THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in 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.

==> picture [58 x 60] intentionally omitted <==

WANG ON GROUP LIMITED ( )[*]

(Incorporated in Bermuda with limited liability)

(Stock Code: 1222)

MAJOR TRANSACTION PROPOSED DISPOSAL OF PROPERTY

Financial adviser

Shenyin Wanguo Capital (H.K.) Limited

A notice convening a special general meeting of Wang On Group Limited to be held at 37th Floor, Two International Finance Centre, 8 Finance Street, Central, Hong Kong on 8 March 2006 at 9:30 a.m. is set out on pages 112 and 113 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 by no later than 48 hours before the time appointed for holding the special general meeting or any adjourned meeting thereof. Completion and return of the form of proxy shall 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

16 February 2006

		Page
DEFINITIONS . . . .	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
LETTER FROM THE BOARD
Introduction . .	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3
The Agreement	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
Information on the Property and financial effects of the Disposal . . . . . . . . . . . . . . . . . .		5
Reason for the Disposal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		6
Use of proceeds	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
General . . . . . .	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
SGM . . . . . . . .	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
Voting by poll	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
Recommendation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		8
Additional information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		8
APPENDIX I —	FINANCIAL INFORMATION ON THE GROUP . . . . . . . . . . . . . . . .	9
APPENDIX II —	PROPERTY VALUATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	100
APPENDIX III —	GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	104
NOTICE OF THE SGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		112

— i —

DEFINITIONS

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

“Agreement”	the sale and purchase agreement entered into by DRIL on 25
	January 2006 in respect of the Disposal
“associate”	has the meaning ascribed to it under the Listing Rules
“Board”	the board of Directors
“Company”	Wang On Group Limited, a company incorporated in Bermuda
	and the shares of which are listed on the Stock Exchange
“Directors”	the directors of the Company
“Disposal”	the disposal of the Property pursuant to the terms of the
	Agreement
“DRIL”	Dragon Richly Investment Limited, a wholly-owned
	subsidiary of the Company
“Group”	the Company and its subsidiaries
“Hong Kong”	the Hong Kong Special Administrative Region of the People’s
	Republic of China
“Latest Practicable Date”	15 February 2006, being the latest practicable date for
	ascertaining certain information for inclusion in this circular
“Listing Rules”	the Rules Governing the Listing of Securities on the Stock
	Exchange
“Mr. Tang”	Mr. Tang Ching Ho, the chairman of the Company, together
	with his associates interested in approximately 15.74% of the
	issued share capital of the Company
“Property”	the entirety of six 5-storey commercial and residential
	buildings situated at Nos. 12, 14, 16, 18, 20 and 22 Davis
	Street, Kennedy Town, Hong Kong
“Purchaser”	Aniwell Investments Limited. To the best of the Directors’
	knowledge, information and belief having made all
	reasonable enquiry, the Purchaser and its ultimate beneficial
	owner are not connected with the Company, the director, chief
	executive or substantial shareholder of the Company or any of
	its subsidiaries or an associate of any of them. To the best of
	the Directors’ knowledge, the Purchaser is an investment
	holding company

— 1 —

	DEFINITIONS
“SFO”	the Securities and Futures Ordinance (Chapter 571 of the
	Laws of Hong Kong)
“SGM”	the special general meeting of the Company convened by the
	notice set out on pages 112 and 113 of this circular to consider
	and, if thought fit, approve, amongst other things, the
	Agreement and the Disposal
“Share(s)”	share(s) of HK$0.10 each in the capital of the Company
“Shareholder(s)”	holder(s) of the Shares
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“HK$”	Hong Kong dollars, the lawful currency of Hong Kong
“%”	per cent.
“sq ft”	square feet

— 2 —

LETTER FROM THE BOARD

==> picture [58 x 61] intentionally omitted <==

**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)

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

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

Head office and principal place of business: 5th Floor Wai Yuen Tong Medicine Building 9 Wang Kwong Road Kowloon Bay Kowloon Hong Kong 16 February 2006

To the Shareholders

Dear Sir or Madam

MAJOR TRANSACTION PROPOSED DISPOSAL OF PROPERTY

INTRODUCTION

On 26 January 2006, the Board announced that on 25 January 2006, DRIL, a wholly-owned subsidiary of the Company, entered into the Agreement pursuant to which DRIL conditionally agreed to sell to the Purchaser the Property for a cash consideration of HK$149.9 million. The Disposal constitutes a major transaction of the Company under the Listing Rules.

The purpose of this circular is to, among other things, provide you with information of the Agreement and the Disposal; a property valuation report; financial information of the Group; and notice of the SGM to consider and, if thought fit, approve the Agreement and the Disposal.

* For identification purpose only

— 3 —

LETTER FROM THE BOARD

THE AGREEMENT

Date of execution

25 January 2006

Parties

Vendor: DRIL, a wholly-owned subsidiary of the Company

Purchaser: Aniwell Investments Limited. To the best of the Directors’ knowledge, information and belief having made all reasonable enquiry, the Purchaser and its ultimate beneficial owner are not connected with the Company, the director, chief executive or substantial shareholder of the Company or any of its subsidiaries or an associate of any of them. To the best of the Directors’ knowledge, the Purchaser is an investment holding company

Asset subject to the Disposal

The entirety of the six 5-storey commercial and residential buildings situated at Nos. 12, 14, 16, 18, 20 and 22 Davis Street, Kennedy Town, Hong Kong.

Consideration

The consideration for the Disposal is HK$149.9 million, which was determined after arm’s length negotiations between the parties and was agreed on normal commercial terms between the parties. In arriving at the consideration, the Directors have taken into account the prevailing market conditions and prices of similar properties located in the nearby area.

Pursuant to the Agreement, the consideration for the Disposal shall be paid by the Purchaser in the following manners:

(i) a sum of HK$5,000,000 shall be paid as deposit and in part payment of the purchase price upon signing of the Agreement;
(ii) a sum of HK$9,990,000 shall be paid on 26 January 2006; and
(iii) the balance of HK$134,910,000 shall be paid upon completion of the Disposal.

As at the Latest Practicable Date, an aggregate sum of HK$14,990,000 as described in (i) and (ii) above was paid by the Purchaser.

The Property occupies a site area of approximately 4,966 sq ft. The Company has undertaken that a 3-feet wide back lane adjacent to the Property would not render the site area of the Property to be less than 4,966 sq ft. In the event that the site area of the Property is less than 4,966 sq ft due to the back lane, the consideration shall be reduced in proportion to the reduction in the site area.

— 4 —

LETTER FROM THE BOARD

Condition precedent

Completion of the Disposal is conditional upon, among other things, the approval of the Agreement and the Disposal by the Shareholders at a general meeting of the Company, which shall be held on or before 31 March 2006.

Completion

Completion shall take place on or before 10 April 2006.

In the event that the Agreement and the Disposal are not approved by the Shareholders in the SGM, DRIL shall be required to cancel the Agreement and refund all amounts paid by the Purchaser and the Purchaser shall have no rights to claim against DRIL for damage or specific performance.

INFORMATION ON THE PROPERTY AND FINANCIAL EFFECTS OF THE DISPOSAL

The acquisition of all units of the Property was completed by the Group on 18 October 2005 with an aggregate total cost of acquisition amounting to approximately HK$100.3 million. The Group acquired 29 units out of the total of 31 units of the Property through the acquisition of DRIL from Mr. Tang in September 2004, details of which were set out in the Company’s announcement and circular dated 30 September 2004 and 5 November 2004, respectively. The Group subsequently acquired the 2 remaining units from independent third parties in August 2005, details of which were set out in the Company’s announcement dated 12 August 2005. To the best of the Directors’ knowledge, the vendors for the properties as mentioned above are not connected with the Purchaser. Details of the Property are summarised below:

Address: the entire six 5-storey commercial and residential buildings situated at Nos. 12, 14, 16, 18, 20 and 22 Davis Street, Kennedy Town, Hong Kong. Site area: the Property occupies a site area of approximately 4,966 sq ft.

The net book value of the Property as at 24 January 2006 was approximately HK$105.2 million. The excess of the consideration of the Property over its net book value as at 24 January 2006 amounted to approximately HK$44.7 million. There is no revenue attributable to the Property since the Group’s acquisition of the Property. Currently, all units of the Property are vacant and the Property is subject to various orders in relation to the illegal building works. Details of the Property are set out in Appendix II to this circular. Pursuant to the Agreement, DRIL shall not be obliged to pay any cost or contribution towards the discharge or compliance of the various orders.

— 5 —

LETTER FROM THE BOARD

Based on the total cost of acquisition of the Property, the Directors estimate that the Group will record a gain before taxation of approximately HK$41.4 million arising from the Disposal after taking into account the relevant expenses in relation to the Disposal. Such gain will be recognized in the profit and loss account of the Group for the year ending 31 March 2007, during which period completion of the Disposal is expected to take place. Completion of the Disposal will give rise to the following effects on the financial position of the Group:

(i) the consolidated fixed assets of the Group will be reduced by the net book value of the Property as at the date of completion of the Disposal (which amount was approximately HK$105.2 million as at 24 January 2006);
(ii) the consolidated balance of the bank loan secured by the Property (the “Bank Loan”) and the interest accrued thereon will be reduced to nil as they will be fully repaid; and
(iii) the consolidated cash balance of the Group will be increased by the net proceeds from the Disposal of approximately HK$102 million after deducting the amount outstanding under the Bank Loan as at the date of completion of the Disposal.

The effects of the Disposal are expected to be reflected in the consolidated financial statements of the Group for the year ending 31 March 2007, during which period completion of the Disposal is expected to take place.

REASON FOR THE DISPOSAL

The acquisition of all units of the Property was completed on 18 October 2005 with an aggregate total cost of acquisition of approximately HK$100.3 million. Having regard to the consideration for the Disposal of HK$149.9 million and the expected gain before taxation arising from the Disposal of approximately HK$41.4 million after taking into account the relevant expenses in relation to the Disposal, the Directors consider that the terms of the Disposal are fair and reasonable and in the interest of the Company and the Shareholders as a whole.

USE OF PROCEEDS

Pursuant to the Agreement, the Property was subject to mortgages in favour of The Hongkong and Shanghai Banking Corporation Limited. As at the Latest Practicable Date, the aggregate outstanding amount of Bank Loan was HK$47.6 million and the interest accrued thereon was approximately HK$0.3 million. Part of the net proceeds from the Disposal will be applied to repay the amount outstanding under the Bank Loan in full and the interest accrued thereon. The remaining balance will be used as the Group’s working capital. The said mortgages will be released upon completion of the Disposal.

— 6 —

LETTER FROM THE BOARD

GENERAL

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

SGM

The Disposal constitutes a major transaction of the Company pursuant to Rule 14.06(3) of the Listing Rules and is therefore subject to approval by the Shareholders in the SGM. So far as is known to the Directors, no Shareholder has a material interest in the Disposal and accordingly no Shareholder is required to abstain from voting at the SGM. In this regard, Mr. Tang has undertaken to the Purchaser that he will vote in favor of the resolution in approving the Disposal at the SGM.

Set out on pages 112 and 113 of this circular is a notice convening the SGM to be held at 37th Floor, Two International Finance Centre, 8 Finance Street, Central, Hong Kong on 8 March 2006 at 9:30 a.m. at which an ordinary resolution will be proposed to the Shareholders to consider and, if thought fit, approve, amongst other things, the Agreement and the Disposal.

A form of proxy for use at the SGM is enclosed with this circular. Whether or not you are able to attend the SGM in person, you are requested to complete and return the form of proxy in accordance with the instructions printed thereon to the branch share registrar of the Company in Hong Kong, Tengis Limited, at Level 28, Three Pacific Place, 1 Queen’s Road East, Hong Kong as soon as possible but in any event not later than 48 hours before the time appointed for holding the SGM or any adjournment thereof. Completion and return of the form of proxy will not preclude you from attending and voting in person at the SGM or any adjournment thereof if you so wish.

VOTING BY 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

— 7 —

LETTER FROM THE BOARD

(iv) by any member or members present in person or by proxy (or being a corporation, is present by a representative duly authorised therefor) 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.

By virtue of the existing bye-laws of the Company, unless a poll is so required or demanded and, in the latter case, the demand is not withdrawn, a declaration by the chairman that a resolution has on a show of hands been carried or carried unanimously, or by a particular majority, or lost, and an entry to that effect in the book containing the minutes of the proceedings of the Company shall be conclusive evidence of the fact without proof of the number or proportion of the votes recorded in favour of or against that resolution.

RECOMMENDATION

Having regard to the consideration for the Disposal of HK$149.9 million, the expected gain before taxation arising from the Disposal of approximately HK$41.4 million after taking into account the relevant expenses in relation to the Disposal, the prevailing market conditions and prices of similar properties located in the nearby area, the Directors consider that the terms of the Disposal are fair and reasonable and that the Disposal is in the interests of the Company and the Shareholders as a whole. Accordingly, the Directors recommend the Shareholders to vote in favour of the resolution as set out in the notice of the SGM.

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

1. 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 reports of the Company for the years ended 31 March 2004 and 2005 respectively; and the results and the financial position of the Group for the six months ended 30 September 2004 and 2005 as extracted from the interim reports of the Company for the six months ended 30 September 2004 and 2005 respectively. The figures for the year ended 31 March 2003 and the six months ended 30 September 2004 have been adjusted for the effects of the retrospective change in accounting policy affecting income tax.

Results

Year 2005 HK$’000 (Audited) 364,123	ended 31 March Six months ended 30 September 2004 2003 2005 2004 HK$’000 HK$’000 HK$’000 HK$’000 (Audited) (Audited)(Unaudited)(Unaudited) (Restated) (Restated) 296,565 292,156 137,273 144,015 51,671 80,004 29,654 12,255 (10,307) (11,409) (10,000) (2,071) (7,656) (16,454) — — — (7,000) — — 33,708 45,141 19,654 10,184 (4,334) (3,361) (8,385) (2,522) 29,374 41,780 11,269 7,662 (89) (641) 9 1 29,285 41,139 11,278 7,663	ended 31 March Six months ended 30 September 2004 2003 2005 2004 HK$’000 HK$’000 HK$’000 HK$’000 (Audited) (Audited)(Unaudited)(Unaudited) (Restated) (Restated) 296,565 292,156 137,273 144,015 51,671 80,004 29,654 12,255 (10,307) (11,409) (10,000) (2,071) (7,656) (16,454) — — — (7,000) — — 33,708 45,141 19,654 10,184 (4,334) (3,361) (8,385) (2,522) 29,374 41,780 11,269 7,662 (89) (641) 9 1 29,285 41,139 11,278 7,663	ended 31 March Six months ended 30 September 2004 2003 2005 2004 HK$’000 HK$’000 HK$’000 HK$’000 (Audited) (Audited)(Unaudited)(Unaudited) (Restated) (Restated) 296,565 292,156 137,273 144,015 51,671 80,004 29,654 12,255 (10,307) (11,409) (10,000) (2,071) (7,656) (16,454) — — — (7,000) — — 33,708 45,141 19,654 10,184 (4,334) (3,361) (8,385) (2,522) 29,374 41,780 11,269 7,662 (89) (641) 9 1 29,285 41,139 11,278 7,663	ended 31 March Six months ended 30 September 2004 2003 2005 2004 HK$’000 HK$’000 HK$’000 HK$’000 (Audited) (Audited)(Unaudited)(Unaudited) (Restated) (Restated) 296,565 292,156 137,273 144,015 51,671 80,004 29,654 12,255 (10,307) (11,409) (10,000) (2,071) (7,656) (16,454) — — — (7,000) — — 33,708 45,141 19,654 10,184 (4,334) (3,361) (8,385) (2,522) 29,374 41,780 11,269 7,662 (89) (641) 9 1 29,285 41,139 11,278 7,663
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 29,654 12,255 (11,409) (10,000) (2,071 (16,454) — — (7,000) — — 45,141 19,654 10,184 (3,361) (8,385) (2,522 41,780 11,269 7,662 (641) 9 1
				7,662 1
70,127	29,285	41,139	11,278

— 9 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

Assets, liabilities and minority interests

TOTAL ASSETS TOTAL LIABILITIES MINORITY INTERESTS	2005 HK$’000 (Audited) 1,148,296 (411,484) (435) 736,377	As at 31 March 2004 HK$’000 (Audited) 857,583 (176,600) (401) 680,582	As at 30 September 2003 2005 2004 HK$’000 HK$’000 HK$’000 (Audited)(Unaudited)(Unaudited) (Restated) 781,578 1,387,578 1,020,591 (157,766) (601,983) (344,533) (324) (426) (400) 623,488 785,169 675,658	As at 30 September 2003 2005 2004 HK$’000 HK$’000 HK$’000 (Audited)(Unaudited)(Unaudited) (Restated) 781,578 1,387,578 1,020,591 (157,766) (601,983) (344,533) (324) (426) (400) 623,488 785,169 675,658
			623,488	785,169

— 10 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

2. FINANCIAL INFORMATION

(a) Financial Statements for the Year Ended 31 March 2005

The following is the audited consolidated financial statements of the Group for the year ended 31 March 2005 together with comparative figures and relevant notes as extracted from the Company’s annual report 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

— 11 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

Consolidated Balance Sheet

31 March 2005

2005 2004 Notes HK$’000 HK$’000 NON-CURRENT ASSETS Fixed assets 14 245,191 292,779 Properties under development 15 208,412 — Goodwill 16 4,987 5,459 Interests in associates 18 179,011 136,602 Long term investments 19(a) 54,234 34,843 Loans receivable 1,400 1,741 Rental deposits paid 5,465 7,556 Other deposits 30,603 30,630 Deferred tax assets 30 743 1,584 730,046 511,194 CURRENT ASSETS Properties under development 15 13,044 — Short term investments 19(b) 59,305 37,428 Inventories 20 70 73 Trade receivables 21 10,027 5,551 Prepayments, deposits and other receivables 22 22,401 13,972 Tax recoverable 740 — Pledged deposits 23 7,723 — Cash and cash equivalents 23 304,940 289,365 418,250 346,389 CURRENT LIABILITIES Trade payables 24 157 188 Other payables and accruals 25 14,794 12,997 Deposits received and receipts in advance 42,470 40,299 Interest-bearing bank loans 26, 28 28,072 24,575 Provisions for onerous contracts 27 6,749 9,112 Tax payable 3,269 4,729 95,511 91,900	2005 2004 Notes HK$’000 HK$’000 NON-CURRENT ASSETS Fixed assets 14 245,191 292,779 Properties under development 15 208,412 — Goodwill 16 4,987 5,459 Interests in associates 18 179,011 136,602 Long term investments 19(a) 54,234 34,843 Loans receivable 1,400 1,741 Rental deposits paid 5,465 7,556 Other deposits 30,603 30,630 Deferred tax assets 30 743 1,584 730,046 511,194 CURRENT ASSETS Properties under development 15 13,044 — Short term investments 19(b) 59,305 37,428 Inventories 20 70 73 Trade receivables 21 10,027 5,551 Prepayments, deposits and other receivables 22 22,401 13,972 Tax recoverable 740 — Pledged deposits 23 7,723 — Cash and cash equivalents 23 304,940 289,365 418,250 346,389 CURRENT LIABILITIES Trade payables 24 157 188 Other payables and accruals 25 14,794 12,997 Deposits received and receipts in advance 42,470 40,299 Interest-bearing bank loans 26, 28 28,072 24,575 Provisions for onerous contracts 27 6,749 9,112 Tax payable 3,269 4,729 95,511 91,900	2005 2004 Notes HK$’000 HK$’000 NON-CURRENT ASSETS Fixed assets 14 245,191 292,779 Properties under development 15 208,412 — Goodwill 16 4,987 5,459 Interests in associates 18 179,011 136,602 Long term investments 19(a) 54,234 34,843 Loans receivable 1,400 1,741 Rental deposits paid 5,465 7,556 Other deposits 30,603 30,630 Deferred tax assets 30 743 1,584 730,046 511,194 CURRENT ASSETS Properties under development 15 13,044 — Short term investments 19(b) 59,305 37,428 Inventories 20 70 73 Trade receivables 21 10,027 5,551 Prepayments, deposits and other receivables 22 22,401 13,972 Tax recoverable 740 — Pledged deposits 23 7,723 — Cash and cash equivalents 23 304,940 289,365 418,250 346,389 CURRENT LIABILITIES Trade payables 24 157 188 Other payables and accruals 25 14,794 12,997 Deposits received and receipts in advance 42,470 40,299 Interest-bearing bank loans 26, 28 28,072 24,575 Provisions for onerous contracts 27 6,749 9,112 Tax payable 3,269 4,729 95,511 91,900
	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	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

— 12 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

Notes 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 2004 HK$’000 HK$’000 322,739 254,489 1,052,785 765,683 214,496 80,073 1,420 4,461 98,620 — 1,437 166 315,973 84,700 435 401 736,377 680,582	2005 2004 HK$’000 HK$’000 322,739 254,489 1,052,785 765,683 214,496 80,073 1,420 4,461 98,620 — 1,437 166 315,973 84,700 435 401 736,377 680,582
		765,683
		80,073 4,461 — 166
		84,700
		401
		680,582
	14,332 722,045	14,332 666,250
	736,377	680,582

— 13 —

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 —

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

— 14 —

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

Issued share capital HK$’000 Reserves retained by: Company and subsidiaries 14,332 Associates — At 31 March 2005 14,332 Company and subsidiaries (as restated) 14,332 Associates — At 31 March 2004 (as restated) 14,332	Share Premium account Contributed surplus HK$’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

— 15 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

Consolidated Cash Flow Statement

Year ended 31 March 2005

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

— 16 —

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 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 2004 HK$’000 HK$’000 3,323 8,295 405 128 2,373 2,386 74 208 15 19 (943) — — (1,929) (85,872) — 96,133 (3,904) (30,603) (30,630) (197,802) (95,807) (5,565) (11,678) (190,000) — 115,135 1,925 62 217 17,343 4,784 — 102,383 — (9,000) 7,000 87,750 56,500 13,000 (35,690) (21,784) (35,938) (38,189) (7,723) — (291,773) 8,174 (5,198) (2,041) (14,332) (2,037) — 25,960 — (810) 98,620 — (3,143) — (75,322) (27,065) 275,172 60,475 — (110) 275,797 54,372 15,575 75,174 289,365 214,191 304,940 289,365 43,300 25,931 261,640 263,434 304,940 289,365	2005 2004 HK$’000 HK$’000 3,323 8,295 405 128 2,373 2,386 74 208 15 19 (943) — — (1,929) (85,872) — 96,133 (3,904) (30,603) (30,630) (197,802) (95,807) (5,565) (11,678) (190,000) — 115,135 1,925 62 217 17,343 4,784 — 102,383 — (9,000) 7,000 87,750 56,500 13,000 (35,690) (21,784) (35,938) (38,189) (7,723) — (291,773) 8,174 (5,198) (2,041) (14,332) (2,037) — 25,960 — (810) 98,620 — (3,143) — (75,322) (27,065) 275,172 60,475 — (110) 275,797 54,372 15,575 75,174 289,365 214,191 304,940 289,365 43,300 25,931 261,640 263,434 304,940 289,365
	(291,773) (5,198) (14,332) — — 98,620 (3,143) (75,322) 275,172 — 275,797 15,575 289,365	8,174
		(2,041 (2,037 25,960 (810 — — (27,065 60,475 (110
		54,372
		75,174 214,191
	304,940
	43,300 261,640	25,931 263,434
	304,940

— 17 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

Balance Sheet

31 March 2005

2005 2004 Notes HK$’000 HK$’000 NON-CURRENT ASSETS Fixed assets 14 2 5 Interests in subsidiaries 17 450,569 356,632 Interests in associates 18 219 219 Long term investments 19(a) 42,234 15,534 493,024 372,390 CURRENT ASSETS Short term investments 19(b) 43,947 12,105 Prepayments, deposits and other receivables 22 4,867 1,088 Pledged deposits 23 7,723 — Cash and cash equivalents 23 256,883 238,389 313,420 251,582 CURRENT LIABILITIES Other payables and accruals 25 2,599 241 Interest-bearing bank loans 26, 28 20,000 — 22,599 241 NET CURRENT ASSETS 290,821 251,341 TOTAL ASSETS LESS CURRENT LIABILITIES 783,845 623,731 NON-CURRENT LIABILITIES Interest-bearing bank loans 28 45,000 — Convertible notes 29 98,620 — 143,620 — 640,225 623,731 CAPITAL AND RESERVES Issued capital 31 14,332 14,332 Reserves 33(b) 625,893 609,399 640,225 623,731	2005 2004 Notes HK$’000 HK$’000 NON-CURRENT ASSETS Fixed assets 14 2 5 Interests in subsidiaries 17 450,569 356,632 Interests in associates 18 219 219 Long term investments 19(a) 42,234 15,534 493,024 372,390 CURRENT ASSETS Short term investments 19(b) 43,947 12,105 Prepayments, deposits and other receivables 22 4,867 1,088 Pledged deposits 23 7,723 — Cash and cash equivalents 23 256,883 238,389 313,420 251,582 CURRENT LIABILITIES Other payables and accruals 25 2,599 241 Interest-bearing bank loans 26, 28 20,000 — 22,599 241 NET CURRENT ASSETS 290,821 251,341 TOTAL ASSETS LESS CURRENT LIABILITIES 783,845 623,731 NON-CURRENT LIABILITIES Interest-bearing bank loans 28 45,000 — Convertible notes 29 98,620 — 143,620 — 640,225 623,731 CAPITAL AND RESERVES Issued capital 31 14,332 14,332 Reserves 33(b) 625,893 609,399 640,225 623,731	2005 2004 Notes HK$’000 HK$’000 NON-CURRENT ASSETS Fixed assets 14 2 5 Interests in subsidiaries 17 450,569 356,632 Interests in associates 18 219 219 Long term investments 19(a) 42,234 15,534 493,024 372,390 CURRENT ASSETS Short term investments 19(b) 43,947 12,105 Prepayments, deposits and other receivables 22 4,867 1,088 Pledged deposits 23 7,723 — Cash and cash equivalents 23 256,883 238,389 313,420 251,582 CURRENT LIABILITIES Other payables and accruals 25 2,599 241 Interest-bearing bank loans 26, 28 20,000 — 22,599 241 NET CURRENT ASSETS 290,821 251,341 TOTAL ASSETS LESS CURRENT LIABILITIES 783,845 623,731 NON-CURRENT LIABILITIES Interest-bearing bank loans 28 45,000 — Convertible notes 29 98,620 — 143,620 — 640,225 623,731 CAPITAL AND RESERVES Issued capital 31 14,332 14,332 Reserves 33(b) 625,893 609,399 640,225 623,731
	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

— 18 —

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

— 19 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

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;
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.

— 20 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

(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.

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.

— 21 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

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.

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.

— 22 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

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.

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.

— 23 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

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.

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.

— 24 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

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.

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.

— 25 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

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

— 26 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

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.

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.

— 27 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

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.

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.

— 28 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

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.

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.

— 29 —

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

	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
	Eliminations	2005 2004	HK$’000 HK$’000		— —	(17,454) (13,531)	— —	(17,454) (13,531)	(416) —
	Pharmaceutical*	2005 2004	HK$’000 HK$’000		— 18,555	— —	— 45	— 18,600	— 6,023
Property Chinese wet Shopping centres Corporate and	development Property investment markets and car parks Retail business others	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	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	Intersegment sales — — — 346 3,837 3,189 933 967 — — 12,684 9,029	Other revenue — — 31,314 7,308 811 641 1,632 2,361 994 81 65,588 34,703	Total — — 116,376 15,792 150,890 141,688 91,905 92,662 39,207 37,031 83,538 49,462	Segment results (3,104) — 59,702 11,923 15,425 15,840 6,904 5,411 947 761 12,697 10,336	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	* The Group’s pharmaceutical operations were disposed of to an associate during the year ended 31 March 2004.

— 30 —

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

	Eliminations Consolidated	2005 2004 2005 2004	HK$’000 HK$’000 HK$’000 HK$’000	(477,393) (299,490) 967,802 719,397	— — 179,011 136,602	— — 1,483 1,584	(477,393) (299,490) 1,148,296 857,583	477,393 299,490 (65,590) (67,057)	— — (345,894) (109,543)	477,393 299,490 (411,484) (176,600)		— — 12,109 12,595	— — — 6,246	— — 15,955 8,483	— — 455,426 107,485
	Pharmaceutical*	2005 2004	HK$’000 HK$’000	— —	— —	— —	— —	— —	— —	— —		— 88	— —	— —	— 57
Property Chinese wet Shopping centres Corporate and	development Property investment markets and car parks Retail business others	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	Segment assets 238,215 — 271,203 264,457 68,658 62,601 40,822 40,460 3,739 3,484 822,558 647,885	Interests in associates — — — — — — — — — — 179,011 136,602	Unallocated assets — — — — — — — — — — — —	Total assets 238,215 — 271,203 264,457 68,658 62,601 40,822 40,460 3,739 3,484 1,001,569 784,487	Segment liabilities (162,467) — (190,979) (224,452) (68,938) (62,662) (35,601) (47,586) (2,551) (2,877) (82,447) (28,970)	Unallocated liabilities — — — — — — — — — — — —	Total liabilities (162,467) — (190,979) (224,452) (68,938) (62,662) (35,601)) (47,586) (2,551) (2,877) (82,447) (28,970)	Other segment information:	Depreciation — — 10 — 7,574 6,830 1,908 2,973 179 134 2,438 2,570	Amortisation of goodwill — — — — — — — — — — — 6,246	Other non-cash expenses — — — — 656 — — 21 — — 15,299 8,462	Capital expenditure 252,059 — 197,802 102,266 3,706 748 626 3,545 118 163 1,115 706	* The Group’s pharmaceutical operations were disposed of to an associate during the year ended 31 March 2004.

— 31 —

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 HK$’000 216,689 18,904 38,213 5,256 11,261 73,800 364,123	2004 HK$’000 213,335 13,454 55,679 5,959 8,138 —
		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

— 32 —

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 HK$’000 — 995 24,310 205,218 53,000 12,109 (23,003) (7,335) 1 28 (375) 140,193 15,299 656 53,197 2,022	2004 HK$’000 6,246 785 30,235 208,935 — 12,595 (7,066) 15 164 21 (570) 121,176 1,641 6,821 56,104 2,114
	55,219	58,218
	(5,404) (10,817)	(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.

— 33 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

7. FINANCE COSTS

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

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 HK$’000 — 693 9,666 36 10,395	2004 HK$’000 — 631 9,975 36
		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 of directors 2005 2004 4 3 1 — — 1 2 1 — 1 7 6	Number of directors 2005 2004 4 3 1 — — 1 2 1 — 1 7 6
		6

— 34 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

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 HK$’000 1,460 18 1,478	2004 HK$’000 1,567 37
		1,604

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 of employees 2005 2004 2 1 — 1 2 2	Number of employees 2005 2004 2 1 — 1 2 2
		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.

— 35 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

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

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)).

— 36 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

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.

— 37 —

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 Furniture, fixtures and office equipment HK$’000 HK$’000 5,516 49,259 104 852 (30) (309) (66) (5) — —	Machinery Furniture, fixtures and office equipment HK$’000 HK$’000 5,516 49,259 104 852 (30) (309) (66) (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

— 38 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

Company

Furniture, fixtures and office equipment Computer equipment HK$’000 HK$’000 Cost: At 1 April 2004 and 31 March 2005 15 66 Accumulated depreciation: At beginning of year 10 66 Provided during the year 3 — At 31 March 2005 13 66 Net book value: At 31 March 2005 2 — At 31 March 2004 5 —	Furniture, fixtures and office equipment Computer equipment HK$’000 HK$’000 Cost: At 1 April 2004 and 31 March 2005 15 66 Accumulated depreciation: At beginning of year 10 66 Provided during the year 3 — At 31 March 2005 13 66 Net book value: At 31 March 2005 2 — At 31 March 2004 5 —	Total HK$’000 81
10 3 13	66 — 66	76 3
		79
2 5	— —	2
		5

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.

— 39 —

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

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 HK$’000 11,261 (444) 10,817	2004 HK$’000 8,138 (78
		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).

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 HK$’000 — 221,456	2004 HK$’000 — —
	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).

— 40 —

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

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

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.

— 41 —

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			Principal
Name	operations	share capital	to the	Company		activities
			Direct	Indirect
Advance Century Limited	Hong Kong	Ordinary	—		100	Investment
		HK$2				holding
Charter Golden Design &	Hong Kong	Ordinary	—		100	Property
Contracting Limited		HK$2				development
Century Fortune Hong Kong Limited	Hong Kong	Ordinary	—		100	Property
		HK$2				investment
China Coin Management Limited	Hong Kong	Ordinary	—		100	Property
		HK$1,000				investment
Conway Consultants Limited	Hong Kong	Ordinary	—		70	Provision of
		HK$1,400,000				medical
		Non-voting				consultation
		preference (Note 2)				services
		HK$600,000
Denox Management Limited	Hong Kong	Ordinary	—		100	Management
		HK$2				and sub-
						letting of
						properties

— 42 —

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

	Place of	Nominal value of	Percentage of	Percentage of
	incorporation/	issued ordinary	equity attributable			Principal
Name	operations	share capital	to the	Company		activities
			Direct	Indirect
Dragon Richly Investment Limited	Hong Kong	Ordinary	—		100	Property
		HK$1				development
Easy Kindom Limited	Hong Kong	Ordinary	—		100	Property
		HK$2				investment
Goodtech Management Limited	Hong Kong	Ordinary	—		100	Management
		HK$2,800,100				of shopping
						centres
Grand Quality Development Limited	Hong Kong	Ordinary	—		100	Property
		HK$2				investment
Greatest Wealth Limited	Hong Kong	Ordinary	—		100	Management
		HK$100				of pork stalls
						and butcher
						shops
Join China Investment Limited	Hong Kong	Ordinary	—		100	Investment
		HK$2				holding
Lead Fortune Limited	Hong Kong	Ordinary	—		100	Property
		HK$1,000				investment
Kartix Investment Limited	Hong Kong	Ordinary	—		100	Property
		HK$1				development
Lica Parking Company Limited	Hong Kong	Ordinary	—		99	Management
		HK$25,500,000				and sub-
						licensing of
						car parks
Majorluck Limited	Hong Kong	Ordinary	—		100	Management
		HK$10,000				and sub-
						licensing of
						Chinese wet
						markets
Poly Talent Investment Limited	Hong Kong	Ordinary	—		100	Property
		HK$1				development
Profit Million Investment Limited	Hong Kong	Ordinary	—		100	Property
		HK$1				development
Parking Lot Management Limited	Hong Kong	Ordinary	—		100	Property
		HK$700,002				investment
Rich Time Strategy Limited	British Virgin	Ordinary	—		100	Investment
	Islands/ Hong	US$1				holding
	Kong
WOB Investments Limited	Hong Kong	Ordinary	—		100	Property
		HK$2				investment
Wang On Commercial Management	British Virgin	Ordinary	—		100	Investment
Limited	Islands/	US$2				holding
	Hong Kong
WEH Investments Limited	Hong Kong	Ordinary HK$477	—		100	Property
		Non-voting				investment
		deferred (Note 3)
		HK$1,262,523

— 43 —

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

	Place of	Nominal value of	Percentage of	Percentage of
	incorporation/	issued ordinary	equity attributable				Principal
Name	operations	share capital	to the	Company			activities
			Direct	Indirect
Wang On Enterprises (BVI) Limited	British Virgin	Ordinary	100			—	Investment
	Islands/ Hong	US$1					holding
	Kong
Wang On Majorluck Limited	Hong Kong	Ordinary	—		100		Management
		HK$1,000					and sub-
							licensing of
							Chinese wet
							markets
Wang On Shopping Centre	Hong Kong	Ordinary	—		100		Management
Management Limited		HK$2					and sub-
							licensing of
							shopping
							centres
Willing Dental Consultants Limited	Hong Kong	Ordinary	—		100		Provision of
		HK$100					dental
							consultation
							services

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.

— 44 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

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.

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

					Percentage of	Percentage of
				Place of	ownership interest
			Business	incorporation/	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.

— 45 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

(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 HK$’000 326,909 (66,975)	2004 HK$’000 349,225
		(30,006)
	604,570 223,244 (96,232) (132,494) (7,877)	343,339 126,017 (44,784) (70,667) (212)
	591,211	353,693

— 46 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

19. INVESTMENTS

(a) Long term investments

Held-to-maturity securities: Hong Kong unlisted dated debt securities, at amortised cost Investment securities: Hong Kong unlisted callable deposit, at cost Hong Kong unlisted unit trusts, at cost Hong Kong unlisted equity shares, at cost Unlisted equity investment in Mainland China, at cost Less: Provisions for impairment	Group 2005 2004 HK$’000 HK$’000 31,454 15,534 7,770 — 3,010 4,010 30,098 30,098 12,000 — 52,878 34,108 (30,098) (14,799) 22,780 19,309 54,234 34,843	Company 2005 2004 HK$’000 HK$’000 31,454 15,534 7,770 — 3,010 — — — — — 10,780 — — — 10,780 — 42,234 15,534	Company 2005 2004 HK$’000 HK$’000 31,454 15,534 7,770 — 3,010 — — — — — 10,780 — — — 10,780 — 42,234 15,534
			— — — —
			— —
			—
			15,534

— 47 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

(b) Short term investments

Held-to-maturity securities: Hong Kong unlisted unit trusts, at cost Investment securities: Hong Kong unlisted certificate of deposit, at cost Hong Kong unlisted callable deposit, at cost Hong Kong unlisted unit trusts, at cost Hong Kong unlisted commercial paper, at cost Hong Kong unlisted currency link deposit, at cost Other investments: Listed equity securities, at fair value Hong Kong Elsewhere	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

20. INVENTORIES


		2005	2004
		HK$’000	HK$’000
Finished	goods	70	73

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

— 48 —

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

Group 2005 2004 HK$’000 HK$’000 Prepayments 5,397 2,978 Deposits 8,655 6,269 Other receivables 8,349 4,725 22,401 13,972 CASH AND CASH EQUIVALENTS AND PLEDGED DEPOSITS Group 2005 2004 HK$’000 HK$’000 Cash and bank balances 43,300 25,931 Time deposits 269,363 263,434 312,663 289,365 Less: Pledged deposits (7,723) — Cash and cash equivalents 304,940 289,365	Group 2005 2004 HK$’000 HK$’000 Prepayments 5,397 2,978 Deposits 8,655 6,269 Other receivables 8,349 4,725 22,401 13,972 CASH AND CASH EQUIVALENTS AND PLEDGED DEPOSITS Group 2005 2004 HK$’000 HK$’000 Cash and bank balances 43,300 25,931 Time deposits 269,363 263,434 312,663 289,365 Less: Pledged deposits (7,723) — Cash and cash equivalents 304,940 289,365	Group 2005 2004 HK$’000 HK$’000 Prepayments 5,397 2,978 Deposits 8,655 6,269 Other receivables 8,349 4,725 22,401 13,972 CASH AND CASH EQUIVALENTS AND PLEDGED DEPOSITS Group 2005 2004 HK$’000 HK$’000 Cash and bank balances 43,300 25,931 Time deposits 269,363 263,434 312,663 289,365 Less: Pledged deposits (7,723) — Cash and cash equivalents 304,940 289,365	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 19,235 2,189 245,371 236,200	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 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

23. CASH AND CASH EQUIVALENTS AND PLEDGED DEPOSITS

— 49 —

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 26. INTEREST-BEARING BANK LOANS Note Current portion of bank loans and overdrafts 28 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 Company 2005 2004 2005 2004 HK$’000 HK$’000 HK$’000 HK$’000 4,291 4,010 2,023 110 10,503 8,987 576 131 14,794 12,997 2,599 241 Group Company 2005 2004 2005 2004 HK$’000 HK$’000 HK$’000 HK$’000 28,072 24,575 20,000 — Group 2005 2004 HK$’000 HK$’000 13,573 20,139 1,777 (420 (7,181) (6,146 8,169 13,573 (6,749) (9,112 1,420 4,461	Group Company 2005 2004 2005 2004 HK$’000 HK$’000 HK$’000 HK$’000 4,291 4,010 2,023 110 10,503 8,987 576 131 14,794 12,997 2,599 241 Group Company 2005 2004 2005 2004 HK$’000 HK$’000 HK$’000 HK$’000 28,072 24,575 20,000 — Group 2005 2004 HK$’000 HK$’000 13,573 20,139 1,777 (420 (7,181) (6,146 8,169 13,573 (6,749) (9,112 1,420 4,461	Group Company 2005 2004 2005 2004 HK$’000 HK$’000 HK$’000 HK$’000 4,291 4,010 2,023 110 10,503 8,987 576 131 14,794 12,997 2,599 241 Group Company 2005 2004 2005 2004 HK$’000 HK$’000 HK$’000 HK$’000 28,072 24,575 20,000 — Group 2005 2004 HK$’000 HK$’000 13,573 20,139 1,777 (420 (7,181) (6,146 8,169 13,573 (6,749) (9,112 1,420 4,461	Group Company 2005 2004 2005 2004 HK$’000 HK$’000 HK$’000 HK$’000 4,291 4,010 2,023 110 10,503 8,987 576 131 14,794 12,997 2,599 241 Group Company 2005 2004 2005 2004 HK$’000 HK$’000 HK$’000 HK$’000 28,072 24,575 20,000 — Group 2005 2004 HK$’000 HK$’000 13,573 20,139 1,777 (420 (7,181) (6,146 8,169 13,573 (6,749) (9,112 1,420 4,461

				2004 HK$’000 20,139 (420 (6,146
			8,169 (6,749)	13,573 (9,112
			1,420	4,461

— 50 —

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

							Group		Company
						2005	2004	2005	2004
						HK$’000	HK$’000	HK$’000	HK$’000
2007	convertible	notes	—	_Note _	(i)	37,180	—	37,180	—
2008	convertible	notes	—	_Note _	(ii)	61,440	—	61,440	—
						98,620	—	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.

— 51 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

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.

(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 HK$’000 743 (1,437) (694)	2004 HK$’000 1,584 (166)
		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

— 52 —

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

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

Share options

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

— 53 —

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.

— 54 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

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.

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).

— 55 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

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.

(b) Company

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

— 56 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

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

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

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 — —
		—

— 57 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

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

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	2005 HK$’000 — — — —	2004 HK$’000 (2,750) (23) 844
		(1,929)

— 58 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

(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$’000 153,958 — 94 746 52 2,465 (2,546) (61,930) — —	2004 HK$’000 324 3,377 9,194 647 — 3,691 (6,208) (4,722) (628) (12)
	92,839 1,415 26,975 7,369	5,663 126,094 (1,020) (1,012)
	128,598	129,725
	98,980 — 30,000 (382)	— 59,938 70,000 (213)
	128,598	129,725

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)

— 59 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

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.

— 60 —

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 HK$’000 140,509 137,077 277,586	2004 HK$’000 70,810 30,319
		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 HK$’000 124,371 188,373 2,495 315,239	2004 HK$’000 109,754 114,171 378
		224,303

— 61 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

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:


							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.

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.

— 62 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

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.
(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.

— 63 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

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.

— 64 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

(b) Management Discussion and Analysis for the Year Ended 31 March 2005

The following paragraphs have been extracted from the Company’s annual report for the year ended 31 March 2005.

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 Wai Yuen Tong Medicine Holdings Limited (“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
			Approximate	Gross Floor	Development	Anticipated
Property Name	Location	Consideration	Site Area	Area	Plan	Completion
		(HK$)	(sq ft)	(sq ft)
Shatin Heights Road	Lot No. 1476 in D.D.	103,800,000	49,100	27,900	Low density	End of 2006
	189				residential area
					with 11 luxury
					houses

— 65 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

				Estimated
				Approximate
			Approximate	Gross Floor	Development	Anticipated
Property Name	Location	Consideration	Site Area	Area	Plan	Completion
		(HK$)	(sq ft)	(sq ft)
Fairview Park	Lot No. 4781 in D.D.	82,600,000	154,800	39,000	Low density	End of 2006
Boulevard	104, Lot No. 3254 RP				residential and
	in D.D. 104, Lot No.				commercial area
	3265 S.A RP in D.D.				with 16 luxury
	104, Lot No. 3251				houses, 6 shops
	S.B RP, Lot No. 3257				and club house
	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
Cheung Sha Wan	270-274 Cheung Sha	75,000,000	4,200	36,800	24 storey	Early 2008
	Wan Road Kowloon				residential and
					commercial
					building
Kennedy Town	29 residential and	77,600,000	5,000	37,000	26 storey	Early 2008
	commercial units of				residential and
	Nos. 12, 14, 16, 18,				commercial
	20 and 22, Davis				building
	Street, Kennedy
	Town, Hong Kong
Ho Chung	Various lots in D.D.	13,800,000	68,000	20,500	Low density	Early 2009
	210 and D.D. 244 Sai				residential
	Kung, New Territories				development
		352,800,000	281,100	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.

— 66 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

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/
		Actual
Location	Consideration	Completion
	(HK$)
Shop 6 (including Cockloft)
on the G/F., Cheuk Ming Street,
Nos. 10-22 Tsuen Wan Market Street,
Tsuen Wan, New Territories	33,800,000	June 2004
Whole block located at
No. 32 Argyle Street,
Kowloon	73,800,000	January 2005
Flat D on the Ground Floor and
Flat D on Mezzanine Floor,
Nam Yeung Mansion,
Nos. 31-34 Mut Wah Street,
Kwun Tong, Kowloon	29,100,000	March 2005
Ground Floor and Cockloft,
Nos. 581 and 581A,
Nathan Road, Kowloon	105,000,000	March 2005
1 residential unit at Parc Palais,
18 Wylie Road,
King’s Park, Kowloon	13,100,000	October 2005

— 67 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

Acquisitions
		Anticipated/
		Actual
Location	Consideration	Completion
	(HK$)
Ground Floor and Cockloft,
No. 203 Tung Choi Street,
Mongkok, Kowloon	19,800,000	July 2004
4 residential units at Parc Palais,
18 Wylie Road,
King’s Park, Kowloon	30,900,000	March 2005
Shop 6 on G/F., Grandeur Garden,
Nos. 14-18 Chik Fai Street,
Nos. 55-65 Tai Wai Road,
Shatin, New Territories	16,300,000	March 2005
G/F., 170 Castle Peak Road,
Yuen Long, New Territories	35,000,000	May 2005
Shop B on G/F., 106-108,
Shaukeiwan Road, Hong Kong	13,000,000	May 2005
G/F., 1/F., 2/F., and Rooftop,
No. 68 San Hong Street,
Sheung Shui, New Territories	15,750,000	June 2005
Shop B on G/F., Kwong Sen Mansion,
Nos. 23-33 Shui Wo Street, Kowloon	17,200,000	June 2005
Whole block located at
No. 58 Yen Chow Street,
Sham Shui Po, Kowloon	110,000,000	July 2005
Shop 5 on G/F., Tak Lee Building,
No. 993 King Road, Hong Kong	15,000,000	July 2005
Shop B on G/F.,
336-338 Tung Chau Street, Kowloon	10,800,000	October 2005

— 68 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

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 approximately 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 the People’s Republic of 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.

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.

— 69 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

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. Total staff cost for the year ended 31 March 2005 amounted to approximately HK$55,219,000.

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.

— 70 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

(c) Financial Statements for the Six Months Ended 30 September 2005

The following is the unaudited condensed consolidated financial statements of the Group for the six months ended 30 September 2005 together with comparative figures and relevant notes as extracted from the Company’s interim report for the six months ended 30 September 2005.

Condensed Consolidated Income Statement

For the six months ended 30 September 2005

		For the six months	For the six months
		ended 30 September
		2005	2004
		(Unaudited)	(Unaudited)
			(Restated)
	Notes	HK$’000	HK$’000
TURNOVER	3	137,273	144,015
Cost of sales		(115,937)	(118,484)
Gross profit		21,336	25,531
Other income and gains	4	12,259	11,648
Selling and distribution costs		(4,083)	(3,759)
Administrative expenses		(19,970)	(12,999)
Other operating expenses		(902)	(310)
Changes in fair value of investments		2,609	(1,200)
Gain/(loss) on disposal of interests in subsidiaries		573	(372)
Surplus/(deficit) on revaluation of investment properties		24,276	(4,414)
Finance costs	5	(6,444)	(1,870)
Share of losses of an associate		(10,000)	(2,071)
PROFIT BEFORE TAX	6	19,654	10,184
Tax	7	(8,385)	(2,522)
PROFIT FOR THE PERIOD		11,269	7,662
ATTRIBUTABLE TO:
Equity holders of the parent		11,278	7,663
Minority interests		(9)	(1)
		11,269	7,662
EARNINGS PER SHARE	8
Basic		HK5.65 cents	HK4.46 cents
Diluted		HK5.31 cents	HK4.45 cents
DIVIDEND PER SHARE	9	HK3 cents	HK3 cents

— 71 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

Condensed Consolidated Balance Sheet

30 September 2005

30 September 2005 (Unaudited) Notes HK$’000 NON-CURRENT ASSETS Fixed assets: Property, plant and equipment 21,437 Investment properties 322,700 Properties under development 318,505 Goodwill 4,987 Interests in associates 11 168,559 Held-to-maturity securities 36,448 Available-for-sale investments — Loan receivables 15,915 Rental deposits paid 6,011 Other deposits 13,910 Deferred tax assets 587 Total non-current assets 909,059 CURRENT ASSETS Properties held for sale 115,711 Properties under development 16,228 Held-to-maturity securities 14,194 Available-for-sale investments — Investments at fair value through profit or loss 18,966 Inventories 74 Trade receivables 12 8,755 Prepayments, deposits and other receivables 21,770 Tax recoverable 47 Pledged deposits 17,771 Cash and cash equivalents 265,003 Total current assets 478,519 CURRENT LIABILITIES Trade payables 13 210 Other payables and accruals 22,129 Deposits received and receipts in advance 44,971 Interest-bearing bank loans 112,265 Provisions for onerous contracts 667 Tax payable 5,315 Total current liabilities 185,557 NET CURRENT ASSETS 292,962 TOTAL ASSETS LESS CURRENT LIABILITIES 1,202,021	30 September 2005 (Unaudited) Notes HK$’000 NON-CURRENT ASSETS Fixed assets: Property, plant and equipment 21,437 Investment properties 322,700 Properties under development 318,505 Goodwill 4,987 Interests in associates 11 168,559 Held-to-maturity securities 36,448 Available-for-sale investments — Loan receivables 15,915 Rental deposits paid 6,011 Other deposits 13,910 Deferred tax assets 587 Total non-current assets 909,059 CURRENT ASSETS Properties held for sale 115,711 Properties under development 16,228 Held-to-maturity securities 14,194 Available-for-sale investments — Investments at fair value through profit or loss 18,966 Inventories 74 Trade receivables 12 8,755 Prepayments, deposits and other receivables 21,770 Tax recoverable 47 Pledged deposits 17,771 Cash and cash equivalents 265,003 Total current assets 478,519 CURRENT LIABILITIES Trade payables 13 210 Other payables and accruals 22,129 Deposits received and receipts in advance 44,971 Interest-bearing bank loans 112,265 Provisions for onerous contracts 667 Tax payable 5,315 Total current liabilities 185,557 NET CURRENT ASSETS 292,962 TOTAL ASSETS LESS CURRENT LIABILITIES 1,202,021	31 March 2005 (Restated) HK$’000 25,641 219,550 208,412 4,987 179,011 42,234 12,000 1,400 5,465 30,603 743
	909,059 115,711 16,228 14,194 — 18,966 74 8,755 21,770 47 17,771 265,003 478,519 210 22,129 44,971 112,265 667 5,315 185,557 292,962 1,202,021	730,046
		— 13,044 20,424 15,520 23,361 70 10,027 19,308 740 7,723 304,940
		415,157
		157 14,794 42,470 28,072 6,749 3,269
		95,511
		319,646
		1,049,692

— 72 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

30 September 2005 31 March 2005 (Unaudited) (Restated) Notes HK$’000 HK$’000 NON-CURRENT LIABILITIES Interest-bearing bank loans 362,049 214,496 Provisions for onerous contracts 2,856 1,420 Convertible notes 14 45,472 85,254 Deferred tax liabilities 6,049 1,437 Total non-current liabilities 416,426 302,607 785,595 747,085 CAPITAL AND RESERVES Equity attributable to equity holders of the parent Issued capital 15 22,454 14,332 Reserves 16 534,697 489,594 Retained profits 16 221,282 224,878 Proposed dividends 16 6,736 17,846 785,169 746,650 Minority interests 426 435 785,595 747,085	30 September 2005 31 March 2005 (Unaudited) (Restated) Notes HK$’000 HK$’000 NON-CURRENT LIABILITIES Interest-bearing bank loans 362,049 214,496 Provisions for onerous contracts 2,856 1,420 Convertible notes 14 45,472 85,254 Deferred tax liabilities 6,049 1,437 Total non-current liabilities 416,426 302,607 785,595 747,085 CAPITAL AND RESERVES Equity attributable to equity holders of the parent Issued capital 15 22,454 14,332 Reserves 16 534,697 489,594 Retained profits 16 221,282 224,878 Proposed dividends 16 6,736 17,846 785,169 746,650 Minority interests 426 435 785,595 747,085	30 September 2005 31 March 2005 (Unaudited) (Restated) Notes HK$’000 HK$’000 NON-CURRENT LIABILITIES Interest-bearing bank loans 362,049 214,496 Provisions for onerous contracts 2,856 1,420 Convertible notes 14 45,472 85,254 Deferred tax liabilities 6,049 1,437 Total non-current liabilities 416,426 302,607 785,595 747,085 CAPITAL AND RESERVES Equity attributable to equity holders of the parent Issued capital 15 22,454 14,332 Reserves 16 534,697 489,594 Retained profits 16 221,282 224,878 Proposed dividends 16 6,736 17,846 785,169 746,650 Minority interests 426 435 785,595 747,085
		302,607
		747,085
	22,454 534,697 221,282 6,736 785,169 426	14,332 489,594 224,878 17,846
		746,650 435
	785,595	747,085

— 73 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

Consolidated Statement of Changes in Equity

For the six months ended 30 September 2005

		For the six months	For the six months
		ended 30	September
		2005	2004
		(Unaudited)	(Unaudited)
			(Restated)
	Notes	HK$’000	HK$’000
Total equity at 1 April:
As previously reported as equity		736,377	680,582
As previously reported separately as minority interests		435	401
		736,812	680,983
Prior period adjustment	1, 2	10,273	—
As restated, before opening adjustment		747,085	680,983
Opening adjustment	1, 2	(3,530)	—
As restated, after opening adjustment		743,555	680,983
Changes in equity during the period:
Profit for the period (as restated)		11,269	7,662
Dividend declared		(22,454)	(10,032)
Exercise of share options		11,528	—
Conversion of convertible notes		41,697	—
Total equity at 30 September		785,595	678,613
Total recognised income and expense for the period
attributable to:
Equity holders of the parent		11,278	7,663
Minority interests		(9)	(1)
		11,269	7,662
Effect of prior period and opening adjustments
attributable to:
Equity holders of the parent		6,743	—
Minority interests		—	—
		6,743	—

— 74 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

Condensed Consolidated Cash Flow Statement

For the six months ended 30 September 2005

	Six months ended	Six months ended
	30 September
	2005	2004
	(Unaudited)	(Unaudited)
	HK$’000	HK$’000
NET CASH INFLOW FROM OPERATING ACTIVITIES	12,202	8,216
NET CASH OUTFLOW FROM INVESTING ACTIVITIES	(250,770)	(174,542)
NET CASH INFLOW FROM FINANCING ACTIVITIES	198,631	175,017
INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS	(39,937)	8,691
Cash and cash equivalents at beginning of period	304,940	289,365
CASH AND CASH EQUIVALENTS AT END OF PERIOD	265,003	298,056
ANALYSIS OF BALANCES OF CASH AND CASH
EQUIVALENTS
Cash and bank balances	67,216	33,126
Non-pledged time deposits with original maturity of less than three
months when acquired	197,787	264,930
	265,003	298,056

— 75 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

Notes To Condensed Consolidated Financial Statements For the six months ended 30 September 2005

1. ACCOUNTING POLICIES

HKFRS 3 Business Combinations HKAS 36 Impairment of Assets HKAS 38 Intangible Assets HKAS 40 Investment Property HK-Int 3 Revenue — Pre-completion Contracts for the Sale of Development Properties

The condensed consolidated interim financial statements are prepared in accordance with HKAS 34 “Interim Financial Reporting”. The accounting policies and basis of preparation adopted in the preparation of the interim financial statements are the same as those used in the annual financial statements for the year ended 31 March 2005, except in relation to the following new and revised HKFRSs not yet previously early adopted by the Group and are adopted for the first time for the current period’s financial statements:

HKAS 1	Presentation of Financial Statements
HKAS 2	Inventories
HKAS 7	Cash Flow Statements
HKAS 8	Accounting Policies, Changes in Accounting Estimates and Errors
HKAS 10	Events after the Balance Sheet Date
HKAS 12	Income Taxes
HKAS 16	Property, Plant and Equipment
HKAS 17	Leases
HKAS 18	Revenue
HKAS 19	Employee Benefits
HKAS 21	The Effects of Changes in Foreign Exchange Rates
HKAS 23	Borrowing Costs
HKAS 24	Related Party Disclosures
HKAS 27	Consolidated and Separate Financial Statements
HKAS 28	Investments in Associates
HKAS 32	Financial Instruments: Disclosure and Presentation
HKAS 33	Earnings per Share
HKAS 37	Provisions, Contingent Liabilities and Contingent Assets
HKAS 39	Financial Instruments: Recognition and Measurement
HKFRS 2	Share-based Payment
HK(SIC)-Int 21	Income Taxes — Recovery of Revalued Non-depreciable Assets
HK-Int 4	Leases — Determination of the Length of Lease Term in respect of Hong Kong Land
	Leases

The adoption of HKASs 2, 7, 8, 10, 12, 16, 17, 18, 19, 21, 23, 24, 27, 28, 33, 37 and HK-Int 4 has had no material impact on the accounting policies of the Group and the methods of computation in the Group’s condensed consolidated financial statements. The impact of adopting the other HKFRSs is summarised as follows:

— 76 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

(a) HKAS 32 and HKAS 39 — Financial Instruments
(i) Financial assets

Upon the adoption of HKASs 32 and 39, the Group classified financial assets in the following categories:

Financial assets at fair value through profit or loss

This category has two sub-categories: financial assets held for trading, and those designated at fair value through profit or loss at inception. A financial asset is classified in this category if acquired principally for the purpose of selling in the short term or if so designated by management. It is carried at fair value, with changes in fair value through profit or loss.

In prior periods, the Group’s other investments were measured at fair value, with unrealised gains or losses included in the income statement, while the Group’s convertible notes due from an associate were stated at cost less any impairment losses.

On 1 April 2005, other investments were reclassified to investments at fair value through profit or loss with the same accounting treatment as before. In accordance with HKAS 32, comparative amounts have been reclassified for presentation purpose.

On 1 April 2005, convertible notes due from an associate were measured at fair values with changes in fair value recognised in the income statement for the period in which they arose. The effect of this change in accounting policy is summarised in note 2 to the condensed consolidated financial statements. In accordance with the transitional provisions of HKAS 39, comparative amounts have not been restated.

Loan receivables

Loan receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for maturities greater than 12 months after the balance sheet date. These are classified as non-current assets. Assets in this category are measured at amortised cost using effective interest method.

Held-to-maturity securities

Held-to-maturity securities are non-derivative financial assets with fixed or determinable payments and fixed maturities that the Group’s management has the positive intention and ability to hold to maturity. Assets in this category are measured at amortised cost using effective interest method, the same accounting treatment as before.

Available-for-sale investments

Available-for-sale investments are those non-derivative investments in unlisted equity securities that are designated as available-for-sale or are not classified in any of the other categories of financial assets as defined in HKAS 39. After initial recognition, available-for-sale investments are measured at fair value with gains or losses being recognised as a separate component of equity until the investment is sold, collected or otherwise disposed of or until the investment is determined to be impaired at which time the cumulative gain or loss previously reported in equity is included in the income statement.

For investments where there is no active market, fair value is determined using valuation techniques. Such techniques include using recent arm’s length market transactions; reference to the current market value of another instrument, which is substantially the same and discounted cash flow analysis.

— 77 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

When the fair value of unlisted equity securities cannot be reliably measured because (1) the variability in the range of reasonable fair value estimates is significant for that investment, or (2) the probabilities of the various estimates within the range cannot be reasonably assessed and used in estimating fair value, such securities are stated at cost.

The Group assesses at each balance sheet date whether there is any objective evidence that an available-for-sale investment is impaired as a result of one or more events that occurred after the initial recognition of the assets (“loss events”), and that the loss event has an impact on the estimated future cash flows that can be reliably estimated.

If there is objective evidence of impairment, the cumulative loss that had been recognised directly in equity shall be removed from equity and recognised in the income statement. The amount of the loss recognised in the income statement shall be the difference between the acquisition cost and current fair value, less any impairment loss on that available-for-sale investment previously recognised in the income statement.

This change in accounting policy has had no effect on the condensed consolidated income statement and retained profits. In accordance with HKAS 32, comparative amounts have been reclassified for presentation purpose.

(ii) Convertible notes

In prior periods, convertible notes were stated at amortised cost. Upon the adoption of HKASs 32 and 39, convertible notes issued are split into liability and equity components.

On the issue of the convertible notes, the fair value of the liability component is determined using a market rate for an equivalent non-convertible note; and this amount is carried as a long term liability on the amortised cost basis until extinguished on conversion or redemption.

The remainder of the proceeds is allocated to the conversion option that is recognised and included in shareholders’ equity, net of transaction costs. The carrying amount of the conversion option is not remeasured in subsequent years.

Transaction costs are apportioned between the liability and equity components of the convertible notes based on the allocation of proceeds to the liability and equity components when the instruments are first recognised.

The effects of the above changes are summarised in note 2 to the condensed consolidated financial statements. In accordance with HKAS 32, comparative amounts have been restated.

(b) HKFRS 2 — Share-based Payment

In prior periods, no recognition and measurement of share-based transactions in which employees (including directors) were granted share options over shares in the Company was required until such options were exercised by employees, at which time the share capital and share premium were credited with the proceeds received.

Upon the adoption of HKFRS 2, when employees (including directors) render services as consideration for equity instruments (“equity-settled transactions”), the cost of the equity-settled transactions with employees is measured by reference to the fair value at the date at which the instruments are granted. The fair value is determined by an external valuer using a binomial model. In valuing equity-settled transactions, no account is taken of any performance conditions, other than conditions linked to the price of the shares of the Company, if applicable.

— 78 —

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in which the performance and/or service conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the award (the “vesting date”). The cumulative expense recognised for equity-settled transactions at each balance sheet date until the vesting date reflects the extent to which the vesting period has expired and the Group’s best estimate of the number of equity instruments that will ultimately vest. The charge or credit to the income statement for a period represents the movement in cumulative expense recognised as at the beginning and end of that period.

No expense is recognised for awards that do not ultimately vest, except for awards where vesting is conditional upon a market condition, which are treated as vesting irrespective of whether or not the market condition is satisfied, provided that all other performance conditions are satisfied.

The dilutive effect of outstanding options is reflected as additional share dilution in the computation of earnings per share.

In accordance with the transitional provision of HKFRS 2, the Group applies HKFRS 2 to share options granted after 7 November 2002 and not yet vested at 1 April 2005. The adoption of HKFRS 2 has had no effect on the condensed consolidated financial statements.

(c) HK(SIC)-Int 21 — Income Taxes — Recovery of Revalued Non-depreciable Assets

In prior periods, deferred tax arising on the revaluation of investment properties was recognised based on the tax rate that would be applicable upon the sale of the investment properties.

Upon the adoption of HK(SIC)-Int 21, deferred tax arising on the revaluation of the Group’s investment properties is determined depending on whether the properties will be recovered through use or through sale. The adoption of HK(SIC)-Int 21 has no significant effect on the condensed consolidated financial statements.

(d) HKAS 1 — Presentation of Financial Statements and HKAS 27 — Consolidated and Separate Financial Statements

In prior periods, minority interests at the balance sheet date were presented in the condensed consolidated balance sheet separately from liabilities and as a deduction from the net assets. Minority interests in the results of the Group for the period were also separately presented in the condensed consolidated income statement as a reduction before arriving at the profit attributable to the equity holders of the parent.

Upon the adoption of HKASs 1 and 27, minority interests at the balance sheet date are presented in the condensed consolidated balance sheet as an element of capital and reserves, separately from the equity attributable to the equity holders of the parent, and the minority interests in the results of the Group for the period are presented on the face of the condensed consolidated income statement as an allocation of the total profit or loss for the period between the minority interests and the equity holders of the parent.

The presentation of minority interests in the condensed consolidated balance sheet, income statement and statement of changes in equity for the comparative period has been restated.

— 79 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

2. SUMMARY OF THE IMPACT OF CHANGES IN ACCOUNTING POLICIES

Effect on opening balance of total equity at 1 April:

Following the adoption of the HKFRSs, the opening balances of the following accounts were adjusted. The details of the prior period adjustment and opening adjustment are summarised as follows:

			2005			2004
		Equity			Equity
		component of		component of
Effect of new policy		convertible	Retained		convertible	Retained
(Increase/(decrease))		notes	profits	Total	notes	profits		Total
		(Unaudited)	(Unaudited)	(Unaudited)	(Unaudited)	(Unaudited)		(Unaudited)
	Notes	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000		HK$’000
Prior period adjustment:
HKAS 32
— Convertible notes	1(a)(ii)	10,903	(630)	10,273	—		—	—
Opening adjustment:
HKAS 39
— Convertible notes due
from an associate	1(a)(i)	—	(3,530)	(3,530)	—		—	—
Total effect at 1 April		10,903	(4,160)	6,743	—		—	—

— 80 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

Effect on profit after tax for the six months ended 30 September:

The following table summarises the impact on profit after tax for the six months ended 30 September 2005 and 2004 upon the adoption of the new HKFRSs. As no retrospective adjustments have been made for the adoption of HKAS 39, the amounts shown for the six months ended 30 September 2004 may not be comparable to the amount shown for the current interim period.

			2005			2004
		Equity			Equity
Effect of new policy		holders of	Minority		holders of	Minority
(Increase/(decrease))		the parent	interests	Total	the parent	interests		Total
		(Unaudited)	(Unaudited)	(Unaudited)	(Unaudited)	(Unaudited)		(Unaudited)
	Notes	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000		HK$’000
HKAS 32
— Convertible notes	1(a)(ii)	(1,966)	—	(1,966)	—		—	—
HKAS 39
— Convertible notes due
from an associate	1(a)(i)	620	—	620	—		—	—
Total effect for the period		(1,346)	—	(1,346)	—		—	—
Effect on earnings per share:
Basic	(HK0.67 cents)				—
Diluted	(HK0.63 cents)				—

— 81 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

3. SEGMENT INFORMATION

The Company is an investment holding company and the Group principally operates business segments as described below.

The following table presents revenue and result information for the Group’s business segments for the six months ended 30 September.

2005

Property development Property investment Chinese wet market Shopping centres and car parks Retail business Corporate and other Eliminations Consolidated (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 Group Segment revenue Sales to external customers — 3,781 72,199 41,115 18,495 1,683 — 137,273 Intersegment sales — — 2,025 1,180 — 1,028 (4,233) — Other revenue — 24,684 730 832 47 14,756 (1,332) 39,717 Total — 28,465 74,954 43,127 18,542 17,467 (5,565) 176,990 Segment results (2,339) 26,450 7,781 1,003 183 4,614 (1,403) 36,289 Unallocated expenses (191) Finance costs (6,444) Share of losses of an associate (10,000) Profit before tax 19,654 Tax (8,385) Profit for the period 11,269	Property development Property investment Chinese wet market Shopping centres and car parks Retail business Corporate and other Eliminations Consolidated (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 Group Segment revenue Sales to external customers — 3,781 72,199 41,115 18,495 1,683 — 137,273 Intersegment sales — — 2,025 1,180 — 1,028 (4,233) — Other revenue — 24,684 730 832 47 14,756 (1,332) 39,717 Total — 28,465 74,954 43,127 18,542 17,467 (5,565) 176,990 Segment results (2,339) 26,450 7,781 1,003 183 4,614 (1,403) 36,289 Unallocated expenses (191) Finance costs (6,444) Share of losses of an associate (10,000) Profit before tax 19,654 Tax (8,385) Profit for the period 11,269	Property development Property investment Chinese wet market Shopping centres and car parks Retail business Corporate and other Eliminations Consolidated (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 Group Segment revenue Sales to external customers — 3,781 72,199 41,115 18,495 1,683 — 137,273 Intersegment sales — — 2,025 1,180 — 1,028 (4,233) — Other revenue — 24,684 730 832 47 14,756 (1,332) 39,717 Total — 28,465 74,954 43,127 18,542 17,467 (5,565) 176,990 Segment results (2,339) 26,450 7,781 1,003 183 4,614 (1,403) 36,289 Unallocated expenses (191) Finance costs (6,444) Share of losses of an associate (10,000) Profit before tax 19,654 Tax (8,385) Profit for the period 11,269	Property development Property investment Chinese wet market Shopping centres and car parks Retail business Corporate and other Eliminations Consolidated (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 Group Segment revenue Sales to external customers — 3,781 72,199 41,115 18,495 1,683 — 137,273 Intersegment sales — — 2,025 1,180 — 1,028 (4,233) — Other revenue — 24,684 730 832 47 14,756 (1,332) 39,717 Total — 28,465 74,954 43,127 18,542 17,467 (5,565) 176,990 Segment results (2,339) 26,450 7,781 1,003 183 4,614 (1,403) 36,289 Unallocated expenses (191) Finance costs (6,444) Share of losses of an associate (10,000) Profit before tax 19,654 Tax (8,385) Profit for the period 11,269	Property development Property investment Chinese wet market Shopping centres and car parks Retail business Corporate and other Eliminations Consolidated (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 Group Segment revenue Sales to external customers — 3,781 72,199 41,115 18,495 1,683 — 137,273 Intersegment sales — — 2,025 1,180 — 1,028 (4,233) — Other revenue — 24,684 730 832 47 14,756 (1,332) 39,717 Total — 28,465 74,954 43,127 18,542 17,467 (5,565) 176,990 Segment results (2,339) 26,450 7,781 1,003 183 4,614 (1,403) 36,289 Unallocated expenses (191) Finance costs (6,444) Share of losses of an associate (10,000) Profit before tax 19,654 Tax (8,385) Profit for the period 11,269	Property development Property investment Chinese wet market Shopping centres and car parks Retail business Corporate and other Eliminations Consolidated (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 Group Segment revenue Sales to external customers — 3,781 72,199 41,115 18,495 1,683 — 137,273 Intersegment sales — — 2,025 1,180 — 1,028 (4,233) — Other revenue — 24,684 730 832 47 14,756 (1,332) 39,717 Total — 28,465 74,954 43,127 18,542 17,467 (5,565) 176,990 Segment results (2,339) 26,450 7,781 1,003 183 4,614 (1,403) 36,289 Unallocated expenses (191) Finance costs (6,444) Share of losses of an associate (10,000) Profit before tax 19,654 Tax (8,385) Profit for the period 11,269	Property development Property investment Chinese wet market Shopping centres and car parks Retail business Corporate and other Eliminations Consolidated (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 Group Segment revenue Sales to external customers — 3,781 72,199 41,115 18,495 1,683 — 137,273 Intersegment sales — — 2,025 1,180 — 1,028 (4,233) — Other revenue — 24,684 730 832 47 14,756 (1,332) 39,717 Total — 28,465 74,954 43,127 18,542 17,467 (5,565) 176,990 Segment results (2,339) 26,450 7,781 1,003 183 4,614 (1,403) 36,289 Unallocated expenses (191) Finance costs (6,444) Share of losses of an associate (10,000) Profit before tax 19,654 Tax (8,385) Profit for the period 11,269	Property development Property investment Chinese wet market Shopping centres and car parks Retail business Corporate and other Eliminations Consolidated (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 Group Segment revenue Sales to external customers — 3,781 72,199 41,115 18,495 1,683 — 137,273 Intersegment sales — — 2,025 1,180 — 1,028 (4,233) — Other revenue — 24,684 730 832 47 14,756 (1,332) 39,717 Total — 28,465 74,954 43,127 18,542 17,467 (5,565) 176,990 Segment results (2,339) 26,450 7,781 1,003 183 4,614 (1,403) 36,289 Unallocated expenses (191) Finance costs (6,444) Share of losses of an associate (10,000) Profit before tax 19,654 Tax (8,385) Profit for the period 11,269
— (2,339)	28,465 26,450	74,954 7,781	43,127 1,003	18,542 183	17,467 4,614	(5,565) (1,403)	176,990
							36,289 (191) (6,444) (10,000)
							19,654 (8,385)
							11,269

— 82 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

2004

Property development Property investment Chinese wet market Shopping centres and car parks Retail business Corporate and other Eliminations Consolidated (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 Group Segment revenue Sales to external customers — 5,794 72,129 44,377 18,921 2,794 — 144,015 Intersegment sales — — 1,821 462 — 5,181 (7,464) — Other revenue — 4,730 436 960 27 5,495 — 11,648 Total — 10,524 74,386 45,799 18,948 13,470 (7,464) 155,663 Segment results (1,556) 4,691 7,055 2,906 491 3,367 — 16,954 Unallocated expenses (2,829) Finance costs (1,870) Share of losses of an associate (2,071) Profit before tax 10,184 Tax (2,522) Profit for the period 7,662	Property development Property investment Chinese wet market Shopping centres and car parks Retail business Corporate and other Eliminations Consolidated (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 Group Segment revenue Sales to external customers — 5,794 72,129 44,377 18,921 2,794 — 144,015 Intersegment sales — — 1,821 462 — 5,181 (7,464) — Other revenue — 4,730 436 960 27 5,495 — 11,648 Total — 10,524 74,386 45,799 18,948 13,470 (7,464) 155,663 Segment results (1,556) 4,691 7,055 2,906 491 3,367 — 16,954 Unallocated expenses (2,829) Finance costs (1,870) Share of losses of an associate (2,071) Profit before tax 10,184 Tax (2,522) Profit for the period 7,662	Property development Property investment Chinese wet market Shopping centres and car parks Retail business Corporate and other Eliminations Consolidated (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 Group Segment revenue Sales to external customers — 5,794 72,129 44,377 18,921 2,794 — 144,015 Intersegment sales — — 1,821 462 — 5,181 (7,464) — Other revenue — 4,730 436 960 27 5,495 — 11,648 Total — 10,524 74,386 45,799 18,948 13,470 (7,464) 155,663 Segment results (1,556) 4,691 7,055 2,906 491 3,367 — 16,954 Unallocated expenses (2,829) Finance costs (1,870) Share of losses of an associate (2,071) Profit before tax 10,184 Tax (2,522) Profit for the period 7,662	Property development Property investment Chinese wet market Shopping centres and car parks Retail business Corporate and other Eliminations Consolidated (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 Group Segment revenue Sales to external customers — 5,794 72,129 44,377 18,921 2,794 — 144,015 Intersegment sales — — 1,821 462 — 5,181 (7,464) — Other revenue — 4,730 436 960 27 5,495 — 11,648 Total — 10,524 74,386 45,799 18,948 13,470 (7,464) 155,663 Segment results (1,556) 4,691 7,055 2,906 491 3,367 — 16,954 Unallocated expenses (2,829) Finance costs (1,870) Share of losses of an associate (2,071) Profit before tax 10,184 Tax (2,522) Profit for the period 7,662	Property development Property investment Chinese wet market Shopping centres and car parks Retail business Corporate and other Eliminations Consolidated (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 Group Segment revenue Sales to external customers — 5,794 72,129 44,377 18,921 2,794 — 144,015 Intersegment sales — — 1,821 462 — 5,181 (7,464) — Other revenue — 4,730 436 960 27 5,495 — 11,648 Total — 10,524 74,386 45,799 18,948 13,470 (7,464) 155,663 Segment results (1,556) 4,691 7,055 2,906 491 3,367 — 16,954 Unallocated expenses (2,829) Finance costs (1,870) Share of losses of an associate (2,071) Profit before tax 10,184 Tax (2,522) Profit for the period 7,662	Property development Property investment Chinese wet market Shopping centres and car parks Retail business Corporate and other Eliminations Consolidated (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 Group Segment revenue Sales to external customers — 5,794 72,129 44,377 18,921 2,794 — 144,015 Intersegment sales — — 1,821 462 — 5,181 (7,464) — Other revenue — 4,730 436 960 27 5,495 — 11,648 Total — 10,524 74,386 45,799 18,948 13,470 (7,464) 155,663 Segment results (1,556) 4,691 7,055 2,906 491 3,367 — 16,954 Unallocated expenses (2,829) Finance costs (1,870) Share of losses of an associate (2,071) Profit before tax 10,184 Tax (2,522) Profit for the period 7,662	Property development Property investment Chinese wet market Shopping centres and car parks Retail business Corporate and other Eliminations Consolidated (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 Group Segment revenue Sales to external customers — 5,794 72,129 44,377 18,921 2,794 — 144,015 Intersegment sales — — 1,821 462 — 5,181 (7,464) — Other revenue — 4,730 436 960 27 5,495 — 11,648 Total — 10,524 74,386 45,799 18,948 13,470 (7,464) 155,663 Segment results (1,556) 4,691 7,055 2,906 491 3,367 — 16,954 Unallocated expenses (2,829) Finance costs (1,870) Share of losses of an associate (2,071) Profit before tax 10,184 Tax (2,522) Profit for the period 7,662	Property development Property investment Chinese wet market Shopping centres and car parks Retail business Corporate and other Eliminations Consolidated (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 Group Segment revenue Sales to external customers — 5,794 72,129 44,377 18,921 2,794 — 144,015 Intersegment sales — — 1,821 462 — 5,181 (7,464) — Other revenue — 4,730 436 960 27 5,495 — 11,648 Total — 10,524 74,386 45,799 18,948 13,470 (7,464) 155,663 Segment results (1,556) 4,691 7,055 2,906 491 3,367 — 16,954 Unallocated expenses (2,829) Finance costs (1,870) Share of losses of an associate (2,071) Profit before tax 10,184 Tax (2,522) Profit for the period 7,662
— (1,556)	10,524 4,691	74,386 7,055	45,799 2,906	18,948 491	13,470 3,367	(7,464) —	155,663
							16,954 (2,829) (1,870) (2,071)
							10,184 (2,522)
							7,662

No geographical segment information is presented as over 90% of the Group’s turnover was derived from customers in Hong Kong during the period.

— 83 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

4. OTHER INCOME AND GAINS

	For the six	months	ended 30
	September
	2005		2004
	(Unaudited)	(Unaudited)
	HK$’000		HK$’000
Gain on disposal of investment properties	210		4,223
Interest income from:
Investments	120		175
Others	4,102		2,256
Gain on disposal of investments	920		1,501
Dividend income from listed equity securities	173		202
Recognition of deferred gain	2,703		457
Others	4,031		2,834
	12,259		11,648

5. FINANCE COSTS

			For the six	months	ended 30
			September
			2005		2004
			(Unaudited)	(Unaudited)
			HK$’000		HK$’000
Interest	on	convertible notes	2,353		—
Interest	on	bank loans and overdrafts	4,091		1,870
			6,444		1,870

6. PROFIT BEFORE TAX

	For the six months	For the six months	ended 30
	September
	2005		2004
	(Unaudited)	(Unaudited)
	HK$’000		HK$’000
Depreciation	5,194		6,048
Amount released from onerous contracts, net	(4,646)		(5,387)
Gain on disposal of investment properties	(210)		(4,223)
(Gain)/loss on disposal of interests in subsidiaries	(573)		372
Provision for impairment of investments	—		1,200

— 84 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

7. TAX

	For the six	months	ended 30
	September
	2005		2004
	(Unaudited)	(Unaudited)
	HK$’000		HK$’000
Group:
Current tax — Hong Kong
Charge for the period	2,208		2,156
Under/(over)provision in prior year	610		(538)
Deferred	5,567		904
Tax charge for the period	8,385		2,522

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 period.

Share of tax attributable to an associate amounting to nil (2004: HK$417,000) is included in “Share of losses of an associate” on the face of the condensed consolidated income statement.

8. EARNINGS PER SHARE

The calculation of basic earnings per share for the period is based on the net profit attributable to equity holders of the parent of HK$11,278,000 (2004: HK$7,663,000 as restated), and the weighted average of 199,467,390 (2004: 171,984,439 as adjusted for the bonus issue during the period) ordinary shares in issue during the period, as adjusted to reflect the bonus issue during the period.

The calculation of diluted earnings per share is based on the net profit attributable to equity holders of the parent of HK$11,278,000 (2004: HK$7,663,000 as restated). The weighted average number of ordinary shares used in the calculation is 199,467,390 (2004: 171,984,439 as adjusted for the bonus issue during the period) ordinary shares in issue during the period, as used in the basic earnings per share calculation; and the weighted average of 13,104,234 (2004: 309,311 as adjusted for the bonus issue during the period) ordinary shares assumed to have been issued at no consideration on deemed exercise of all the share options during the period.

The basic and diluted earnings per share for the period ended 30 September 2004 has been adjusted to take into account of the effect of bonus issue of shares during the period ended 30 September 2005.

9. DIVIDEND

	For the six	months	ended 30
	September
	2005		2004
	(Unaudited)	(Unaudited)
	HK$’000		HK$’000
Interim dividend of HK3 cents
(2004: HK3 cents) per share	6,736		4,300

— 85 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

At a meeting of the board of directors held on 16 December 2005, the director resolved to pay an interim dividend to shareholders of HK3 cents (2004: HK3 cents).

10. PLEDGE OF ASSETS

As at 30 September 2005, the Group’s properties under development and held for sale, investment properties and certain rental income generated therefrom were pledged to secure certain of the Group’s general banking facilities.

11. INTERESTS IN ASSOCIATES

30 September 2005 31 March 2005 (Unaudited) HK$’000 HK$’000 Share of net assets 157,557 167,557 Deferred gain (11,989) (14,692) Goodwill on acquisition 9,718 9,718 155,286 162,583 Due from associates — Note (i) 329 465 Due to associates — Note (i) (143) (34) Convertible notes due from an associate — Note (ii) 13,090 16,000 168,562 179,014 Provisions for impairment (3) (3) 168,559 179,011	30 September 2005 31 March 2005 (Unaudited) HK$’000 HK$’000 Share of net assets 157,557 167,557 Deferred gain (11,989) (14,692) Goodwill on acquisition 9,718 9,718 155,286 162,583 Due from associates — Note (i) 329 465 Due to associates — Note (i) (143) (34) Convertible notes due from an associate — Note (ii) 13,090 16,000 168,562 179,014 Provisions for impairment (3) (3) 168,559 179,011	30 September 2005 31 March 2005 (Unaudited) HK$’000 HK$’000 Share of net assets 157,557 167,557 Deferred gain (11,989) (14,692) Goodwill on acquisition 9,718 9,718 155,286 162,583 Due from associates — Note (i) 329 465 Due to associates — Note (i) (143) (34) Convertible notes due from an associate — Note (ii) 13,090 16,000 168,562 179,014 Provisions for impairment (3) (3) 168,559 179,011
	155,286 329 (143) 13,090 168,562 (3)	162,583 465 (34) 16,000
		179,014 (3)
	168,559	179,011

Notes:

(i) The balances with associates are unsecured, interest-free and have no fixed terms of repayment.
(ii) The convertible notes carried 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. Subsequent to 30 September 2005, the conversion price of HK$0.80 per share had been adjusted to HK$0.50 per share as a result of a right issue on 6 December 2005. The convertible notes have been fully repaid by WYTH on 9 December 2005.

— 86 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

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

			Percentage of	Percentage of
			ownership interest
			attributable to the
			Group
		Place of	30	31
	Business	incorporation/	September	March
Name	structure	operation	2005	2005	Principal activities
WYTH*	Corporate	Bermuda/	28.57	28.57	Production and sales of
		Hong Kong			traditional Chinese and Western
					Pharmaceutical, health food
					products and property holding

Listed on The Stock Exchange of Hong Kong Limited

12. TRADE RECEIVABLES

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

30 September 2005 31 March 2005 (Unaudited) HK$’000 HK$’000 Within 90 days 7,697 9,073 91 days to 180 days 749 1,154 Over 180 days 1,300 636 9,746 10,863 Less: Provision for doubtful debts (991) (836 8,755 10,027	30 September 2005 31 March 2005 (Unaudited) HK$’000 HK$’000 Within 90 days 7,697 9,073 91 days to 180 days 749 1,154 Over 180 days 1,300 636 9,746 10,863 Less: Provision for doubtful debts (991) (836 8,755 10,027	30 September 2005 31 March 2005 (Unaudited) HK$’000 HK$’000 Within 90 days 7,697 9,073 91 days to 180 days 749 1,154 Over 180 days 1,300 636 9,746 10,863 Less: Provision for doubtful debts (991) (836 8,755 10,027
	9,746 (991)	10,863 (836
	8,755	10,027

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

— 87 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

13. TRADE PAYABLES

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

			September	31 March
			2005	2005
			(Unaudited)
			HK$’000	HK$’000
Within	90	days	210	157

14. CONVERTIBLE NOTES

						September	31 March
						2005	2005
						(Unaudited)
						HK$’000	HK$’000
2007	convertible	notes	—	note	(i)	—	32,585
2008	convertible	notes	—	note	(ii)	45,472	52,669
						45,472	85,254

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 an initial conversion price of HK$1.30 per share.

The principal amounts of the convertible notes bore interest at 1% per annum and the convertible notes were fully converted into the Company’s shares during the period.

(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$2.00 per share (as adjusted after the bonus issue.)

The principal amounts of the convertible notes bore 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. Part of the convertible notes with face value of HK$9,840,000 were converted into the Company’s share during the period.

Fair value of the liability component of the convertible note was determined, upon issuance, using the prevailing market interest rate for similar debt without a conversion option of 5.5% and is carried as a long-term liability. The remainder of the proceeds was allocated to the conversion option that is recognised and included in shareholders’ equity.

— 88 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

15. SHARE CAPITAL

Shares

	30 September	31 March
	2005	2005
	(Unaudited)
	HK$’000	HK$’000
Authorised:
2,000,000,000 ordinary shares of HK$0.10 each	200,000	200,000
Issued and fully paid:
224,544,439 (31 March 2005: 143,320,366) ordinary shares of HK$0.10 each	22,454	14,332

Share options

Details of the Company’s share option scheme are set out in the section “Share Option Scheme” of the interim report.

16. RESERVES

			Equity
			component
	Share		of		Proposed	Proposed
	premium	Contributed	convertible	Retained	interim	final		Minority
	account	surplus	notes	profits	dividend	dividend	Total	interests
	(Unaudited)	(Unaudited)	(Unaudited)	(Unaudited)	(Unaudited)	(Unaudited)	(Unaudited)	(Unaudited)
	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000
At 1 April 2004	372,362	106,329	—	177,527	—	10,032	666,250	401
Final 2004 dividend declared	—	—	—	—	—	(10,032)	(10,032)	—
Profit for the period
(as restated)	—	—	—	7,663	—	—	7,663	(1)
Interim 2005 dividend	—	—	—	(4,300)	4,300	—	—	—
At 30 September 2004 and 1
October 2004 (as restated)	372,362	106,329	—	180,890	4,300	—	663,881	400
Interim 2005 dividend
declared	—	—	—	—	(4,300)	—	(4,300)	—
Equity component of
convertible notes
(as restated)	—	—	10,903	—	—	—	10,903	—
Profit for the period
(as restated)	—	—	—	61,834	—	—	61,834	35

— 89 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

Share premium account Contributed surplus Equity component of convertible notes Retained profits Proposed interim dividend Proposed final dividend Total Minority interests (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 Proposed final 2005 dividend — — — (17,846) — 17,846 — — At 31 March 2005 (as restated) 372,362 106,329 10,903 224,878 — 17,846 732,318 435 At 1 April 2005 As previously reported 372,362 106,329 — 225,508 — 17,846 722,045 435 Prior period adjustments: (notes 1 & 2) — — 10,903 (4,160) — — 6,743 — As restated 372,362 106,329 10,903 221,348 — 17,846 728,788 435 Final 2005 dividend declared — — — — — (17,846) (17,846) — Additional 2005 dividend declared — — — (4,608) — — (4,608) Exercise of share options 10,418 — — — — — 10,418 — Conversion of convertible notes 43,253 — (4,826) — — — 38,427 — Bonus issue (3,742) — — — — — (3,742) — Profit for the period — — — 11,278 — — 11,278 (9) Proposed 2006 interim dividend — — — (6,736) 6,736 — — — At 30 September 2005 422,291 106,329 6,077 221,282 6,736 — 762,715 426	Share premium account Contributed surplus Equity component of convertible notes Retained profits Proposed interim dividend Proposed final dividend Total Minority interests (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 Proposed final 2005 dividend — — — (17,846) — 17,846 — — At 31 March 2005 (as restated) 372,362 106,329 10,903 224,878 — 17,846 732,318 435 At 1 April 2005 As previously reported 372,362 106,329 — 225,508 — 17,846 722,045 435 Prior period adjustments: (notes 1 & 2) — — 10,903 (4,160) — — 6,743 — As restated 372,362 106,329 10,903 221,348 — 17,846 728,788 435 Final 2005 dividend declared — — — — — (17,846) (17,846) — Additional 2005 dividend declared — — — (4,608) — — (4,608) Exercise of share options 10,418 — — — — — 10,418 — Conversion of convertible notes 43,253 — (4,826) — — — 38,427 — Bonus issue (3,742) — — — — — (3,742) — Profit for the period — — — 11,278 — — 11,278 (9) Proposed 2006 interim dividend — — — (6,736) 6,736 — — — At 30 September 2005 422,291 106,329 6,077 221,282 6,736 — 762,715 426	Share premium account Contributed surplus Equity component of convertible notes Retained profits Proposed interim dividend Proposed final dividend Total Minority interests (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 Proposed final 2005 dividend — — — (17,846) — 17,846 — — At 31 March 2005 (as restated) 372,362 106,329 10,903 224,878 — 17,846 732,318 435 At 1 April 2005 As previously reported 372,362 106,329 — 225,508 — 17,846 722,045 435 Prior period adjustments: (notes 1 & 2) — — 10,903 (4,160) — — 6,743 — As restated 372,362 106,329 10,903 221,348 — 17,846 728,788 435 Final 2005 dividend declared — — — — — (17,846) (17,846) — Additional 2005 dividend declared — — — (4,608) — — (4,608) Exercise of share options 10,418 — — — — — 10,418 — Conversion of convertible notes 43,253 — (4,826) — — — 38,427 — Bonus issue (3,742) — — — — — (3,742) — Profit for the period — — — 11,278 — — 11,278 (9) Proposed 2006 interim dividend — — — (6,736) 6,736 — — — At 30 September 2005 422,291 106,329 6,077 221,282 6,736 — 762,715 426	Share premium account Contributed surplus Equity component of convertible notes Retained profits Proposed interim dividend Proposed final dividend Total Minority interests (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 Proposed final 2005 dividend — — — (17,846) — 17,846 — — At 31 March 2005 (as restated) 372,362 106,329 10,903 224,878 — 17,846 732,318 435 At 1 April 2005 As previously reported 372,362 106,329 — 225,508 — 17,846 722,045 435 Prior period adjustments: (notes 1 & 2) — — 10,903 (4,160) — — 6,743 — As restated 372,362 106,329 10,903 221,348 — 17,846 728,788 435 Final 2005 dividend declared — — — — — (17,846) (17,846) — Additional 2005 dividend declared — — — (4,608) — — (4,608) Exercise of share options 10,418 — — — — — 10,418 — Conversion of convertible notes 43,253 — (4,826) — — — 38,427 — Bonus issue (3,742) — — — — — (3,742) — Profit for the period — — — 11,278 — — 11,278 (9) Proposed 2006 interim dividend — — — (6,736) 6,736 — — — At 30 September 2005 422,291 106,329 6,077 221,282 6,736 — 762,715 426	Share premium account Contributed surplus Equity component of convertible notes Retained profits Proposed interim dividend Proposed final dividend Total Minority interests (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 Proposed final 2005 dividend — — — (17,846) — 17,846 — — At 31 March 2005 (as restated) 372,362 106,329 10,903 224,878 — 17,846 732,318 435 At 1 April 2005 As previously reported 372,362 106,329 — 225,508 — 17,846 722,045 435 Prior period adjustments: (notes 1 & 2) — — 10,903 (4,160) — — 6,743 — As restated 372,362 106,329 10,903 221,348 — 17,846 728,788 435 Final 2005 dividend declared — — — — — (17,846) (17,846) — Additional 2005 dividend declared — — — (4,608) — — (4,608) Exercise of share options 10,418 — — — — — 10,418 — Conversion of convertible notes 43,253 — (4,826) — — — 38,427 — Bonus issue (3,742) — — — — — (3,742) — Profit for the period — — — 11,278 — — 11,278 (9) Proposed 2006 interim dividend — — — (6,736) 6,736 — — — At 30 September 2005 422,291 106,329 6,077 221,282 6,736 — 762,715 426	Share premium account Contributed surplus Equity component of convertible notes Retained profits Proposed interim dividend Proposed final dividend Total Minority interests (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 Proposed final 2005 dividend — — — (17,846) — 17,846 — — At 31 March 2005 (as restated) 372,362 106,329 10,903 224,878 — 17,846 732,318 435 At 1 April 2005 As previously reported 372,362 106,329 — 225,508 — 17,846 722,045 435 Prior period adjustments: (notes 1 & 2) — — 10,903 (4,160) — — 6,743 — As restated 372,362 106,329 10,903 221,348 — 17,846 728,788 435 Final 2005 dividend declared — — — — — (17,846) (17,846) — Additional 2005 dividend declared — — — (4,608) — — (4,608) Exercise of share options 10,418 — — — — — 10,418 — Conversion of convertible notes 43,253 — (4,826) — — — 38,427 — Bonus issue (3,742) — — — — — (3,742) — Profit for the period — — — 11,278 — — 11,278 (9) Proposed 2006 interim dividend — — — (6,736) 6,736 — — — At 30 September 2005 422,291 106,329 6,077 221,282 6,736 — 762,715 426	Share premium account Contributed surplus Equity component of convertible notes Retained profits Proposed interim dividend Proposed final dividend Total Minority interests (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 Proposed final 2005 dividend — — — (17,846) — 17,846 — — At 31 March 2005 (as restated) 372,362 106,329 10,903 224,878 — 17,846 732,318 435 At 1 April 2005 As previously reported 372,362 106,329 — 225,508 — 17,846 722,045 435 Prior period adjustments: (notes 1 & 2) — — 10,903 (4,160) — — 6,743 — As restated 372,362 106,329 10,903 221,348 — 17,846 728,788 435 Final 2005 dividend declared — — — — — (17,846) (17,846) — Additional 2005 dividend declared — — — (4,608) — — (4,608) Exercise of share options 10,418 — — — — — 10,418 — Conversion of convertible notes 43,253 — (4,826) — — — 38,427 — Bonus issue (3,742) — — — — — (3,742) — Profit for the period — — — 11,278 — — 11,278 (9) Proposed 2006 interim dividend — — — (6,736) 6,736 — — — At 30 September 2005 422,291 106,329 6,077 221,282 6,736 — 762,715 426	Share premium account Contributed surplus Equity component of convertible notes Retained profits Proposed interim dividend Proposed final dividend Total Minority interests (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 (Unaudited) HK$’000 Proposed final 2005 dividend — — — (17,846) — 17,846 — — At 31 March 2005 (as restated) 372,362 106,329 10,903 224,878 — 17,846 732,318 435 At 1 April 2005 As previously reported 372,362 106,329 — 225,508 — 17,846 722,045 435 Prior period adjustments: (notes 1 & 2) — — 10,903 (4,160) — — 6,743 — As restated 372,362 106,329 10,903 221,348 — 17,846 728,788 435 Final 2005 dividend declared — — — — — (17,846) (17,846) — Additional 2005 dividend declared — — — (4,608) — — (4,608) Exercise of share options 10,418 — — — — — 10,418 — Conversion of convertible notes 43,253 — (4,826) — — — 38,427 — Bonus issue (3,742) — — — — — (3,742) — Profit for the period — — — 11,278 — — 11,278 (9) Proposed 2006 interim dividend — — — (6,736) 6,736 — — — At 30 September 2005 422,291 106,329 6,077 221,282 6,736 — 762,715 426
							435
372,362 — 372,362 — — 10,418 43,253 (3,742) — —	106,329 — 106,329 — — — — — — —	— 10,903 10,903 — — — (4,826) — — —	225,508 (4,160) 221,348 — (4,608) — — — 11,278 (6,736)	— — — — — — — — — 6,736	17,846 — 17,846 (17,846) — — — — — —	722,045 6,743 728,788 (17,846) (4,608) 10,418 38,427 (3,742) 11,278 —	435 —
							435 — — — — (9) —
422,291	106,329	6,077	221,282	6,736	—	762,715	426

17. CONTINGENT LIABILITIES

At the balance sheet date, the Group had a contingent liability in respect of possible future long service payments to employees under the Hong Kong Employee Ordinance, with a maximum possible amount of HK$532,000 (31 March 2005: HK$1,366,000). The contingent liability has arisen because, at the balance sheet date, a number of current employees have achieved the required number of years of service of the Group in order to be eligible for long service payments under the Employment Ordinance if their employment was to be 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.

— 90 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

18. OPERATING LEASE ARRANGEMENTS

(a) As lessor

The Group leases its investment properties 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 rent adjustments according to the then prevailing market conditions.

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

	30 September	31 March
	2005	2005
	(Unaudited)
	HK$’000	HK$’000
Within one year	79,984	140,509
In the second to fifth years, inclusive	68,684	137,077
	148,668	277,586

(b) As lessee

The Group leases Chinese wet markets, shopping centres and car parks under operating lease arrangements. Leases are negotiated for terms ranging from one to nine years.

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

	30 September	31 March
	2005	2005
	(Unaudited)
	HK$’000	HK$’000
Within one year	125,104	124,371
In the second to fifth years, inclusive	108,559	188,373
After five years	1,824	2,495
	235,487	315,239

— 91 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

19. COMMITMENTS

In addition to the operating lease commitments detailed in note 18(b) above, the Group had the following commitments at the balance sheet date:

							September	31 March
							2005	2005
							(Unaudited)
							HK$’000	HK$’000
Capital	commitments	contracted,	but	not	provided	for	238,097	121,350

20. POST BALANCE SHEET EVENTS

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

(a) Since 21 September 2005, the Group entered into various provisional agreements with purchasers who are independent third parties for their purchase of 27 residential units and 9 shop lots in Milan Place from the Group at the aggregate consideration of HK$108.2 million.
(b) On 10 October 2005, WYTH proposed to raise approximately HK$157.1 million, before expenses, by issuing not less than 1,047,260,766 and not more than 1,047,260,892 of new shares at a price of HK$0.15 each by way of the rights issue on the basis of three rights share for every the then share held on 16 November 2005. The Group had irrevocably undertaken to procure that Rich Time Strategy Ltd (“Rich Time”), an indirect wholly-owned subsidiary of the Company, would, and Rich Time had irrevocably undertaken to, among other things, (i) take up all the provisional entitlements of 299,196,993 rights shares; and (ii) make an excess application for 285,280,000 rights shares. On 9 November 2005, the Securities and Futures Commission had granted the whitewash waiver to exempt the Group from general offer in subscription of the rights shares. On 6 December 2005, a total of 584,476,993 rights shares were allotted to Rich Time and the Group’s percentage of equity interest in WYTH had been increased from 28.57% to 49% accordingly.

— 92 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

21. RELATED PARTY TRANSACTIONS

In addition to the transactions set out elsewhere in the financial statements, the Group had the following transactions with related parties during the period:

(a) Transactions with related parties

		For the six	months	ended 30
		September
		2005		2004
		(Unaudited)	(Unaudited)
	Notes	HK$’000		HK$’000
Purchase of a subsidiary and its shareholder’s loan from a
director	(i)	3,000		—
Rental income received from a director	(ii)	300		270
Proceeds from disposal of subsidiaries to an associate	(iii)	—		65,354
Income from associates:	(iv)
— Management fee		438		504
— Interest income		240		519
— Rental		—		2,355
Expenses paid to associates:	(iv)
— Rental		993		588

(i) During the period, the Group acquired from a director of the Company, Mr. Tang Ching Ho (“Mr. Tang”) the entire interests in Hanwin Investment Limited, a company wholly and beneficially owned by Mr. Tang, at a consideration equivalent to the face value of the entire issued share capital and shareholder’s loan of Hanwin Investment Limited. Prior to the completion of the agreement in respect of the acquisition of Hanwin Investment Limited from Mr. Tang, Hanwin Investment Limited had entered into agreements with independent third parties to acquire an investment property at a consideration of approximately HK$110.0 million.
(ii) 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 further one year at an agreed monthly rental of HK$50,000. The rentals were determined with reference to the prevailing market rates.
(iii) One of the subsidiaries of the Company was disposed of to WYTH at a consideration of HK$65.4 million. The consideration was based on terms mutually agreed between both parties.
(iv) The transactions were based on terms mutually agreed between both parties.

— 93 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

(b) Compensation of key management personnel of the Group

	For the six	months	ended 30
	September
	2005		2004
	(Unaudited)	(Unaudited)
	HK$’000		HK$’000
Short term employment benefits	7,518		5,730
Post-employment benefits	84		72
	7,602		5,802

22. APPROVAL OF THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The unaudited condensed consolidated financial statements were approved and authorised for issue by the Board of Directors on 16 December 2005.

— 94 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

(d) Management Discussion and Analysis for the Six Months Ended 30 September 2005

The following paragraphs have been extracted from the Company’s interim report for the six months ended 30 September 2005.

Business Review

During the period ended 30 September 2005, the Group’s turnover amounted to approximately HK$137.3 million (2004: HK$144.0 million) showing a slight decrease of approximately 5% when compared to that recorded in the same period last year. This was mainly attributed to a reduction in turnover from the shopping centres and car parks under the Group’s management and from property investment. The Group’s net profit attributable to shareholders improved by approximately 47% and amounted to approximately HK$11.3 million in the current period under review (2004: HK$7.7 million).

Property Development

During the period under review, the Group commenced the foundation work for the Shatin Heights Road and Fairview Park Boulevard projects and the progress of these 2 projects is on schedule. In October 2005, the Group completed the purchase of the two remaining units at the Kennedy Town project. Preliminary works such as design and submissions have started. The Group plans to demolish the existing building structures for redevelopment in the next few months.

As at 30 November 2005, the Group’s property development portfolio is as follows:

		Approximate		Anticipated
Property Name	Location	Site Area	Development Plan	Completion
		(sq ft)
Shatin Heights Road	Lot No. 1476 in DD 189	49,100	Low density residential area with	Early 2007
			11 luxury houses
Fairview Park	Lot No. 4781 in D.D. No. 104,	154,800	Low density residential and	Early 2007
Boulevard	Lot No. 3254 RP in D.D. 104,		commercial area with 16 luxury
	Lot No. 3265 S.A RP in D.D. 104,		houses, 6 shops and club house
	Lot No. 3251 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
Cheung Sha Wan#	270-274 Cheung Sha Wan Road	4,200	24 storey residential and	Early 2009
	Kowloon		commercial building
Kennedy Town	Nos. 12, 14, 16, 18, 20 and22, Davis	5,000	26 storey residential and	Early 2008
	Street, Kennedy Town, Hong Kong		commercial building

— 95 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

		Approximate		Anticipated
Property Name	Location	Site Area	Development Plan	Completion
		(sq ft)
Ho Chung	Various lots in D.D. 210 and D.D.	40,000	Low density residential	Early 2009
	244 Sai Kung, New Territories		development
		253,100

The acquisition of the property is expected to be completed in the second half of 2006.

The Directors expect the Hong Kong property market will enjoy substained healthy growth accompanied by steady rises in property and land prices. The Group’s current landbank is expected to be sufficient to accommodate its development plans and generate handsome returns to the Group for the next two to three years.

Property Investment

In the current period under review, gross rental income amounted to approximately HK$3.8 million (2004: HK$5.8 million). The decrease in gross rental income was caused by the sale of a number of investment properties in the second half of last financial year. The Group’s retail property portfolio was replenished during the period under review upon completion of the purchase of 5 shops with a total consideration of approximately HK$100.4 million.

During the period under review and up to the date of the Company’s interim report for the six months ended 30 September 2005, the Group has sold 27 residential units and 9 shop lots at Milan Place which had been acquired by the Group earlier during the period under review, generating a turnover of approximately HK$108.2 million. Such turnover will be reflected in the Group’s financial statements for the year ended 31 March 2006. The Group will continue to sell the remaining 21 residential units.

Due to the adoption of HKAS 40, the Group recorded an amount of approximately HK$24.3 million in respect of increase in the fair value of investment properties in the period under review.

As at 30 September 2005, the Group held a retail property portfolio with a net book value of approximately HK$322.7 million, generating a projected annual rental income of approximately HK$10.4 million. The Directors believe that the existing strategy of keeping a balanced portfolio will continue to provide stable recurrent rental income for the Group.

Management and Sub-licensing of Chinese Wet Markets

The Group continues to be the market leader in this business sector in Hong Kong. The Group will explore potential opportunities to further expand this business segment and enhance our market share in Hong Kong.

— 96 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

During the period under review, this business sector generated a profit of HK$7.8 million and provided a steady recurrent income for the Group.

Given the Group’s extensive expertise and experience in the management of Chinese wet markets and with the recent privatization of Hong Kong Housing Authority’s commercial properties via the launching of the The Link Real Estate Investment Trust, the Directors are optimistic of securing more business opportunities in the management and sub-licensing of Chinese wet markets.

Management and Sub-licensing of Shopping Centres and Car Parks

These two areas of business remained stable during the period.

Investment in Pharmaceutical and Health Products Retail Business

The retail environment remains highly competitive and challenging under pressure of rising rental and labour costs and keen competition amongst various competitors. These have dampened retail sales and led to the loss of Wai Yuen Tong Medicine Holdings Limited (“WYTH”) during the period under review. However, with the increasing health awareness of the public and the increasing popularity of Chinese medicinal and health related products, the Directors believe that the future of the pharmaceutical industry is promising and are confident that the performance of WYTH will improve.

On 10 October 2005, it was announced that the Group would undertake to take up all its entitlement of a rights issue announced by WYTH on the same date and to make an excess application for 285.28 million rights shares under the rights issue.

This rights issue of WYTH was completed in December 2005. As a result of the rights issue, the Group has taken up all its rights shares allocation and the excess application for 285.28 million shares was also fully allotted to the Group. After the completion of the rights issue, the Group holds approximately 49% of WYTH’s enlarged issued share capital.

Liquidity and Financial Resources

As at 30 September 2005, the Group had cash resources and short term investment of approximately HK$315.9 million (31 March 2005: HK$372.0 million), of which approximately HK$33.2 million (31 March 2005: HK$59.3 million) was invested in certificates of deposits, callable deposits, bank commercial papers and listed securities, and HK$36.4 million (31 March 2005: HK$54.2 million) was invested in long term guaranteed return funds, callable deposit and bonds.

As at 30 September 2005, equity attributable to equity holders of the parent amounted to approximately HK$785.2 million, representing an increase of approximately 5% compared to that as at 31 March 2005. The Group is in a strong financial position whilst the net debt position remains at a relatively low level. As at 30 September 2005, the Group’s gearing ratio was approximately 30% (calculated by reference to the Group’s total borrowings net of cash and cash equivalent, and shareholders funds of HK$237.0 million and HK$785.2 million, respectively, as at 30 September 2005). As at 31 March 2005, the Group had a net debt position of HK$15.1 million (calculated with reference to the Group’s cash and cash equivalent and total borrowings of HK$312.7 million and HK$327.8 million, respectively, as at 31 March 2005).

— 97 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

As at 30 September 2005, the Group’s investment properties with a net book value of approximately HK$293.7 million (31 March 2005: HK$196.7 million) and certain rental income generated therefrom were pledged to secure the Group’s banking facilities, approximately HK$139.3 million of which was utilised at 30 September 2005.

The Group’s contingent liabilities and capital commitment as at 30 September 2005 amounted to approximately HK$238.6 million.

With cash and marketable short term investments in hand as well as available banking facilities, the Group’s liquidity position remains strong and the Group has sufficient financial resources to satisfy its commitments and working capital requirements.

For the period under review, the share capital of the Company increased by HK$8.1 million due to the following:

a. the conversion of convertible notes in an aggregate principal amount of HK$37.18 million into 28.6 million new shares of HK$0.10 each of the Company;
b. the conversion of convertible notes in an aggregate principal amount of HK$9.84 million into 4.1 million new shares of HK$0.10 each of the Company;
c. the exercise of 11.1 million employee share options resulting in the issue of 11.1 million new shares of HK$0.10 each of the Company; and
d. the bonus issue of shares, on the basis of one bonus share for every five existing shares, in August 2005 creating approximately 37.42 million new shares of HK$0.10 each of the Company.

Employees and Remuneration Policies

As at 30 September 2005, the Group had nearly 600 full time employees, around 98% of whom were located in Hong Kong.

3. STATEMENT OF INDEBTEDNESS

As at 31 December 2005, the Group has utilised unsecured bank borrowings of approximately HK$106.2 million and secured bank borrowings of approximately HK$333.9 million. Such secured bank borrowings were secured by certain of the Group’s investment properties, properties held for sale and 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 31 December 2005.

— 98 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

Save as disclosed above, the Directors confirm that there has been no material change in the indebtedness and contingent liabilities of the Group since 31 December 2005.

4. WORKING CAPITAL

After due and careful enquiry and taking into account the estimated net proceeds from the Disposal upon its completion, 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.

5. MATERIAL ADVERSE CHANGE

The Directors are not aware of any material adverse change in the financial or trading position of the Group since 31 March 2005, being the date to which the latest published audited financial statements of the Group were made up.

6. FOREIGN EXCHANGE EXPOSURE

As the Group’s sales are mostly based on United States dollar (“USD”) and HK$, having pegged with USD the exchange rates of USD and HK$ are considered 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.

7. 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 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 markets sub-licensing business, for which the Group is the industry leader, together with shopping centres and car parks 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 are confident that the Group’s investment in pharmaceutical and health products business through Wai Yuen Tong Medicine Holdings Limited, an associate of the Company, will bring satisfactory returns to the Group in the long run.

The Directors consider that upon completion of the Disposal, 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, the Group will be able to make suitable investments promptly when opportunities arise although no specific investment has been identified at 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 the Shareholders’ return.

— 99 —

PROPERTY VALUATION

APPENDIX II

The following is the text of the letter and valuation certificate, prepared for the purpose of incorporation in this circular, received from an independent valuer, Savills (Hong Kong) Limited, in connection with their valuation of the Property as at 31 December 2005.

==> picture [86 x 7] intentionally omitted <==

==> picture [86 x 6] intentionally omitted <==

==> picture [86 x 7] intentionally omitted <==

==> picture [86 x 6] intentionally omitted <==

==> picture [86 x 7] intentionally omitted <==

==> picture [86 x 6] intentionally omitted <==

==> picture [86 x 7] intentionally omitted <==

==> picture [86 x 6] intentionally omitted <==

==> picture [86 x 7] intentionally omitted <==

==> picture [86 x 6] intentionally omitted <==

==> picture [86 x 7] intentionally omitted <==

==> picture [86 x 6] intentionally omitted <==

==> picture [86 x 7] intentionally omitted <==

==> picture [86 x 6] intentionally omitted <==

Valuation & Consultancy DL: (852) 2801 6100 F: (852) 2530 0756

23/F Two Exchange Square Central, Hong Kong

16 February 2006

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: 12-22 DAVIS STREET, KENNEDY TOWN, HONG KONG

In accordance with your recent instructions for us to value the above property, we confirm that we have carried out inspection, made relevant enquiries and carried out searches and obtained such further information as we consider necessary for the purpose of providing you with our opinion of the market value of the property as at 31 December 2005 for your circular purposes.

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

— 100 —

PROPERTY VALUATION

APPENDIX II

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 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.

We have valued the property on the basis that the property will be redeveloped in accordance with the latest redevelopment proposal provided to us. We have assumed that all necessary approvals for the proposal will be obtained from the relevant Government authorities without onerous restrictions.

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, searched the original documents to verify ownership or to verify 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, site and floor areas, development proposal 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 but we have not carried out investigations on site to determine the suitability of the ground conditions and services etc for the redevelopment. Our valuation is prepared on the assumption that these aspects are satisfactory and that no extraordinary expenses or delays will be incurred during construction period. We have not been able to carry out detailed site measurements to verify the correctness of the site area of the property and we have assumed that the site area shown on the documents handed to us is correct.

No allowance has been made in our valuation for any charge, mortgage or amount owing on the property nor for any expense 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.

Yours faithfully For and on behalf of

Savills Valuation and Professional Services Limited

Charles C K Chan

MSc FRICS FHKIS MCIArb RPS(GP)

Managing Director

— 101 —

PROPERTY VALUATION

APPENDIX II

VALUATION CERTIFICATE

Property

Description and tenure

Particulars of occupancy

Market value as at 31 December 2005

12-22 Davis Street, Kennedy Town, Hong Kong

Sections A, B, C and D and the Remaining Portion of Sub-section 7 of Section A of Inland Lot No. 905.

Sub-section 12 of Section A of Inland Lot No. 905.

The property comprises six contiguous rectangular sites with a total site area of approximately 461.38 sq m (4,966 sq ft).

Currently standing on the sites are three blocks of 4-storey residential building over ground floor retail shops completed in about 1955. The breakdown of the saleable area of the subject buildings is as follows:

The property is vacant as at the date of valuation.

HK$149,000,000

G/F C/L 1/F-4/F Total	Saleable Area (sq m) (sq ft) 345.00 3,714 103.40 1,113 1,159.20 12,478 1,607.60 17,305	Saleable Area (sq m) (sq ft) 345.00 3,714 103.40 1,113 1,159.20 12,478 1,607.60 17,305
		17,305

The property also comprises various yards on the Ground Floor of approximately 95.4 sq m (1,027 sq ft).

Inland Lot No. 905 is held under a Government lease for a term of 999 years commencing from 24 September 1883.

Notes:

(1) The registered owner of the property is Dragon Richly Investment Limited.
(2) The property is subject to various Orders under Section 24(1) of the Buildings Ordinance for Unit B on G/F and 1/F, 12 Davis Street; G/F to 4/F, 14 Davis Street; G/F to 2/F, 16 Davis Street; G/F to 4/F, 18 Davis Street; G/F and 1/F, 22 Davis Street. The Orders refer to the illegal structures on and over the yards/cocklofts or building works including abandoned air-conditioners supporting frames, flower racks, canopies, metal cages and other projecting structures attached to the external walls of the existing buildings. According to your instruction, we have not taken into account of these Orders in preparing our valuation.

— 102 —

PROPERTY VALUATION

APPENDIX II

(3) According to the information provided to us, an application for permission under section 16 of the Town Planning Ordinance for a proposed hotel development at the subject sites, which are zoned “Residential (Group A)” on the approved Kennedy Town and Mount Davis Outline Zoning Plan No. S/H1/14, has been approved by the Town Planning Board (the TPB) on 11 November 2005 and the permission is valid until 28 October 2009 subject to the following conditions:
(a) the submission and implementation of a landscaping proposal to the satisfaction of the Director of Planning or of the TPB;
(b) the design and provision of sewerage and drainage improvement/connection works to the satisfaction of the Director of Drainage Services or of the TPB; and
(c) the design and provision of water supply facilities for fire fighting and fire service installations to the satisfaction of the Director of Fire Services or of the TPB.
(4) We have valued the property on the basis that the property will be redeveloped in accordance with the latest development proposal provided to us. The proposed development is a 31-storey (including Ground Floor, a refuge floor, a mechanical floor, Roof and Upper Roof) hotel building with two car parking spaces, three lay-bys and one loading/unloading bay. The proposed hotel building comprises totally 200 guest rooms with a gross floor area of approximately 6,920.75 sq m (74,495 sq ft) and back-of-house area of approximately 346.04 sq m (3,725 sq ft).

— 103 —

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 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) Interests of Directors

As at the Latest Practicable Date, the interests and short positions of each Director or chief executive of the Company in the Shares, underlying shares and debentures of the Company or any of its associated corporation(s) (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 were taken or deemed to have under such provisions of the SFO), or which were required, pursuant to Section 352 of the SFO, to be entered in the register referred to therein, or which were required, pursuant to the Model Code for Securities Transactions by Directors of Listed Companies, to be notified to the Company and the Stock Exchange, were as follows:

Interests in Shares

						Percentage
	Number	of Shares	held, capacity and nature		of interest	of the
						Company’s
	Personal	Family	Corporate	Other		issued share
Name of Director	interest	interest	interest	interest	Total	capital
Mr. Tang	737,226	737,224	2,696,672	31,192,155	35,363,277	15.74%
		(Note (a))	(Note (b))	(Note (c))
Ms. Yau Yuk Yin	737,224	3,433,898	—	31,192,155	35,363,277	15.74%
		(Note (d))		(Note (e))

Notes:

(a) Mr. Tang was taken to be interested in those Shares in which his spouse, Ms. Yau Yuk Yin, was interested.
(b) Mr. Tang was taken to be interested in those Shares in which Caister Limited, a company which is wholly and beneficially owned by him, was interested.
(c) Mr. Tang was taken to be interested in those Shares by virtue of being the founder of a discretionary trust, namely Tang’s Family Trust.

— 104 —

GENERAL INFORMATION

APPENDIX III

(d) Ms. Yau Yuk Yin was taken to be interested in those Shares in which her spouse, Mr. Tang, 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.

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 corporation(s) (within the meaning 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 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 referred to therein, or which were required, pursuant to the Model Code for Securities Transactions by Directors of Listed Companies, to be notified to the Company and the Stock Exchange.

(b) Persons who have an interest or short position 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, 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 and the Stock Exchange under the provisions of Divisions 2 and 3 of Part XV of the SFO or, who were, directly or indirectly, interested in 5% 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:

		Percentage of
		the Company’s
	Number of	issued share
Name	Shares held	capital
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.

Save as disclosed above, according to the register of interests kept by the Company under section 336 of the SFO and so far as is known to the Directors, 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 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 5% 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.

— 105 —

GENERAL INFORMATION

APPENDIX III

(c) Particulars of executive Directors’ service contracts

As at the Latest Practicable Date, none of the Directors had any existing or proposed service contracts with 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).

(d) Miscellaneous

Save as disclosed in this circular and as at the Latest Practicable Date,

(i) none of the Directors and Savills Valuation and Professional Services Limited had any direct or indirect interest in any assets which, since 31 March 2005, being 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 Valuation and Professional Services Limited did not have 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. LITIGATION

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

4. DIRECTORS’ INTERESTS IN COMPETING BUSINESS

None of the Directors and their respective associates is 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.

5. EXPERT’S QUALIFICATION AND CONSENT

Savills Valuation and Professional Services Limited has given and has not withdrawn its written consent to the issue of this circular with the inclusion of its letter and valuation certificate and reference to its name in the form and context in which it appeared.

— 106 —

GENERAL INFORMATION

APPENDIX III

The qualification of the expert who has given its opinions or advice contained in this circular is set out as follows:

Name

Qualification Date of report

Savills Valuation and Professional surveyors and valuer 16 February 2006 Professional Services Limited

6. MATERIAL CONTRACTS

The following contracts (not being contacts entered into in the ordinary course of business) were entered into by members of the Group within 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 Wai Yuen Tong Medicine Holdings Limited) 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 48% 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 provisional sale and purchase agreement dated 24 September 2004 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;
(d) a conditional agreement dated 27 September 2004 entered into between Suitbest Investments Limited (a wholly-owned subsidiary of the Company), Mr. Tang and DRIL, in respect of the acquisition of the entire issued share capital and shareholder’s loan of DRIL at a consideration of HK$720,001;
(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

— 107 —

GENERAL INFORMATION

APPENDIX III

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;

(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 Wai Yuen Tong Medicine Holdings Limited, Sutibest 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) a provisional agreement for sale and purchase dated 16 March 2005 entered into between Champford Investment Limited, a company incorporated in Hong Kong and Mr. Or Wing Ming in relation to the acquisition of a property located at Ground Floor, No. 170 Castle Peak Road (Section A of Lot No. 3705 IN DD120), Yuen Long, New Territories, Hong Kong at a consideration of HK$35,000,000;

— 108 —

GENERAL INFORMATION

APPENDIX III

(n) a conditional agreement dated 18 March 2005 entered into between Suitbest Investment Limited, Mr. Tang and Hanwin Investment Limited in relation to the sale and purchase of the entire issued share capital and shareholder’s loan of Hanwin Investment Limited at a consideration of HK$3,000,001;
(o) a provisional sale and purchase agreement dated 31 March 2005 entered between Shiny World Investment Limited (a wholly-owned subsidiary of the Company) and Fou Hop Man Kee Investment Limited in relation to the 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) a provisional sale and purchase agreement dated 5 July 2005 entered into between Faithful World Investment Limited (a company incorporated in Hong Kong and is a wholly-owned subsidiary of the Company) and Yau Chun Shun in relation to the acquisition of a 6-storey residential and commercial building property located at The Remaining Portion of New Kowloon Inland Lot No. 1069 and known as Nos. 270-274 Cheung Sha Wan Road, Kowloon, Hong Kong at a consideration of HK$75,000,000;
(s) a provisional sale and purchase agreement dated 8 August 2005 entered into between DRIL and Yu Fung Company Limited in relation to the acquisition of a property located at Ground floor, No. 22 Davis Street, Kennedy Town, Hong Kong at a consideration of HK$12,500,000;
(t) a provisional sale and purchase agreement dated 8 August 2005 entered into between DRIL and Sunny Era Limited in relation to the acquisition of a property located at 4th floor, No. 22 Davis Street, Kennedy Town, Hong Kong at a consideration of HK$5,000,000;
(u) the provisional sale and purchase agreements entered into by Hanwin Investment Limited and Lica Parking Company Limited, each being an indirect wholly-owned subsidiary of the Company, since 21 September 2005 and 5 October 2005, with the independent third parties in relation to the disposals of 26 residential units and 3 shop lots in Milan Place located at No. 58 Yen Chow Street, Kowloon, Hong Kong; and
(v) the Agreement.

— 109 —

GENERAL INFORMATION

APPENDIX III

7. GENERAL

(a) The registered office of the Company at Clarendon House, 2 Church Street, 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 Public Accountants and an associate member of the Hong Kong Institute of Certified Public Accountants.
(d) The branch share registrar of the Company in Hong Kong is Tengis Limited, at Level 28, Three Pacific Place, 1 Queen’s Road East, Hong Kong.
(e) The English text of this circular shall prevail over the Chinese text in the case of inconsistency.

8. 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 holiday 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 and the interim reports for the six months ended 30 September 2004 and 30 September 2005;
(c) the letter and valuation certificate prepared by Savills Valuation and Professional Services Limited as set out in Appendix II to this circular;
(d) the written consent referred to in the paragraph headed “Expert’s qualification and consent” in this appendix;
(e) the material contracts referred to in paragraph headed “Material contracts” in this appendix;
(f) the circular dated 13 April 2005 issued by the Company in relation to the acquisition of properties;

— 110 —

GENERAL INFORMATION

APPENDIX III

(g) the circular dated 5 May 2005 issued by the Company in relation to the acquisition of a property;
(h) the circular dated 10 May 2005 issued by the Company in relation to the acquisition of a property;
(i) the circular dated 22 July 2005 issued by the Company in relation to the acquisition of a property;
(j) the circular dated 23 November 2005 issued by the Company in relation to the disposal of a property; and
(k) this circular.

— 111 —

NOTICE OF THE SGM

==> picture [58 x 61] intentionally omitted <==

WANG ON GROUP LIMITED

( )[*]

(Incorporated in Bermuda with limited liability)

(Stock Code: 1222)

NOTICE OF SPECIAL GENERAL MEETING

NOTICE is hereby given that a special general meeting of Wang On Group Limited (the “Company”) will be held at 37th Floor, Two International Finance Centre, 8 Finance Street, Central, Hong Kong on 8 March 2006 at 9:30 a.m. (Hong Kong time) for the purpose of considering and, if thought fit, passing the following resolution, which will be proposed as ordinary resolution of the Company:

ORDINARY RESOLUTION

“THAT the Sale and Purchase Agreement, a copy of which marked “A” has been produced to the meeting and signed by the chairman of the meeting (for the purpose of identification) dated 25 January 2006 and made between Dragon Richly Investment Limited, a wholly-owned subsidiary of the Company, as the vendor and Aniwell Investments Limited as the purchaser, for the disposal of the property comprising six 5-storey commercial and residential buildings situated at Nos. 12, 14, 16, 18, 20 and 22 Davis Street, Kennedy Town, Hong Kong and the transactions contemplated thereunder be and are hereby approved; and any one director of the Company be and is hereby authorized on behalf of the Company to execute all such documents, in such final form or with such amendments as that director may deem appropriate, and to do all such acts or things, as he/she may in his/her absolute discretion consider necessary or desirable, to give effect to the said Agreement and the transactions contemplated therein.”

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

Hong Kong, 16 February 2006

* For identification purpose only

— 112 —

NOTICE OF THE SGM

Head office and principal place of business:

5th Floor

Wai Yuen Tong Medicine Building 9 Wang Kwong Road

Kowloon Bay Kowloon Hong Kong

Notes:

A member of the Company entitled to attend and vote at the above meeting is entitled to appoint one or more 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 authorized in writing. If the appointer is a corporation, the form of a proxy must be executed under its common seal or under the hand of an officer, attorney or other person authorized 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 branch share registrar, Tengis Limited, at Level 28, Three Pacific Place, 1 Queen’s Road East, 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 be preclude members from attending and voting in person at the meeting or any adjourned meeting (as the case may be) should they so wish, and in such event, the form of proxy shall be deemed to be revoked.

— 113 —

AI assistant

Wang On Group Limited — Proxy Solicitation & Information Statement 2006

49778_rns_2006-02-16_51d7d473-adaa-410a-9c29-970506b56dfc.pdf

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

MAJOR TRANSACTION PROPOSED DISPOSAL OF PROPERTY

Financial adviser

Shenyin Wanguo Capital (H.K.) Limited

CONTENTS

WANG ON GROUP LIMITED ( )[*]

Executive Directors:

Independent non-executive Directors:

To the Shareholders

MAJOR TRANSACTION PROPOSED DISPOSAL OF PROPERTY

INTRODUCTION

THE AGREEMENT

Date of execution

Parties

Asset subject to the Disposal

Consideration

LETTER FROM THE BOARD

Condition precedent

Completion

INFORMATION ON THE PROPERTY AND FINANCIAL EFFECTS OF THE DISPOSAL

LETTER FROM THE BOARD

REASON FOR THE DISPOSAL

USE OF PROCEEDS

GENERAL

SGM

VOTING BY POLL

LETTER FROM THE BOARD

RECOMMENDATION

ADDITIONAL INFORMATION

1. SUMMARY OF AUDITED FINANCIAL INFORMATION

Results

Assets, liabilities and minority interests

2. FINANCIAL INFORMATION

Consolidated Profit and Loss Account

Consolidated Balance Sheet

Consolidated Statement of Changes in Equity

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

APPENDIX I

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

APPENDIX I

4. SEGMENT INFORMATION

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

Wang On Group Limited Proxy Solicitation & Information Statement 2006

**WANG ON GROUP LIMITED ( )[*]**