rules, the Company will comply with the requirements under the Listing Rules.

GENERAL

The sale of the remaining properties in Milan Place, in aggregate with the Disposals, may constitute a major transaction under Chapter 14 of the Listing Rules. A SGM will be convened by the Company to seek prior approval from the Shareholders in respect of such possible major transaction arising from the future disposal(s) of the remaining units of Milan Place to the Independent Third Party(ies). To the best knowledge of the Company, none of the Shareholders has material interest in the Disposals and therefore none of the Shareholders is required to abstain from voting in the SGM.

−7 −

LETTER FROM THE BOARD

VOTING ON POLL

Pursuant to bye-law 66(C) of the existing bye-laws of the Company, at any general meeting a resolution put to the vote of the meeting shall be decided on a show of hands unless a poll is (before or after the declaration of the results of the show of hands or on the withdrawal of any other demand for a poll) demanded:

(i) by the chairman of the meeting; or
(ii) by at least 3 members present in person or by proxy (or in the case of a member being a corporation, by its representative duly authorised therefor) for the time being entitled to vote at the meeting; or
(iii) by any member or members present in person or by proxy (or being a corporation, is present by a representative duly authorised therefor) and representing not less than one-tenth of the total voting rights of all the members having the right to attend and vote at the meeting; or
(iv) by any member or members present in person or by proxy (or being a corporation, is present by a representative duly authorised therefor) and having the right to attend and vote at the meeting on which there have been paid up sums in the aggregate equal to not less than one-tenth of the total sum paid up on all the shares having that right.

RECOMMENDATION

For the reasons set out above, the Directors consider that the Disposal is fair and reasonable and in the interests of the Company and its shareholders as a whole, and therefore recommend the Shareholders to vote in favour of the ordinary resolution to be proposed at the SGM to approve the possible major transaction arising from the future disposal of the remaining units in Milan Place.

ADDITIONAL INFORMATION

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

Yours faithfully, For and on behalf of the Board Wang On Group Limited Tang Ching Ho

Chairman

−8 −

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

SUMMARY OF AUDITED FINANCIAL INFORMATION

The following is a summary of the results and financial position of the Group for the three years ended 31 March 2005, as extracted from the annual report of the Company for the year ended 31 March 2005. The figures for the year ended 31 March 2003 have been adjusted for the effects of the retrospective change in accounting policy affecting income tax.

Results

Year ended 31 March 2005 2004 2003 HK$’000 HK$’000 HK$’000 (Restated) 364,123 296,565 292,156 91,071 51,671 80,004 (15,000) (10,307) (11,409) – (7,656) (16,454) – – (7,000) 76,071 33,708 45,141 (5,910) (4,334) (3,361) 70,161 29,374 41,780 (34) (89) (641) 70,127 29,285 41,139 31 March 2005 2004 2003 HK$’000 HK$’000 HK$’000 (Restated) 1,148,296 857,583 781,578 (411,484) (176,600) (157,766) (435) (401) (324) 736,377 680,582 623,488	Year ended 31 March 2005 2004 2003 HK$’000 HK$’000 HK$’000 (Restated) 364,123 296,565 292,156 91,071 51,671 80,004 (15,000) (10,307) (11,409) – (7,656) (16,454) – – (7,000) 76,071 33,708 45,141 (5,910) (4,334) (3,361) 70,161 29,374 41,780 (34) (89) (641) 70,127 29,285 41,139 31 March 2005 2004 2003 HK$’000 HK$’000 HK$’000 (Restated) 1,148,296 857,583 781,578 (411,484) (176,600) (157,766) (435) (401) (324) 736,377 680,582 623,488	Year ended 31 March 2005 2004 2003 HK$’000 HK$’000 HK$’000 (Restated) 364,123 296,565 292,156 91,071 51,671 80,004 (15,000) (10,307) (11,409) – (7,656) (16,454) – – (7,000) 76,071 33,708 45,141 (5,910) (4,334) (3,361) 70,161 29,374 41,780 (34) (89) (641) 70,127 29,285 41,139 31 March 2005 2004 2003 HK$’000 HK$’000 HK$’000 (Restated) 1,148,296 857,583 781,578 (411,484) (176,600) (157,766) (435) (401) (324) 736,377 680,582 623,488
91,071 (15,000) – – 76,071 (5,910) 70,161 (34)	51,671 (10,307) (7,656) – 33,708 (4,334) 29,374 (89)	80,004 (11,409 (16,454 (7,000
		45,141 (3,361
		41,780 (641
70,127 2005 HK$’000 1,148,296 (411,484) (435) 736,377	29,285 31 March 2004 HK$’000 857,583 (176,600) (401) 680,582

−9 −

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

EXTRACT OF THE FINANCIAL STATEMENTS

Set out below are the audited consolidated profit and loss account of the Group for the two years ended 31 March 2005, the audited consolidated balance sheet of the Group as at 31 March 2004 and 31 March 2005, the audited consolidated statement of changes in equity of the Group for the two years ended 31 March 2005 and the audited consolidated cash flow statement of the Group for the two years ended 31 March 2005, the balance sheet of the Company as at 31 March 2004 and 31 March 2005 together with the relevant notes in the accounts, as extracted from the annual report of the Company for the year ended 31 March 2005.

Consolidated Profit and Loss Account

Year ended 31 March 2005

Notes TURNOVER 5 Cost of sales Gross profit Other revenue and gains 5 Selling and distribution costs Administrative expenses Other operating expenses Gain/(loss) on disposal of subsidiaries 34(d) Gain/(loss) on disposal of interests in associates Surplus on revaluation of investment properties 6, 14 PROFIT FROM OPERATING ACTIVITIES 6 Finance costs 7 Share of profits and losses of associates Amortisation of goodwill of associates PROFIT BEFORE TAX Tax 10 PROFIT BEFORE MINORITY INTERESTS Minority interests NET PROFIT FROM ORDINARY ACTIVITIES ATTRIBUTABLE TO SHAREHOLDERS 11 DIVIDENDS 12 Interim Proposed final EARNINGS PER SHARE 13 Basic Diluted	2005 HK$’000 364,123 (284,160)	2004 HK$’000 296,565 (227,559) 69,006 35,839 (10,439) (44,841) (14,947) (1,020) 13,048 7,066 53,712 (2,041) (10,307) (7,656) 33,708 (4,334) 29,374 (89) 29,285 3,544 10,032 13,576 HK$0.241 HK$0.228
	79,963 55,650 (7,857) (43,867) (17,596) 26,975 (20,874) 23,003 95,397 (4,326) (15,000) – 76,071 (5,910) 70,161 (34) 70,127 4,300 17,846	69,006 35,839 (10,439 (44,841 (14,947 (1,020 13,048 7,066
		53,712 (2,041 (10,307 (7,656
		33,708 (4,334
		29,374 (89
		29,285
		3,544 10,032
	22,146 HK$0.489 HK$0.470

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FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

Consolidated Balance Sheet

31 March 2005

Notes NON-CURRENT ASSETS Fixed assets 14 Properties under development 15 Goodwill 16 Interests in associates 18 Long term investments 19(a) Loans receivable Rental deposits paid Other deposits Deferred tax assets 30 CURRENT ASSETS Properties under development 15 Short term investments 19(b) Inventories 20 Trade receivables 21 Prepayments, deposits and other receivables 22 Tax recoverable Pledged deposits 23 Cash and cash equivalents 23 CURRENT LIABILITIES Trade payables 24 Other payables and accruals 25 Deposits received and receipts in advance Interest-bearing bank loans 26, 28 Provisions for onerous contracts 27 Tax payable NET CURRENT ASSETS TOTAL ASSETS LESS CURRENT LIABILITIES NON-CURRENT LIABILITIES Interest-bearing bank loans 28 Provisions for onerous contracts 27 Convertible notes 29 Deferred tax liabilities 30 MINORITY INTERESTS CAPITAL AND RESERVES Issued capital 31 Reserves 33(a)	2005 HK$’000 245,191 208,412 4,987 179,011 54,234 1,400 5,465 30,603 743	2004 HK$’000 292,779 – 5,459 136,602 34,843 1,741 7,556 30,630 1,584
	730,046 13,044 59,305 70 10,027 22,401 740 7,723 304,940 418,250 157 14,794 42,470 28,072 6,749 3,269 95,511 322,739 1,052,785 214,496 1,420 98,620 1,437 315,973 435	511,194
		– 37,428 73 5,551 13,972 – – 289,365
		346,389
		188 12,997 40,299 24,575 9,112 4,729
		91,900
		254,489
		765,683
		80,073 4,461 – 166
		84,700
		401
	736,377	680,582

	14,332 722,045	14,332 666,250
	736,377	680,582

−11 −

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

Consolidated Statement of Changes in Equity

Year ended 31 March 2005

Issued share capital HK$’000 11,815 2,360 – – – – 157 – –	Share premium account Contributed surplus HK$’000 HK$’000 348,222 106,329 23,600 – – – (810) – – – – – 1,350 – – – – –	Share premium account Contributed surplus HK$’000 HK$’000 348,222 106,329 23,600 – – – (810) – – – – – 1,350 – – – – –	Warrant reserve HK$’000 1,735 – (1,735) – – – – – –	Capital reserve Investment property revaluation reserve HK$’000 HK$’000 1,511 – – – – – – – – 4,696 – – – – – – (1,511) –	Capital reserve Investment property revaluation reserve HK$’000 HK$’000 1,511 – – – – – – – – 4,696 – – – – – – (1,511) –	Retained profits HK$’000 153,876 – 1,735 – – 29,285 (3,544) (10,032) 1,511	Proposed final dividend HK$’000 – – – – – – – 10,032 –	Total HK$’000’ 623,488 25,960 – (810 4,696 29,285 (2,037 – –
14,332 –	372,362 –	106,329 –	– –	– –	4,696 (4,696)	172,831 4,696	10,032 –	680,582 –
14,332	372,362*	106,329*	–*	–*	–*	177,527*	10,032*	680,582

14,332 – 14,332 – – – –	372,362 – 372,362 – – – –	106,329 – 106,329 – – – –	– – – – – – –	– – – – – – –	4,696 (4,696) – – – – –	172,831 4,696 177,527 – 70,127 (4,300) (17,846)	10,032 – 10,032 (10,032) – – 17,846	680,582 –
								680,582 (10,032 70,127 (4,300 –
14,332	372,362*	106,329*	–*	–*	–*	225,508*	17,846*	736,377

These reserve accounts comprise the consolidated reserves of HK$722,045,000 (2004: HK$666,250,000) in the consolidated balance sheet.

−12 −

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

Reserves retained by: Company and subsidiaries Associates At 31 March 2005 Company and subsidiaries (as restated) Associates At 31 March 2004 (as restated)	Issued share capital HK$’000 14,332 – 14,332 14,332 – 14,332	Share premium account Contributed surplus HK$’000 HK$’000 372,362 106,329 – – 372,362 106,329 372,362 106,329 – – 372,362 106,329	Warrant reserve HK$’000 – – – – – –	Capital reserve Investment property revaluation reserve Retained profits/ (accumulated losses) HK$’000 HK$’000 HK$’000 – – 262,415 – – (36,907) – – 225,508 – – 197,779 – – (20,252) – – 177,527	Proposed final dividend HK$’000 17,846 – 17,846 10,032 – 10,032	Total HK$’000 773,284 (36,907)
						736,377

						700,834 (20,252)
						680,582

−13 −

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

Consolidated Cash Flow Statement

Year ended 31 March 2005

Notes CASH FLOWS FROM OPERATING ACTIVITIES Profit before tax Adjustments for: Finance costs 7 Share of profits and losses of associates Amortisation of goodwill of associates Net holding gain on investments 6 Interest income from investments 5 Interest income 5 Dividend income from listed securities 5 Loss/(gain) on disposal of subsidiaries 34(d) Loss/(gain) on disposal of interests in an associate Gain on disposal of investments, net 5 Gain on disposal of investment properties 5 Gain on disposal of convertible notes due from an associate 5 Excess of the Group’s interest in the net fair value of the investees’ identifiable assets, liabilities and contingent liabilities over cost recognised as income 5 Provision for and write-off of bad and doubtful debts 6 Provision for impairment of long term investments 6 Depreciation 6, 14 Amortisation of goodwill of subsidiaries 6 Loss on disposal/write-off of fixed assets 6 Surplus on revaluation of investment properties 6, 14 Recognition of deferred gain on disposal of subsidiaries 5 Operating profit before working capital changes Decrease/(increase) in trade receivables, prepayments, deposits and other receivables Decrease/(increase) in inventories Increase/(decrease) in trade payables, other payables and accruals Increase/(decrease) in deposits received and receipts in advance Decrease in provisions for onerous contracts 6, 27 Cash generated from operations Hong Kong profits tax paid Net cash inflow from operating activities Net cash inflow from operating activities	2005 HK$’000 76,071 4,326 15,000 – (375) (2,373) (2,916) (405) (26,975) 20,874 (1,907) (7,335) – (35,024) 656 15,299 12,109 – 29 (23,003) –	2004 HK$’000 33,708 2,041 10,307 7,656 (570) (2,386) (8,428) (128) 1,020 (13,048) (109) – (17,883) – 6,821 1,641 12,595 6,246 200 (7,066) (688) 31,929 (11,721) (887) 2,202 (1,420) (6,566) 13,537 (909) 12,628 12,628
	44,051 682 3 (5,557) 2,171 (5,404) 35,946 (4,395) 31,551 31,551	31,929 (11,721 (887 2,202 (1,420 (6,566
		13,537 (909
		12,628
		12,628

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FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

Notes CASH FLOWS FROM INVESTING ACTIVITIES Interest received Dividend income from listed securities Interest income from investments Decrease in amounts due from associates Increase in amounts due to associates Acquisition of subsidiaries 34(b) Acquisitions of additional shares in a subsidiary 34(c) Acquisitions of additional shares in an associate Net inflow/(outflow) of cash and cash equivalents in respect of the disposal of subsidiaries 34(d) Increase in other deposits Purchases of investment properties Purchases of other fixed assets Purchases of properties under development Proceeds from disposal of investment properties Proceeds from disposal of fixed assets Proceeds from disposal of short term investments Proceeds from disposal of convertible notes New loans to an associate Settlement of loans to an associate Settlement of convertible notes due from an associate Purchases of long term investments Purchases of short term investments Increase in pledged deposits Net cash inflow/(outflow) from investing activities CASH FLOWS FROM FINANCING ACTIVITIES Interest paid Dividends paid Proceeds from issue of shares Share issue expenses Proceeds from issue of convertible notes Convertible note issue expenses Repayment of bank loans New bank loans Capital element of finance lease rental payments Net cash inflow from financing activities	2005 HK$’000 3,323 405 2,373 74 15 (943) – (85,872) 96,133 (30,603) (197,802) (5,565) (190,000) 115,135 62 17,343 – – 7,000 56,500 (35,690) (35,938) (7,723)	2004 HK$’000 8,295 128 2,386 208 19 – (1,929) – (3,904) (30,630) (95,807) (11,678) – 1,925 217 4,784 102,383 (9,000) 87,750 13,000 (21,784) (38,189) – 8,174 (2,041) (2,037) 25,960 (810) – – (27,065) 60,475 (110) 54,372
	(291,773) (5,198) (14,332) – – 98,620 (3,143) (75,322) 275,172 – 275,797	8,174
		(2,041 (2,037 25,960 (810 – – (27,065 60,475 (110
		54,372

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FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

Notes NET INCREASE IN CASH AND CASH EQUIVALENTS Cash and cash equivalents at beginning of year CASH AND CASH EQUIVALENTS AT END OF YEAR ANALYSIS OF BALANCES OF CASH AND CASH EQUIVALENTS Cash and bank balances 23 Non-pledged time deposits with original maturity of less than three months when acquired 23	2005 HK$’000 15,575 289,365 304,940 43,300 261,640 304,940	2004 HK$’000 75,174 214,191
		289,365

		25,931 263,434
		289,365

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FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

Balance Sheet

31 March 2005

Notes NON-CURRENT ASSETS Fixed assets 14 Interests in subsidiaries 17 Interests in associates 18 Long term investments 19(a) CURRENT ASSETS Short term investments 19(b) Prepayments, deposits and other receivables 22 Pledged deposits 23 Cash and cash equivalents 23 CURRENT LIABILITIES Other payables and accruals 25 Interest-bearing bank loans 26, 28 NET CURRENT ASSETS TOTAL ASSETS LESS CURRENT LIABILITIES NON-CURRENT LIABILITIES Interest-bearing bank loans 28 Convertible notes 29 CAPITAL AND RESERVES Issued capital 31 Reserves 33(b)	2005 HK$’000 2 450,569 219 42,234	2004 HK$’000 5 356,632 219 15,534
	493,024 43,947 4,867 7,723 256,883 313,420 2,599 20,000 22,599 290,821 783,845 45,000 98,620 143,620	372,390
		12,105 1,088 – 238,389
		251,582
		241 –
		241
		251,341
		623,731 – –
		–
	640,225	623,731

	14,332 625,893	14,332 609,399
	640,225	623,731

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FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

Notes to Financial Statements

31 March 2005

1. CORPORATE INFORMATION

The head office and principal place of business of Wang On Group Limited is located at 5th Floor, 9 Wang Kwong Road, Kowloon Bay, Kowloon, Hong Kong.

During the year, the Group was involved in the following principal activities:

property development
property investment
management and sub-licensing of Chinese wet markets, shopping centres and car parks
retailing of pork stalls

2. IMPACT OF RECENTLY ISSUED HONG KONG FINANCIAL REPORTING STANDARDS (“HKFRSs”) AND EARLY ADOPTION OF HKFRSs

The Hong Kong Institute of Certified Public Accountants has issued a number of new Hong Kong Financial Reporting Standards, Hong Kong Accounting Standards (“HKASs”) and Interpretations, herein collectively referred to as the new HKFRSs, which are generally effective for accounting periods beginning on or after 1 January 2005.

The Group has early adopted the following new HKFRSs in the financial statements for the year ended 31 March 2005:

• HKFRS 3 “Business Combinations” • HKAS 36 “Impairment of Assets” • HKAS 38 “Intangible Assets” • HKAS 40 “Investment Property” • Interpretation 24 “Revenue – Pre-completion Contracts for the Sale of Development Properties”

The major effect of the adoption of these HKFRSs are summarised as follows:

(a) The adoption of HKFRS 3, HKAS 36 and HKAS 38 has resulted in a change in the accounting policy for goodwill and negative goodwill. Prior to this:
goodwill arising from acquisitions after 1 April 2001 was amortised on the straight-line basis over a period of not exceeding 20 years;
goodwill was assessed for impairment at each balance sheet date;
to the extent that negative goodwill did not relate to identifiable expected future losses and expenses as at the date of acquisition, negative goodwill arising from acquisitions after 1 April 2001 was recognised in the consolidated profit and loss account on a systematic basis over the remaining average useful life of the acquired depreciable/amortisable assets; and
on disposal of subsidiaries or associates, any attributable goodwill or negative goodwill previously eliminated against or credited to the consolidated reserves at the time of acquisition was written back and included in the calculation of the gain or loss on disposal.

In accordance with the provisions of HKFRS 3:

the Group ceased amortisation of goodwill from 1 April 2004;
accumulated amortisation of goodwill arising on the acquisition of subsidiaries and associates as at 1 April 2004 has been eliminated with a corresponding decrease in the respective cost of goodwill at that date;
from the year ended 31 March 2005 onwards, goodwill is tested annually for impairment, as well as when there are indications of impairment;

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FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

any excess of the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities acquired as at the date of acquisition over the cost of the business combination is recognised immediately in the consolidated profit and loss account; and
on disposal of subsidiaries or associates, any attributable goodwill previously eliminated against the consolidated reserves at the time of acquisition is transferred to consolidated retained profits as a movement in reserves and not included in the calculation of the gain or loss on disposal.

HKFRS 3 is early adopted and the effect of its adoption on these financial statements in respect of the year ended 31 March 2005 is summarised as follows:

accumulated amortisation of goodwill arising on the acquisition of subsidiaries and associates as at 1 April 2004 of HK$1,637,000 and HK$23,999,000, respectively, have been eliminated with a corresponding decrease in the respective cost of goodwill at that date;
the excess of the Group’s interest in the net fair value of identifiable assets, liabilities and contingent liabilities of those companies acquired by the Group during the year over cost of acquisitions in an aggregate amount of HK$35,024,000 was fully recognised as income for the year ended 31 March 2005; and
in respect of disposal of a subsidiary during the year, the attributable goodwill previously eliminated against the consolidated reserves at the respective time of its acquisition of HK$926,000 is not included in the calculation of the gain or loss on disposal.
(b) The adoption of HKAS 40 has resulted in a change in accounting policy for the Group’s investment properties.

Changes in valuation of the investment property were previously dealt with in the investment property revaluation reserve, on a portfolio basis. Following the adoption of HKAS 40, all changes in valuation of the investment property would be recognised in the profit and loss account.

As permitted by the transitional requirements in HKAS 40, the comparative statements for the year ended 31 March 2004 have not been restated to conform to the new policy. The effect of the change in this accounting policy on the consolidated financial statements in respect of the year ended 31 March 2005 is to adjust the opening retained profits as at 1 April 2004 by reclassifying HK$4,696,000 held in the investment property revaluation reserve.

(c) The adoption of Interpretation 24 has resulted in a change in accounting policy for the recognition of revenue arising from pre-completion contracts for the sale of development properties.

Prior to the adoption of Interpretation 24, the estimated profit on pre-sold properties under development was recognised over the course of development of the properties after execution of the formal sale and purchase agreement. The amount of estimated profit was calculated based on the proportion of construction costs incurred over the total estimated construction costs to completion, after making due allowances for contingencies, and limited to non-refundable cash deposits received. In addition, properties under development which have been pre-sold were stated at cost plus estimated attributable profits less foreseeable losses and sales deposits received.

In accordance with the provisions of Interpretation 24, revenue arising from pre-completion contracts for the sale of development properties that do not fall within the scope of HKAS 11 “Construction Contracts” is recognised when the significant risks and rewards of ownership have been transferred to the buyer, provided that the Group maintains neither managerial involvement to the degree usually associated with ownership, nor effective control over the properties under development sold. Such properties are stated at cost.

There is no impact on these financial statements on the adoption of this interpretation as the Group did not have any pre-sold properties under development during the years ended 31 March 2005 and 2004.

The Group has not early adopted other new HKFRSs except for those mentioned above in the financial statements for the year ended 31 March 2005. The Group has already commenced an assessment of the impact of other new HKFRSs but is not yet in a position to state whether other new HKFRSs would have a significant impact on its results of operations and financial position.

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FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of preparation

These financial statements have been prepared in accordance with Hong Kong Financial Reporting Standards (which also includes Statements of Standard Accounting Practice (“SSAPs”) and Interpretations) issued by the Hong Kong Institute of Certified Public Accountants, accounting principles generally accepted in Hong Kong and the disclosure requirements of the Hong Kong Companies Ordinance. They have been prepared under the historical cost convention, except for the periodic remeasurement of investment properties and certain investments, as further explained below.

Basis of consolidation

The consolidated financial statements include the financial statements of the Company and its subsidiaries for the year ended 31 March 2005. The results of the subsidiaries acquired or disposed of during the year are consolidated from or to their effective dates of acquisition or disposal, respectively. All significant intercompany transactions and balances within the Group are eliminated on consolidation.

Minority interests represent the interests of outside shareholders in the results and net assets of the Company’s subsidiaries.

Subsidiaries

A subsidiary is a company whose financial and operating policies the Company controls, directly or indirectly, so as to obtain benefits from its activities.

The results of subsidiaries are included in the Company’s profit and loss account to the extent of dividends received and receivable. The Company’s interests in subsidiaries are stated at cost less any impairment losses.

Associates

An associate is a company, not being a subsidiary or a jointly-controlled entity, in which the Group has a long term interest of generally not less than 20% of the equity voting rights and over which it is in a position to exercise significant influence.

The Group’s share of the post-acquisition results and reserves of associates is included in the consolidated profit and loss account and consolidated reserves, respectively. The Group’s interests in associates are stated in the consolidated balance sheet at the Group’s share of net assets under the equity method of accounting, less any impairment losses. Goodwill arising from the acquisition of associates, which was not previously eliminated or recognised in the consolidated reserves, is included as part of the Group’s interests in associates.

The results of associates are included in the Company’s profit and loss account to the extent of dividends received and receivable. The Company’s interests in associates are treated as long term assets and are stated at cost less any impairment losses.

Deferred gain represents the unrealised profit resulting from downstream transactions with an associate eliminated to the extent of the Group’s interest in that associate. Deferred gain is recognised in the consolidated balance sheet as part of the Group’s interests in associates.

Business combinations

Goodwill

Goodwill arising on the acquisition of subsidiaries and associates is initially measured at cost, being the excess of the cost of the business combination over the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities. Goodwill arising on the acquisition of subsidiaries is recognised in the consolidated balance sheet as an asset and in the case of associates, any unamortised goodwill is included in the carrying amount thereof, rather than as a separately identified asset on the consolidated balance sheet.

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FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

Following initial recognition, goodwill is measured at cost less any accumulated impairment losses. Goodwill arising on acquisitions on or after 1 April 2004 is not amortised and goodwill already carried in the consolidated balance sheet is not amortised after 1 April 2004. Goodwill is reviewed for impairment annually or more frequently if events or changes in circumstances indicate that the carrying value may be impaired.

As at the acquisition date, any goodwill acquired is allocated to each of the cash-generating units expected to benefit from the combination’s synergy. Impairment is determined by assessing the recoverable amount of the cash-generating unit, to which the goodwill relates. Where the recoverable amount of the cash-generating unit is less than the carrying amount, an impairment loss is recognised. Where goodwill forms part of a cash-generating unit and part of the operation within that unit are disposed of, the goodwill associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal of the operation. Goodwill disposed of in such circumstances is measured on the basis of the relative values of the operation disposed of and the portion of the cash-generating unit retained.

Goodwill arising on acquisitions on or before 31 March 2001 was eliminated against the consolidated capital reserve in the year of acquisition. The Group applied the transitional provisions of HKFRS 3 that required such goodwill to remain eliminated against the consolidated reserves and that required such goodwill not to be recognised in the consolidated profit and loss account when the Group disposes of all or part of the business to which that goodwill relates or when a cash-generating unit to which the goodwill relates become impaired.

Excess of the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities of an entity being acquired over cost

On acquisition of subsidiaries and associates, if the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities of an entity being acquired recognised as at the date of acquisition exceeds the cost of the business combination, the Group shall reassess the identification and measurement of the identifiable assets, liabilities and contingent liabilities of that entity and the measurement of the cost of the business combination; and recognise immediately in consolidated profit and loss account any excess remaining after that reassessment.

Negative goodwill (applicable to the accounting year ended 31 March 2004)

Negative goodwill arising on the acquisition of subsidiaries and associates represents the excess of the Group’s share of the fair values of the identifiable assets and liabilities acquired as at the date of acquisition, over the cost of the acquisition.

To the extent that negative goodwill relates to expectations of future losses and expenses that are identified in the acquisition plan and that can be measured reliably, but which do not represent identifiable liabilities as at the date of acquisition, that portion of negative goodwill is recognised as income in the consolidated profit and loss account when the future losses and expenses are recognised.

To the extent that negative goodwill does not relate to identifiable expected future losses and expenses as at the date of acquisition, negative goodwill is recognised in the consolidated profit and loss account on a systematic basis over the remaining average useful life of the acquired depreciable/amortisable assets. The amount of any negative goodwill in excess of the fair values of the acquired non-monetary assets is recognised as income immediately.

In the case of associates, any negative goodwill not yet recognised in the consolidated profit and loss account is included in the carrying amount thereof, rather than as a separately identified item on the consolidated balance sheet.

Prior to the adoption of SSAP 30 “Business Combinations” in 2002, negative goodwill arising on acquisitions was credited to the consolidated reserves in the year of acquisition. On the adoption of SSAP 30, the Group applied the transitional provisions of the SSAP that permitted such negative goodwill to remain credited to the consolidated reserves. Negative goodwill on acquisitions subsequent to the adoption of the SSAP is treated according to the SSAP 30 negative goodwill accounting policy above.

On disposal of subsidiaries or associates, the gain or loss on disposal is calculated by reference to the net assets at the date of disposal, including the attributable amount of negative goodwill which has not been recognised in the consolidated profit and loss account and any relevant reserves, as appropriate. Any attributable negative goodwill previously credited to the consolidated reserves at the time of acquisition is written back and included in the calculation of the gain or loss on disposal.

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FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

Related parties

Parties are considered to be related if one party has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Parties are also considered to be related if they are subject to common control or common significant influence. Related parties may be individuals or corporate entities.

Impairment of assets

An assessment is made at each balance sheet date of whether there is any indication of impairment of any asset, or whether there is any indication that an impairment loss previously recognised for an asset in prior years may no longer exist or may have decreased. If any such indication exists, the asset’s recoverable amount is estimated. An asset’s recoverable amount is calculated as the higher of the asset’s or cash-generating unit’s fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets.

An impairment loss is recognised only if the carrying amount of an asset exceeds its recoverable amount. An impairment loss is charged to the profit and loss account in the period in which it arises, unless the asset is carried at a revalued amount, when the impairment loss is accounted for in accordance with the relevant accounting policy for that revalued asset.

A previously recognised impairment loss for an asset other than goodwill is reversed only if there has been a change in the estimates used to determine the recoverable amount of an asset, however not to an amount higher than the carrying amount that would have been determined (net of any depreciation/amortisation), had no impairment loss been recognised for the asset in prior years. A reversal of an impairment loss is credited to the profit and loss account in the period in which it arises, unless the asset is carried at a revalued amount, when the reversal of the impairment loss is accounted for in accordance with the relevant accounting policy for that revalued asset. Any impairment losses made against goodwill is not reversed.

Fixed assets and depreciation

Fixed assets, other than investment properties, are stated at cost less accumulated depreciation and any impairment losses. The cost of an asset comprises its purchase price and any directly attributable costs of bringing the asset to its working condition and location for its intended use. Expenditure incurred after fixed assets have been put into operation, such as repairs and maintenance, is normally charged to the profit and loss account in the period in which it is incurred. In situations where it can be clearly demonstrated that the expenditure has resulted in an increase in the future economic benefits expected to be obtained from the use of the fixed asset, the expenditure is capitalised as an additional cost of that asset.

Depreciation is calculated on the straight-line basis to write off the cost of each asset over its estimated useful life. The principal annual rates used for this purpose are as follows:

Leasehold land	Over the lease terms
Buildings	2%
Leasehold improvements	10%-20%
Machinery	15%-20%
Furniture, fixtures and office equipment	15%-20%
Motor vehicles	20%-30%
Computer equipment	15%-30%

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

Investment properties

Investment properties are interests in land and buildings in respect of which construction work and development have been completed and which are owned by the Group or held by the Group under finance leases to earn rentals or for capital appreciation or both. Such properties are not depreciated, and are measured initially at cost including all transaction costs and, after initial recognition, carried at fair values, being their open market values on the basis of annual professional valuations performed at the end of each financial year.

−22 −

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

Changes in the fair values of investment properties are recognised in the profit and loss account in the period in which they arise.

An investment property is derecognised upon disposal or when the investment property is permanently withdrawn from use and no future economic benefits are expected from its disposal. The gain or loss arising from the retirement or disposal of the investment property, calculated as the difference between the net disposal proceeds and the carrying amount of the investment property, is recognised in profit and loss account in the period of the retirement or disposal.

Properties under development

Properties under development represent properties developed for sale and are stated at cost less any accumulated impairment losses. Cost comprises the cost of land together with any other direct costs attributable to the development of the properties, borrowing costs and professional fees capitalised during the development period.

Properties under development which are expected to be completed within 12 months from the balance sheet date are classified as current assets.

Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, i.e., assets that necessarily take a substantial period of time to get ready for their intended use or sale, are capitalised as part of the cost of those assets. Capitalisation of such borrowing costs ceases when the assets are substantially ready for their intended use or sale. Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs capitalised.

Investments

Debt securities which are intended to be held to maturity are accounted for as held-to-maturity securities, while other securities are accounted for as investment securities or other investments, as explained below.

Held-to-maturity securities

Investments in dated debt securities which are intended to be held to maturity are stated at cost, adjusted for the amortisation of premiums or discounts arising on acquisitions, less any impairment losses, on an individual investment basis.

The carrying amounts of held-to-maturity securities are reviewed as at the balance sheet date in order to assess the credit risk and whether the carrying amounts are expected to be recovered. Provisions are made when carrying amounts are not expected to be recovered and are recognised as an expense in the profit and loss account in the period in which they arise.

Investment securities

Investments in dated debt securities, equity securities, unit trusts and certificates of deposit intended to be held for a continuing strategic or identified long term purpose are stated at cost less any impairment losses, on an individual investment basis.

When a decline in the fair value of an investment security below its carrying amount has occurred, unless there is evidence that the decline is temporary, the carrying amount of the security is reduced to its fair value, as estimated by the directors. The amount of the impairment is charged to the profit and loss account for the period in which it arises.

Other investments

Investments in equity securities which are not intended to be held for an identified long term purpose are included in short term investments and are stated in the balance sheet at fair values. Fair values are determined on the basis of their quoted market prices at the balance sheet date, on an individual investment basis. The gains or losses arising from changes in the fair values of such investments are credited or charged to the profit and loss account in the period in which they arise.

−23 −

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

The profit or loss on disposal of an investment is credited or charged to the profit and loss account in the period in which the disposal occurs, and is calculated as the difference between the net sales proceeds and the carrying amount of the investment.

Provisions against the carrying amounts of investments are written back when the circumstances and events that led to the write-down or write-off cease to exist and there is persuasive evidence that the new circumstances and events will persist for the foreseeable future.

Inventories

Inventories are stated at the lower of cost and net realisable value. Cost is determined on the first-in, first-out basis and in the case of finished goods, comprises direct materials, direct labour and an appropriate proportion of overheads. Net realisable value is based on estimated selling prices less any estimated costs to be incurred to completion and disposal.

Cash and cash equivalents

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

For the purpose of the balance sheet, cash and cash equivalents comprise cash on hand and at banks, including term deposits, and assets similar in nature to cash, which are not restricted as to use.

Provisions

A provision is recognised when a present obligation (legal or constructive) has arisen as a result of a past event and it is probable that a future outflow of resources will be required to settle the obligation, provided that a reliable estimate can be made of the amount of the obligation.

When the effect of discounting is material, the amount recognised for a provision is the present value at the balance sheet date of the future expenditures expected to be required to settle the obligation. The increase in the discounted present value amount arising from the passage of time is included in finance costs in the profit and loss account.

Provisions for onerous contracts

Onerous contracts represent lease contracts for certain Hong Kong properties and projects where the unavoidable costs of meeting the obligations under the contracts exceed the economic benefits expected to be received under them. Provisions for onerous contracts are recognised based on the difference between the rental payments receivable by the Group and those unavoidable rental payments payable by the Group under the contracts, together with any compensation or penalties arising from the failure to fulfil the contracts, discounted to their present value as appropriate.

Income tax

Income tax comprises current and deferred tax. Income tax is recognised in the profit and loss account, or in equity if it relates to items that are recognised in the same or a different period, directly in equity.

Deferred tax is provided, using the liability method, on all temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred tax liabilities are recognised for all taxable temporary differences:

except where the deferred tax liability arises from the initial recognition of an asset or liability and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and
in respect of taxable temporary differences associated with investments in subsidiaries and associates, except where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

−24 −

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

Deferred tax assets are recognised for all deductible temporary differences, carryforward of unused tax assets and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carryforward of unused tax assets and unused tax losses can be utilised:

except where the deferred tax asset relating to the deductible temporary differences arises from the initial recognition of an asset or liability and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and
in respect of deductible temporary differences associated with investments in subsidiaries and associates, deferred tax assets are only recognised to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised.

The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Conversely, previously unrecognised deferred tax assets are recognised to the extent that it is probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised.

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

Revenue recognition

Revenue is recognised when it is probable that the economic benefits will flow to the Group and when the revenue can be measured reliably, on the following bases:

(a) rental and sub-licensing fee income, on an accrual basis;
(b) from the provision of management services, when the services are rendered;
(c) from the sale of goods and pre-sale of properties under development, when the significant risks and rewards of ownership have been transferred to the buyer, provided that the Group maintains neither managerial involvement to the degree usually associated with ownership, nor effective control over the goods or properties sold;
(d) from the sale of properties, when the sale agreement becomes unconditional;
(e) from the provision of project management and agency services, when the services are rendered;
(f) interest income, on a time proportion basis taking into account the principal outstanding and the effective interest rate applicable;
(g) on the trading of securities, revenue is recognised on the date when the transaction takes place; and
(h) dividend income, where the shareholders’ right to receive payment has been established.

Employee benefits

Employment Ordinance long service payments

Certain of the Group’s employees have completed the required number of years of service to the Group in order to be eligible for long service payments under the Hong Kong Employment Ordinance in the event of the termination of their employment. The Group is liable to make such payments in the event that such a termination of employment meets the circumstances specified in the Employment Ordinance.

−25 −

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

A contingent liability is disclosed in respect of possible future long service payments to employees, as a number of current employees have achieved the required number of years of service to the Group, to the balance sheet date, in order to be eligible for long service payments under the Employment Ordinance if their employment is terminated in the circumstances specified. A provision has not been recognised in respect of such possible payments, as it is not considered probable that the situation will result in a material future outflow of resources from the Group.

Retirement benefits scheme

The Group operates a defined contribution Mandatory Provident Fund retirement benefits scheme (the “Scheme”) under the Mandatory Provident Fund Schemes Ordinance, for those employees who are eligible to participate in the Scheme. Contributions are made based on a percentage of the employees’ basic salaries and are charged to the profit and loss account as they become payable in accordance with the rules of the Scheme. The assets of the Scheme are held separately from those of the Group in an independently administered fund. The Group’s employer contributions vest fully with the employees when contributed into the Scheme.

Share option schemes

The Company operates share option schemes for the purpose of providing incentives and rewards to eligible participants who contribute to the success of the Group’s operations. The financial impact of share options granted under the share option schemes is not recorded in the Company’s or the Group’s balance sheet until such time as the options are exercised, and no charge is recorded in the profit and loss account or balance sheet for their cost. Upon the exercise of share options, the resulting shares issued are recorded by the Company as additional share capital at the nominal value of the shares, and the excess of the exercise price per share over the nominal value of the shares is recorded by the Company in the share premium account. Options which are cancelled prior to their exercise date, or which lapse, are deleted from the register of outstanding options.

Dividends

Final dividends proposed by the directors are classified as a separate allocation of retained profits within the capital and reserves section of the balance sheet, until they have been approved by the shareholders in a general meeting. When these dividends have been approved by the shareholders and declared, they are recognised as a liability.

Interim dividends are simultaneously proposed and declared, because bye-law 140 of the Company’s bye-laws grants the directors the authority to declare interim dividends. Consequently, interim dividends are recognised immediately as a liability when they are proposed and declared.

Foreign currencies

Foreign currency transactions are recorded at the applicable exchange rates ruling at the transaction dates. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are translated at the applicable exchange rates ruling at that date. Exchange differences are dealt with in the profit and loss account.

On consolidation, the financial statements of overseas subsidiaries and associates are translated into Hong Kong dollars using the net investment method. The profit and loss accounts of overseas subsidiaries and associates are translated into Hong Kong dollars at the weighted average exchange rates for the year, and their balance sheets are translated into Hong Kong dollars at the exchange rates ruling at the balance sheet date. The resulting translation differences are included in the exchange fluctuation reserve.

For the purpose of the consolidated cash flow statement, the cash flows of overseas subsidiaries are translated into Hong Kong dollars at the exchange rates ruling at the dates of the cash flows. Frequently recurring cash flows of overseas subsidiaries which arise throughout the year are translated into Hong Kong dollars at the weighted average exchange rates for the year.

−26 −

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

4. SEGMENT INFORMATION

Segment information is presented by way of two segment formats: (i) on a primary segment reporting basis, by business segment; and (ii) on a secondary segment reporting basis, by geographical segment.

Segment information is presented by way of the Group’s primary segment reporting basis, by business segment. In determining the Group’s geographical segments, revenues are attributed to the segments based on the location of the customers, and assets are attributed to the segments based on the location of the assets. No further geographical segment information is presented as over 90% of the Group’s revenue is derived from customers based in Hong Kong, and over 90% of the Group’s assets are located in Hong Kong.

The Group’s operating businesses are structured and managed separately, according to the nature of their operations and the products and services they provide. Each of the Group’s business segments represents a strategic business unit that offers products and services which are subject to risks and returns that are different from those of the other business segments. Summary details of the business segments are as follows:

(a) the property development segment engages in the development of properties;
(b) the property investment segment invests in industrial and commercial premises and residential units for rental income;
(c) the Chinese wet markets segment engages in the management and sub-licensing of Chinese wet markets;
(d) the shopping centres and car parks segment engages in the management and sub-licensing of shopping centres and car parks;
(e) the retail business segment engages in the retailing of pork;
(f) the corporate and others segment comprises the Group’s management service business. This segment also includes corporate income and expense items; and
(g) the pharmaceutical segment engages in the production and sale of cough syrup and health care products.

Intersegment sales and transfers are transacted with reference to the selling prices used for sales made to third parties at the then prevailing market prices.

−27 −

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

	Consolidated	2005 2004	HK$’000 HK$’000		364,123 296,565	– –	100,339 45,139	464,462 341,704		92,155 50,294		(2,047) (7,396)	5,289 10,814	95,397 53,712	(4,326) (2,041)			(15,000) (17,963)	76,071 33,708	(5,910) (4,334)	70,161 29,374	(34) (89)		70,127 29,285
Property Chinese wet Shopping centres Corporate and	development Property investment markets and car parks Retail business others Pharmaceutical Eliminations*	2005 2004 2005 2004 2005 2004 2005 2004 2005 2004 2005 2004 2005 2004 2005 2004	HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000	Segment revenue:	Sales to external customers – – 85,062 8,138 146,242 137,858 89,340 89,334 38,213 36,950 5,266 5,730 – 18,555 – –	Intersegment sales – – – 346 3,837 3,189 933 967 – – 12,684 9,029 – – (17,454) (13,531)	Other revenue – – 31,314 7,308 811 641 1,632 2,361 994 81 65,588 34,703 – 45 – –	Total – – 116,376 15,792 150,890 141,688 91,905 92,662 39,207 37,031 83,538 49,462 – 18,600 (17,454) (13,531)		Segment results (3,104) – 59,702 11,923 15,425 15,840 6,904 5,411 947 761 12,697 10,336 – 6,023 (416) –		Unallocated expenses	Interest income	Profit from operating activities	Finance costs	Share of profits and losses of	associates (including amortisation	of goodwill)	Profit before tax	Tax	Profit before minority interests	Minority interests	Net profit from ordinary activities	attributable to shareholders		* ThG’htiltididftitdithdd31Mh2004

−28 −

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

	Consolidated	2005 2004	HK$’000 HK$’000	967,802 719,397	179,011 136,602	1,483 1,584	1,148,296 857,583	(65,590) (67,057)	(345,894) (109,543)	(411,484) (176,600)		12,109 12,595	– 6,246	15,955 8,483	455,426 107,485
	Eliminations	2005 2004	HK$’000 HK$’000	(477,393) (299,490)	– –	– –	(477,393) (299,490)	477,393 299,490	– –	477,393 299,490		– –	– –	– –	– –
	Pharmaceutical*	2005 2004	HK$’000 HK$’000	– –	– –	– –	– –	– –	– –	– –		– 88	– –	– –	– 57
Corporate and	others	2005 2004	HK$’000 HK$’000	822,558 647,885	179,011 136,602	– –	1,001,569 784,487	(82,447) (28,970)	– –	(82,447) (28,970)		2,438 2,570	– 6,246	15,299 8,462	1,115 706
	Retail business	2005 2004	HK$’000 HK$’000	3,739 3,484	– –	– –	3,739 3,484	(2,551) (2,877)	– –	(2,551) (2,877)		179 134	– –	– –	118 163
Shopping centres	and car parks	2005 2004	HK$’000 HK$’000	40,822 40,460	– –	– –	40,822 40,460	(35,601) (47,586)	– –	(35,601)) (47,586)		1,908 2,973	– –	– 21	626 3,545
Chinese wet	markets	2005 2004	HK$’000 HK$’000	68,658 62,601	– –	– –	68,658 62,601	(68,938) (62,662)	– –	(68,938) (62,662)		7,574 6,830	– –	656 –	3,706 748
	Property investment	2005 2004	HK$’000 HK$’000	271,203 264,457	– –	– –	271,203 264,457	(190,979) (224,452)	– –	(190,979) (224,452)		10 –	– –	– –	197,802 102,266
Property	development	2005 2004	HK$’000 HK$’000	238,215 –	– –	– –	238,215 –	(162,467) –	– –	(162,467) –		– –	– –	– –	252,059 –
				Segment assets	Interests in associates	Unallocated assets	Total assets	Segment liabilities	Unallocated liabilities	Total liabilities	Other segment information:	Depreciation	Amortisation of goodwill	Other non-cash expenses	Capital expenditure

−29 −

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

5. TURNOVER, REVENUE AND GAINS

Turnover represents management and sub-licensing fee income received and receivable; the invoiced value of goods sold, after allowances for returns and trade discounts; the invoiced value of services rendered; the gross rental income received and receivable from investment properties and proceeds from the disposal of properties during the year.

An analysis of turnover, other revenue and gains is as follows:

Turnover Sub-licensing fee income Management fee income Sale of goods Rendering of services Gross rental income Sale of investment properties Other revenue Interest income Interest income from investments Dividend income from listed securities Others Gains Gain on disposal of convertible notes due from an associate Gain on disposal of investments, net Exchange gains, net Recognition of deferred gain on disposal of subsidiaries Gain on disposal of investment properties Excess of the Group’s interest in the net fair value of the investees’ identifiable assets, liabilities and contingent liabilities over cost recognised as income Other revenue and gains	Group 2005 2004 HK$’000 HK$’000 216,689 213,335 18,904 13,454 38,213 55,679 5,256 5,959 11,261 8,138 73,800 – 364,123 296,565	Group 2005 2004 HK$’000 HK$’000 216,689 213,335 18,904 13,454 38,213 55,679 5,256 5,959 11,261 8,138 73,800 – 364,123 296,565
		296,565

	2,916 2,373 405 5,401 11,095 – 1,907 289 – 7,335 35,024 44,555	8,428 2,386 128 4,653
		15,595
		17,883 109 1,564 688 – –
		20,244
	55,650	35,839

−30 −

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

6. PROFIT FROM OPERATING ACTIVITIES

The Group’s profit from operating activities is arrived at after charging/(crediting):

Notes Amortisation of goodwill of subsidiaries Auditors’ remuneration Cost of inventories sold Cost of services provided Cost of properties sold Depreciation 14 Surplus on revaluation of investment properties 14 Loss/(gain) on disposal of investment properties 5 Loss on disposal of other fixed assets Fixed assets written off Net holding gain on investments Minimum lease payments under operating leases for land and buildings Provision for impairment of long term investments* Provision for and write-off of bad and doubtful debts Staff costs (including directors’ remuneration – Note 8): Wages and salaries Pension scheme contributions Amount released for onerous contracts 27 Net rental income	Group 2005 2004 HK$’000 HK$’000 – 6,246 995 785 24,310 30,235 205,218 208,935 53,000 – 12,109 12,595 (23,003) (7,066 (7,335) 15 1 164 28 21 (375) (570 140,193 121,176 15,299 1,641 656 6,821 53,197 56,104 2,022 2,114 55,219 58,218 (5,404) (6,566 (10,817) (8,060	Group 2005 2004 HK$’000 HK$’000 – 6,246 995 785 24,310 30,235 205,218 208,935 53,000 – 12,109 12,595 (23,003) (7,066 (7,335) 15 1 164 28 21 (375) (570 140,193 121,176 15,299 1,641 656 6,821 53,197 56,104 2,022 2,114 55,219 58,218 (5,404) (6,566 (10,817) (8,060
		58,218
		(6,566 (8,060

The provision for impairment of long term investments is included in “Other operating expenses” on the face of the consolidated profit and loss account.

7. FINANCE COSTS

Interest on convertible notes Interest on bank loans and overdrafts Total interest Less: Interest capitalised	Group 2005 2004 HK$’000 HK$’000 170 – 4,982 2,041	Group 2005 2004 HK$’000 HK$’000 170 – 4,982 2,041
	5,152 (826)	2,041 –
	4,326	2,041

−31 −

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

8. DIRECTORS’ REMUNERATION

Directors’ remuneration for the year, disclosed pursuant to the Listing Rules and Section 161 of the Hong Kong Companies Ordinance, is as follows:

Fees: Executive directors Independent non-executive directors Other emoluments for executive directors: Salaries and allowances Pension scheme contributions	Group 2005 2004 HK$’000 HK$’000 – – 693 631 9,666 9,975 36 36 10,395 10,642	Group 2005 2004 HK$’000 HK$’000 – – 693 631 9,666 9,975 36 36 10,395 10,642
		10,642

The number of directors whose remuneration fell within the following bands is as follows:

Nil to HK$1,000,000 HK$1,500,001 to HK$2,000,000 HK$2,000,001 to HK$2,500,000 HK$3,500,001 to HK$4,000,000 HK$4,000,001 to HK$4,500,000	Number 2005 4 1 – 2 – 7	of directors 2004 3 – 1 1 1
		6

There was no arrangement under which a director waived or agreed to waive any remuneration during the year.

9. FIVE HIGHEST PAID EMPLOYEES

The five highest paid employees during the year included three (2004: three) directors, details of whose remuneration are disclosed in note 8 above. Details of the remuneration of the remaining two (2004: two) non-director, highest paid employees for the year are as follows:

Salaries and allowances Pension scheme contributions	Group 2005 2004 HK$’000 HK$’000 1,460 1,567 18 37 1,478 1,604	Group 2005 2004 HK$’000 HK$’000 1,460 1,567 18 37 1,478 1,604
		1,604

−32 −

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

The number of non-director, highest paid employees whose remuneration fell within the following bands is as follows:

HK$500,001 to HK$1,000,000 HK$1,000,001 to HK$1,500,000	Number 2005 2 – 2	of employees 2004 1 1
		2

During the year, 2,860,000 share options of the Company were granted to the two non-director, highest paid employees in respect of their services to the Group, further details of which are set out in note 32 to the financial statements. No value in respect of the share options granted during the year has been charged to the profit and loss account, or is otherwise included in the above non-director, highest paid employees’ remuneration disclosures.

10. TAX

Hong Kong profits tax has been provided at the rate of 17.5% (2004: 17.5%) on the estimated assessable profits arising in Hong Kong during the year.

Group: Current – Hong Kong Charge for the year Underprovision/(overprovision) in prior years Deferred (Note 30) Share of tax attributable to associates Total tax charge for the year	2005 HK$’000 2,284 (141) 2,112	2004 HK$’000 2,796 213 809
	4,255 1,655	3,818 516
	5,910	4,334

A reconciliation of the tax expense applicable to profit before tax using the statutory rates for the countries in which the Company and the majority of its subsidiaries and associates are domiciled to the tax expense at the effective tax rates, and a reconciliation of the applicable rates (i.e. the statutory tax rates) to the effective tax rates, are as follows:

Profit before tax Tax at the statutory tax rate Adjustments in respect of current tax of previous periods Income not subject to tax Expenses not deductible for tax Tax losses utilised from previous periods Tax losses not recognised Tax charge at the Group’s effective rate	Group 2005 2004 HK$’000 % HK$’000 % 76,071 33,708	Group 2005 2004 HK$’000 % HK$’000 % 76,071 33,708	Group 2005 2004 HK$’000 % HK$’000 % 76,071 33,708	Group 2005 2004 HK$’000 % HK$’000 % 76,071 33,708
	13,312 (141) (20,002) 15,255 (4,757) 2,243	17.5 (0.2) (26.3) 20.1 (6.3) 3.0	5,899 213 (20,968) 20,358 (4,967) 3,799	17.5 0.6 (62.2 60.4 (14.7 11.3
	5,910	7.8	4,334	12.9

−33 −

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

11. NET PROFIT FROM ORDINARY ACTIVITIES ATTRIBUTABLE TO SHAREHOLDERS

The net profit from ordinary activities attributable to shareholders for the year ended 31 March 2005 dealt with in the financial statements of the Company was HK$30,826,000 (2004: HK$6,166,000 (Note 33(b)).

12. DIVIDENDS

Interim – HK3.0 cents (2004: HK3.0 cents) per ordinary share Proposed final – HK12.0 cents (2004: HK7.0 cents) per ordinary share	2005 HK$’000 4,300 17,846 22,146	2004 HK$’000 3,544 10,032
		13,576

The proposed final dividend for the year is subject to the approval of the Company’s shareholders at the forthcoming annual general meeting.

13. EARNINGS PER SHARE

The calculation of basic earnings per share is based on the net profit attributable to shareholders for the year of HK$70,127,000 (2004: HK$29,285,000), and the weighted average of 143,320,366 (2004: 121,746,522) ordinary shares in issue during the year.

The calculation of diluted earnings per share is based on the net profit attributable to shareholders for the year of HK$70,234,000 (2004: HK$29,285,000) after adjustment for interest saved upon deemed exercise of all convertible notes during the year. The weighted average number of ordinary shares used in the calculation is the 143,320,366 (2004: 121,746,522) ordinary shares in issue during the year, as used in the basic earnings per share calculation and the weighted average of 6,260,100 (2004: 6,807,774) ordinary shares assumed to have been issued at no consideration on the deemed exercise of all the share options and convertible notes during the year.

−34 −

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

14. FIXED ASSETS

Group

Investment properties Leasehold improvements HK$’000 HK$’000 260,400 53,284 197,802 3,403 (107,800) (1,460) (153,855) – 23,003 –	Investment properties Leasehold improvements HK$’000 HK$’000 260,400 53,284 197,802 3,403 (107,800) (1,460) (153,855) – 23,003 –	Machinery HK$’000 5,516 104 (30) (66) –	Furniture, fixtures and office equipment HK$’000 49,259 852 (309) (5) –	Motor vehicles HK$’000 758 346 (176) (76) –	Computer equipment HK$’000 1,767 860 (245) (18) –	Total HK$’000 370,984 203,367 (110,020 (154,020 23,003
219,550 – – – – –	55,227 29,815 7,040 (1,402) – 35,453	5,524 2,072 1,177 (10) (26) 3,213	49,797 44,634 3,298 (294) (2) 47,636	852 574 177 (176) (33) 542	2,364 1,110 417 (247) (1) 1,279	333,314
						78,205 12,109 (2,129 (62
						88,123
219,550 260,400	19,774 23,469	2,311 3,444	2,161 4,625	310 184	1,085 657	245,191

						292,779

– 219,550	55,227 –	5,524 –	49,797 –	852 –	2,364 –	113,764 219,550
219,550	55,227	5,524	49,797	852	2,364	333,314

Company

Furniture, fixtures and office equipment HK$’000 15	Computer equipment HK$’000 66	Total HK$’000 81
10 3 13	66 – 66	76 3
		79
2 5	– –	2

		5

−35 −

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

The Group’s investment properties are all situated in Hong Kong and are held under the following term leases:

Long term leases Medium term leases	HK$’000 20,500 199,050
	219,550

The Group’s investment properties were revalued on 31 March 2005 by Vigers Appraisal & Consulting Limited, independent professionally qualified valuers, on an open market, existing use basis. An aggregate amount of revaluation surplus of HK$23,003,000 resulting from the revaluation has been credited to the profit and loss account. The investment properties are leased to a director of the Company, third parties and associates under operating leases, further details of which are included in notes 36 and 39 to the financial statements.

Save as disclosed in note 39(a) to the financial statements, the investment properties are leased to third parties under operating leases, further summary details of which are included in note 36 to the financial statements. The gross rental income received and receivable by the Group and the related expenses in respect of these investment properties are summarised as follows:

Gross rental income Direct expenses Net rental income	Group 2005 2004 HK$’000 HK$’000 11,261 8,138 (444) (78 10,817 8,060	Group 2005 2004 HK$’000 HK$’000 11,261 8,138 (444) (78 10,817 8,060
		8,060

At 31 March 2005, the Group’s investment properties with an aggregate value of HK$196,650,000 (2004: HK$260,400,000) and certain rental income generated therefrom were pledged to secure the Group’s general banking facilities, of which approximately HK$92,328,000 (2004: HK$140,735,000) had been utilised as at 31 March 2005 (Note 28).

Further particulars of the Group’s investment properties are included on pages 90 and 91.

15. PROPERTIES UNDER DEVELOPMENT

At beginning of year Additions At the end of year Less: Portion classified as current assets Long term portion	Group 2005 2004 HK$’000 HK$’000 – – 221,456 –	Group 2005 2004 HK$’000 HK$’000 – – 221,456 –
	221,456 (13,044)	– –
	208,412	–

At 31 March 2005, the Group’s properties under development with an aggregate value of HK$180,254,000 (2004: Nil) were pledged to secure the Group’s general banking facilities, of which approximately HK$148,000,000 (2004: Nil) had been utilised as at 31 March 2005 (Note 28).

Further particulars of the Group’s properties under development are included on page 92.

−36 −

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

16. GOODWILL

The amounts of the goodwill capitalised as an asset in the consolidated balance sheet, arising from the acquisition of subsidiaries and associates, are as follows:

Group

Notes Cost: At 1 April 2004 As previously reported Effect of adopting HKFRS 3 As restated Acquisitions during the year 34(b) Disposal of subsidiaries 34(d) Disposal of interests in an associate At 31 March 2005 Accumulated amortisation and impairment: At 1 April 2004 As previously reported Effect of adopting HKFRS 3 At restated Net book value: At 31 March 2005 At 31 March 2004	Goodwill arising on acquisition of subsidiaries HK$’000 7,096 (1,637)	Goodwill arising on acquisition of associates (Note 18) HK$’000 35,656 (23,999) 11,657 – – (1,939) 9,718 23,999 (23,999) – 9,718 11,657
	5,459 943 (1,415) – 4,987 1,637 (1,637) –	11,657
		– – (1,939
		9,718
		23,999 (23,999
		–
	4,987 5,459

As detailed in note 3 to the financial statements, on the adoption of SSAP 30 in 2002, the Group applied the transitional provision of SSAP 30 that permitted goodwill and negative goodwill in respect of acquisitions which occurred prior to the adoption of the SSAP, to remain eliminated against consolidated reserves or credited to the capital reserve, respectively.

The amounts of goodwill recorded at cost in consolidated reserves, arising from the acquisition of subsidiaries prior to the adoption of SSAP 30 in 2002 were HK$20,829,000 as at 1 April 2003. During the year ended 31 March 2004, upon the acquisition of additional interest in an associate, which became a subsidiary thereafter, the entire amount of goodwill of HK$926,000 recorded at cost in consolidated reserves as at 1 April 2003, arising from the acquisition of an associate prior to the adoption of SSAP 30 in 2002, was reclassified as goodwill arising on acquisition of subsidiaries. Accordingly, the goodwill remaining in consolidated reserves as at 31 March 2005 was HK$21,755,000.

−37 −

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

17. INTERESTS IN SUBSIDIARIES

Unlisted shares, at cost Due from subsidiaries – Note (i) Loans to subsidiaries – Note (ii) Due to subsidiaries – Note (i) Less: Provisions for impairment	Company 2005 2004 HK$’000 HK$’000 71,000 71,000 783,825 655,101 91,385 83,461 (76,192) (33,481	Company 2005 2004 HK$’000 HK$’000 71,000 71,000 783,825 655,101 91,385 83,461 (76,192) (33,481
	870,018 (419,449)	776,081 (419,449
	450,569	356,632

Notes:

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

(ii) The amounts are unsecured and have no fixed terms of repayment. Except for a loan to a subsidiary of HK$15,878,000 which bears interest at 3% per annum, the remaining balances are interest-free.

Particulars of the principal subsidiaries at the balance sheet date are as follows:

	Place of	Nominal value of	Percentage of	Percentage of
	incorporation/	issued ordinary	equity attributable
Name	operations	share capital	to the	Company	Principal activities
			Direct	Indirect
Advance Century Limited	Hong Kong	Ordinary	–	100	Investment holding
		HK$2
Charter Golden Design &	Hong Kong	Ordinary	–	100	Property development
Contracting Limited		HK$2
Century Fortune Hong Kong	Hong Kong	Ordinary	–	100	Property investment
Limited		HK$2
China Coin Management	Hong Kong	Ordinary	–	100	Property investment
Limited		HK$1,000
Conway Consultants Limited	Hong Kong	Ordinary	–	70	Provision of medical
		HK$1,400,000			consultation
		Non-voting			services
		preference (Note 2)
		HK$600,000
Denox Management Limited	Hong Kong	Ordinary	–	100	Management and sub-
		HK$2			letting of
					properties
Dragon Richly Investment	Hong Kong	Ordinary	–	100	Property development
Limited		HK$1
Easy Kindom Limited	Hong Kong	Ordinary	–	100	Property investment
		HK$2
Goodtech Management	Hong Kong	Ordinary	–	100	Management of
Limited		HK$2,800,100			shopping centres
Grand Quality Development	Hong Kong	Ordinary	–	100	Property investment
Limited		HK$2

−38 −

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

	Place of	Nominal value of	Percentage of	Percentage of
	incorporation/	issued ordinary	equity attributable
Name	operations	share capital	to the	Company	Principal activities
			Direct	Indirect
Greatest Wealth Limited	Hong Kong	Ordinary	–	100	Management of pork
		HK$100			stalls and butcher
					shops
Join China Investment	Hong Kong	Ordinary	–	100	Investment holding
Limited		HK$2
Lead Fortune Limited	Hong Kong	Ordinary	–	100	Property investment
		HK$1,000
Kartix Investment Limited	Hong Kong	Ordinary	–	100	Property development
		HK$1
Lica Parking Company	Hong Kong	Ordinary	–	99	Management and sub-
Limited		HK$25,500,000			licensing of car parks
Majorluck Limited	Hong Kong	Ordinary	–	100	Management and sub-
		HK$10,000			licensing of Chinese
					wet markets
Poly Talent Investment	Hong Kong	Ordinary	–	100	Property development
Limited		HK$1
Profit Million Investment	Hong Kong	Ordinary	–	100	Property development
Limited		HK$1
Parking Lot Management	Hong Kong	Ordinary	–	100	Property investment
Limited		HK$700,002
Rich Time Strategy Limited	British	Ordinary	–	100	Investment holding
	Virgin Islands/	US$1
	Hong Kong
WOB Investments Limited	Hong Kong	Ordinary	–	100	Property investment
		HK$2
Wang On Commercial	British	Ordinary	–	100	Investment holding
Management Limited	Virgin Islands/	US$2
	Hong Kong
WEH Investments Limited	Hong Kong	Ordinary	–	100	Property investment
		HK$477 Non-voting
		deferred (Note 3)
		HK$1,262,523
Wang On Enterprises (BVI)	British	Ordinary	100	–	Investment holding
Limited	Virgin Islands/	US$1
	Hong Kong
Wang On Majorluck Limited	Hong Kong	Ordinary	–	100	Management and sub-
		HK$1,000			licensing of
					Chinese wet
					markets
Wang On Shopping Centre	Hong Kong	Ordinary	–	100	Management and sub-
Management Limited		HK$2			licensing of
					shopping centres
Willing Dental Consultants	Hong Kong	Ordinary	–	100	Provision of dental
Limited		HK$100			consultation services

−39 −

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

Notes:

(1) The above table lists the subsidiaries of the Company which, in the opinion of the directors, principally affected the results for the year or formed a substantial portion of the net assets of the Group. To give details of other subsidiaries would, in the opinion of the directors, result in particulars of excessive length.
(2) The non-voting preference shares carry no voting rights but the holders have the right to receive an annual cash dividend equivalent to 30% of the audited net profit after tax. On the winding-up of the company, the holders rank in priority to the ordinary shareholders provided that the assets of the company available for distribution to its members shall be applied first towards arrears or accruals of the dividend.
(3) The non-voting deferred shares carry no voting rights or rights to dividends. On the winding-up of the companies, the holders of non-voting deferred shares have a right to repayment in proportion to the amounts of all paid-up ordinary and deferred shares after the first HK$1,000,000,000,000 thereof has been distributed among the holders of the ordinary shares.

18. INTERESTS IN ASSOCIATES

Group 2005 2004 HK$’000 HK$’000 167,557 69,713 (14,692) (8,785) 9,718 11,657	Group 2005 2004 HK$’000 HK$’000 167,557 69,713 (14,692) (8,785) 9,718 11,657	Company 2005 2004 HK$’000 HK$’000 – – – – – –	Company 2005 2004 HK$’000 HK$’000 – – – – – –
162,583 465 (34) – 16,000 179,014 (3)	72,585 539 (19) 7,000 56,500 136,605 (3)	– 219 – – – 219 –	– 219 – – –
			219 –
179,011	136,602	219	219

Notes:

(i) The amounts with associates are unsecured, interest-free and have no fixed terms of repayment.
(ii) The convertible notes of HK$16,000,000 carry interest at 3% per annum with a right to convert into ordinary shares of Wai Yuen Tong Medicine Holdings Limited (“WYTH”) at an initial conversion price of HK$0.08 per share during the period from 15 March 2005 to 14 March 2008. The initial conversion price of HK$0.08 per share was increased to HK$0.80 per share as a result of the capital reorganisation of WYTH effective on 9 June 2005.

−40 −

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

Particulars of the principal associate at the balance sheet date are as follows:

				Place of	Percentage of ownership	Percentage of ownership
			Business	incorporation/	interest attributable to the
Name			structure	operations	Group		Principal activities
					2005	2004
					(Note 2)
WYTH*	_(Note _	3)	Corporate	Hong Kong	28.57	19.62	Production and sale of
							traditional Chinese and
							Western pharmaceutical,
							health food products and
							property holding

Notes:

(1) The above table lists the associate of the Group which, in the opinion of the directors, principally affected the results for the year or formed a substantial portion of the net assets of the Group. To give details of other associates would, in the opinion of the directors, result in particulars of excessive length.
(2) During the year, the interest in WYTH was increased as a result of subscription of rights shares, placements of shares and the exercise of convertible notes in the investee company.
(3) The financial statements of the company are not audited by Ernst & Young Hong Kong or other Ernst & Young International member firms.
Listed on The Stock Exchange of Hong Kong Limited.

Extracts of the financial information of the Group’s principal associate are as follows:

Profit and loss account Turnover Net loss for the year Balance sheet Non-current assets Current assets Current liabilities Non-current liabilities Minority interests Net assets	WYTH 2005 2004 HK$’000 HK$’000 326,909 349,225 (66,975) (30,006) 604,570 343,339 223,244 126,017 (96,232) (44,784) (132,494) (70,667) (7,877) (212) 591,211 353,693	WYTH 2005 2004 HK$’000 HK$’000 326,909 349,225 (66,975) (30,006) 604,570 343,339 223,244 126,017 (96,232) (44,784) (132,494) (70,667) (7,877) (212) 591,211 353,693
	604,570 223,244 (96,232) (132,494) (7,877)	343,339 126,017 (44,784 (70,667 (212
	591,211

−41 −

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

19. INVESTMENTS

(a) Long term investments

Group 2005 2004 HK$’000 HK$’000 31,454 15,534	Group 2005 2004 HK$’000 HK$’000 31,454 15,534	Company 2005 2004 HK$’000 HK$’000 31,454 15,534	Company 2005 2004 HK$’000 HK$’000 31,454 15,534

7,770 3,010 30,098 12,000 52,878 (30,098) 22,780	– 4,010 30,098 – 34,108 (14,799) 19,309	7,770 3,010 – – 10,780 – 10,780	– – – –
			– –
			–
54,234	34,843	42,234	15,534

−42 −

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

(b) Short term investments

Group 2005 2004 HK$’000 HK$’000 – 19,403 – 11,650 19,424 – 1,000 – 7,751 – 7,769 –	Group 2005 2004 HK$’000 HK$’000 – 19,403 – 11,650 19,424 – 1,000 – 7,751 – 7,769 –	Company 2005 2004 HK$’000 HK$’000 – – – 11,650 19,424 – 1,000 – 7,751 – 7,769 –	Company 2005 2004 HK$’000 HK$’000 – – – 11,650 19,424 – 1,000 – 7,751 – 7,769 –
35,944 23,361 –	31,053 5,920 455	35,944 8,003 –	11,650 – 455
59,305	37,428	43,947 12,105 Group 2005 2004 HK$’000 HK$’000 70 73	12,105

None of the inventories included in the above was carried at net realisable value as at the balance sheet date (2004: Nil).

−43 −

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

21. TRADE RECEIVABLES

An aged analysis of the trade receivables as at the balance sheet date, based on invoice date, is as follows:

Group 2005 2004 HK$’000 Percentage HK$’000 Percentage 9,073 84 5,297 94 1,154 11 253 4 636 5 86 2 10,863 100 5,636 100 (836) (85)	Group 2005 2004 HK$’000 Percentage HK$’000 Percentage 9,073 84 5,297 94 1,154 11 253 4 636 5 86 2 10,863 100 5,636 100 (836) (85)	Group 2005 2004 HK$’000 Percentage HK$’000 Percentage 9,073 84 5,297 94 1,154 11 253 4 636 5 86 2 10,863 100 5,636 100 (836) (85)	Group 2005 2004 HK$’000 Percentage HK$’000 Percentage 9,073 84 5,297 94 1,154 11 253 4 636 5 86 2 10,863 100 5,636 100 (836) (85)
			100

	)	(85)
10,027		5,551

The Group’s businesses generally do not grant any credit to customers.

22. PREPAYMENTS, DEPOSITS AND OTHER RECEIVABLES

Prepayments Deposits Other receivables	Group 2005 2004 HK$’000 HK$’000 5,397 2,978 8,655 6,269 8,349 4,725 22,401 13,972	Company 2005 2004 HK$’000 HK$’000 3,667 814 – 47 1,200 227 4,867 1,088	Company 2005 2004 HK$’000 HK$’000 3,667 814 – 47 1,200 227 4,867 1,088
			1,088

23. CASH AND CASH EQUIVALENTS AND PLEDGED DEPOSITS

Cash and bank balances Time deposits Less: Pledged deposits Cash and cash equivalents	Group 2005 2004 HK$’000 HK$’000 43,300 25,931 269,363 263,434	Group 2005 2004 HK$’000 HK$’000 43,300 25,931 269,363 263,434	Company 2005 2004 HK$’000 HK$’000 19,235 2,189 245,371 236,200	Company 2005 2004 HK$’000 HK$’000 19,235 2,189 245,371 236,200
	312,663 (7,723)	289,365 –	264,606 (7,723)	238,389 –
	304,940	289,365	256,883	238,389

−44 −

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

24. TRADE PAYABLES

An aged analysis of the trade payables as at the balance sheet date, based on invoice date, is as follows:


			2005	2004
			HK$’000	HK$’000
Within	90	days	157	188

25. OTHER PAYABLES AND ACCRUALS

Other payables Accruals	Group 2005 2004 HK$’000 HK$’000 4,291 4,010 10,503 8,987 14,794 12,997	Company 2005 2004 HK$’000 HK$’000 2,023 110 576 131 2,599 241	Company 2005 2004 HK$’000 HK$’000 2,023 110 576 131 2,599 241
			241

26. INTEREST-BEARING BANK LOANS

		Group		Company
		2005	2004	2005	2004
	Note	HK$’000	HK$’000	HK$’000	HK$’000
Current portion of bank loans
and overdrafts	28	28,072	24,575	20,000	–

27. PROVISIONS FOR ONEROUS CONTRACTS

At beginning of year Additional provision/(write back of provision) Amount utilised during the year At 31 March Portion classified as current liabilities Long term portion	Group 2005 2004 HK$’000 HK$’000 13,573 20,139 1,777 (420 (7,181) (6,146	Group 2005 2004 HK$’000 HK$’000 13,573 20,139 1,777 (420 (7,181) (6,146
	8,169 (6,749)	13,573 (9,112
	1,420	4,461

−45 −

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

28. INTEREST-BEARING BANK LOANS

Group 2005 2004 HK$’000 HK$’000 240,328 104,648 2,240 – 242,568 104,648	Group 2005 2004 HK$’000 HK$’000 240,328 104,648 2,240 – 242,568 104,648	Company 2005 2004 HK$’000 HK$’000 65,000 – – – 65,000 –	Company 2005 2004 HK$’000 HK$’000 65,000 – – – 65,000 –
			–

28,072 79,907 75,687 58,902 242,568 (28,072)	24,575 9,734 24,890 45,449 104,648 (24,575)	20,000 20,000 25,000 – 65,000 (20,000)	– – – –
			–
			–
214,496	80,073	45,000	–

Note: Certain of the Group’s bank loans are secured by the Group’s investment properties (Note 14) and properties under development (Note 15).

In addition, the Company has guaranteed certain of the Group’s bank loans up to HK$358,993,000 (2004: HK$243,650,000) as at the balance sheet date.

29. CONVERTIBLE NOTES

2007 convertible notes – Note (i) 2008 convertible notes – Note (ii)	Group 2005 2004 HK$’000 HK$’000 37,180 – 61,440 – 98,620 –	Company 2005 2004 HK$’000 HK$’000 37,180 – 61,440 – 98,620 –	Company 2005 2004 HK$’000 HK$’000 37,180 – 61,440 – 98,620 –
			–

Notes:

(i) On 16 December 2004, the Company issued convertible notes with aggregate principal amounts of HK$37,180,000 through a placing agent to several independent third parties. The convertible notes provide the holders option rights to convert the principal amount into ordinary shares of HK$0.10 each of the Company on any business day prior to the maturity of the convertible notes at a conversion price of HK$1.30 per share.

The principal amounts of the convertible notes bear interest at 1% per annum and the convertible notes will mature on the first day of a period of two years and six months from the date of their issue.

−46 −

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

(ii) On 23 February 2005, the Company issued convertible notes with aggregate principal amounts of HK$61,440,000 through a placing agent to several independent third parties. The convertible notes provide the holders option rights to convert the principal amount into ordinary shares of HK$0.10 each of the Company on any business day prior to the maturity of the convertible notes at a conversion price of HK$2.40 per share.

The principal amounts of the convertible notes bear interest at 1% per annum and the convertible notes will mature on the first day of a period of three years from the date of their issue.

Subsequent to the balance sheet date, on 20 June 2005, 4,100,000 ordinary shares of the Company were issued upon conversion of the 2008 convertible notes with an aggregate principal amount of HK$9,840,000, at a conversion price of HK$2.40 per share.

30. DEFERRED TAX

The net deferred tax assets/(liabilities) in the consolidated balance sheet are as follows:

Deferred tax assets Deferred tax liabilities	Group 2005 2004 HK$’000 HK$’000 743 1,584 (1,437) (166) (694) 1,418

The components of deferred tax assets and liabilities and the movements during the year are as follows:

Group

Accelerated tax depreciation HK$’000 At 1 April 2003 (1,764) Deferred tax credited/(charged) to the profit and loss account during the year (Note 10) (962) Deferred tax assets/(liabilities) at 31 March 2004 (2,726)	2004 Provisions for onerous contract Revaluation of properties Losses available for offset against future taxable profit HK$’000 HK$’000 HK$’000 1,500 78 2,393 (254) (59) 476 1,246 19 2,869	Others HK$’000 20 (10) 10	Total HK$’000 2,227 (809) 1,418

−47 −

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

Group

Accelerated tax depreciation HK$’000 At 1 April 2004 (2,726) Disposal of subsidiaries 2,194 Deferred tax credited/(charged) to the profit and loss account during the year (Note 10) 788 Deferred tax assets/(liabilities) at 31 March 2005 256	2005 Provisions for onerous contract Revaluation of properties Losses available for offset against future taxable profit HK$’000 HK$’000 HK$’000 1,246 19 2,869 – – (2,194) (1,011) (2,164) 275 235 (2,145) 950	Others HK$’000 10 – – 10	Total HK$’000 1,418 – (2,112)
			(694)

The Group has tax losses arising in Hong Kong of approximately HK$77,601,000 (2004: HK$121,230,000) that are available indefinitely for offsetting against future taxable profits of the companies in which the losses arose. Deferred tax assets have not been recognised in respect of these losses as they have arisen in subsidiaries that have been loss-making for some time.

At 31 March 2005, there is no significant unrecognised deferred tax liability (2004: Nil) for taxes that would be payable on the unremitted earnings of certain of the Group’s subsidiaries or associates as the Group has no liability to additional tax should such amounts be remitted.

There are no income tax consequences attaching to the payment of dividends by the Company to its shareholders.

31. SHARE CAPITAL

Authorised: 2,000,000,000 ordinary shares of HK$0.10 each Issued and fully paid: 143,320,366 (2004: 143,320,366) ordinary shares of HK$0.10 each	2005 HK$’000 200,000 14,332	2004 HK$’000 200,000

		14,332

Share options

Details of the Company’s share option schemes are set out in note 32 to the financial statements.

−48 −

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

32. SHARE OPTION SCHEMES

The Company operates share option schemes for the purpose of providing incentives and rewards to eligible participants who contribute to the success of the Group’s operations. On 6 February 1995, the Company approved a share option scheme (the “Old Scheme”) under which the directors of the Company may, at their discretion, invite any executive directors or full-time employees of the Group to take up share options to subscribe for shares of the Company at any time during the 10 years from the date of approval of the Old Scheme. The Old Scheme became effective upon the listing of the Company’s shares on The Stock Exchange of Hong Kong Limited (the “Stock Exchange”) on 28 February 1995.

In compliance with the amended Chapter 17 of the Listing Rules, the Old Scheme was terminated on 3 May 2002 and a new share option scheme (the “New Scheme”) was adopted pursuant to an ordinary resolution passed at a special general meeting of the Company on 3 May 2002. As a result, the Company will no longer grant any further share options under the Old Scheme. However, all share options granted prior to the termination of the Old Scheme will remain in full force and effect. As at 31 March 2005, all share options granted under the Old Scheme were lapsed.

Under the New Scheme, eligible participants include any director or proposed director (whether executive or non-executive, including independent non-executive director), employee or proposed employee (whether full-time or part-time), secondee, any holder of securities issued by any member of the Group, any business or joint venture partner, contractor, agent or representative, any person or entity that provides research, development or other technology support or advisory, consultancy, professional or other services to the Group, any supplier, producer or licensor of goods or services to the Group, any customer, licencee (including any sub-licencee) or distributor of goods or services of the Group, or any landlord or tenant (including any sub-tenant) of the Group or any substantial shareholder or company controlled by a substantial shareholder, or any company controlled by one or more persons belonging to any of the above classes of participants. The New Scheme became effective on 3 May 2002 and, unless otherwise terminated earlier by shareholders in a general meeting, will remain in force for a period of 10 years from that date.

Pursuant to the New Scheme, the maximum number of share options that may be granted under the New Scheme and any other share option schemes of the Company is an amount equivalent, upon their exercise, not in aggregate exceed 10% of the issued share capital of the Company from time to time, excluding any shares issued on the exercise of share options. As at 31 March 2005, the number of shares issuable under the share options granted under the New Scheme was 22,790,000 which in aggregate represented approximately 15.9% of the Company’s shares in issue as at that date.

The maximum number of shares issuable under share options to each eligible participant (except for a substantial shareholder or an independent non-executive director or any of their respective associates) under the New Scheme within any 12-month period is limited to 1% of the shares of the Company in issue at any time. Any further grant of share options in excess of such limit must be separately approved by shareholders with such eligible participant and his associates abstaining from voting.

Share options granted to a director, chief executive or substantial shareholder of the Company (or any of their respective associates) must be approved by the independent non-executive directors (excluding any independent non-executive director who is the grantee of the option). Where any grant of share options to a substantial shareholder or an independent non-executive director (or any of their respective associates) will result in the total number of shares issued and to be issued upon exercise of share options already granted and to be granted to such person under the New Scheme and any other share option schemes of the Company (including options exercised, cancelled and outstanding) in any 12-month period up to and including the date of grant representing in aggregate over 0.1% of the shares in issue, and having an aggregate value, based on the closing price of the Company’s shares at each date of grant, in excess of HK$5 million, such further grant of share options is required to be approved by shareholders in a general meeting in accordance with the Listing Rules. Any change in the terms of a share option granted to a substantial shareholder or an independent non-executive director (or any of their respective associates) is also required to be approved by shareholders.

An offer for the grant of share options must be accepted within 30 days from the date on which such offer was made. The amount payable by the grantee of a share option to the Company on acceptance of the offer of the grant is HK$1.00.

−49 −

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

The option price per share payable on the exercise of an option is determined by the directors provided that it shall be at least the higher of (i) the closing price of the shares as stated in the daily quotation sheet issued by the Stock Exchange at the date of offer of grant (which is deemed to be the date of grant if the offer for the grant of a share option is accepted by the eligible person), which must be a business day; and (ii) the average closing price of the shares as stated in the daily quotation sheets issued by the Stock Exchange for the five business days immediately preceding the date of offer of grant, provided that the option price per share shall in no event be less than the nominal amount of one share.

Share options do not confer rights on the holders to dividends or to vote at shareholders’ meetings.

The following share options were outstanding under the two share option schemes during the year:

Name or category of participant Directors Tang Ching Ho Yau Yuk Yin Other employees In aggregate (under the Old Scheme) In aggregate (under the New Scheme)	At 1 April 2004 654,000 654,000 1,320,000 9,800,000 12,428,000	Granted during the year – – – 12,990,000 12,990,000	Lapsed during the year (654,000) (654,000) (1,320,000) – (2,628,000)	At 31 March 2005 Date of grant of share options Exercise period of share options Exercise price of share options HK$ – 6-3-2001 6-3-2001 to 5-2-2005 2.17 – 6-3-2001 6-3-2001 to 5-2-2005 2.17 – 6-3-2001 6-3-2001 to 5-2-2005 2.17 22,790,000 * 22,790,000

These represented options granted to employees with exercise prices ranging from HK$0.968 to HK$1.28 per share and an exercise period starting on the earliest on 7 October 2003 and ending on the latest on 11 November 2014. The weighted average exercise price of the Company’s share options at grant date of options was HK$1.16.

At the balance sheet date, the Company had 22,790,000 (2004: 9,800,000) share options outstanding under the New Scheme. The exercise in full of the share options would, under the present capital structure of the Company, result in the issue of 22,790,000 (2004: 12,428,000) additional ordinary shares of the Company and additional share capital of HK$2,790,000 (2004: HK$1,242,800) and share premium of HK$24,212,000 (2004: HK$14,323,760) (before issue expenses).

Subsequent to the balance sheet date, on 24 May 2005, a total of 1,300,000 share options under the New Scheme were exercised, resulting in the issue of 1,300,000 additional ordinary shares of the Company and additional share capital of HK$130,000 and share premium of HK$1,534,000 (before issue expenses).

33. RESERVES

(a) Group

The amounts of the Group’s reserves and the movements therein for the current and prior years are presented in the consolidated statement of changes in equity on pages 28 to 30 of the financial statements.

Certain amounts of goodwill and negative goodwill arising on the acquisition of subsidiaries and associates in prior years remain eliminated against consolidated retained profits and credited to the capital reserve, respectively, as explained in note 16 to the financial statements.

−50 −

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

(b) Company

Note At 1 April 2003 Placement of shares Expiry of warrant Share issue expenses Net profit for the year Interim 2004 dividend 12 Proposed final 2004 dividend 12 At 31 March 2004 and 1 April 2004 Final 2004 dividend declared Net profit for the year Interim 2005 dividend 12 Proposed final 2005 dividend 12 At 31 March 2005	Share premium account Contributed surplus (Note) HK$’000 HK$’000 348,222 121,364 23,600 – – – (810) – – – 1,350 – – –	Share premium account Contributed surplus (Note) HK$’000 HK$’000 348,222 121,364 23,600 – – – (810) – – – 1,350 – – –	Warrant reserve HK$’000 1,735 – (1,735) – – – –	Retained profits HK$’000 111,316 – 1,735 – 6,166 (3,544) (10,032)	Proposed final dividend HK$’000 – – – – – – 10,032	Total HK$’000 582,637 23,600 – (810 6,166 (2,194 –
	372,362 – – – –	121,364 – – – –	– – – – –	105,641 – 30,826 (4,300) (17,846)	10,032 (10,032) – – 17,846	609,399 (10,032 30,826 (4,300 –
	372,362	121,364	–	114,321	17,846	625,893

Note: The contributed surplus of the Company originally derived from the difference between the nominal value of the share capital and share premium of the subsidiaries acquired pursuant to the Group reorganisation on 6 February 1995 and the par value of the Company’s shares issued in exchange therefor. Under the Companies Act 1981 of Bermuda (as amended), the contributed surplus is distributable to shareholders under certain circumstances.

34. NOTES TO THE CONSOLIDATED CASH FLOW STATEMENT

(a) Major non-cash transactions

During the year, the Group entered into a sale and purchase agreement to dispose of its entire interests in a subsidiary of the Group to WYTH at a consideration of approximately HK$63.6 million. The consideration was satisfied by cash of approximately HK$33.6 million and convertible notes issued by WYTH of HK$30 million. Further details are set out in note (d) below.

(b) Acquisition of subsidiaries

Net assets acquired: Deposits and other receivables Other payables and accruals Goodwill on acquisition Satisfied by: Cash	2005 HK$’000 9,915 (9,915)	2004 HK$’000 – –
	– 943	– –
	943 –	–

		–

−51 −

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

An analysis of the net outflow of cash and cash equivalents in respect of the acquisition of subsidiaries is as follows:

Cash consideration Expenses incurred Net outflow of cash and cash equivalents in respect of the acquisition of subsidiaries	2005 HK$’000 – (943) (943)	2004 HK$’000 – –
		–

(c) Acquisition of additional shares in associates which became subsidiaries as a result thereof

Net assets acquired: Fixed assets Trade receivables, prepayments, deposits and other receivables Tax recoverable Cash and cash equivalents Trade payables, other payables and accruals Goodwill on acquisition Satisfied by: Cash Disposal of interests in an associate	2005 HK$’000 – – – – –	2004 HK$’000 158 827 12 844 (677
	– –	1,164 2,191
	–	3,355

	– –	2,773 582
	–	3,355

−52 −

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

An analysis of the net outflow of cash and cash equivalents in respect of the acquisition of additional shares in associates which became subsidiaries as a result thereof is as follows:

Cash consideration Expenses incurred Cash and cash equivalents acquired Net outflow of cash and cash equivalents in respect of the acquisition of additional shares in associates (d) Disposal of subsidiaries Notes Net assets disposed of: Fixed assets 14 Inventories Trade receivables Deposits and other receivables Tax recoverable Cash and cash equivalents Trade and other payables Interest-bearing bank loans Tax payable Minority interests Goodwill released on disposal 16 Gain/(loss) on disposal of subsidiaries Deferred gain/(loss) on disposal of subsidiaries Satisfied by: Cash Interests in an associate Convertible notes of an associate Expenses incurred		2005 HK$’000 – – – – 2005 HK$’000 153,958 – 94 746 52 2,465 (2,546) (61,930) – –		2004 HK$’000 (2,750) (23) 844 (1,929) 2004 HK$’000 324 3,377 9,194 647 – 3,691 (6,208) (4,722) (628) (12) 5,663 126,094 (1,020) (1,012) 129,725 – 59,938 70,000 (213) 129,725


		92,839 1,415 26,975 7,369		5,663 126,094 (1,020 (1,012
		128,598
		98,980 – 30,000 (382)		– 59,938 70,000 (213
		128,598

−53 −

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

An analysis of the net inflow/(outflow) of cash and cash equivalents in respect of the disposal of subsidiaries is as follows:

Cash consideration Expenses incurred Cash and cash equivalents disposed of Net inflow/(outflow) of cash and cash equivalents in respect of the disposal of subsidiaries	2005 HK$’000 98,980 (382) (2,465) 96,133	2004 HK$’000 – (213) (3,691)
		(3,904)

During the year, the Group disposed of its entire interests in WOD Investments Limited (“WOD”), which was a wholly-owned subsidiary of the Group and held the Wai Yuen Tong Medicine Building, to WYTH for a consideration of approximately HK$65.3 million. The consideration was satisfied by cash.

During the year, the Group disposed of its entire interests in Geswin Limited, which was a wholly-owned subsidiary of the Group and held an investment property at Nathan Road, Hong Kong, to WYTH at a consideration of approximately HK$63.6 million. The consideration was satisfied by cash of approximately HK$33.6 million and convertible notes issued by WYTH of HK$30 million. The convertible notes are interest-bearing at 3% per annum with a right to convert into ordinary shares of WYTH at an initial conversion price of HK$0.80 per share during the period from 15 March 2005 to 14 March 2008.

The subsidiaries disposed of during the year contributed HK$5,220,000 (2004: HK$8,960,000) to the Group’s consolidated turnover and HK$2,884,000 (2004: loss after tax of HK$1,916,000) to the consolidated profit after tax for the year ended 31 March 2005.

35. CONTINGENT LIABILITIES

At the balance sheet date, contingent liabilities not provided for in the financial statements were as follows:


	Group		Company
	2005	2004	2005	2004
	HK$’000	HK$’000	HK$’000	HK$’000
Guarantees given to financial
institutions in connection
with facilities granted to
subsidiaries	–	–	358,993	243,650

(b) The Group has a contingent liability in respect of possible future long service payments to employees under the Hong Kong Employment Ordinance, with a maximum possible amount of HK$1,366,000 as at 31 March 2005, as further explained under the heading “Employee benefits” in note 3 to the financial statements. The contingent liability has arisen because, at the balance sheet date, a number of current employees had achieved the required number of years of service to the Group in order to be eligible for long service payments under the Employment Ordinance if their employment is terminated under certain circumstances. A provision has not been recognised in respect of such possible payments, as it is not considered probable that the situation will result in a material future outflow of resources from the Group.

−54 −

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

36. OPERATING LEASE ARRANGEMENTS

(a) As lessor

The Group leases its investment properties (note 14 to the financial statements) and sub-leases Chinese wet markets, shopping centres and car parks under operating lease arrangements, with leases negotiated for terms ranging from three months to five years. The terms of the leases generally also require the tenants to pay security deposits and provide for periodic rental adjustments according to the then prevailing market conditions.

At the balance sheet date, the Group had total future minimum lease receivables under non-cancellable operating leases with its tenants falling due as follows:

Within one year In the second to fifth years, inclusive	Group 2005 2004 HK$’000 HK$’000 140,509 70,810 137,077 30,319 277,586 101,129	Group 2005 2004 HK$’000 HK$’000 140,509 70,810 137,077 30,319 277,586 101,129
		101,129

(b) As lessee

The Group leases Chinese wet markets, shopping centres, car parks and certain of its office properties under operating lease arrangements. Leases are negotiated for terms ranging from three months to seven years.

At the balance sheet date, the Group had total future minimum lease payments under non-cancellable operating leases falling due as follows:

Within one year In the second to fifth years, inclusive After five years	Group 2005 2004 HK$’000 HK$’000 124,371 109,754 188,373 114,171 2,495 378 315,239 224,303	Group 2005 2004 HK$’000 HK$’000 124,371 109,754 188,373 114,171 2,495 378 315,239 224,303
		224,303

37. COMMITMENTS

In addition to the operating lease commitments detailed in note 36(b) above, the Group had the following commitments at the balance sheet date:

							Group
							2005	2004
							HK$’000	HK$’000
Capital	commitments	contracted,	but	not	provided	for	121,350	146,561

At the balance sheet date, the Company had no significant commitments.

−55 −

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

38. POST BALANCE SHEET EVENTS

Subsequent to the balance sheet date, the Group had the following post balance sheet events:

(a) On 16 March 2005, the Group entered into a provisional sale and purchase agreement with an independent third party to acquire an investment property for a consideration of HK$35.0 million, of which, HK$3.5 million had been paid as a deposit by the Group prior to the balance sheet date. The outstanding balance of HK$31.5 million was included in the amount of capital commitments contracted, but not provided for, in note 37 to the financial statements. The acquisition was completed on 31 May 2005.
(b) On 18 March 2005, the Group entered into a sale and purchase agreement (the “Hanwin Agreement”) with Mr. Tang Ching Ho (“Mr. Tang”) to acquire from Mr. Tang the entire issued share capital and the shareholder’s loan of Hanwin Investment Limited (“Hanwin”). The consideration for the acquisition of Hanwin should represent the face value of the entire issued share capital and the shareholder’s loan of Hanwin. Prior to the entering into the Hanwin Agreement, Hanwin entered into a provisional sale and purchase agreement with an independent third party for the purchase of an investment property for a consideration of HK$110.0 million. The acquisition of Hanwin was completed on 9 May 2005.
(c) On 13 April 2005, the Group entered into a provisional sale and purchase agreement with an independent third party to acquire an investment property, together with an existing tenancy at a monthly rental of approximately HK$58,000 expiring on 8 June 2006, at a consideration of approximately HK$17.2 million.
(d) On 15 April 2005, the Group entered into a provisional sale and purchase agreement with an independent third party to acquire investment properties, together with two existing tenancies, one with a monthly rental of HK$34,000 expiring on 15 January 2006 and the other with a monthly rental of approximately HK$6,000 expiring on 7 April 2007, for a total consideration of approximately HK$15.8 million.
(e) On 5 July 2005, the Group entered into a provisional sale and purchase agreement with an independent third party to acquire a property for redevelopment for a consideration of HK$75.0 million. The directors anticipate the acquisition will be completed on 20 December 2005.
(f) The directors proposed a conditional bonus issue of shares of HK$0.10 each in the share capital of the Company on the basis of one bonus share (the “Bonus Share(s)”) for every five existing shares held by shareholders of the Company on the register of members on 12 August 2005. The Bonus Shares will rank pari passu in all respects with the existing issued shares except that they will not carry any right to receive the final dividend for the year ended 31 March 2005.

39. RELATED PARTY TRANSACTIONS

In addition to the transaction and balances detailed elsewhere in these financial statements, the Group had the following material transactions with related parties during the year:

		2005	2004
	Notes	HK$’000	HK$’000
Rental income received from Mr. Tang	(a)	557	583
Proceeds from disposal of subsidiaries to an associate	(b)	128,980	149,725
Income from associates:	(c)
Management fee		918	960
Rental		5,065	5,116
Interest income		557	6,957
Cleaning expenses paid to an associate	(c)	–	1,716
Rental expenses paid to an associate	(c)	1,764	–

Notes:

(a) An investment property of the Group was leased to Mr. Tang for a period of one year from 20 December 2003 at an agreed monthly rental of HK$45,000. The lease was renewed and extended for a further one year at an agreed monthly rental of HK$50,000. The rental was determined with reference to the prevailing market rates.

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FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

(b) The entire interests of WOD and Geswin (the “Disposed Subsidiaries”), wholly-owned subsidiaries of the Group, were disposed of to WYTH at considerations of approximately HK$65.3 million and HK$63.6 million, respectively. The considerations were based on terms mutually agreed between the Group and WYTH. Further details of the disposal of the Disposed Subsidiaries are disclosed in note 34(d) to the financial statements.
(c) The transactions were based on terms mutually agreed between the Group and the related parties.
(d) During the year, the Group acquired from Mr. Tang the entire interests in Dragon Richly Investment Limited, Poly Talent Investment Limited and Profit Million Investment Limited (the “Acquired Companies”), companies wholly and beneficially owned by Mr. Tang, at an aggregate consideration equivalent to the face value of the entire issued share capital and shareholder’s loans of the Acquired Companies. Prior to the completion of the agreements in respect of the acquisition of the Acquired Companies from Mr. Tang, the Acquired Companies had entered into agreements with independent third parties to acquire properties for redevelopment at an aggregate consideration of approximately HK$145.9 million.

Details of the Group’s balances with associates as at the balance sheet date are disclosed in note 18 to the financial statements.

The related party transactions disclosed in notes 38(b) and 39(d) above also constitute connected transactions as defined in Chapter 14A of the Listing Rules.

40. COMPARATIVE AMOUNTS

As further explained in note 2 to the financial statements, due to the adoption of certain new HKFRSs during the current year, the accounting treatment and presentation of certain items and balances in the financial statements have been revised to comply with the new requirements. Accordingly, certain comparative amounts have been reclassified to conform with the current year’s presentation.

41. APPROVAL OF THE FINANCIAL STATEMENTS

The financial statements were approved and authorised for issue by the board of directors on 6 July 2005.

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FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

BUSINESS REVIEW

The Group achieved a historical high net profit of approximately HK$70.1 million and net assets of approximately HK$736.4 million for the year ended 31 March 2005 since its listing in 1995.

Turnover increased by approximately 23% to HK$364.1 million (2004: HK$296.6 million) in the year ended 31 March 2005 despite the disposal of the effective 99.79% interest in Luxemburg Medicine Company Limited to WYT which had contributed a turnover of HK$18.6 million for the year ended 31 March 2004. This was mainly attributable to the good performance of the Group’s property investment division. The net profit attributable to shareholders for the year grew significantly to HK$70.1 million from HK$29.3 million in the year ended 31 March 2004, representing a significant increase of approximately 139% over the same period last year.

The Group’s financial position remained strong, with cash in hand and short term investments of approximately HK$372.0 million. This provides the Group with a strong cash backing to support expansion in the areas of property development and investment properties in the near future.

Property Development

With the anticipated continuing buoyancy in the Hong Kong property market, the Group has allocated additional resources to expand this area of business. During the year ended 31 March 2005 and up to the date of the annual report of the Company for the year ended 31 March 2005, the Group made the following acquisitions:

				Estimated
				Approximate
Property			Approximate	Gross Floor		Anticipated
Name	Location	Consideration	Site Area	Area	Development Plan	Completion
		(HK$)	(sq ft)	(sq ft)
Shatin Heights	Lot No. 1476 in D.D. 189	103,800,000	49,100	27,900	Low density	End of 2006
Road					residential area with
					11 luxury houses
Fairview Park	Lot No. 4781 in D.D. 104,	82,600,000	154,800	39,000	Low density residential	End of 2006
Boulevard	Lot No. 3254 RP in D.D. 104,				and commercial area
	Lot No. 3265 S.A RP				with 16 luxury houses,
	in D.D. 104, Lot No. 3251				6 shops and club house
	S.B RP, Lot No. 3257 RP,
	Lot No. 3258 S.B SS.1,
	Lot No. 3641 S.A,
	Lot No. 3258 S.B RP,
	Lot No. 3641 RP all
	in D.D. 104

−58 −

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

Property Name Location Consideration (HK$) Cheung Sha Wan 270-274 Cheung Sha Wan Road Kowloon 75,000,000 Kennedy Town 29 residential and commercial units of Nos. 12, 14, 16, 18, 20 and 22, Davis Street, Kennedy Town, Hong Kong 77,600,000 Ho Chung Various lots in D.D. 210 and D.D. 244 Sai Kung, New Territories 13,800,000 352,800,000	Approximate Site Area (sq ft) 4,200 5,000 68,000 281,100	Estimated Approximate Gross Floor Area Development Plan Anticipated Completion (sq ft) 36,800 24 storey residential and commercial building Early 2008 37,000 26 storey residential and commercial building Early 2008 20,500 Low density residential development Early 2009 161,200

The Directors expect that, with the Hong Kong property market expected to show continuing strength, these property development projects should bring handsome returns to the Group in the coming years.

Property Investment

Gross rental income for the year under review increased by approximately 38% to HK$11.3 million. Retail sales continued to improve as a result of broad recovery in the local economy. The Group has seen strong demand for retail space and will put more emphasis particularly on retail shops. During the year ended 31 March 2005 and up to the date of the annual report of the Company for the year ended 31 March 2005, the Group has made the following acquisitions/disposals:

Disposals

		Anticipated/
Location	Consideration	Actual Completion
	(HK$)
Shop 6 (including Cockloft)	33,800,000	June 2004
on the G/F., Cheuk Ming Street,
Nos. 10-22 Tsuen Wan Market Street,
Tsuen Wan, New Territories

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FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

		Anticipated/
Location	Consideration	Actual Completion
	(HK$)
Whole block located at	73,800,000	January 2005
No. 32 Argyle Street,
Kowloon
Flat D on the Ground Floor and	29,100,000	March 2005
Flat D on Mezzanine Floor,
Nam Yeung Mansion,
Nos. 31-34 Mut Wah Street,
Kwun Tong, Kowloon
Ground Floor and Cockloft,	105,000,000	March 2005
Nos. 581 and 581A,
Nathan Road, Kowloon
1 residential unit at Parc Palais,	13,100,000	October 2005
18 Wylie Road,
King’s Park, Kowloon
Acquisitions
		Anticipated/
Location	Consideration	Actual Completion
	(HK$)
Ground Floor and Cockloft,	19,800,000	July 2004
No. 203 Tung Choi Street,
Mongkok, Kowloon
4 residential units at Parc Palais,	30,900,000	March 2005
18 Wylie Road,
King’s Park, Kowloon
Shop 6 on G/F., Grandeur Garden,	16,300,000	March 2005
Nos. 14-18 Chik Fai Street,
Nos. 55-65 Tai Wai Road,
Shatin, New Territories
G/F., 170 Castle Peak Road,	35,000,000	May 2005
Yuen Long, New Territories
Shop B on G/F., 106-108,	13,000,000	May 2005
Shaukeiwan Road, Hong Kong

−60 −

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

		Anticipated/
Location	Consideration	Actual Completion
	(HK$)
G/F., 1/F., 2/F., and Rooftop,	15,750,000	June 2005
No. 68 San Hong Street,
Sheung Shui, New Territories
Shop B on G/F., Kwong Sen Mansion,	17,200,000	June 2005
Nos. 23-33 Shui Wo Street, Kowloon
Whole block located at	110,000,000	July 2005
No. 58 Yen Chow Street,
Sham Shui Po, Kowloon
Shop 5 on G/F., Tak Lee Building,	15,000,000	July 2005
No. 993 King Road, Hong Kong
Shop B on G/F.,	10,800,000	October 2005
336-338 Tung Chau Street, Kowloon

As at 30 June 2005, the Group held a retail property portfolio with a net book value of approximately HK$303.9 million, generating a projected annual rental income of approximately HK$11.3 million. The Directors believe that this area of business will continue to provide a steady income stream for the Group in the years to come.

Management and Sub-licensing of Chinese Wet Markets

The Group continues to be the leader in this business section in Hong Kong. This division remained profitable during the year under review, recording a net profit of HK$15.4 million and generated a fairly stable profit for the Group. The Group is looking to strengthen its market share.

Management and Sub-licensing of Shopping Centres and Car Parks

These two areas of business remained fairly stable compared with their performance and contribution achieved in the previous financial year.

Investment in Pharmaceutical and Health Products related Business

The booming economy, coupled with the Individual Visit Scheme which allows travelers from Mainland China to visit Hong Kong on an individual basis, contributed to the continual growth of WYT. The Directors are confident that the Group’s indirect investment in pharmaceutical and health products business via WYT will bring satisfactory returns to the Group in the long term.

−61 −

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

LIQUIDITY AND FINANCIAL RESOURCES

With a view to enlarging the Company’s shareholder base and strengthening the financial position of the Company, the following capital raising exercises were undertaken during the year ended 31 March 2005:

a. Issue of convertible notes in an aggregate principal amount of HK$37,180,000 through a placing agent to several independent third parties in December 2004; and
b. Issue of convertible notes in an aggregate principal amount of HK$61,440,000 through a placing agent to several independent third parties in February 2005.

The Group currently has cash resources and short term investments of approximately HK$372.0 million (2004: HK$326.8 million), of which approximately HK$59.3 million (2004: HK$37.4 million) is invested in certificates of deposits, callable deposits, bank commercial papers and listed securities, and HK$54.2 million (2004: HK$34.8 million) is invested in long-term guaranteed return funds, callable deposits and bonds.

As at 31 March 2005, the Group’s gearing ratio was approximately 3.9% (calculated with reference to the Group’s total borrowings net of cash and cash equivalent and capital and reserves of approximately HK$28.5 million and HK$736.4 million, respectively, as at 31 March 2005). As at 31 March 2004, the Group had a net cash position of HK$184.8 million (calculated with reference to the Group’s cash and cash equivalent and total borrowings of HK$289.4 million and HK$104.6 million, respectively, as at 31 March 2004).

As at 31 March 2005, the Group’s investment properties with a book value of approximately HK$196.7 million (2004: HK$260.4 million) and certain rental income generated therefrom were pledged to secure the Group’s general banking facilities, approximately HK$92.3 million (2004: HK$140.7 million) of which was utilised as at 31 March 2005.

The Group’s contingent liabilities and capital commitment as at 31 March 2005 amounted to approximately HK$121.4 million (2004: HK$149.6 million).

EMPLOYEES AND REMUNERATION POLICIES

As at 31 March 2005, the Group had over 500 full time employees, over 96% of whom were located in Hong Kong.

The Group remunerates its employees mainly based on industry practices and individual performance and experience. On top of the regular remuneration, discretionary bonus and share options may be granted to selected staff by reference to the Group’s performance as well as the individual’s performance. Other benefits, such as medical and retirement benefits and structured training programmes, are also provided.

−62 −

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

STATEMENT OF INDEBTEDNESS

As at 30 September 2005, the Group has utilised unsecured bank borrowings of approximately HK$55 million and secured bank borrowings of approximately HK$419.2 million. Such secured bank borrowings were secured by certain of the Group’s investment properties, properties under development, rental income from certain of the Group’s investment properties and corporate guarantees given by the Company. In addition, as at the same date, the Group had outstanding convertible notes with a principal sum of approximately HK$51.6 million.

Save as aforesaid and apart from intra-group liabilities, the Group did not have any outstanding mortgages, charges, debentures, loan capital, debt securities, loans, bank overdraft or other similar indebtedness, finance leases or hire purchase commitments, liabilities under acceptance or acceptance credits or guarantees or other contingent liabilities as at 30 September 2005.

Save as disclosed above, the Directors confirm that there has been no material change in the indebtedness and contingent liabilities of the Group since 30 September 2005.

WORKING CAPITAL

After due and careful enquiry, the Directors are satisfied that the Group will have available sufficient working capital for the Group’s present requirements, that is for at least the next 12 months from the date of publication of this circular.

MATERIAL ADVERSE CHANGE

The Directors are not aware of any material adverse change in the financial or trading position of the Group since the date to which the latest published audited financial statements of the Group were made up.

FOREIGN EXCHANGE EXPOSURE

As the Group’s sales are mostly based on United States dollar (“USD”) and HK$, having considered the exchange rates of USD and HK$ are fairly stable, no foreign exchange and interest rate risk management or related hedges were made at present. Proper policy will be in place when the Board considers appropriate.

FINANCIAL AND TRADING PROSPECTS

Along with the property market in Hong Kong having rebounded since 2003, the Group has capitalised on its own expertise and past experience in building construction and focused on allocation of its resources allocation to property development and property investment in Hong Kong. For the year ended 31 March 2005, the Group had acquired several sites and properties in Fairview Park Boulevard, Kennedy Town and Ho Chung. The Group’s property

−63 −

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

investment portfolio includes shops and residential apartments providing recurrent rental income and is expected to bring in capital appreciation in the long run. The Group is confident that the land property acquisitions will help boost future growth potential and profitability of the Group which will in turn provide higher returns to the Shareholders.

The Group’s investment in the Chinese wet market sub-licensing business, which is the leader in the industry, together with shopping centre and car park management and retail business, continue to provide steady income.

In addition, in view of the increasing health awareness of the public and in particular the increasing popularity of Chinese medical and health related products, the Directors believe that there is likely a continuous demand for health care products and is confident its indirect investment in pharmaceutical and health product business through WYT will bring satisfactory returns to the Group in the long run.

The Directors consider that upon completion of the sale of the Properties, the Group’s financial and cash position can be further strengthened and, together with the funding from, among other things, bank financing and operational profits, will enable the Group to make suitable investments promptly when opportunities arise although no specific investment has been identified in present.

The Group will leverage on its strength in its existing business and strong financial resources and will also continue to explore new areas of business to enhance Shareholders’ returns.

−64 −

VALUATION REPORT ON THE PROPERTIES

APPENDIX II

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

Valuation & Consultancy T: (852) 2842 4400 F: (852) 2501 5590

23/F Two Exchange Square Central, Hong Kong

23 November 2005

The Directors

Wang On Group Limited 5th Floor, Wai Yuen Tong Medicine Building 9 Wang Kwong Road Kowloon Bay Kowloon Hong Kong

Dear Sirs

Re: Valuation of The Whole Block of Milan Place, 58 Yen Chow Street, Sham Shui Po, Kowloon

In accordance with your instructions for us to value the captioned property held by Wang On Group Limited (the “Company”) or its subsidiary (collectively the “Group”), we confirm that we have caused land searches at the Land Registry and made relevant enquiries and investigations as we consider necessary for the purpose of providing you with our opinion of the market value of the property as at 30th September, 2005 for circular purposes.

Our valuation is our opinion of the market value of the property concerned 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”.

The market value is the best price reasonably obtainable in the market by the seller and the most advantageous price reasonably obtainable in the market by the buyer. This estimate specifically excludes an estimated price inflated or deflated by special terms or circumstances

−65 −

VALUATION REPORT ON THE PROPERTIES

APPENDIX II

such as atypical financing, sale and leaseback arrangements, joint ventures, management agreements, special considerations or concessions granted by anyone associated with the sale, or any element of special value. The market value of a property is also estimated without regard to costs of sale and purchase, and without offset for any associated taxes.

According to your specific instructions, our valuation is the aggregate of the market values of all units within the property. We have valued each unit of the property with reference to sales evidence as available on the market and where appropriate on the basis of capitalization of the net income shown on schedules handed to us. We have allowed for outgoings and, in appropriate cases, made provisions for reversionary income potential.

We have not been provided with any title document relating to the property but we have caused searches to be made at the Land Registry. We have not, however, inspected the original documents to verify ownership or to ascertain the existence of any amendment which does not appear on the copies obtained by us.

We have relied to a very considerable extent on information given by you and have accepted advice given to us on such matters as planning approvals or statutory notices, easements, tenure, occupancy, site and floor areas and all other relevant matters. Dimensions, measurements and areas included in the valuation certificate are based on information contained in the documents provided to us and are therefore only approximations.

We have inspected the exterior of the property and where possible, we have also inspected the interior of the premises. However, no structural survey has been made but in the course of our inspection, we did not note any serious defect. We are not, however, able to report that the property is free of rot, infestation or any other structural defect. No test was carried out on any of the services.

No allowance has been made in our valuation for any charges, mortgages or amounts owing on the property 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.

We enclose herewith our valuation certificate for your attention.

Yours faithfully For and on behalf of Savills (Hong Kong) Limited Charles C K Chan MSc FRICS FHKIS MCIArb RPS (GP) Executive Director Valuation and Professional Services

−66 −

VALUATION REPORT ON THE PROPERTIES

APPENDIX II

VALUATION CERTIFICATE

Property

Description and tenure

Market value in existing state as at Particulars of 30th September, occupancy 2005

The Whole Block of Milan Place is a 16-storey residential Milan Place, tower over a 2-storey commercial 58 Yen Chow Street, podium erected on a rectangular site Sham Shui Po, with a development site area of Kowloon approximately 311.05 sq.m. (3,348 sq.ft.) and was completed in 2003. 4th Sections A, B, C and 14th Floors are omitted from floor and the Remaining numbering. Portion of New Kowloon The property comprises 48 residential Inland flats and 9 shops and the total gross Lot No. 1062. floor area of the property is as follows:

G/F 1/F 2-19/F Total	sq.m. 222.78 201.88 2,164.07 2,588.73	(sq.ft.) (2,398) (2,173) (23,294) (27,865)

The property also comprises Flat Roofs on the 2nd Floor and Roofs of the building with total areas of approximately 140.56 sq.m. (1,513 sq.ft.) and 31.03 sq.m. (334 sq.ft.) respectively.

3,880 sq.ft. of the HK$137,613,000 commercial portion of the property are subject to various tenancies mostly for terms of 2 to 3 years with the latest expiring in September 2008 at a total monthly rent of approximately $238,000 excusive of rates and management fees.

Each of the tenancies contains an option to renew each for a further term of one to two years.

The remaining portion of the commercial portion of the property is occupied by the Group.

The residential portion of the property is vacant.

New Kowloon Inland Lot No. 1062 is held under a government lease for a term expiring on 30th June, 2047 at an annual Government rent at 3% of the rateable value for the time being of the lot.

Notes:

(1) The registered owner of the property is Hanwin Investment Limited, in which the Group has a 100% interest.
(2) The property is subject to a mortgage and an Assignment of Rental both in favour of The Hongkong and Shanghai Banking Corporation Limited.
(3) The property is subject to a Memorandum to Change the Name of the Building.
(4) As per your specific instructions, our valuation is the aggregate of the market values of all units within the property.
(5) As at the current date, 26 residential units and 3 shops on Ground Floor were sold. The remaining unsold units are as follows:

Shop units:

Shops A, B, D, E, F on G/F and the whole of 1/F

Flat units: Flats A on 3/F and 5-7/F Flats B on 2/F including Flat Roof, 3/F, 5-7/F, 9-13/F, 15/F and 18/F Flats C on 3/F, 5/F, 7/F, 17/F, 18/F and 19/F including the roof

(6) The market value of the unsold units as at 30th September, 2005 was in the sum of HK$77,290,000.

−67 −

GENERAL INFORMATION

APPENDIX III

1. RESPONSIBILITY STATEMENT

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

2. DISCLOSURE OF INTERESTS

(a) Directors’ interests and short position in the securities of the Company and its associated corporations

As at the Latest Practicable Date, the interests and short positions of the Directors and chief executive of the Company in the shares, underlying shares and debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) which were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which they have taken or deemed to have under such provisions of the SFO), or which were required, pursuant to section 352 of the SFO, to be entered in the register maintained by the Company referred to therein, or which were required, pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers in the Listing Rules, to be notified to the Company and the Stock Exchange, were as follows:

Long position in Shares

						Approximate
		Number of Shares held,		capacity		percentage of the issued share
		and nature of interest				capital of the
						Company as at
Name of	Personal	Family	Corporate	Other		the Latest
Director	interest	interest	interest	interest	Total	Practicable Date
Mr. Tang	737,226	737,224	2,696,672	31,192,155	35,363,277	15.74%
Ching Ho		(Note (a))	(Note (b))	(Note (c))
Ms. Yau	737,224	3,433,898	–	31,192,155	35,363,277	15.74%
Yuk Yin		(Note (d))		(Note (e))

Notes:

(a) Mr. Tang Ching Ho was taken to be interested in those Shares in which his spouse, Ms. Yau Yuk Yin, was interested.
(b) Mr. Tang Ching Ho was taken to be interested in those Shares in which Caister Limited, a company which is wholly and beneficially owned by him, was interested.

−68 −

GENERAL INFORMATION

APPENDIX III

(c) Mr. Tang Ching Ho was taken to be interested in those Shares by virtue of being the founder of a discretionary trust, namely Tang’s Family Trust.
(d) Ms. Yau Yuk Yin was taken to be interested in those Shares in which her spouse, Mr. Tang Ching Ho, was interested.
(e) Ms. Yau Yuk Yin was taken to be interested in those Shares by virtue of being a beneficiary of Tang’s Family Trust.

The interests of Mr. Tang Ching Ho and Ms. Yau Yuk Yin in the Shares mentioned above also fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO.

Save as disclosed above, as at the Latest Practicable Date, none of the Directors or chief executive of the Company had any interest or short position in the shares, underlying shares or debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) which were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including any interests and short positions which he/she was taken or deemed to have under such provisions of the SFO) or which were required, pursuant to section 352 of the SFO, to be entered in the register maintained by the Company referred to therein, or which were required, pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers in the Listing Rules, to be notified to the Company and the Stock Exchange.

(b) Persons who have an interest or short position in the shares or underlying shares of the Company which is discloseable under Divisions 2 and 3 of Part XV of the SFO and substantial shareholders

As at the Latest Practicable Date, so far as is known to the Directors or chief executive of the Company, the following persons (not being a Director or chief executive of the Company) had, or were deemed or taken to have, interests or short positions in the shares or underlying shares of the Company which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO or, who were, directly or indirectly, interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any other member of the Group or had any option in respect of such capital:

		Approximate
		percentage of the
		issued share capital
		of the Company
	Number of	as at the Latest
Name	Shares held	Practicable Date
Accord Power Limited	31,192,155	13.89%
Trustcorp Limited (Note)	31,192,155	13.89%

Note: Accord Power Limited is wholly owned by Trustcorp Limited in its capacity as the trustee of Tang’s Family Trust; accordingly, Trustcorp Limited was taken to be interested in those Shares held by Accord Power Limited.

−69 −

GENERAL INFORMATION

APPENDIX III

Save as disclosed above, so far as is known to the Directors or chief executive of the Company, as at the Latest Practicable Date, no other person (not being a Director or chief executive of the Company) had any interest or short position in the shares or underlying shares of the Company which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO, or who was, directly or indirectly, interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any other member of the Group or held any option in respect of such capital.

(c) Miscellaneous

On 18 March 2005, Suitbest Investment Limited, a wholly-owned subsidiary of the Company, has entered into a sale and purchase agreement with Mr. Tang Ching Ho, the chairman of the Company, to acquire the entire issued share capital and shareholder’s loan of Hanwin Investment Limited at a consideration of HK$110,000,000 from Mr. Tang who, at the request of the Company, had stepped in, through Hanwin Investment Limited, to acquire the Properties from an Independent Third Party at the same consideration on 17 March 2005. The acquisition of the Properties was completed in July 2005. Details of the above transaction were set out in the Company’s announcement and circular dated 22 March 2005 and 13 April 2005 respectively.

Save as disclosed above and as at the Latest Practicable Date,

(i) none of the Directors and Savills (Hong Kong) Limited had any direct or indirect interest in any assets which, since 31 March 2005, the date to which the latest published audited consolidated accounts of the Group were made up, have been acquired or disposed of by or leased to any member of the Group, or are proposed to be acquired or disposed of by or leased to any member of the Group;
(ii) none of the Directors was materially interested in any contract or arrangement subsisting at the Latest Practicable Date and which was significant in relation to the business of the Group; and
(iii) Savills (Hong Kong) Limited had not had any shareholding in any member of the Group and did not have any right, whether legally enforceable or not, to subscribe for or to nominate persons to subscribe for securities in any member of the Group.

3. SERVICE CONTRACTS

As at the Latest Practicable Date, none of the Directors had any existing or proposed service contracts with the Company or any member of the Group (excluding contracts expiring or determinable by the employing company within one year without payment of compensation other than statutory compensation).

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GENERAL INFORMATION

APPENDIX III

4. LITIGATION

As at the Latest Practicable Date, neither the Company nor any of its subsidiaries was engaged in any litigation or arbitration of material importance and no litigation or claim of material importance was known to the Directors to be pending or threatened against the Company or any of its subsidiaries.

5. DIRECTORS’ INTERESTS IN COMPETING BUSINESS

As at the Latest Practicable Date, none of the Directors and their respective associates was interested in any business, apart from the Group’s business, which competes or is likely to compete, either directly or indirectly, with the Group’s business.

6. EXPERT’S QUALIFICATION AND CONSENT

The qualification of the expert who has provided its advice, opinion or report contained in this circular is set out as follows:

Name Qualification Savills (Hong Kong) Limited Professional surveyors and valuer

Savills (Hong Kong) Limited has given and has not withdrawn its written consent to the issue of this circular with the inclusion of its letter and report and the reference to its name in the form and context in which they respectively appear.

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GENERAL INFORMATION

APPENDIX III

7. MATERIAL CONTRACTS

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

(a) a conditional sale and purchase agreement dated 19 February 2004 entered into between the Company and Bright Leading Limited (a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of WYT) and Advance Century Limited (a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of the Company) in respect of the acquisition by Bright Leading Limited of a 49% interest in the issued share capital of China Field Enterprises Limited (a company incorporated in Hong Kong with limited liability) from Advance Century Limited at a consideration of HK$20 million and the transfer of loan due from Advance Century Limited to Bright Leading Limited at a consideration of HK$7 million;
(b) a conditional sale and purchase agreement dated 8 April 2004 entered into between, among others, Wang On Enterprises (B.V.I.) Limited and Source Millennium Limited in respect of the disposal by Wang On Enterprises (B.V.I.) Limited of the entire issued share capital of WOD Investments Limited and a related shareholder’s loan at a total consideration of approximately HK$64 million (subject to adjustment);
(c) a conditional agreement dated 27 September 2004 entered into between Suitbest Investments Limited (a wholly owned subsidiary of the Company), Mr. Tang Ching Ho, being the chairman of the Company (“Mr. Tang”), and Dragon Richly Investment Limited, in respect of the acquisition of the entire issued share capital and shareholder’s loan of Dragon Richly Investment Limited at a consideration of HK$720,001;
(d) the provisional sale and purchase agreement dated 24 September 2004 and entered into between WOB Investments Limited, a wholly-owned subsidiary of the Company, and Modern Win (Hong Kong) Limited in relation to the sale of the property known as the whole block of No. 32 Argyle Street, Kowloon, Hong Kong by WOB Investments Limited to Modern Win (Hong Kong) Limited at a consideration of HK$73.8 million;
(e) a conditional agreement dated 12 October 2004 entered into between Suitbest Investments Limited (a wholly owned subsidiary of the Company), Mr. Tang, Poly Talent Investment Limited and Profit Million Investment Limited in respect of the acquisition of the entire issued share capital and shareholders’ loan of each of Poly Talent Investment Limited and Profit Million Investment Limited at a consideration of HK$1,800,001 and HK$300,001 respectively;

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GENERAL INFORMATION

APPENDIX III

(f) an agreement dated 10 November 2004 entered into between Ventix Investment Limited (a wholly owned subsidiary of the Company) and Citigold Development Limited in respect of an acquisition of a property site in Sai Kung from Citigold Development Limited by Ventix Investment Limited at a consideration of HK$6,600,000;
(g) an agreement dated 10 November 2004 entered into between Ventix Investment Limited (a wholly owned subsidiary of the Company) and Score Million Investment Limited in respect of an acquisition of a property site in Sai Kung from Score Million Investment Limited by Ventix Investment Limited at a consideration of HK$7,200,000;
(h) a placing and underwriting agreement dated 19 November 2004 entered into between the Company and Kingston Securities Limited in relation to a private placing of convertible notes in the aggregate principal amount of HK$37,180,000 to independent professional, corporate or individual investors;
(i) an agreement dated 30 December 2004 entered into between Century Fortune Limited (a wholly owned subsidiary of the Company) and Time Pioneer Investments Limited in respect of the disposal of a property by Century Fortune Limited to Time Pioneer Investments Limited at a consideration of HK$29,080,000;
(j) a provisional agreement dated 25 January 2005 entered into between Longable Limited (a wholly owned subsidiary of the Company), and Yield Land Limited in relation to the acquisition of a property at a consideration of HK$16,300,000;
(k) a conditional sale and purchase agreement dated 28 January 2005 entered into between WYT, Suitbest Investments Limited (a wholly owned subsidiary of the Company), Source Millennium Limited and the Company in respect of the disposal by Suitbest Investments Limited of the entire issued share capital of Geswin Limited at a total consideration of HK$63,232,857;
(l) a placing agreement dated 4 February 2005 entered into between the Company and Kingsway Financial Services Group Limited in relation to a private placing of the convertible notes in the aggregate principal amount of HK$68,640,000 to independent professional, corporate or individual investors;
(m) the provisional agreement for sale and purchase entered into between the Champford Investment Limited (a wholly-owned subsidiary of the Company) and Mr. Or Wing Ming on 16 March 2005 relating to the acquisition of a property at a consideration of HK$35,000,000;
(n) the conditional agreement dated 18 March 2005 entered into between Suitbest Investments Limited, Mr. Tang and Hanwin Investment Limited in relation to the acquisition of the entire issued share capital and shareholder’s loan of Hanwin Investment Limited;

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GENERAL INFORMATION

APPENDIX III

(o) an agreement dated 7 May 2005 entered between Shiny World Investment Limited (a wholly owned subsidiary of the Company) and Fou Hop Man Kee Investment Company Limited in relation to an acquisition of a property from Fou Hop Man Kee Investment Company Limited by Shiny World Investment Limited at a consideration of HK$13,000,000;
(p) the provisional agreement entered into between Smart First Investment Limited (a wholly-owned subsidiary of the Company) and Ms. Au For Mui on 15 April 2005 in relation to the acquisition of a property at a consideration of HK$15,750,000;
(q) an agreement dated 9 May 2005 entered into between Info World Investment Limited (a wholly-owned subsidiary of the Company) and CTMA Investment Limited in relation to the acquisition of a property at a consideration of HK$17,200,000;
(r) the provisional agreement dated 5 July 2005 entered into between Faithful World Investment Limited (a wholly-owned subsidiary of the Company) and Mr. Yau Chun Shun as surviving Administrator of the estate of Yau Chung Hing deceased in relation to the acquisition of a property at a consideration of HK$75,000,000;
(s) the provisional agreement dated 8 August 2005 entered into between Dragon Richly Investment Limited (a wholly-owned subsidiary of the Company) and Yu Fung Company Limited in relation to the acquisition of a property at a consideration of HK$12,500,000;
(t) the provisional agreement dated 8 August 2005 entered into between Dragon Richly Investment Limited (a wholly-owned subsidiary of the Company) and Sunny Era Limited in relation to the acquisition of a property at a consideration of HK$5,000,000; and
(u) the Provisional Agreements.

8. GENERAL

(a) The registered office of the Company is at Clarendon House, 2 Church Street, 41 Cedar Avenue, Hamilton HM 11, Bermuda. The head office and principal place of business of the Company is at 5th Floor, Wai Yuen Tong Medicine Building, 9 Wang Kwong Road, Kowloon Bay, Kowloon, Hong Kong.
(b) The qualified accountant of the Company appointed pursuant to Rule 3.24 of the Listing Rules is Mr. Leong Weng Kin, CPA.
(c) The company secretary of the Company is Mr. Chan Chun Hong, Thomas. He is a fellow member of The Association of Chartered Certified Accountants and a Certified Public Accountant of The Hong Kong Institute of Certified Public Accountants.

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GENERAL INFORMATION

APPENDIX III

(d) The branch share registrar of the Company in Hong Kong is Tengis Limited, at Ground Floor, Bank of East Asia Harbour View Centre, 56 Gloucester Road, Wanchai, Hong Kong.
(e) The English text of this circular shall prevail over the Chinese text in the case of inconsistency.

9. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be available for inspection at the head office and principal place of business of the Company at 5th Floor, Wai Yuen Tong Medicine Building, 9 Wang Kwong Road, Kowloon Bay, Kowloon, Hong Kong during normal business hours on any weekday (public holidays excepted) from the date of this circular up to and including the date of the SGM:

(a) the memorandum of association and bye-laws of the Company;
(b) the annual reports of the Company containing financial information of the Company in respect of the years ended 31 March 2004 and 31 March 2005;
(c) the letter and valuation certificate prepared by Savills (Hong Kong) Limited as set out in Appendix II to this circular;
(d) the written consent referred to in the paragraph headed “6. Expert’s qualification and consent” in this appendix;
(e) the material contracts referred to in the paragraph headed “7. Material contracts” in this appendix;
(f) the circular dated 13 April 2005 issued by the Company in relation to the acquisition of Hanwin Investment Limited and acquisition of property;
(g) the circular dated 5 May 2005 issued by the Company in relation to the acquisition of property;
(h) the circular dated 10 May 2005 issued by the Company in relation to acquisition of property;
(i) the circular dated 22 July 2005 issued by the Company in relation to acquisition of property;
(j) the circular dated 31 October 2005 issued by the Company in relation to the subscription of right shares and application of excess right shares alloted by WYT; and
(k) this circular.

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NOTICE OF SGM

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WANG ON GROUP LIMITED

( )[*]

(Incorporated in Bermuda with limited liability)

(Stock Code: 1222)

NOTICE is hereby given that a special general meeting of Wang On Group Limited (the “Company”) will be held at 3503, 35/F., Two International Finance Centre, 8 Finance Street, Central, Hong Kong on 9 December 2005 at 9:30 a.m. (Hong Kong time) for the purposes of considering and, if thought fit, passing the following resolution, which will be proposed as an ordinary resolution of the Company:

ORDINARY RESOLUTION

“ THAT the possible disposal of all or any part of the remaining units of the Milan Place (details of which as referred to in the circular of the Company dated 23 November 2005) located at No. 58 Yen Chow Street, Kowloon, Hong Kong held by the subsidiaries of the Company from time to time to independent third parties not connected with the Company, the directors, chief executive or substantial shareholders of the Company or its subsidiaries or any of their respective associates be and are hereby approved and that the directors of the Company be and are hereby authorized to carry out and effect such disposals in such manner and on such terms and conditions as they may in their absolute discretion determine and to do or execute for and on behalf of the Company all acts, deeds and things, which in their opinion are necessary or desirable to effect such disposals.”

By order of the Board Wang On Group Limited Chan Chun Hong, Thomas Managing Director

Hong Kong, 23 November 2005

Head office and principal place of business:

5th Floor

Wai Yuen Tong Medicine Building 9 Wang Kwong Road Kowloon Bay Kowloon Hong Kong

For identification purpose only

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NOTICE OF SGM

Notes:

A member of the Company entitled to attend and vote at the above meeting is entitled to appoint one or more than one proxy to attend and to vote in his stead. A proxy need not be a member of the Company.
A form of proxy for use at the meeting is enclosed herewith. The instrument appointing a proxy shall be in writing under the hand of the appointer or his/her attorney duly authorised in writing. If the appointer is a corporation, the form of a proxy must be under its common seal or under the hand of an officer, attorney or other person authorised to sign the proxy.
To be valid, the form of proxy together with the power of attorney or other authority (if any) under which it is signed, or a notarially certified copy of that power of authority, must be deposited at the Company’s registrar, Tengis Limited, at Ground Floor, Bank of East Asia Harbour View Centre, 56 Gloucester Road, Wanchai, Hong Kong, as soon as possible and in any event not less than 48 hours before the time appointed for holding the meeting or any adjournment thereof.
Completion and return of the form of proxy shall not preclude members from attending and voting in person at the meeting or at any adjourned meeting (as the case may be) should they wish, and in such event, the form of proxy shall be deemed to be revoked.

As at the date of this notice, the Board comprises three executive Directors, namely Mr. Tang Ching Ho, Ms. Yau Yuk Yin and Mr. Chan Chun Hong, Thomas, and four independent non-executive Directors, namely Dr. Lee Peng Fei, Allen, Mr. Wong Chun, Justein, Dr. Siu Yim Kwan, Sidney and Mr. Siu Kam Chau.

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AI assistant

Wang On Group Limited — Proxy Solicitation & Information Statement 2005

49778_rns_2005-11-24_436e8138-8859-4042-b202-afcc911c2843.pdf

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

WANG ON GROUP LIMITED

DISCLOSEABLE AND POSSIBLE MAJOR TRANSACTION – DISPOSAL OF PROPERTIES

Financial adviser

DEFINITIONS

DEFINITIONS

WANG ON GROUP LIMITED

DISCLOSEABLE AND POSSIBLE MAJOR TRANSACTION – DISPOSAL OF PROPERTIES

INTRODUCTION

INFORMATION ON MILAN PLACE (PREVIOUSLY KNOWN AS WEALTHY TERRACE)

REASONS AND BENEFITS FOR THE DISPOSAL OF THE PROPERTIES

USE OF PROCEEDS FROM THE SALE OF THE PROPERTIES

IMPLICATIONS OF THE LISTING RULES

Discloseable transaction

Possible major transaction

GENERAL

VOTING ON POLL

RECOMMENDATION

ADDITIONAL INFORMATION

SUMMARY OF AUDITED FINANCIAL INFORMATION

Results

EXTRACT OF THE FINANCIAL STATEMENTS

Consolidated Profit and Loss Account

Consolidated Balance Sheet

Consolidated Statement of Changes in Equity

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

Consolidated Cash Flow Statement

Balance Sheet

Notes to Financial Statements

1. CORPORATE INFORMATION

2. IMPACT OF RECENTLY ISSUED HONG KONG FINANCIAL REPORTING STANDARDS (“HKFRSs”) AND EARLY ADOPTION OF HKFRSs

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of preparation

Basis of consolidation

Subsidiaries

Associates

Business combinations

Goodwill

Related parties

Impairment of assets

Fixed assets and depreciation

Investment properties

Properties under development

Borrowing costs

Investments

Held-to-maturity securities

Investment securities

Other investments

Inventories

Cash and cash equivalents

Provisions

Provisions for onerous contracts

Income tax

Revenue recognition

Employee benefits

Employment Ordinance long service payments

Retirement benefits scheme

Share option schemes

Dividends

Foreign currencies

4. SEGMENT INFORMATION

APPENDIX I

APPENDIX I

5. TURNOVER, REVENUE AND GAINS

6. PROFIT FROM OPERATING ACTIVITIES

7. FINANCE COSTS

8. DIRECTORS’ REMUNERATION

9. FIVE HIGHEST PAID EMPLOYEES

10. TAX

11. NET PROFIT FROM ORDINARY ACTIVITIES ATTRIBUTABLE TO SHAREHOLDERS

12. DIVIDENDS

13. EARNINGS PER SHARE

14. FIXED ASSETS

Group

Company

15. PROPERTIES UNDER DEVELOPMENT

Wang On Group Limited Proxy Solicitation & Information Statement 2005