THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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

If you have sold or transferred all your securities in Wang On Group Limited (宏安集團有限公司)[*] , you should at once hand this circular with the accompanying form of proxy to the purchaser or the transferee or to the bank, the licensed securities dealer or other agent through whom the sale or transfer was effected for transmission to the purchaser or the transferee.

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this circular, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this circular. The circular is for information only and does not constitute an invitation or offer to acquire, purchase or subscribe for the securities of the Company.

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**WANG ON GROUP LIMITED （宏安集團有限公司）[*]**

(Incorporated in Bermuda with limited liability)

(Stock Code: 01222)

(1) PROPOSED CAPITAL REORGANISATION;

(2) PROPOSED CHANGE IN BOARD LOT SIZE; (3) PROPOSED OPEN OFFER ON THE BASIS OF THREE OFFER SHARES FOR EVERY ONE ADJUSTED SHARE HELD ON THE RECORD DATE WITH BONUS ISSUE ON THE BASIS OF TWO BONUS SHARES FOR EVERY THREE OFFER SHARES TAKEN UP UNDER THE OPEN OFFER AND

(4) NOTICE OF SPECIAL GENERAL MEETING

Financial adviser to Wang On Group Limited

Underwriters of the Open Offer

ACCORD POWER LIMITED

Independent financial adviser to the Independent Board Committee and the Independent Shareholders

A letter from the Board is set out on pages 10 to 29 of this circular. A letter of recommendation from the Independent Board Committee to the Independent Shareholders is set out on page 30 of this circular and a letter of advice from Nuada to the Independent Board Committee and the Independent Shareholders on the Open Offer and the Bonus Issue is set out on pages 31 to 43 of this circular.

A notice convening the SGM to be held at 35th Floor, Two International Finance Centre, 8 Finance Street, Central, Hong Kong on Monday, 30 March 2009 at 10:00 a.m. is set out on pages SGM-1 to SGM-4 of this circular. Whether or not you are able to attend the SGM, you are requested to complete the enclosed form of proxy in accordance with the instructions printed thereon and return it to the Company’s branch share registrar and transfer office in Hong Kong, Tricor Tengis Limited at 26/F., Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong as soon as practicable but in any event not later than 48 hours before the time appointed for holding the SGM or any adjournment thereof (as the case may be). Completion and return of the form of proxy will not preclude you from attending and voting in person at the SGM or any adjournment thereof (as the case may be) should you so wish.

It should be noted that the Underwriting Agreement in respect of the Open Offer and the Bonus Issue contains provisions entitling the Underwriters by notice in writing to the Company at any time prior to the Latest Time for Termination to terminate the obligations of the Underwriters thereunder on the occurrence of certain events including force majeure. These events are set out under the section headed “Termination of the Underwriting Agreement” on pages 8 to 9 of this circular. If the Underwriters terminate the Underwriting Agreement in accordance with the terms thereof, the Open Offer and the Bonus Issue will not proceed. In addition, the Open Offer and the Bonus Issue are conditional on all the conditions set out on page 22 of this circular being satisfied and/or waived (in whole or in part). If such conditions are not satisfied and/or waived (in whole or in part) at or prior to the respective time stipulated therein, the Underwriting Agreement shall terminate and the Open Offer and the Bonus Issue will not proceed.

3 March 2009

For identification purpose only

	Page
Definitions	1
Expected timetable 6
Termination of the Underwriting Agreement 8
Letter from the Board 10
Letter from the Independent Board Committee 30
Letter from Nuada 31
Appendix I – Financial information of the Group I-1
Appendix II – Unaudited pro forma financial information of the Group	II-1
Appendix III – Summary of the Constitution of the Company and
Bermuda Company Law	III-1
Appendix IV – General information IV-1
Notice of the SGM	SGM-1

Definitions

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

“Accord Power”
Accord Power Limited (致力有限公司), a company incorporated in the British Virgin Islands with limited liability, controlled by Trustcorp Limited in its capacity as the trustee of Tang’s Family Trust
“Adjusted Shares” the new ordinary share(s) of HK$0.01 each in the capital of the Company immediately after the Capital Reorganisation becoming effective
“Announcement”
the announcement of the Company dated 13 February 2009 in respect of, among other things, the Capital Reorganisation, change in board lot size, the Open Offer and the Bonus Issue
“associate”
has the meaning ascribed thereto under the Listing Rules
“Board”

the board of Directors

“Bonus Issue”
the issue of the Bonus Shares pursuant to the terms and conditions to be set out in the Prospectus Documents and summarised herein
“Bonus Shares”
the bonus Adjusted Shares to be issued (for no additional payment from the relevant shareholders) to the first registered holders of Offer Shares on the basis of two (2) Bonus Shares for every three (3) Offer Shares taken up under the Open Offer subject to the terms and upon conditions to be set out in the Prospectus Documents and summarised herein
“Business Day” a day, other than Saturday, on which banks in Hong Kong are open for business
“Bye-laws”
the bye-laws of the Company
“Capital Reduction”

the proposal for the reduction of the par value of the issued Consolidated Shares from HK$0.125 each to HK$0.01 each by canceling HK$0.115 of the paid-up capital on each issued Consolidated Share and the cancellation of the fractional Consolidated Share arising from the Share Consolidation

“Capital Reorganisation”

the Share Consolidation and the Capital Reduction

“CCASS”

the Central Clearing and Settlement System established and operated by HKSCC

Definitions

“Company” Wang On Group Limited (宏安集團有限公司)*, an exempted company incorporated in Bermuda with limited liability and the Shares of which are listed on the main board of the Stock Exchange

“Companies Act” Companies Act 1981 of Bermuda
“connected persons” has the meaning ascribed thereto under the Listing Rules
“Consolidated Share(s)” the ordinary share(s) of HK$0.125 each in the issued share capital of the Company immediately following and arising from the Share Consolidation
“Director(s)” the director(s) of the Company
“Enlarged Group” the Group immediately after completion of the conditional sale and purchase agreement dated 13 February 2009 entered into between Loyal Fame International Limited and Wang On Enterprises (BVI) Limited in respect of the acquisition of the entire issued share capital of Everlong Limited and the assignment of the relevant shareholder’s loan to Wang On Enterprises (BVI) Limited from Loyal Fame International Limited pursuant to such agreement
“Excluded Shareholder(s)”
the Overseas Shareholder(s) on the Record Date in respect of whom the Directors, after making enquiries, consider it necessary or expedient on account either of legal restrictions under the laws of the relevant place or the requirements of the relevant regulatory body or stock exchange in that place not to offer the Offer Shares and the Bonus Shares
“Group”
the Company and its subsidiaries
“HKSCC”

Hong Kong Securities Clearing Company Limited

“Hong Kong”

the Hong Kong Special Administrative Region of the PRC

“Independent Board Committee”
an independent committee of the Board comprising all of the four independent non-executive Directors formed for the purpose of advising the Independent Shareholders on the Open Offer and the Bonus Issue
“Independent Shareholder(s)”
the Shareholders other than the Directors (excluding the independent non-executive Directors), the chief executive of the Company, Accord Power and their respective associates
For identification purpose only
2 -

Definitions

“Irrevocable Undertaking”
an irrevocable undertaking dated 10 February 2009 under which Mr. Tang and Accord Power have provided the irrevocable undertaking to the Company and Kingston Securities as described under the paragraph headed “Irrevocable Undertaking” in this circular
“Kingston Securities” Kingston Securities Limited, a licensed corporation to carry out business in type 1 (dealing in securities) regulated activity under the SFO
“Last Trading Day” 10 February 2009, being the last trading day for the Shares on the Stock Exchange before the release of the Announcement
“Latest Practicable Date” 26 February 2009, being the latest practicable date prior to the printing of this circular for ascertaining certain information for inclusion in this circular
“Latest Time for Termination”
4:00 p.m. on Thursday, 30 April 2009, or such other time as may be agreed between the Company and the Underwriters
“Listing Rules” the Rules Governing the Listing of Securities on the Stock Exchange
“Mr. Tang” Mr. Tang Ching Ho, an executive Director and the chairman of the Company
“Nuada” Nuada Limited, a licensed corporation under the SFO to conduct type 6 (advising on corporate finance) regulated activity and the independent financial adviser to the Independent Board Committee and the Independent Shareholders on the Open Offer and the Bonus Issue
“Offer Share(s)” not less than 1,132,861,635 Adjusted Shares but not more than 1,180,639,635 Adjusted Shares proposed to be offered to the Qualifying Shareholders for subscription on the basis of three (3) Offer Shares for every one (1) Adjusted Share held on the Record Date pursuant to the Open Offer
“Open Offer”
the proposed issue of the Offer Shares (with Bonus Shares) by way of open offer to the Qualifying Shareholders for subscription on the terms and conditions to be set out in the Prospectus Documents and summarised herein
“Overseas Shareholder(s)” the Shareholder(s) whose address(es) on the register of members of the Company is/(are) outside Hong Kong
3 -

Definitions

“Posting Date” Thursday, 9 April 2009 or such other day as may be agreed between the Company and the Underwriters, being the date of despatch of the Prospectus Documents or the Prospectus only (as the case may be) to the Shareholders
“PRC” the People’s Republic of China, which for the purpose of this circular only, excludes Hong Kong, the Macau Special Administrative Region of the PRC and Taiwan
“Prospectus” the prospectus to be despatched to the Shareholders on the Posting Date in connection with the Open Offer in such form as may be agreed between the Company and the Underwriters
“Prospectus Documents” the Prospectus and the application form for use by the Qualifying Shareholders to apply for the Offer Shares
“Qualifying Shareholder(s)” the Shareholder(s), whose names appear on the register of members of the Company as at the close of business on the Record Date, other than the Excluded Shareholders
“Record Date” Tuesday, 7 April 2009, being the date for determining the entitlements of the Shareholders to participate in the Open Offer
“Registrar” Tricor Tengis Limited, 26/F., Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong, the Company’s branch share registrar and transfer office in Hong Kong
“SFC” the Securities and Futures Commission
“SFO” Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong)
“SGM” the special general meeting of the Company to be convened at 35th Floor, Two International Finance Centre, 8 Finance Street, Central, Hong Kong on Monday, 30 March 2009 at 10:00 a.m. to consider and approve, among other things, the proposed Capital Reorganisation, the Open Offer and the Bonus Issue
“Share(s)” the ordinary share(s) of HK$0.005 each in the share capital of the Company prior to the implementation of the Capital Reorganisation
“Share Consolidation” the consolidation of every twenty-five (25) existing issued Shares of HK$0.005 each in the capital of the Company into one (1) issued Consolidated Share and the consolidation of every two (2) authorised but unissued Shares of HK$0.005 each in the capital of the Company into one (1) authorised but unissued Adjusted Share
4 -

Definitions

“Shareholder(s)” the holder(s) of the Shares or the Adjusted Shares (as the case may be) “Share Option(s)” the option(s) granted by the Company to subscribe for Shares pursuant to the Share Option Scheme “Share Options Scheme” the share option scheme adopted by the Company on 3 May 2002

“Stock Exchange” The Stock Exchange of Hong Kong Limited “Subscription Price” the subscription price of HK$0.10 per Offer Share “Takeovers Code” the Hong Kong Code on Takeovers and Mergers “Underwriters” Accord Power and Kingston Securities “Underwriting Agreement” the underwriting agreement dated 10 February 2009 entered into between the Company and the Underwriters in relation to the Open Offer and the Bonus Issue “Underwritten Shares” not less than 1,012,182,669 Offer Shares (with 674,788,445 Bonus Shares) and not more than 1,059,960,669 Offer Shares (with 706,640,445 Bonus Shares) “WYT” Wai Yuen Tong Medicine Holdings Limited (位元堂藥業控股有限公司[*] ), an exempted company incorporated in Bermuda with limited liability and the shares of which are listed on the main board of the Stock Exchange “HK$” Hong Kong dollar(s), the lawful currency of Hong Kong “RMB” Renminbi, the lawful currency of the PRC “%” per cent.

For identification purpose only

EXPECTED TIMETABLE

The expected timetable set out below is for illustration purposes only and has been prepared on the assumption that all the conditions precedent of the Capital Reorganisation, the Open Offer, the Bonus Issue and the Underwriting Agreement will be fulfilled. The expected timetable is subject to change, and any changes will be announced in a separate announcement by the Company as and when appropriate.

2009 SGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10:00 a .m . on Monday, 30 March Effective date of the Capital Reorganisation . . . . . . . . . . . . . . . . . . 9:30 a .m . on Tuesday, 31 March Commencement in dealings in the Adjusted Shares . . . . . . . . . . . . . 9:30 a .m . on Tuesday, 31 March Original counter for trading in existing Shares in existing share certificates in board lots of 6,000 existing Shares temporarily closes . . . . . . . . . . . . . . . . . . . . . . . 9:30 a .m . on Tuesday, 31 March Temporary counter for trading in board lots of 240 Adjusted Shares (in the form of existing share certificates) opens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9:30 a .m . on Tuesday, 31 March First day of free exchange of certificates for Shares into new certificates for the Adjusted Shares . . . . . . . . . . . . . . . . . . . . Tuesday, 31 March Last day of dealings in the Adjusted Shares on a cum-entitlement basis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Tuesday, 31 March First day of dealings in the Adjusted Shares on an ex-entitlement basis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Wednesday, 1 April Latest time for lodging transfers of the Adjusted Shares in order to be qualified for the Open Offer and the Bonus Issue . . . . . . . . . . . . . . . . . . . .4:30 p .m . on Thursday, 2 April Register of members closes . . . . . . . . . . . . . . . . . . . . . . . . . . . . Friday, 3 April to Tuesday, 7 April (both dates inclusive) Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Tuesday, 7 April Register of members re-opens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Wednesday, 8 April Despatch of the Prospectus Documents or the Prospectus (as the case may be) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Thursday, 9 April Original counter for trading in Adjusted Shares in board lots of 20,000 Adjusted Shares (only new certificates for the Adjusted Shares can be traded at this counter) re-opens . . . . . . . . . . . . . . . . . . . . . . . 9:30 a .m . on Thursday, 16 April

EXPECTED TIMETABLE

Parallel trading in the Adjusted Shares

(in the form of new and existing certificates) commences . . . . . . 9:30 a .m . on Thursday, 16 April
Designated broker starts to stand in the market to
provide matching services for the sale and
purchase of odd lots of Adjusted Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Thursday, 16 April

Latest time for acceptance of, and payment for, the Offer Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4:00 p .m . on Monday, 27 April

Latest time for the Open Offer and the Bonus Issue

to become unconditional . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4:00 p .m . on Thursday, 30 April

Announcement of results of the Open Offer and the Bonus Issue . . . . . . . . . . . . . . Tuesday, 5 May

Certificates for the Offer Shares and the Bonus Shares expected to be despatched on or before . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Thursday, 7 May

Temporary counter for trading in board lots of

240 Adjusted Shares (in the form of existing
share certificates) closes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4:10 p .m . on Thursday, 7 May

Parallel trading in the Adjusted Shares

(in the form of new and existing certificates) ends . . . . . . . . . . . . 4:10 p .m . on Thursday, 7 May
Designated broker ceases to stand in the
market to provide matching services for the sale
and purchase of odd lots of Adjusted Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . Thursday, 7 May

Dealings in the Offer Shares and

the Bonus Shares commence on . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Monday, 11 May

Last day of free exchange of certificates for

the Shares into new certificates for the Adjusted Shares . . . . . . . . . . . . . . . . . . Tuesday, 12 May

Notes:

1 . All references to time in this circular are references to Hong Kong time .
2 . If there is a “black” rainstorm warning or a tropical cyclone warning signal number 8 or above in force in Hong Kong on the latest date for acceptance of, and payment for, the Offer Shares at any time between 12:00 noon and 4:00 p .m ., the latest acceptance time of, and payment for, the Offer Shares will be postponed to the next Business Day which does not have either of those warnings in force in Hong Kong at any time between 12:00 noon and 4:00 p .m .
7 -

termination of the underwriting agreement

if, prior to the Latest time for termination:

(1) in the absolute opinion of the underwriters, the success of the open offer would be materially and adversely affected by:
(a) the introduction of any new law or regulation or any change in existing law or regulation (or the judicial interpretation thereof) or other occurrence of any nature whatsoever which may in the absolute opinion of the underwriters materially and adversely affect the business or the financial or trading position or prospects of the group as a whole or is materially adverse in the context of the open offer; or
(b) the occurrence of any local, national or international event or change (whether or not forming part of a series of events or changes occurring or continuing before, and/or after the date hereof) of a political, military, financial, economic or other nature (whether or not ejusdem generis with any of the foregoing), or in the nature of any local, national or international outbreak or escalation of hostilities or armed conflict, or affecting local securities markets which may, in the absolute opinion of the underwriters materially and adversely affect the business or the financial or trading position or prospects of the group as a whole or materially and adversely prejudice the success of the open offer or otherwise makes it inexpedient or inadvisable to proceed with the open offer; or
(2) any adverse change in market conditions (including without limitation, any change in fiscal or monetary policy, or foreign exchange or currency markets, suspension or material restriction or trading in securities) occurs which in the absolute opinion of the underwriters are likely to materially or adversely affect the success of the open offer or otherwise makes it inexpedient or inadvisable to proceed with the open offer; or
(3) there is any change in the circumstances of the Company or any member of the group which in the absolute opinion of the underwriters will adversely affect the prospects of the Company, including without limiting the generality of the foregoing the presentation of a petition or the passing of a resolution for the liquidation or winding up or similar event occurring in respect of any member of the group or the destruction of any material asset of the group; or
(4) any event of force majeure including, without limiting the generality thereof, any act of god, war, riot, public disorder, civil commotion, fire, flood, explosion, epidemic, terrorism, strike or lock-out; or
(5) any other material adverse change in relation to the business or the financial or trading position or prospects of the group as a whole whether or not ejusdem generis with any of the foregoing; or
8 -

termination of the underwriting agreement

(6) any matter which, had it arisen or been discovered immediately before the date of the Prospectus and not having been disclosed in the Prospectus, would have constituted, in the absolute opinion of any of the underwriters, a material omission in the context of the open offer; or
(7) any suspension in the trading of securities generally or the Company’s securities on the Stock exchange for a period of more than ten consecutive business days, excluding any suspension in connection with the clearance of the announcement or the Prospectus documents or other announcements or circulars in connection with the open offer,

the underwriters shall be entitled by notice in writing to the Company, served prior to the Latest time for termination, to terminate the underwriting agreement.

Letter from the Board

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**WaNG oN GroUP LImIted （宏安集團有限公司）[*]**

(Incorporated in Bermuda with limited liability)

(Stock Code: 01222)

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, BS, FHKIE, JP

Mr. Wong Chun, Justein, MBE, JP

Mr. Siu Yim Kwan, Sidney, S.B.St.J. Mr. Siu Kam Chau

Head office and principal place of business: 5/F., Wai Yuen Tong Medicine Building 9 Wang Kwong Road Kowloon Bay Kowloon Hong Kong

3 March 2009

To the Shareholders and holders of the Share Options

Dear Sir or Madam,

(1) ProPoSed CaPItaL reorGaNISatIoN;

(2) ProPoSed ChaNGe IN Board Lot SIZe;

(3) ProPoSed oPeN offer oN the BaSIS of three offer ShareS for eVerY oNe adJUSted Share heLd oN the reCord date WIth BoNUS ISSUe oN the BaSIS of tWo BoNUS ShareS for eVerY three offer ShareS taKeN UP UNder the oPeN offer aNd

(4) NotICe of SPeCIaL GeNeraL meetING

INtrodUCtIoN

On 13 February 2009, the Board announced that the Company proposed to:

(i) effect the Capital Reorganisation;

For identification purpose only

10 -

Letter from the Board

(ii) change the board lot size of the Adjusted Shares for trading on the Stock Exchange upon the Capital Reorganisation becoming effective; and
(iii) raise not less than approximately HK$113.3 million but not more than approximately HK$118.1 million before expenses, by way of an open offer of not less than 1,132,861,635 Offer Shares and not more than 1,180,639,635 Offer Shares at the Subscription Price of HK$0.10 per Offer Share on the basis of three (3) Offer Shares for every one (1) Adjusted Share held on the Record Date and payable in full on acceptance, together with two (2) Bonus Shares for every three (3) Offer Shares taken up under the Open Offer.

The Capital Reorganisation, the Open Offer and the Bonus Issue are subject to, among other things, the approval of the Shareholders or the Independent Shareholders at the SGM. The purpose of this circular is to provide you with, among other things, (i) further details of the Capital Reorganisation, the change in board lot size of the Adjusted Shares for trading on the Stock Exchange, the Open Offer and the Bonus Issue; (ii) the recommendation from the Independent Board Committee to the Independent Shareholders on the Open Offer and the Bonus Issue; (iii) the advice from Nuada to the Independent Board Committee and the Independent Shareholders on the Open Offer and the Bonus Issue; and (iv) a notice convening the SGM.

ProPoSed CaPItaL reorGaNISatIoN

The Company intends to put forward a proposal to the Shareholders to effect the Capital Reorganisation which involves:

(i) the consolidation of every twenty-five (25) issued Shares of HK$0.005 each into one (1) issued Consolidated Share of HK$0.125 each and the consolidation of every two (2) authorised but unissued Shares of HK$0.005 each into one (1) authorised but unissued Adjusted Share of HK$0.01 each;
(ii) the total number of the Consolidated Shares in the issued share capital of the Company immediately following the Share Consolidation will be rounded down to a whole number by canceling the fractional Consolidated Share arising from the Share Consolidation;
(iii) a reduction of issued share capital whereby the par value of each issued Consolidated Share will be reduced from HK$0.125 to HK$0.01 by canceling HK$0.115 of the paid-up capital on each issued Consolidated Share; and
(iv) the credit arising from the Capital Reduction will be transferred to the contributed surplus account of the Company and the Directors will be authorised to apply the amount in the contributed surplus account in any manner permitted by the laws of Bermuda and the Bye-laws.
11 -

Letter from the Board

effects of the Capital reorganisation

As at the Latest Practicable Date, the authorised share capital of the Company was HK$200,000,000 divided into 40,000,000,000 Shares of HK$0.005 each, of which 9,440,513,640 Shares had been issued and were fully paid. Assuming that no further Shares are issued or repurchased between the Latest Practicable Date and the date of the SGM, immediately upon the Capital Reorganisation becoming effective, the authorised share capital of the Company will become HK$200,000,000 divided into 20,000,000,000 Adjusted Shares of HK$0.01 each, of which 377,620,545 Adjusted Shares will be in issue.

Based on 9,440,513,640 Shares in issue as at the Latest Practicable Date, a credit of approximately HK$43,426,362 will arise as a result of the Capital Reorganisation and will be transferred to the contributed surplus account of the Company. The Board currently has no plan as to the use of such amount.

The Adjusted Shares will rank pari passu in all respects with each other. Fractional Adjusted Shares will not be issued by the Company to the Shareholders. Any fractional entitlements of the Adjusted Shares will be aggregated and sold for the benefit of the Company.

Other than the relevant expenses incurred, the implementation of the Capital Reorganisation will have no effect on the consolidated net asset value of the Group, nor will it alter the underlying assets, business, operations, management or financial position of the Company or the interests of the Shareholders as a whole. The Directors believe that the Capital Reorganisation will not have any material adverse effect on the financial position of the Group and that on the date the Capital Reorganisation is to become effective, there are no reasonable grounds for believing that the Company is, or after the Capital Reorganisation would be, unable to pay its liabilities as they become due. The Capital Reorganisation will not involve any diminution of any liability in respect of any unpaid capital of the Company or the repayment to the Shareholders of any unpaid capital of the Company nor will it result in any change in the relative rights of the Shareholders.

reasons for the Capital reorganisation

The Board considers that the Capital Reorganisation will give greater flexibility to the Company to raise funds through the issue of new Adjusted Shares in the future and the credit in the contributed surplus account arising from the Capital Reduction may be applied in the future for distribution to the Shareholders or in any manner permitted by the laws of Bermuda and the Bye-laws as and when the Board considers appropriate. As such, the Board is of the view that the Capital Reorganisation is in the interests of the Company and the Shareholders as a whole.

Conditions of the Capital reorganisation

The Capital Reorganisation (which will be effected in accordance with the Bye-laws and the Companies Act) is conditional upon:

(i) the passing of the necessary resolution(s) by the Shareholders to approve, among other things, the Capital Reorganisation at the SGM;
12 -

Letter from the Board

(ii) the Listing Committee of the Stock Exchange granting the listing of, and permission to deal in, the Adjusted Shares in issue arising from the Capital Reorganisation; and
(iii) the compliance with the requirements of section 46(2) of the Companies Act, including (i) publication of a notice in relation to the Capital Reduction in an appointed newspaper in Bermuda on a date not more than thirty (30) days and not less than fifteen (15) days before the date on which the Capital Reduction is to take effect and (ii) that on the date of the Capital Reduction is to be effected, there are no reasonable grounds for believing that the Company is, or after the Capital Reduction, would be unable to pay its liabilities as they become due.

Assuming the above conditions are fulfilled, it is expected that the Capital Reorganisation will become effective on the Business Day immediately after the date of passing of the relevant resolution(s) approving the Capital Reorganisation. Subject to the passing of the requisite resolution(s) at the SGM approving the Capital Reduction and the Share Consolidation and completion of the necessary filings in Bermuda, the Capital Reorganisation will comply with the laws of Bermuda.

As at the Latest Practicable Date, none of the above conditions was fulfilled.

Listing and dealings

Application will be made to the Listing Committee of the Stock Exchange for the granting of the listing of, and permission to deal in, the Adjusted Shares arising from the Capital Reorganisation.

The Adjusted Shares will be identical in all respects and rank pari passu in all respects with each other as to all future dividends and distributions which are declared, made or paid. Subject to the granting of the listing of, and permission to deal in, the Adjusted Shares on the Stock Exchange, the Adjusted Shares will be accepted as eligible securities by HKSCC for deposit, clearance and settlement in CCASS with effect from the commencement date of dealings in the Adjusted Shares on the Stock Exchange or such other date as determined by HKSCC. Settlement of transactions between participants of the Stock Exchange on any trading day is required to take place in CCASS on the second trading day thereafter. All activities under CCASS are subject to the General Rules of CCASS and CCASS Operational Procedures in effect from time to time.

free exchange of Share certificates

Subject to the Capital Reorganisation becoming effective, Shareholders may submit certificates for the existing Shares, to the Company’s branch share registrar and transfer office in Hong Kong, Tricor Tengis Limited, of 26/F., Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong for exchange from Tuesday, 31 March 2009 to Tuesday, 12 May 2009 (both dates inclusive), at the expense of the Company for certificates of the Adjusted Shares. Thereafter, certificates for the existing Shares will be accepted for exchange only on payment of a fee of HK$2.50 (or such higher amount as may from time to time be allowed by the Stock Exchange) for each share certificate of the existing Shares cancelled or each new share certificate issued for the Adjusted Shares, whichever number of certificates cancelled/issued is higher. The existing certificates will be valid for trading and

13 -

Letter from the Board

settlement up to 4:10 p.m. on Thursday, 7 May 2009, being the latest time for trading in board lot of 240 Adjusted Shares in the form of existing certificates (or such other date which will be announced by the Company) and will continue to be good evidence of legal title after the Capital Reorganisation has become effective and may be exchanged for certificates of the Adjusted Shares at any time in accordance with the foregoing.

ProPoSed ChaNGe IN Board Lot SIZe

The Shares are presently traded in board lots of 6,000 Shares each. The Board has proposed that upon the Capital Reorganisation becoming effective, the board lot size of the Adjusted Shares for trading on the Stock Exchange will be changed from 6,000 Shares to 20,000 Adjusted Shares.

The reason for the change in board lot size is to increase the value of each board lot of the Adjusted Shares to ensure that the market value per board lot after the Open Offer and the Bonus Issue would be more than HK$2,000 and to reduce transaction and registration costs of the Shareholders and investors of the Company. Accordingly, the Board considers the change in board lot size to be in the interests of the Company and the Shareholders as a whole.

arraNGemeNt for odd Lot tradING

In order to facilitate the trading of odd lots (if any) of the Adjusted Shares arising from the Capital Reorganisation and the change in board lot size, the Company has appointed Kingston Securities to provide matching services on a best effort basis to the Shareholders who wish to top up or sell their holdings of odd lots of the Adjusted Shares for the period from Thursday, 16 April 2009 to Thursday, 7 May 2009 (both dates inclusive). Holders of odd lots of the Adjusted Shares who wish to take advantage of this facility either to dispose of their odd lots of the Adjusted Shares or top up to a full board lot may, directly or through their brokers, contact Ms. Rosita Kiu of Kingston Securities by phone at (852)2298-6215 or by fax at (852)2295-0682 during this period. Holders of odd lots of the Adjusted Shares should note that successful matching of the sale and purchase of odd lots of the Adjusted Shares is not guaranteed. Any Shareholder, who is in any doubt about the odd lot facility, is recommended to consult his/her/its own professional advisers.

ProPoSed oPeN offer aNd BoNUS ISSUe

The Open Offer and the Bonus Issue are proposed to take place after the Capital Reorganisation becoming effective.

Issue statistics

Basis of the Open Offer : Three (3) Offer Shares for every one (1) Adjusted Share held on the Record Date and payable in full on acceptance, together with two (2) Bonus Shares for every three (3) Offer Shares taken up under the Open Offer Subscription Price : HK$0.10 per Offer Share

14 -

Letter from the Board

Number of Shares in : 9,440,513,640 Shares issue as at the Latest Practicable Date

Number of Adjusted : 377,620,545 Adjusted Shares (assuming that no further Shares in issue upon Shares are issued or repurchased between the Latest the Capital Practicable Date and the date of the SGM) or 393,546,545 Reorganisation Adjusted Shares (assuming all rights attaching to the becoming effective outstanding Share Options are exercised before the date of the SGM)

Number of Offer Shares : Not less than 1,132,861,635 Offer Shares but not more than 1,180,639,635 Offer Shares Number of Bonus Shares : Not less than 755,241,089 Bonus Shares and not more than 787,093,090 Bonus Shares to be issued to the first registered holders of the Offer Shares on the basis of two (2) Bonus Shares for every three (3) Offer Shares taken up under the Open Offer Total Number of Adjusted : Not less than 2,265,723,269 Adjusted Shares but not more Shares in issue upon than 2,361,279,270 Adjusted Shares completion of the Open

Offer and the Bonus Issue

The minimum total number of Offer Shares and Bonus Shares of 1,888,102,724 Adjusted Shares represents:

(i) approximately 500% of the Company’s existing issued share capital as at the Latest Practicable Date; and
(ii) approximately 83.3% of the Company’s issued share capital as enlarged by the issue of the Offer Shares and the Bonus Shares,

assuming no exercise of any Share Options on or before the Record Date.

The maximum total number of Offer Shares and Bonus Shares of 1,967,732,725 Adjusted Shares represents:

(i) approximately 521.1% of the Company’s existing issued share capital as at the Latest Practicable Date; and
(ii) approximately 83.3% of the Company’s issued share capital as enlarged by the issue of the Offer Shares and the Bonus Shares,
15 -

Letter from the Board

assuming exercise of all Share Options in full on or before the Record Date.

As at the Latest Practicable Date, there were outstanding Share Options which entitle the holders thereof to subscribe for 398,150,000 new Shares. Save for the outstanding Share Options, the Company had no derivatives, options, warrants and conversion rights or other similar rights which are convertible or exchangeable into Shares as at the Latest Practicable Date.

Bonus Issue

Subject to the satisfaction of the conditions of the Open Offer, the Bonus Shares will be issued to the first registered holders of the Offer Shares on the basis of two (2) Bonus Shares for every three (3) Offer Shares taken up under the Open Offer.

On the basis of not less than 1,132,861,635 Offer Shares and not more than 1,180,639,635 Offer Shares to be issued under the Open Offer, not less than 755,241,089 Bonus Shares and not more than 787,093,090 Bonus Shares will be issued.

Qualifying Shareholders

To qualify for the Open Offer, a Shareholder must be registered as a member of the Company and not being Excluded Shareholders on the Record Date. In order to be registered as members of the Company on the Record Date, all transfers of the Adjusted Shares must be lodged (together with the relevant share certificate(s)) with the Company’s branch share registrar and transfer office in Hong Kong by 4:30 p.m. (Hong Kong time) on Thursday, 2 April 2009. The Company’s branch share registrar and transfer office in Hong Kong is:

Tricor Tengis Limited 26/F., Tesbury Centre, 28 Queen’s Road East Wanchai, Hong Kong

rights of overseas Shareholders

The Prospectus Documents are not intended to be registered under the applicable securities legislation of any jurisdiction other than Hong Kong and Bermuda.

According to the register of members of the Company as at the Latest Practicable Date, there was only one Overseas Shareholder whose address is in The Macau Special Administration Region (“ macau ”) of the PRC. The Directors have, in compliance with Rule 13.36(2)(a) of the Listing Rules, conducted enquiries regarding the feasibility of extending the Open Offer to such Overseas Shareholder. The Company has been advised by its legal adviser on the laws of Macau that there is no legal or regulatory restriction under the applicable legislation of Macau or requirement of any relevant regulatory body or stock exchange with respect to the offer of the Open Offer and the Bonus Issue to the Overseas Shareholder in Macau. On this basis, the Directors believe that the Prospectus Documents would not be required to be registered under the relevant laws and regulations of Macau and may be despatched to relevant Overseas Shareholder with registered address in Macau without any restrictions.

16 -

Letter from the Board

Accordingly, the Directors have decided to extend the Open Offer and the Bonus Issue to the Overseas Shareholder(s) with registered addresses in Macau and any such Overseas Shareholders, together with the Shareholders with registered addresses in Hong Kong, are Qualifying Shareholders. The Prospectus Documents will be sent to such Qualifying Shareholders.

The Company will continue to ascertain whether there is any other Overseas Shareholders on the Record Date and will, in determining whether any such Overseas Shareholder(s) will be regarded as Excluded Shareholders, will make enquiry pursuant to Rule 13.36(2) of the Listing Rules regarding the legal restrictions (if any) under the laws of the relevant places and the requirements of the relevant regulatory bodies or stock exchanges in relation to the Company’s offering of the Offer Shares and the Bonus Shares to the Overseas Shareholders. If, based on the relevant legal opinions obtained by the Company, the Directors consider that it is necessary or expedient not to offer the Offer Shares and the Bonus Shares to the Overseas Shareholders on account either of the legal restrictions under the laws of the relevant places or the requirements of the relevant regulatory body or stock exchange in those places, the Open Offer (which includes the Bonus Issue) will not be available to such Overseas Shareholders.

The Company will send the Prospectus Documents to the Qualifying Shareholders and will send the Prospectus (without the application form in respect of the taking up of Offer Shares), for information only, to the Excluded Shareholders on the Posting Date.

Any Offer Shares which would otherwise have been made available for application by the Excluded Shareholders will be underwritten by the Underwriters.

No transfer of nil-paid entitlements and no application for excess offer Shares

The invitation to subscribe for the Offer Shares to be made to the Qualifying Shareholders will not be transferable. There will not be any trading in nil-paid entitlements on the Stock Exchange.

After arm’s length negotiation with the Underwriters, the Company decided that the Qualifying Shareholders will not be entitled to subscribe for any Offer Shares in excess of their respective assured entitlements. Having considered that each Qualifying Shareholder will be given equal and fair opportunities to participate in the Company’s future development by subscribing for his/her/its assured entitlements under the Open Offer, the Company decided not to put in additional effort and costs to administer the excess application procedures. Any Offer Shares (with Bonus Shares) not taken up by the Qualifying Shareholders (exclude those to be taken up by Mr. Tang, Accord Power and their respective associates pursuant to the Irrevocable Undertaking) will be underwritten by the Underwriters. In the view that the related administration costs would be lowered, the Directors consider that the absence of application for excess Offer Shares is fair and reasonable and in the interests of the Company and the Shareholders as a whole.

Closure of register of members

The register of members of the Company, in relation to the Open Offer and the Bonus Issue, will be closed from Friday, 3 April 2009 to Tuesday, 7 April 2009, both dates inclusive. No transfer of Adjusted Shares will be registered during this period.

17 -

Letter from the Board

Subscription Price

The Subscription Price is HK$0.10 per Offer Share, payable in full on application. The Subscription Price represents:

(i) a discount of approximately 83.33% to the adjusted closing price of HK$0.60 per Adjusted Share, based on the closing price of HK$0.024 per Share as quoted on the Stock Exchange on the Last Trading Day and adjusted for the effect of the Capital Reorganisation;
(ii) a discount of approximately 83.05% to the adjusted average closing price of HK$0.59 per Adjusted Share, based on the average closing price of HK$0.0236 as quoted on the Stock Exchange for the five (5) consecutive trading days up to and including the Last Trading Day and adjusted for the effect of the Capital Reorganisation;
(iii) a discount of approximately 33.33% to the theoretical ex-entitlement price of HK$0.15 per Adjusted Share after the Open Offer and the Bonus Issue, based on the closing price of HK$0.024 per Share as quoted on the Stock Exchange on the Last Trading Day and adjusted for the effect of the Captial Reorganisation;
(iv) a discount of approximately 78.95% to the adjusted closing price of HK$0.475 per Adjusted Share, based on the closing price of HK$0.019 per Share as quoted on the Stock Exchange on the Latest Practicable Date and adjusted for the effect of the Capital Reorganisation; and
(v) a discount of approximately 97.36% to the unaudited net asset value per Adjusted Share of approximately HK$3.78 as at 30 September 2008 and adjusted for the Capital Reorganisation.

The Subscription Price was arrived at after arm’s length negotiation between the Company and the Underwriters with reference to the market price of the Shares and the prevailing market conditions. The Directors consider that the discount would encourage Shareholders to participate in the Open Offer and accordingly maintain their shareholdings in the Company and participate in the future growth of the Group. In view of the prevailing market conditions of the capital market in Hong Kong and the benefits of the Open Offer and the Bonus Issue, the Directors (including the independent non-executive Directors) consider that the terms of the Open Offer and the Bonus Issue are fair and reasonable and in the best interests of the Group and the Shareholders as a whole.

Status of the offer Shares and the Bonus Shares

The Offer Shares and the Bonus Shares (when allotted, fully paid or credited as fully paid and issued) will rank pari passu in all respects with the Adjusted Shares in issue on the date of allotment and issue of the Offer Shares and the Bonus Shares. Holders of the Offer Shares and the Bonus Shares will be entitled to receive all future dividends and distributions which are declared, made or paid on or after the date of allotment and issue of the Offer Shares and the Bonus Shares.

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Letter from the Board

Certificates of the offer Shares and the Bonus Shares

Subject to fulfillment of the conditions of the Open Offer and the Bonus Issue, share certificates for the Offer Shares and the Bonus Shares are expected to be sent on or before Thursday, 7 May 2009 to those entitled thereto by ordinary post at their own risk.

fractions of the Bonus Shares

Fractional entitlements to the Bonus Shares will not be allotted and will not be issued.

application for listing

The Company will apply to the Listing Committee of the Stock Exchange for the listing of, and permission to deal in, the Offer Shares and the Bonus Shares. No part of the securities of the Company is listed or dealt in or on which listing or permission to deal is being or is proposed to be sought on any other stock exchange.

Irrevocable Undertaking

As at the Latest Practicable Date, Mr. Tang, Accord Power and their respective associates were interested in 1,005,658,060 Shares in aggregate, representing approximately 10.65% of the existing issued share capital of the Company. Pursuant to the Irrevocable Undertaking, Mr. Tang and Accord Power have given an irrevocable undertaking in favour of the Company and Kingston Securities that (i) they will subscribe for or procure subscriptions for 120,678,966 Offer Shares (with Bonus Shares) to which they and their respective associates will be entitled under the Open Offer; and (ii) the Shares comprising their and their respective associates’ current shareholding will remain registered in their names or the names of their respective associates at the close of business on the Record Date as they are on the date of the Irrevocable Undertaking.

UNderWrItING arraNGemeNtS

the Underwriting agreement

Date	:	10 February 2009
Underwriters	:	Accord Power and Kingston Securities
Total number of Offer	:	The Underwriters have agreed to fully underwrite not less than
Shares (with Bonus		1,012,182,669 Underwritten Shares and not more than 1,059,960,669
Shares) being		Underwritten Shares not taken up by the Shareholders pursuant to
underwritten by		the Underwriting Agreement in the following manner:
the Underwriters
		(i) Accord Power shall subscribe for or procure subscription for the
		first of such number up to 200,000,000 Underwritten Shares;
		and

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Letter from the Board

(ii) Kingston Securities shall subscribe for or procure subscription for all remaining Underwritten Shares.
Commission : 2.5% of the aggregate Subscription Price in respect of the number of Underwritten Shares on the Record Date

Accord Power is an investment holding company wholly owned by Trustcorp Limited in its capacity as the trustee of Tang’s Family Trust, a discretionary trust of which Mr. Tang was the founder and Ms. Yau Yuk Yin, an executive Director and the spouse of Mr. Tang is a beneficiary. The ordinary course of business of Accord Power does not include underwriting. As at the Latest Practicable Date, Mr. Tang, Accord Power and their respective associates were interested in 1,005,658,060 Shares in aggregate, representing approximately 10.65% of the existing issued share capital of the Company. Therefore, Accord Power is a connected person of the Company (as defined in the Listing Rules).

The entering into of the Underwriting Agreement between the Company and Accord Power constitutes a connected transaction for the Company under the Listing Rules. Pursuant to Rule 14A.31(3)(c) of the Listing Rules, provided that Rule 7.26A(2) of the Listing Rules has been complied with, the Underwriting Agreement will be exempted from the reporting, announcement and independent shareholders approval requirements. Pursuant to Rule 7.26A(2) of the Listing Rules, since no excess application for the Offer Shares is available, approval shall be obtained from the Independent Shareholders in respect of the absence of such arrangement and the Underwriting Agreement which serve as the alternative arrangement in respect of the untaken Offer Shares under the Open Offer and any Shareholders who have a material interest in the relevant resolution(s) shall abstain from voting.

As at the Latest Practicable Date, Kingston Securities was interested in 20 Shares. Kingston Securities and its associates will abstain from voting in favour of the resolutions relating to the Open Offer and the Bonus Issue at the SGM. To the best of the Directors’ knowledge and information, save for its shareholding in the Company disclosed above, Kingston Securities and its ultimate beneficial owners are third parties independent of and not connected with the Company and its connected persons (as defined in the Listing Rules).

termination of the Underwriting agreement

If, prior to the Latest Time for Termination:

(1) in the absolute opinion of the Underwriters, the success of the Open Offer would be materially and adversely affected by:
(a) the introduction of any new law or regulation or any change in existing law or regulation (or the judicial interpretation thereof) or other occurrence of any nature whatsoever which may in the absolute opinion of the Underwriters materially and adversely affect the business or the financial or trading position or prospects of the Group as a whole or is materially adverse in the context of the Open Offer; or
20 -

Letter from the Board

(b) the occurrence of any local, national or international event or change (whether or not forming part of a series of events or changes occurring or continuing before, and/or after the date hereof) of a political, military, financial, economic or other nature (whether or not ejusdem generis with any of the foregoing), or in the nature of any local, national or international outbreak or escalation of hostilities or armed conflict, or affecting local securities markets which may, in the absolute opinion of the Underwriters materially and adversely affect the business or the financial or trading position or prospects of the Group as a whole or materially and adversely prejudice the success of the Open Offer or otherwise makes it inexpedient or inadvisable to proceed with the Open Offer; or
(2) any adverse change in market conditions (including without limitation, any change in fiscal or monetary policy, or foreign exchange or currency markets, suspension or material restriction or trading in securities) occurs which in the absolute opinion of the Underwriters are likely to materially or adversely affect the success of the Open Offer or otherwise makes it inexpedient or inadvisable to proceed with the Open Offer; or
(3) there is any change in the circumstances of the Company or any member of the Group which in the absolute opinion of the Underwriters will adversely affect the prospects of the Company, including without limiting the generality of the foregoing the presentation of a petition or the passing of a resolution for the liquidation or winding up or similar event occurring in respect of any member of the Group or the destruction of any material asset of the Group; or
(4) any event of force majeure including, without limiting the generality thereof, any act of God, war, riot, public disorder, civil commotion, fire, flood, explosion, epidemic, terrorism, strike or lock-out; or
(5) any other material adverse change in relation to the business or the financial or trading position or prospects of the Group as a whole whether or not ejusdem generis with any of the foregoing; or
(6) any matter which, had it arisen or been discovered immediately before the date of the Prospectus and not having been disclosed in the Prospectus, would have constituted, in the absolute opinion of any of the Underwriters, a material omission in the context of the Open Offer; or
(7) any suspension in the trading of securities generally or the Company’s securities on the Stock Exchange for a period of more than ten consecutive business days, excluding any suspension in connection with the clearance of the Announcement or the Prospectus Documents or other announcements or circulars in connection with the Open Offer,

the Underwriters shall be entitled by notice in writing to the Company, served prior to the Latest Time for Termination, to terminate the Underwriting Agreement.

21 -

Letter from the Board

Conditions of the open offer and the Bonus Issue

The Open Offer and the Bonus Issue are conditional upon the following:

(1) the delivery to the Stock Exchange for authorisation and the registration with the Registrar of Companies in Hong Kong respectively one copy of each of the Prospectus Documents duly signed by two Directors (or by their agents duly authorised in writing) as having been approved by resolution of the Directors (and all other documents required to be attached thereto) and otherwise in compliance with the Listing Rules and the Companies Ordinance not later than the Posting Date and the filing of the Prospectus Documents with the Registrar of Companies in Bermuda in compliance with the Companies Act;
(2) the posting of the Prospectus Documents to the Qualifying Shareholders and the posting of the Prospectus and a letter in the agreed form to the Excluded Shareholders, if any, for information purpose only explaining the circumstances in which they are not permitted to participate in the Open Offer on or before the Posting Date;
(3) the Listing Committee of the Stock Exchange granting or agreeing to grant (subject to allotment) and not having withdrawn or revoked listing of and permission to deal in the Offer Shares and the Bonus Shares by no later than the first day of their dealings;
(4) the Underwriting Agreement not being terminated by the Underwriters pursuant to the terms thereof on or before the Latest Time for Termination;
(5) the passing of the necessary resolution(s) by the Shareholders (where applicable, the Independent Shareholders) at the SGM to approve (i) the Capital Reorganisation; (ii) the Open Offer; and (iii) the Bonus Issue, and the transactions contemplated thereunder;
(6) the Capital Reorganisation having become effective;
(7) compliance with and performance of all undertakings and obligations of Mr. Tang and Accord Power under the Irrevocable Undertaking; and
(8) if necessary, the obtaining of the consent or permission from the Bermuda Monetary Authority in respect of the issue of the Offer Shares and the Bonus Shares.

If any of the above conditions is not satisfied and/or waived (in whole or in part) at or prior to the respective time stipulated therein, the Underwriting Agreement shall be terminated accordingly and none of the parties shall have any claim against the other save that all such reasonable costs, fees and other out-of-pocket expenses (excluding sub-underwriting fees and related expenses) as have been properly incurred by the Underwriters in connection with the underwriting of the Underwritten Shares by the Underwriters shall to the extent agreed by the Company be borne by the Company, and the Open Offer and the Bonus Issue will not proceed.

As at the Latest Practicable Date, none of the above conditions was fulfilled.

22 -

Letter from the Board

ChaNGeS IN the SharehoLdING StrUCtUre of the ComPaNY arISING from the oPeN offer aNd the BoNUS ISSUe

The changes in the shareholding structure of the Company arising from the Open Offer and the Bonus Issue will be as follows:

(i) assuming no exercise of the outstanding Share options before the record date.

Mr. Tang, Accord Power and their respective associates_(Note 1) Share Options holders Public: Kingston Securities(Note 2)_ Other public Shareholders Total	Immediately Immediately after the Capital after the completion reorganisation becoming effective of the open offer but before the completion and the Bonus Issue as at the Latest of the open offer (all offer Shares are subscribed for Practicable date and the Bonus Issue by the Qualifying Shareholders) Shares Approximate % Adjusted Shares Approximate % Adjusted Shares Approximate % 1,005,658,060 10.65% 40,226,322 10.65% 241,357,932 10.65% – 0.00% – 0.00% – 0.00% 20 0.00% – 0.00% – 0.00% 8,434,855,560 89.35% 337,394,223 89.35% 2,024,365,338 89.35% 8,434,855,580 89.35% 337,394,223 89.35% 2,024,365,338 89.35% 9,440,513,640 100.00% 377,620,545 100.00% 2,265,723,270 100.00%	Immediately after the completion of the open offer and the Bonus Issue (no offer Shares are subscribed for by the Qualifying Shareholders except those undertaken by mr. tang, accord Power and their respective associates pursuant to the Irrevocable Undertaking) Adjusted Shares Approximate % 574,691,265 25.36% – 0.00% 1,353,637,781 59.75% 337,394,223 14.89% 1,691,032,004 74.64% 2,265,723,269 100.00%	Immediately after the completion of the open offer and the Bonus Issue (no offer Shares are subscribed for by the Qualifying Shareholders except those undertaken by mr. tang, accord Power and their respective associates pursuant to the Irrevocable Undertaking) Adjusted Shares Approximate % 574,691,265 25.36% – 0.00% 1,353,637,781 59.75% 337,394,223 14.89% 1,691,032,004 74.64% 2,265,723,269 100.00%
			74.64% 100.00%

23 -

Letter from the Board

(ii) assuming the exercise of the outstanding Share options in full before the record date.

Mr. Tang, Accord Power and their respective associates_(Note 1) Share Options holders Public: Kingston Securities(Note 2)_ Other public Shareholders Total	Immediately Immediately after the Capital after the completion reorganisation becoming effective of the open offer but before the completion and the Bonus Issue as at the Latest of the open offer (all offer Shares are subscribed for Practicable date and the Bonus Issue by the Qualifying Shareholders) Shares Approximate % Adjusted Shares Approximate % Adjusted Shares Approximate % 1,005,658,060 10.65% 40,226,322 10.22% 241,357,932 10.22% – 0.00% 15,926,000 4.05% 95,556,000 4.05% 20 0.00% – 0.00% – 0.00% 8,434,855,560 89.35% 337,394,223 85.73% 2,024,365,338 85.73% 8,434,855,580 89.35% 337,394,223 85.73% 2,024,365,338 85.75% 9,440,513,640 100.00% 393,546,545 100.00% 2,361,279,270 100.00%	Immediately after the completion of the open offer and the Bonus Issue (no offer Shares are subscribed for by the Qualifying Shareholders except those undertaken by mr. tang, accord Power and their respective associates pursuant to the Irrevocable Undertaking) Adjusted Shares Approximate % 574,691,265 24.34% 15,926,000 0.67% 1,433,267,781 60.70% 337,394,223 14.29% 1,770,662,004 74.99% 2,361,279,269 100.00%	Immediately after the completion of the open offer and the Bonus Issue (no offer Shares are subscribed for by the Qualifying Shareholders except those undertaken by mr. tang, accord Power and their respective associates pursuant to the Irrevocable Undertaking) Adjusted Shares Approximate % 574,691,265 24.34% 15,926,000 0.67% 1,433,267,781 60.70% 337,394,223 14.29% 1,770,662,004 74.99% 2,361,279,269 100.00%
			74.99% 100.00%

Notes:

The above 1,005,658,060 Shares include (a) 16,218,960 Shares held by Mr. Tang; (b) 16,218,920 Shares held by Ms. Yau Yuk Yin (“Ms. Yau”), an executive Director and the spouse of Mr. Tang; (c) 59,326,780 Shares held by Caister Limited, a company wholly and beneficially owned by Mr. Tang; and (d) 913,893,400 Shares held by Accord Power (one of the Underwriters), which is wholly owned by Trustcorp Limited in its capacity as the trustee of Tang’s Family Trust, a discretionary trust of which Mr. Tang was the founder and Ms. Yau is a beneficiary.
Kingston Securities, one of the Underwriters, has entered into various sub-underwriting agreements with independent third parties sub-underwriters whereby those sub-underwriters have agreed to subscribe and/or procure subscribers to subscribe for the Underwritten Shares. None of the sub-underwriters or subscribers of the Underwritten Share procured by them will become a substantial Shareholder immediately after completion of the Open Offer and the Bonus Issue. As a result of which, the Company shall maintain a 25% public float after the issue and allotment of the Underwritten Shares to those sub-underwriters or subscribers. The Stock Exchange has indicated that no listing approval in respect of the Offer Shares and the Bonus Shares will be given if, upon completion of the Open Offer and the Bonus Issue, less than 25% of the issued share capital of the Company is held in public hands.
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Letter from the Board

Kingston Securities has undertaken to the Company that (i) it will ensure that the subscribers or purchasers of the Underwritten Shares procured by it or by the sub-underwriters are third parties independent of and not acting in concert with the directors, chief executive or substantial shareholders of the Company or any of its subsidiaries or any of their respective associates; (ii) no such subscriber or purchaser of the Underwritten Shares shall be procured by it or by the sub-underwriters if allotment and issue of any Offer Shares and Bonus Shares to it would result in it and its associates and concert parties, when aggregated with the Adjusted Shares (if any) already held by them holding 30% or more of the enlarged issued share capital of the Company immediately after completion of the Open Offer and the Bonus Issue; and (iii) in performing its underwriting obligations under the Underwriting Agreement, no subscriber or purchaser of the Underwritten Shares will become a substantial Shareholder immediately after completion of the Open Offer and the Bonus Issue.

In view of the above, the Company will ensure the compliance of the public float requirements pursuant to Rule 8.08 of the Listing Rules upon completion of the Open Offer and the Bonus Issue.

reaSoNS for the oPeN offer aNd USe of ProCeedS

The Group is principally engaged in development and management of agricultural by-products wholesaling business in the PRC and Hong Kong, property investment, property development, management and sub-licensing of wet markets in the PRC and Hong Kong, management and sub-licensing shopping centres in Hong Kong. It also has interests in the pharmaceutical business through its investments in WYT, a company listed on the main board of the Stock Exchange.

The estimated expense of approximately HK$5.1 million in relation to the Open Offer and the Bonus Issue, including financial, legal and other professional advisory fees, underwriting commission, printing and translation expenses will be borne by the Company. Having considered other fund raising alternatives for the Group, such as bank borrowings and placing of new Shares, and taking into account the benefits and cost of each of the alternatives, the Open Offer allows the Group to strengthen its balance sheet without facing the increasing interest rates. The Board considers that the Open Offer and the Bonus Issue are in the interests of the Company and the Shareholders as a whole as they offer all the Qualifying Shareholders an equal opportunity to participate in the enlargement of the capital base of the Company and enables the Qualifying Shareholders to maintain their proportionate interests in the Company and continue to participate in the future development of the Company should they wish to do so. In addition, the Bonus Issue will be as an additional incentive for the Shareholders to take part in the Open Offer. however, those Qualifying Shareholders who do not take up the offer Shares to which they are entitled should note that their shareholdings in the Company will be diluted.

The Directors (including the independent non-executive Directors) consider that the Open Offer and the Bonus Issue are fair and reasonable and in the interests of the Company and the Shareholders as a whole having taken into account the terms of the Open Offer and the Bonus Issue.

25 -

Letter from the Board

The gross proceeds from the Open Offer will be not less than approximately HK$113.3 million but not more than approximately HK$118.1 million. The estimated net proceeds from the Open Offer will be not less than approximately HK$108.2 million but not more than approximately HK$112.9 million and are intended to be used as to approximately HK$60 million for acquisition of potential investment and as to the remaining balance for general working capital.

PoSSIBLe adJUStmeNt to the Share oPtIoNS

The Capital Reorganisation, the Open Offer and the Bonus Issue may lead to adjustments to the exercise price and/or the number of Shares or the Adjusted Shares (as the case may be) to be issued upon exercise of the Share Options. The Company will notify the holders of Share Options regarding adjustments to be made (if any) pursuant to the terms of the Share Option Scheme.

PreVIoUS fUNd raISING eXerCISe IN the PrIor 12-moNth PerIod

Save as disclosed below, the Company has not conducted any fund raising activities in the past twelve months before the date of the Announcement and up to the Latest Practicable Date:

				actual use of
				proceeds as at the
date of initial		Net proceeds		Latest Practicable
announcement	description	(approximately)	Intended use of proceeds	date
26 November 2008	Top-up placing	HK$33.24 million	Approximately HK$18.81 million	Has been fully utilised
	and placing of		for repayment of bank loans	as intended
	new Shares
			Approximately HK$14.43 million	Has been fully utilised
			for general working capital	as intended
26 March 2008	Top-up placing	HK$98.90 million	Approximately HK$35.00 million	Has been fully utilised
	and placing of		for financing the development and	as intended
	new Shares		management of agricultural
			by-products wholesaling markets in
			the PRC
			Approximately HK$30.30 million
			for the repayment of bank loans
			Approximately HK$33.60 million
			for financing the expansion and
			development of property investment
			and development business both in
			the PRC and Hong Kong and other
			potential investment opportunities

26 -

Letter from the Board

WarNING of the rISKS of deaLING IN the ShareS

Shareholders and potential investors of the Company should note that the open offer and the Bonus Issue are conditional upon, among other things, the Underwriting agreement having become unconditional and the Underwriters not having terminated the Underwriting agreement in accordance with the terms thereof (a summary of which is set out in the sub-paragraph headed “termination of the Underwriting agreement” above). accordingly, the open offer and the Bonus Issue may or may not proceed.

Shareholders and potential investors of the Company should therefore exercise extreme caution when dealing in the Shares or the adjusted Shares, and if they are in any doubt about their position, they should consult their professional advisers.

SGm

The Capital Reorganisation, the Open Offer and the Bonus Issue are subject to, among other things, the approval of the Shareholders or, where applicable, the Independent Shareholders at the SGM. A notice convening the SGM to be held at 35th Floor, Two International Finance Centre, 8 Finance Street, Central, Hong Kong on Monday, 30 March 2009 at 10:00 a.m. is set out on pages SGM-1 to SGM-4 of this circular. Whether or not you intend to attend the SGM, you are requested to complete the enclosed form of proxy in accordance with the instructions printed thereon and return it to the Company’s branch share registrar and transfer office in Hong Kong, Tricor Tengis Limited at 26/F., Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong as soon as practicable but in any event not later than 48 hours before the time appointed for holding the SGM or any adjournment thereof (as the case may be). Completion and return of the form of proxy will not preclude you from attending and voting in person at the SGM or any adjournment thereof (as the case may be) should you so wish.

As the Open Offer will increase the issued share capital of the Company by more than 50%, pursuant to Rule 7.24(5) of the Listing Rules, the Open Offer must be made conditional on approval by the Independent Shareholders at the SGM and any controlling Shareholders and their associates or, where there are no controlling Shareholders, the Directors (excluding the independent nonexecutive Directors), the chief executive of the Company and their respective associates will abstain from voting in favour of the resolutions relating to the Open Offer. As at the Latest Practicable Date, there was no controlling Shareholder. Accordingly, Mr. Tang, an executive Director, Accord Power and their respective associates, who in aggregate held approximately 10.65% of the existing issued share capital of the Company as at the Latest Practicable Date will abstain from voting in favour of the resolutions relating to the Open Offer and the Bonus Issue at the SGM. To the best of the Directors’ knowledge and information, as at the Latest Practicable Date, save for disclosed above and the 3,900,000 Share Options granted to Mr. Chan Chun Hong, Thomas, an executive Director, none of the Directors (excluding the independent non-executive Directors), the chief executive of the Company and their respective associates was interested in any Shares or Share Options. If Mr. Chan Chun Hong, Thomas exercises any of the Share Options granted to him and holds any Shares as at the date of the SGM, he will also abstain from voting in favour of the resolutions relating to the Open Offer and the Bonus Issue at the SGM.

27 -

Letter from the Board

The voting of the Shareholders and the Independent Shareholders at the SGM must be taken by way of a poll.

Upon passing of the necessary resolution(s) by the Shareholders (where applicable, the Independent Shareholders) at the SGM approving the Capital Reorganisation, the Open Offer and the Bonus Issue and the Capital Reorganisation becoming effective, the Prospectus Documents setting out details of the Open Offer and the Bonus Issue will be despatched to the Qualifying Shareholders on the Posting Date whereas the Prospectus will be despatched to the Excluded Shareholders for their information only.

reCommeNdatIoN

The Independent Board Committee has been established to advise the Independent Shareholders in respect of the Open Offer and the Bonus Issue. Nuada has been appointed as the independent financial adviser to advise the Independent Board Committee and the Independent Shareholders in this regard.

You are advised to read carefully the letter from the Independent Board Committee and the letter from Nuada set out on page 30 and pages 31 to 43 respectively of this circular. The Independent Board Committee, having taken into account the advice of Nuada, considers that the terms of the Open Offer and the Bonus Issue are fair and reasonable so far as the Independent Shareholders are concerned and the Open Offer and the Bonus Issue are in the interests of the Company and the Shareholders as a whole. Accordingly, the Independent Board Committee recommends the Independent Shareholders to vote in favour of the proposed resolutions approving the Open Offer and the Bonus Issue at the SGM.

The Directors believe that the terms of the Capital Reorganisation, the Open Offer and the Bonus Issue are fair and reasonable and in the interests of the Company and the Shareholders as a whole. Accordingly, the Directors recommend the Shareholders to vote in favour of the relevant resolutions to be proposed at the SGM.

28 -

Letter from the Board

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 （宏安集團有限公司）[*] Chan Chun hong, thomas Managing Director

For identification purpose only

29 -

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

The following is the text of a letter of recommendation from the Independent Board Committee to the Independent Shareholders in relation to the Open Offer and the Bonus Issue for the purpose of incorporation in this circular.

==> picture [81 x 60] intentionally omitted <==

**WANG ON GROUP LIMITED （宏安集團有限公司）[*]**

(Incorporated in Bermuda with limited liability) (Stock Code: 01222)

3 March 2009

To the Independent Shareholders

Dear Sir or Madam,

PROPOSED OPEN OFFER ON THE BASIS OF THREE OFFER SHARES FOR EVERY ONE ADJUSTED SHARE HELD ON THE RECORD DATE WITH BONUS ISSUE ON THE BASIS OF TWO BONUS SHARES FOR EVERY THREE OFFER SHARES TAKEN UP UNDER THE OPEN OFFER

We refer to the circular of the Company dated 3 March 2009 (the “ Circular ”) of which this letter forms part. Unless the context specifies otherwise, capitalised terms used herein have the same meanings as defined in the Circular.

We have been appointed by the Board to advise the Independent Shareholders as to whether the Open Offer and the Bonus Issue are in the interests of the Company and the Shareholders as a whole and the terms of which are fair and reasonable so far as the Company and the Independent Shareholders are concerned. Nuada has been appointed as the independent financial adviser to advise us and you in this respect.

Having taken into account the principal reasons and factors considered by and the advice of Nuada as set out in its letter of advice to us and you on pages 31 to 43 of the Circular, we are of the opinion that the Open Offer and the Bonus Issue are in the interests of the Company and the Shareholders as a whole and the terms of which are fair and reasonable so far as the Company and the Independent Shareholders are concerned. Accordingly, we recommend the Independent Shareholders to vote in favour of the ordinary resolution(s) to be proposed at the SGM to approve the Open Offer and the Bonus Issue.

Yours faithfully, For and on behalf of the Independent Board Committee Lee Peng Fei, Allen Wong Chun, Justein Siu Yim Kwan, Sidney Siu Kam Chau Independent non-executive Directors

For identification purpose only

30 -

LETTER FROM NUADA

The following is the text of a letter of advice to the Independent Board Committee and the Independent Shareholders from Nuada dated 3 March 2009 in relation to the Open Offer and the Bonus Issue for the purpose of inclusion in this circular.

7th Floor, New York House 60 Connaught Road Central Hong Kong

3 March 2009

To the Independent Board Committee and the Independent Shareholders of Wang On Group Limited

Dear Sirs,

PROPOSED OPEN OFFER ON THE BASIS OF THREE OFFER SHARES FOR EVERY ONE ADJUSTED SHARE HELD ON THE RECORD DATE WITH BONUS ISSUE ON THE BASIS OF TWO BONUS SHARES FOR EVERY THREE OFFER SHARES TAKEN UP UNDER THE OPEN OFFER

INTRODUCTION

We refer to our appointment as the independent financial adviser to advise the Independent Board Committee with respect to the Open Offer and the Bonus Issue, details of which are set out in the letter from the Board contained in the Circular (the “ Board’s Letter ”). Capitalised terms used in this letter shall have the same meanings ascribed to them in the circular of the Company dated 3 March 2009 (the “ Circular ”) unless the context otherwise requires.

On 13 February 2009, the Company announced, among other things, that the Board proposed to raise not less than approximately HK$113.3 million but not more than approximately HK$118.1 million, before expenses, by way of the Open Offer of not less than 1,132,861,635 Offer Shares and not more than 1,180,639,635 Offer Shares at the Subscription Price of HK$0.10 per Offer Share on the basis of three (3) Offer Shares for every one (1) Adjusted Share held on the Record Date and payable in full on acceptance and, subject to the satisfaction of the conditions of the Open Offer, to issue not less than 755,241,089 Bonus Shares and not more than 787,093,090 Bonus Shares by way of the Bonus Issue on the basis of two (2) Bonus Shares for every three (3) Offer Shares taken up under the Open Offer. The Open Offer and the Bonus Issue are fully underwritten pursuant to the terms and conditions of the Underwriting Agreement. As the Open Offer and the Bonus Issue will increase the issued share capital and the market capitalisation of the Company by more than 50% within 12 month period immediately preceding the date of the Announcement, pursuant to Rule 7.24(5) of the Listing Rules, the Open Offer must be made conditional upon approval by Independent Shareholders at the SGM and any controlling Shareholders and their associates or, where there are no controlling Shareholders, Directors (excluding independent non-executive Directors) and the chief executive of

31 -

LETTER FROM NUADA

the issuer and their respective associates shall abstain from voting in favour of the relevant resolutions relating to the Open Offer at the SGM. As at the Latest Practicable Date, there was no controlling Shareholder. Accordingly, Mr. Tang, an executive Director, Accord Power and their respective associates, who in aggregate held approximately 10.65% of the existing issued share capital of the Company as at the Latest Practicable Date will abstain from voting in favour of the resolutions relating to the Open Offer at the SGM. To the best of the Directors’ knowledge and information, as at the Latest Practicable Date, save for disclosed above and the 3,900,000 Share Options granted to Mr. Chan Chun Hong, Thomas, an executive Director, none of the Directors (excluding the independent non-executive Directors), the chief executive of the Company and their respective associates was interested in any Shares or Share Options.

The Independent Board Committee comprising Dr. Lee Peng Fei, Allen, Mr. Wong Chun, Justein, Mr. Siu Yim Kwan, Sidney and Mr. Siu Kam Chau, all being independent non-executive Directors, has been formed to advise the Independent Shareholders in respect of the Open Offer and the Bonus Issue.

We have been appointed by the Company as the independent financial adviser to advise the Independent Board Committee and the Independent Shareholders as to whether the terms of the Open Offer and the Bonus Issue are fair and reasonable so far as the Independent Shareholders are concerned and whether it is in the interests of the Company and the Shareholders as a whole and advise the Independent Shareholders on how to vote.

BASIS OF OUR OPINION

In formulating our opinion and recommendations, we have relied on the accuracy of the information, opinions and representations contained or referred to in the Circular and provided to us by the Company, the Directors and the management of the Company. We have assumed that all information, opinions and representations contained or referred to in the Circular were true and accurate at the time when they were made and continued to be true and accurate at the date of the SGM. We have also assumed that all statements of belief, opinion and intention made by the Directors in the Circular were reasonably made after due enquiries and considerations. We have no reason to doubt that any relevant information has been withheld, nor are we aware of any fact or circumstance which would render the information provided and representations and opinions made to us untrue, inaccurate or misleading. We consider that we have reviewed sufficient information to enable us to reach an informed view and to justify reliance on the accuracy of the information contained in the Circular to provide a reasonable basis for our opinions and recommendations.

Having made all reasonable enquiries, the Directors have confirmed that, to the best of their knowledge, there are no other facts or representations the omission of which would make any statement in the Circular, including this letter, misleading. We have not, however, carried out any independent verification of the information provided by the Company, the Directors and the management of the Company, nor have we conducted an independent investigation into the business and affairs, financial condition and future prospects of the Group. We disclaim any undertaking or obligation to advise any person of any change in any fact or matter affecting the opinion expressed herein which may come or be brought to our attention after the Latest Practicable Date.

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LETTER FROM NUADA

PRINCIPAL FACTORS AND REASONS CONSIDERED

In arriving at our opinion in respect of the Open Offer and the Bonus Issue, we have taken into consideration the following principal factors and reasons:

Principal businesses of the Group and reasons for the Open Offer

The Group is principally engaged in development and management of agricultural byproducts wholesaling business, property investment, property development, management and sub-licensing of wet markets in the PRC and Hong Kong, management and sub-licensing shopping centres in Hong Kong. It also has interests in the pharmaceutical business through its investments in WYT, a company listed on the main board of the Stock Exchange.

According to the annual report 2008 of the Company for the financial year ended 31 March 2008 (the “ Annual Report 2008 ”), the Group recorded an audited turnover and profit attributable to the Shareholders of approximately HK$545.9 million (2007: approximately HK$499.5 million) and approximately HK$96.1 million (2007: approximately HK$83.2 million) respectively for the financial year ended 31 March 2008. This represented an approximately 9.3% increase in turnover and approximately 15.5% rise in profit attributable to the Shareholders as compared with that for the financial year ended 31 March 2007. As stated in the Annual Report 2008, in 2007, the transaction levels and property prices in the residential property market in Hong Kong both saw an increasing trend. During the year, the Group recorded satisfactory property sales, generating revenue of HK$303.0 million for the Group. In the business segment of property investment, the Group acquired two retail shops for a total consideration of HK$84.0 million.

According to the interim report 2008 of the Company for the six months ended 30 September 2008 (the “ Interim Report 2008 ”), the Company, its subsidiaries and its jointlycontrolled entities recorded a turnover of approximately HK$181.8 million (2007: approximately HK$296.4 million), representing a decrease of approximately 38.7% as compared with the previous corresponding period. The Group recorded a loss attributable to equity holders of approximately HK$82.9 million for the six months ended 30 September 2008 (2007: profit attributable to equity holders of approximately HK$37.8 million). As stated in the Interim Report 2008, the loss was mainly attributable to the loss on the deemed disposal of the equity interest in WYT as a result of a top-up placing exercised by WYT in May 2008, share of loss of WYT as an associate of the Company and change in fair value of financial assets due to the recent troubled investment environment. As mentioned in the Interim Report 2008, in the first half of 2008, the Group had invested approximately HK$57.7 million in residential premises. In the business segment of property development, during the period, the overall residential market in Hong Kong remained stagnant and price and activity levels both declined, and the Group recorded a turnover of approximately HK$19.2 million (2007: approximately HK$199.5 million), representing a 90.4% decrease as compared to the previous corresponding period. Furthermore, the luxurious “Godi” residential project at Shatin Heights has been completed and is ready for sale, and sales efforts will commence when the Group see signs of improvement in the Hong Kong economy, particularly in the property market. Taking into account the decline in turnover in the property development business segment and the sale of the “Godi” residential projects of the Group has slowed down, the cash inflow from property development may be hindered.

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LETTER FROM NUADA

According to the Interim Report 2008, the Group recorded an unaudited net assets of approximately HK$1,190.8 million as at 30 September 2008, as compared to the audited net assets of approximately HK$1,182.6 million as at 31 March 2008. As at 30 September 2008, the Group had cash and cash equivalents of approximately HK$443.2 million, while having an aggregate interest-bearing bank loans of approximately HK$529.4 million, all bearing interest at floating interest rate. As mentioned in the Board’s Letter, during the 12-month period before the date of the Announcement, the Company had conducted a top-up placing and a placing of new Shares as announced on 26 November 2008 for a net proceeds of approximately HK$33.24 million and a top-up placing and a placing of new Shares as announced on 26 March 2008 for a net proceeds of HK$98.90 million, and such net proceeds have been fully utilised for financing the development and management of agricultural by-products wholesaling markets in the PRC, financing the expansion and development of property investment and development business both in the PRC and Hong Kong and other potential investment opportunities, repayment of bank loans and/or general working capital as intended.

As noted from the announcement of the Company dated 13 February 2009 (the “ Transaction Announcement ”), the Group proposed to dispose of its investment in 玉林宏進農副產品批發市場有限公司 (Yulin Hong-Jin Agricultural By-products Wholesale Marketplace Limited) and 徐州源洋商貿發展有限公司 (Xuzhou Yuan Yang Trading Development Company Limited) through the disposal of the entire issued share capital of Shiney Day Investments Limited and its subsidiaries for a cash consideration of approximately HK$150 million (the “ Disposal ”), and the Company is expected to record a gain on disposal of approximately HK$154 million upon completion. The Company intends to apply the proceeds from the Disposal for acquisition of other potential investment targets and as general working capital. It is also announced on the Transaction Announcement that the Group proposed to acquire properties for investment purpose through the acquisition of the entire issued share capital of Everlong Limited and its subsidiaries and the related shareholders’ loan for a cash consideration of HK$63.4 million, and such acquisition will be financed by internal resources of the Group. Save for the above transactions, as at the Latest Practicable Date, the Company had not identified any specific investment targets. Nevertheless, according to the Board’s representation, the Group has been continuing to identify and pursue any investment opportunities related to the daily life of the general public, in particular in the fields of property development and property investment and Chinese wet markets management. With an aim to generate maximum investment returns for the Shareholders, the Group will continue to look for potential sites and projects for development as well as properties with investment value, and meanwhile, the Group will continue to seek more business opportunities in the management of Chinese wet markets in both the PRC and Hong Kong. As stated in section headed “Indebtedness” under Appendix I in the Circular, as at 31 January 2009, the Enlarged Group had outstanding bank loans of approximately HK$509,700,000 and all of which were secured by the Enlarged Group’s investment properties and certain rental income generated therefrom, properties under development and properties held for sale.

By way of the Open Offer, the Group can strengthen its financial position with more liquidity for future development and to expand its capital base, and meanwhile, the Open Offer allows the Qualifying Shareholders an equal opportunity to participate in the enlargement of the capital base of the Company and enables them to maintain their proportionate interests in the Company and continue to participate in the future development of the Company should

34 -

LETTER FROM NUADA

they wish to do so. The estimated net proceeds from the Open Offer will be not less than approximately HK$108.2 million but not more than approximately HK$112.9 million. The Boards intends to apply such net proceeds for acquisition of potential investment and/or general working capital.

Although the Group is expected to receive a cash consideration of approximately HK$150 million upon completion of the Disposal and no specific investment targets had been identified by the Group as at the Latest Practicable Date, taking into account (i) the nature of the principal businesses of the Group, in particular the property development and property investment, which is rather capital intensive, both for development cost of property projects and capturing property investment opportunities in a timely manner; (ii) the Group will continue to look for potential sites and projects for development and investment purpose as well as other business opportunities; (iii) the decline in turnover in the property development segment of the Group and the sale of the Godi Project has slowed down, which may hindered the Group’s cash inflow from property development; (iv) the interest-bearing bank loans borne by the Group; and (v) the net proceeds raised from previous fund raising exercises had been fully ultilised, we consider that the increase in the Group’s liquidity is beneficial to the Group’s business development, in particular if and when suitable investment opportunities arise, and thus, we are of the view that the Open Offer is an essential means to strengthen the financial position of the Group and to enlarge the capital base of the Company for optimizing investment opportunities in a timely manner, and is in the interests of the Company and the Shareholders as a whole.

Terms of the Open Offer and the Bonus Issue

Subscription Price

Pursuant to the terms of the Open Offer and the Bonus Issue, the Company will issue not less than 1,132,861,635 Offer Shares but not more than 1,180,639,635 Offer Shares at the subscription price of HK$0.10 per Offer Share, on the basis of three (3) Offer Shares for every one (1) Adjusted Share held on the Record Date and payable in full on acceptance on the Record Date. Subject to the satisfaction of the conditions of the Open Offer, the Bonus Shares will be issued to the first registered holders of Offer Shares on the basis of two (2) Bonus Shares for every three (3) Offer Shares taken up under the Open Offer. Accordingly, the Bonus Shares to be issued under the Bonus Issue will not be less than 755,241,089 Bonus Shares and not more than 787,093,090 Bonus Shares. The Offer Shares and the Bonus Shares (when allotted, fully paid or credited as fully paid and issued) will rank pari passu in all respects with the Adjusted Shares in issue on the date of allotment and issue of the Offer Shares and the Bonus Shares. Holders of the Offer Shares and the Bonus Shares will be entitled to receive all future dividends and distributions which are declared, made or paid on or after the date of allotment and issue of the Offer Shares and the Bonus Shares.

The Subscription Price of HK$0.10 per Offer Share represents:

(i) a discount of approximately 83.33% to the adjusted closing price of HK$0.60 per Adjusted Share, based on the closing price of HK$0.024 per Share as quoted on the Stock Exchange on the Last Trading Day and adjusted for the effect of the Capital Reorganisation;
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LETTER FROM NUADA

(ii) a discount of approximately 83.05% to the adjusted average closing price of HK$0.59 per Adjusted Share, based in the average closing price of HK$0.0236 per Share as quoted in the Stock Exchange for the last five trading days up to and including the Last Trading Day and adjusted for the effect of the Capital Reorganisation;
(iii) a discount of approximately 33.33% to the theoretical ex-entitlement price of HK$0.15 per Adjusted Share after the Open Offer and the Bonus Issue, based on the closing price of HK$0.024 per Share as quoted on the Stock Exchange on the Last Trading Day and adjusted for the effect of the Capital Reorganisation;
(iv) a discount of approximately 78.95% to the adjusted closing price of HK$0.475 per Adjusted Share, based on the closing price of HK$0.019 per Share as quoted in the Stock Exchange on the Latest Practicable Date and adjusted for the effect of the Capital Reorganisation; and
(v) a discount of approximately 97.36% to the unaudited net asset value per Adjusted Share of approximately HK$3.78 as at 30 September 2008 and adjusted for the effect of the Capital Reorganisation.

As stated in the Board’s Letter, the Subscription Price was arrived at after arm’s length negotiation between the Company and the Underwriters with reference to the market price of the Shares and the prevailing market conditions. The Directors consider that the discount would encourage Shareholders to participate in the Open Offer and accordingly maintain their shareholdings in the Company and participate in the future growth of the Group. In addition, the Bonus Issue will be as additional incentive for the Shareholders to take part in the Open Offer.

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LETTER FROM NUADA

Historical Share price performance

The graph below illustrates the closing price level of the Adjusted Shares (as adjusted for the effect of the Capital Reorganisation) during the period from 11 February 2008 to 10 February 2009 (being the 12-month period prior to the Last Trading Day) (the “ Review Period ”):

==> picture [351 x 291] intentionally omitted <==

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

3.500
3.000
2.500
2.000
1.500
1.000
0.500
0.000
Share Price Subscription Price
Data source: Website of the Stock Exchange (www.hkex.com.hk).
11/2/2008 11/3/2008 11/4/2008 11/5/2008 11/6/2008 11/7/2008 11/8/2008 11/9/2008 11/10/2008 11/11/2008 11/12/2008 11/1/2009 10/2/2009
----- End of picture text -----

Note: Trading of the Shares was suspended on 27 November 2008.

During the Review Period, the adjusted closing price of the Shares ranged from the lowest of HK$0.525 per Adjusted Share (based on the closing price of HK$0.021 per Share as quoted on the Stock Exchange and adjusted for the effect of the Capital Reorganisation) on 28 October 2008 to the highest of HK$3.300 per Adjusted Share (based on the closing price of HK$0.132 per Share as quoted on the Stock Exchange and adjusted for the effect of the Capital Reorganisation) on 20 February 2008. We note that the closing price of the Shares had followed a general downward trend during the review period. We note that the Subscription Price represents discounts to the closing prices of the Adjusted Shares during the Review Period. The Subscription Price also represent a discount of 78.95% to the adjusted closing price of HK$0.475 per Adjusted Share (based on the closing price of HK$0.019 per Shares as quoted on the Stock Exchange and adjusted for the effect of the Capital Reorganisation) on the Latest Practicable Date.

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LETTER FROM NUADA

Liquidity of the Shares

The average daily trading volume of the Adjusted Shares (as adjusted for the effect of the Capital Reorganisation) and its percentage to the total number of issued Adjusted Shares for each of the months during the Review Period are set out below:

Historical trading volume of the Adjusted Shares

		Percentage to
	Average daily	the total
	trading volume	number of
	(Adjusted Shares)	issued Adjusted
	Approximately	*Shares(Note 1)***
		(%)
2008
February (from 11 February onwards)	14,901,832	3.946
March	10,058,450	2.664
April	14,567,756	3.858
May	10,870,617	2.879
June	3,107,232	0.823
July	3,652,533	0.967
August	1,702,747	0.451
September	1,396,210	0.370
October	1,124,123	0.298
November	2,769,408	0.733
December	9,164,481	2.427
2009
January	6,953,865	1.841
February (up to the Last Trading Day)	1,694,813	0.449

Data source: the website of the Stock Exchange (www.hkex.com.hk)

Notes:

Based on 377,620,545 Adjusted Shares in issue as at the Last Trading Day, as adjusted for the effect of the Capital Reorganisation.
Trading of the Shares was suspended on 27 November 2008.

As illustrated in the table above, the trading volume of the Adjusted Shares during the Review Period is significantly low relative to the Company’s total issued Adjusted Shares as at the Last Trading Day with the highest average daily trading volume amounted to 14,901,832 Adjusted Shares recorded in February 2008 (from 11 February onwards), representing approximately 3.946% of the total number of issued Adjusted Shares in issue as at the Last Trading Day.

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LETTER FROM NUADA

Based on the historical Share price performance and low liquidity of the Shares as illustrated above, we consider that the Open Offer may be less attractive to the Independent Shareholders without offering a substantial discount of the Subscription Price to the market trading price of the Shares and the Bonus Issue would provide more incentives for the Independent Shareholders to participate in the Open Offer.

Comparison with other open offers

In order to assess the fairness and reasonableness of the Subscription Price and the absence of the arrangement for application for excess Offer Shares pursuant to the Open Offer, we identified from the website of the Stock Exchange, and reviewed for reference purpose, the open offers (the “ Comparables ”) conducted by other listed issuers in the Stock Exchange from 11 November 2008 to 10 February 2009, being the three calendar months prior to the Last Trading Day. The key terms of the Comparables are set out in the following table:

						Premium/
					Premium/	(discount) of
					(discount) of	subscription
					subscription	prices over/to
					prices over/to	theoretical
					share closing	ex-entitlement
					prices as at	price as at
					the last	the last
					trading day	trading day
					prior to	prior to
Date of	Company	Subscription	Basis of	Excess	release of the	release of the	Underwriting
announcement	(stock code)	price	entitlement	application	announcement	announcement	commission
					%	%	%
(2009)
5 February	Garron International	HK$0.238	2 offer shares for	Not provided	(20.67 )	(8 )	0
	Limited (1226)		1 shares held	(Note 1)
21 January	Hembly International	HK$0.30	1 offer share for	Not provided	(13.00 )	(9.1 )	2.5
	Holdings Limited		2 shares held
	(3989)
20 January	Global Green Tech	HK$0.25	12 offer shares for	Provided	(31.5 )	(23.8 )	3.5
	Group Limited (274)		25 shares held
15 January	Royale Furniture	HK$0.27	1 offer share for	Not provided	(20.6 )	(14.8 )	2.5
	Holdings Limited		two shares held
	(1198)
7 January	Hanny Holdings	HK$0.35	3 offer shares for	Provided	(70.29 )	(32.51 )	2.5
	Limited (275)		1 share held
(2008)
30 December	Hua Xia Healthcare	HK$0.05	1 offer share for	Not provided	(69.07 )	(47.15 )	2.75
	Holdings Limited		2 shares held
	(8143)

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LETTER FROM NUADA

						Premium/
					Premium/	discount of
					(discount) of	subscription
					subscription	prices over/to
					prices over/to	theoretical
					share closing	ex-entitlement
					prices as at	price as at
					the last	the last
					trading day	trading day
					prior to	prior to
Date of	Company	Subscription	Basis of	Excess	release of the	release of the	Underwriting
Announcement	(stock code)	price	entitlement	application	announcement	announcement	commission
					%	%	%
10 December	China Overseas Land &	HK$8.0	1 offer share for	Provided	(34 )	(33 )	2.5
	Investment Ltd. (688)		25 shares held
10 December	Solartech International	HK0.027	4 offer shares for	Not provided	(51 )	(17 )	2.5
	Holdings Limited		1 share held	(Note)
	(1166)
8 December	China Star Entertainment	HK$0.05	2 offer shares for	Provided	(60 )	100	N/A
	Limited (326)		1 share held
4 December	Brilliant Arts Multi-	HK$0.04	9 offer shares for	Provided	(87.3 )	(40.74 )	N/A
	Media Holdings		1 share held
	Limited (8130)		for 2
28 November	Golife Concepts	HK$0.0751	2 offer shares for	Provided	(18.03 )	(4.92 )	1
	Holdings Limited		5 shares held
	(8172)
19 November	China Botanic	HK$0.08	1 offer shares for	Provided	(15.79 )	(11.11 )	0
	Development		2 shares held
	Holdings Limited
	(2349)
18 November	Dore Holdings	HK$1.00	1 offer share for	Provided	104	52	2
	Limited (628)		2 shares held
		Max			104	100	3.5
		Min			(87.3 )	(47.15 )	0
13 February 2009	the Company			Not Provided	(83.33 )	(33.33 )	2.5

Note: Such Comparables were underwritten by a connected person (as defined under the Listing Rules).

40 -

LETTER FROM NUADA

As noted from the table above, save for one Comparable the subscription price of which represented a premium over the share closing price prior to the release of the relevant announcement and the relevant theoretical ex-entitlement price, the subscription prices of the Comparables were all at discounts to their respective share closing price prior to release of the relevant announcements ranging from approximately 13.00% to 87.3%, and discounts to their respective theoretical ex-entitlement price ranging from a premium of approximately 8.00% to a discount of approximately 47.15%. We note that the discount represented by the Subscription Price to the closing price of the Adjusted Shares as at the Last Trading Day of approximately 83.33% and to the theoretical ex-entitlement price of approximately 33.33% fall within the range of discounts of the Comparables.

Taking into account (a) the weakening share price performance of the Shares on prevailing market condition; (b) the significantly low liquidity of the trading in the Shares; (c) the discount of the Subscription Price to the prevailing market prices of the Adjusted Shares and the Bonus Issue are offered to encourage the Qualifying Shareholders to participant in the Open Offer; (d) the discounts represented by the Subscription Price to the closing price of the Adjusted Shares as at the Last Trading Day and to the relevant theoretical ex-entitlement price falls within the range of discounts of the Comparables as detailed above; we are of the view that the Subscription Price is fair and reasonable.

Absence of arrangement for application for excess Offer Shares

As each Qualifying Shareholder will be given equal and fair opportunities to participate in the Company’s future development by subscribing for his/her/its entitlements under the Open Offer, the Company decided not to provide arrangement for application for excess Offer Shares (with Bonus Shares) by the Qualifying Shareholders in order to lower the administrative cost. Any Offer Shares (with Bonus Shares) not taken up by the Qualifying Shareholders (exclude those to be taken up by Mr. Tang, Accord Power and their respective associates pursuant to the Irrevocable Undertaking) will be underwritten by the Underwriters. As advised by the Company, as the Subscription Price is determined in such a way that is reasonably attractive to encourage all Shareholders to take up their assured entitlements, it is expected that the Underwriters will only be obliged to subscribe or procure subscription for minimal Underwritten Shares not taken up by the Qualifying Shareholders, the Company consider that the absence of excess application can alleviate the administrative burden and avoid incurring additional costs by the Company for the arrangement of excess application.

As stated in the Board’s Letter, Accord Power, is an investment holding company wholly owned by Trustcorp Limited in its capacity as the trustee of Tang’s Family Trust, a discretionary trust of which Mr. Tang was the founder and Ms. Yau Yuk Yin, an executive Director and the spouse of Mr. Tang is a beneficiary, and therefore, Accord Power is a connected person of the Company (as defined in the Listing Rules). As advised by the Company, given the prevailing volatile condition of the financial market, they were not able to source independent third parties to underwrite the Open Offer Shares in full on terms that are more acceptable to the Company.

41 -

LETTER FROM NUADA

As illustrated in the table which sets out terms of the Comparables in the paragraph headed “Comparison with other open offers” above, 5 out of the 13 Comparables did not provide arrangement for application for excess offer shares. We also note that 2 out of the 5 Comparables without arrangement for excess application were unwritten by connected persons (as defined under the Listing Rules). As such, we consider that the absence of arrangement for application for excess offer shares under open offers with discounts and unwritten by connected persons are not uncommon in the market. Taking into account (i) the Subscription Price is determined in such a way that is reasonably attractive to encourage all Shareholders to take up their assured entitlements; (ii) the arrangement can alleviate the administrative burden and avoid incurring additional costs; (iii) the Qualifying Shareholders will be given equal and fair opportunities to subscribe for their respective entitlements under the Open Offer so as to maintain their proportionate interests in the Company if they wish to do so; (iv) the Company was not able to source independent third parties to underwrite the Offer Shares in full on terms that are more acceptable to the Company; and (v) the absence of arrangement for application for excess offer shares under open offers with discounts and underwritten by connected persons are not uncommon in the market, we consider that the absence of arrangement for application for excess Offers Shares under the terms of the Open Offer is fair and reasonable.

Nevertheless, we wish to draw the attention of Independent Shareholders that their shareholdings will be diluted upon completion of the Open Offer if they opt not to take up their entitlements in the Open Offer.

Alternative to the Open Offer

We are advised that the Company have considered alternative means for the Group to raise funds other than the Open Offer, including but not limited to, placing of new Shares, rights issue and debt financing. By placing of new Shares, the existing Shareholders will not able to participate in the enlargement of the capital base of the Company and at the same time allow them to maintain their proportionate interests in the Company and result in a dilution of existing Shareholders’ interest. It is more appropriate means if the Shareholders should be at liberty to take up their entitlements.

The Directors also consider that debt financing is not the optimal approach to raise funds in the market as it will incur additional financing cost on the Group, affect gearing ratio of the Group and may subject to lengthy due diligence and negotiations with banks. The Company has also considered the possibility of fund raising by way of rights issue as an alternative to the Open Offer. But, unlike the Open Offer, a rights issue may not be implemented in a timely manner and is less cost effective given that there will be trading in nil-paid rights during the offer period. As such, the Open Offer is considered to be an equitable means to raise funds for the Company.

Potential dilution effect on the shareholding interests of the Independent Shareholders

All Qualifying Shareholders are entitled to subscribe for the Offer Shares (with Bonus Shares). For those Qualifying Shareholders who take up their entitlements in full under the Open Offer and the Bonus Issue, their shareholding interests in the Company will remain unchanged

42 -

LETTER FROM NUADA

upon completion of the Open Offer and the Bonus Issue. For those Qualifying Shareholders who opt not to take up their entitlements in full under the Open Offer, depending on the extent to which they take up their entitlements, their shareholding interests will be diluted. For illustration purpose, assuming no Qualifying Shareholders (except Mr. Tang, Accord Power and their respective associates) take up their entitlements under the Open Offer, the aggregate shareholdings of the existing public Shareholders in the Company will be diluted from 89.35% to 14.89% (assuming no exercise of the outstanding Share Options before the Record Date), and from 85.73% to 14.29% (assuming exercise of the outstanding Shares Options in full before the Record Date.

Financial effects of the Open Offer and the Bonus Issue

With reference to the unaudited pro forma financial information of the Group set out in Appendix II to the Circular, the Group had net tangible assets of approximately HK$1,190.9 million as at 30 September 2008. Assuming the Open Offer with the Bonus Issue had been completed as at 30 September 2008, the net tangible assets, the cash and bank balance and the working capital of the Group would increase by not less than approximately HK$108.2 million and not more than approximately HK$112.9 million, being the net proceeds from the Open Offer. However, Independent Shareholders should note that the effect of the Open Offer and the Bonus Issue on the future financial position of the Group will not be reflected until the actual results are published in the future.

RECOMMENDATION

Taking into consideration principal factors and reasons considered above, we consider that the Open Offer and the Bonus Issue are fair and reasonable and in the interests of the Company and the Shareholders and the Company as a whole. Accordingly, we advise the Independent Board Committee to recommend the Independent Shareholders and the Independent Shareholders to vote in favour of the relevant resolutions to approve the Open Offer and the Bonus Issue at the SGM.

Yours faithfully, For and on behalf of Nuada Limited Po Chan Executive Director

43 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

FINANCIAL SUMMARy

1. THREE-yEAR FINANCIAL SUMMARy

The following is a summary of the audited consolidated financial results of the Group for each of the three years ended 31 March 2008 as extracted from the relevant annual reports of the Company.

RESULTS

Revenue
Gross profit
Profit before tax
Tax
Profit for the year
Attributable to:
Equity holders of the parent
Minority interests
Dividends
Additional final dividend for 2006
Interim
Proposed final
Earnings per share attributable
to ordinary equity holders
of the parent
Basic
Diluted
Assets and liabilities
Non-current assets
Current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Equity
Equity attributable to equity
holders of the parent
Minority interests

For the year ended 31 March
2008
2007
2006
HK$’000
HK$’000
HK$’000
545,882
499,488
395,557
161,325
118,997
82,056
122,577
96,432
82,063
(25,963 )
(13,254 )
(9,480)
96,089
83,170
72,554
525
8
29
96,614
83,178
72,583
–
126
4,608
10,319
7,073
6,736
7,868
19,540
15,718
18,187
26,739
27,062
HK1.55 cents HK1.76 cents HK1.56 cents
HK1.43 cents HK1.58 cents HK1.49 cents
As at 31 March
1,291,413
951,043
932,375
740,561
783,171
564,949
2,031,974
1,734,214
1,497,324
582,055
531,899
400,035
209,704
160,009
257,116
791,759
691,908
657,151
1,182,569
1,041,834
839,709
57,646
472
464
1,240,215
1,042,306
840,173

I - 1 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

2. AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR THE TwO yEARS ENDED 31 MARCH 2008

Set out below are the audited consolidated financial statements of the Group for the two years ended 31 March 2008 which are published in the Company’s annual report 2008:

Consolidated Income Statement

Year ended 31 March 2008

Notes REVENUE 5 Cost of sales Gross profit Other income and gains 5 Selling and distribution costs Administrative expenses Other expenses Finance costs 7 Gain on disposal of subsidiaries Fair value gains on revaluation of investment properties, net 16 Share of profits and losses of associates PROFIT BEFORE TAX 6 Tax 10 PROFIT FOR THE yEAR Attributable to: Equity holders of the parent 11 Minority interests DIVIDENDS 12 Additional final dividend for 2006 Interim Proposed final EARNINGS PER SHARE ATTRIBUTABLE TO ORDINARy EQUITy HOLDERS OF THE PARENT 13 Basic Diluted	2008 HK$’000 545,882 (384,557 ) 161,325 97,329 (10,548 ) (104,427 ) (45,222 ) (14,906 ) – 11,383 27,643 122,577 (25,963 ) 96,614 96,089 525 96,614 – 10,319 7,868 18,187 HK1.55 cents HK1.43 cents	2007 HK$’000 499,488 (380,491 ) 118,997 37,639 (12,536 ) (70,684 ) (1,806 ) (13,828 ) 2,524 31,548 4,578 96,432 (13,254 ) 83,178 83,170 8 83,178 126 7,073 19,540 26,739 HK1.76 cents HK1.58 cents

I - 2 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Consolidated Balance Sheet

31 March 2008

Notes NON-CURRENT ASSETS Property, plant and equipment 14 Prepaid land lease payments 15 Investment properties 16 Properties under development 17 Goodwill 18 Interests in associates 20 Held-to-maturity financial asset 22 Other intangible asset 23 Loans receivable 26 Rental deposits paid 26 Deposits for the acquisition of investment properties and associates Deferred tax assets 35 Total non-current assets CURRENT ASSETS Properties held for sale 24 Properties under development 17 Trade receivables 25 Prepayments, deposits and other receivables 26 Financial assets at fair value through profit or loss 27 Tax recoverable Pledged deposits 28 Cash and cash equivalents 28 Total current assets CURRENT LIABILITIES Trade payables 29 Other payables and accruals 30 Deposits received and receipts in advance Derivative financial instruments 31 Interest-bearing bank loans 32 Provisions for onerous contracts 33 Tax payable Total current liabilities NET CURRENT ASSETS TOTAL ASSETS LESS CURRENT LIABILITIES	2008 HK$’000 160,884 177,902 555,199 – 7,820 305,825 1,943 24,240 12,989 4,595 35,674 4,342 1,291,413 27,885 288,405 4,101 43,190 45,278 883 – 330,819 740,561 24,624 128,423 50,038 2,338 347,115 1,690 27,827 582,055 158,506 1,449,919	2007 HK$’000 11,985 – 315,143 247,869 2,319 321,364 – 30,300 13,987 5,343 – 2,733
		951,043
		1,455 222,811 6,596 38,958 46,767 – 78,000 388,584
		783,171
		23,246 21,095 81,888 – 389,425 369 15,876
		531,899
		251,272
		1,202,315

I - 3 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes NON-CURRENT LIABILITIES Interest-bearing bank loans 32 Provisions for onerous contracts 33 Convertible notes 34 Deferred tax liabilities 35 Total non-current liabilities Net assets EQUITy Equity attributable to equity holders of the parent Issued capital 36 Equity component of convertible notes 34 Reserves 38(a) Proposed final dividend 12 Minority interests Total equity	2008 HK$’000 199,118 1,960 – 8,626 209,704 1,240,215 32,051 – 1,142,650 7,868 1,182,569 57,646 1,240,215	2007 HK$’000 108,799 – 45,756 5,454
		160,009
		1,042,306
		29,418 5,653 987,223 19,540
		1,041,834
		472
		1,042,306

I - 4 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Consolidated Statement of Changes in Equity

Year ended 31 March 2008

			Att	ributable to	equity holde	rs of the parent	rs of the parent				Minority interests HK$’000 464 –	Total equity HK$’000 840,173 (15,844 )
Issued share capital HK$’000 22,454 –	Share premium account HK$’000 422,291 –	Contributed surplus HK$’000 106,329 –	Equity component of convertible notes HK$’000 6,077 –	Share option reserve HK$’000 – –	Exchange fluctuation reserve HK$’000 – –	warrant reserve HK$’000 – –	Other reserve HK$’000 – –	Retained profits HK$’000 266,840 (126 )	Proposed final dividend HK$’000 15,718 (15,718 )	Total HK$’000 839,709 (15,844 )
22,454 – –	422,291 – –	106,329 – –	6,077 – –	– – –	– 378 –	– – –	– – –	266,714 – 83,170	– – –	823,865 378 83,170	464 – 8	824,329 378 83,178
– 180 2,264 (1,930 ) 6,450 – – – –	– 3,822 (2,264 ) (43,087 ) 174,150 (5,300 ) – – –	– – – – – – – – –	– (424 ) – – – – – – –	– – – – – – 7,633 – –	378 – – – – – – – –	– – – – – – – – –	– – – – – – – – –	83,170 – – – – – – (7,073 ) (19,540 )	– – – – – – – – 19,540	83,548 3,578 – (45,017 ) 180,600 (5,300 ) 7,633 (7,073 ) –	8 – – – – – - – –	83,556 3,578 – (45,017 ) 180,600 (5,300 ) 7,633 (7,073 ) –
29,418 –	549,612 * –	106,329 * –	5,653 –	7,633 * –	378 * –	– –	– –	323,271 * –	19,540 (19,540 )	1,041,834 (19,540 )	472 –	1,042,306 (19,540 )
29,418 – –	549,612 – –	106,329 – –	5,653 – –	7,633 – –	378 22,789 –	– – –	– – –	323,271 – 96,089	– – –	1,022,294 22,789 96,089	472 4,056 525	1,022,766 26,845 96,614
– 2,640 896 (903 ) – – – – – – – –	– 49,712 7,798 (20,603 ) – – – – (160 ) – – –	– – – – – – – – – – – –	– (5,653 ) – – – – – – – – – –	– – – – – – – – – 64 – –	22,789 – – – – – – – – – – –	– – – – – – – 4,500 – – – –	– – – – 13,425 – – – – – – –	96,089 – – – – – – – – – (10,319 ) (7,868 )	– – – – – – – – – – – 7,868	118,878 46,699 8,694 (21,506 ) 13,425 – – 4,500 (160 ) 64 (10,319 ) –	4,581 – – – – 24,402 28,191 – – – – –	123,459 46,699 8,694 (21,506 ) 13,425 24,402 28,191 4,500 (160 ) 64 (10,319 ) –
32,051	586,359 *	106,329 *	–	7,697 *	23,167 *	4,500 *	13,425 *	401,173 *	7,868	1,182,569	57,646	1,240,215

These reserve accounts comprise the consolidated reserves of HK$1,142,650,000 (2007: HK$987,223,000) in the consolidated balance sheet.
I - 5 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Consolidated Cash Flow Statement

Year ended 31 March 2008

Notes CASH FLOwS FROM OPERATING ACTIVITIES Profit before tax Adjustments for: Finance costs 7 Share of profits and losses of associates Fair value losses/(gains), net: Financial assets at fair value through profit or loss 5, 6 Derivative financial instruments 6 Interest income from unlisted investments 5 Interest income from loans receivable 5 Bank interest income 5 Dividend income from listed securities 5 Gain on disposal a land use right 5 Gain on disposal of subsidiaries 39(c) Recognition of a deferred gain 5 Gain on disposal of financial assets at fair value through profit or loss, net 5 Gain on disposal of investment properties 5 Loss on partial/deemed disposal of an associate 6 Impairment of trade receivables 6 Depreciation 6 Amortisation of other intangible asset 6 Amortisation of prepaid land lease payments 6 Amount provided/(released) for onerous contracts, net 6 Loss/(gain) on disposal and write-off of items of property, plant and equipment 6 Impairment of a land use right 5 6 Impairment of goodwill 6 Impairment of other receivables 6 Reversal of impairment on trade receivables 25 Written off of trade receivables 25 Fair value gains on revaluation of investment properties, net 16 Equity-settled share option expense 6 Decrease in inventories Decrease in properties held for sale Increase in properties under development Decrease in trade receivables, prepayments, deposits and other receivables Increase in trade payables Increase/(decrease) in other payables and accruals Decrease in deposits received and receipts in advance Cash generated from operations Profits tax paid Net cash inflow from operating activities	2008 HK$’000 122,577 14,906 (27,643 ) 6,663 2,338 (1,195 ) (1,046 ) (8,189 ) (404 ) (62,969 ) – (799 ) (11,522 ) – 4,855 – 7,850 6,060 712 3,281 51 9,700 11,558 70 (244 ) (216 ) (11,383 ) 64 65,075 – 211,504 (48,354 ) 9,723 1,378 75,032 (31,876 ) 282,482 (13,332 ) 269,150	2007 HK$’000 96,432 13,828 (4,578 ) (489 ) – (2,436 ) (1,376 ) (7,116 ) (267 ) – (2,524 ) (3,769 ) (4,120 ) (8,000 ) – 467 5,158 – – (1,566 ) (163 ) – – – – – (31,548 ) 7,633 55,566 55 129,189 (166,638 ) 25,075 23,136 (13,774 ) (2,091 ) 50,518 (3,896 ) 46,622

I - 6 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes Net cash inflow from operating activities CASH FLOwS FROM INVESTING ACTIVITIES Interest received Dividend income from listed securities Interest income from unlisted investments Increase in amounts due from associates Increase/(decrease) in amounts due to associates Acquisition of a subsidiary 39(b) Acquisition of a jointly-controlled entity 21 Investment in an associate Proceeds from disposal of a land use right Proceeds from disposal of subsidiaries 39(c) Purchases of investment properties Purchases of property, plant and equipment Purchases of held-to-maturity financial asset Purchases of financial assets at fair value through profit or loss Proceeds from disposal of investment properties Proceeds from disposal of items of property, plant and equipment Receipt of government grant Prepayment of land lease payments Proceeds from disposal of financial assets at fair value through profit or loss Proceeds from partial disposal of an associate Addition to other intangible asset Deposits paid for the acquisition of investment properties and associates Decrease/(increase) in pledged deposits Net cash outflow from investing activities	2008 HK$’000 269,150 9,295 404 1,195 (2,099 ) (81 ) 3,044 (12,285 ) (43,756 ) 240,000 – (201,113 ) (147,034 ) (1,943 ) (83,942 ) – 1,939 2,217 (345,929 ) 90,290 96,050 – (35,674 ) 78,000 (351,422 )	2007 HK$’000 46,622 7,907 267 2,436 – 814 – (64,560 ) – – 16,830 (18,642 ) (3,949 ) – (51,556 ) 93,600 1,052 – – 80,213 – (30,300 ) – (64,029 ) (29,917 )

I - 7 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes Net cash outflow from investing activities CASH FLOwS FROM FINANCING ACTIVITIES Interest paid Dividends paid Proceeds from issue of shares upon exercise of share options 36 Proceeds from placements of shares 36 Proceeds from issue of warrants 36 Capital contribution from a minority shareholder of a subsidiary Share issue expenses 36 Repurchases of shares 36 Repayment of bank loans New bank loans Net cash inflow from financing activities NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS Cash and cash equivalents at beginning of year Effect of foreign exchange rate changes, net CASH AND CASH EQUIVALENTS AT END OF yEAR ANALySIS OF BALANCES OF CASH AND CASH EQUIVALENTS Cash and bank balances 28 Non-pledged time deposits with original maturity of less than three months when acquired 28	2008 HK$’000 (351,422 ) (22,339 ) (29,859 ) 8,694 – 4,500 28,191 (160 ) (21,506 ) (380,760 ) 428,769 15,530 (66,742 ) 388,584 8,977 330,819 81,307 249,512 330,819	2007 HK$’000 (29,917 ) (20,798 ) (22,917 ) – 180,600 – – (5,300 ) (45,017 ) (385,804 ) 373,500 74,264 90,969 297,902 (287 ) 388,584 135,757 252,827 388,584

I - 8 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Balance Sheet

31 March 2008

Notes NON-CURRENT ASSETS Interests in subsidiaries 19 Interests in associates 20 Held-to-maturity financial asset 22 Total non-current assets CURRENT ASSETS Prepayments, deposits and other receivables 26 Financial assets at fair value through profit or loss 27 Pledged deposits 28 Cash and cash equivalents 28 Total current assets CURRENT LIABILITIES Other payables and accruals 30 Interest-bearing bank loans 32 Total current liabilities NET CURRENT ASSETS TOTAL ASSETS LESS CURRENT LIABILITIES NON-CURRENT LIABILITIES Interest-bearing bank loans 32 Convertible notes 34 Total non-current liabilities Net assets EQUITy Issued capital 36 Equity component of convertible notes 34 Reserves 38(b) Total equity	2008 HK$’000 1,191,421 2,089 1,943 1,195,453 980 14,471 – 224,347 239,798 69,644 133,275 202,919 36,879 1,232,332 117,975 – 117,975 1,114,357 32,051 – 1,082,306 1,114,357	2007 HK$’000 710,622 192 –
		710,814
		758 36,927 78,000 312,484
		428,169
		739 137,000
		137,739
		290,430
		1,001,244
		29,750 45,756
		75,506
		925,738
		29,418 5,653 890,667
		925,738

I - 9 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

NOTES TO FINANCIAL STATEMENTS

1. CORPORATE INFORMATION

Wang On Group Limited (the “Company”) is a limited liability company incorporated in Bermuda, and both its head office and principal place of business is located at 5th Floor, Wai Yuen Tong Medicine Building, 9 Wang Kwong Road, Kowloon Bay, Kowloon, Hong Kong.

During the year, the Company, its subsidiaries and its jointly-controlled entities (collectively referred to as the “Group”) were involved in the following principal activities:

property development
property investment
management and sub-licensing of Chinese wet markets, shopping centres and car parks
operations and management of agricultural by-products wholesale markets

2.1 BASIS OF PREPARATION

These financial statements have been prepared in accordance with Hong Kong Financial Reporting Standards (“HKFRSs”) (which include all Hong Kong Financial Reporting Standards, Hong Kong Accounting Standards (“HKASs”) and Interpretations) issued by the Hong Kong Institute of Certified Public Accountants (the “HKICPA”), 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 investment properties, certain derivative financial instruments and equity investments, which have been measured at fair value. These financial statements are presented in Hong Kong dollars (“HK$”) and all values are rounded to the nearest thousand except when otherwise indicated.

Basis of consolidation

The consolidated financial statements include the financial statements of the Company, its subsidiaries and its jointly-controlled entities for the year ended 31 March 2008. Adjustments are made to bring into line any dissimilar accounting policies that may exist. The results of subsidiaries are consolidated from the date of acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date such control ceases. The assets, liabilities, income and expenses of jointly-controlled entities are proportionally consolidated from the date on which joint control is established and obtained by the Group, and continue to be proportionally consolidated until the date such joint control ceases. All significant intercompany transactions and balances within the Group are eliminated on consolidation.

The acquisition of a subsidiary during the year has been accounted for using the purchase method of accounting. This method involves allocating the cost of the business combinations to the fair value of the identifiable assets acquired, and liabilities and contingent liabilities assumed at the date of acquisition. The cost of the acquisition is measured at the aggregate of the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition.

Minority interests represent the interests of outside shareholders not held by the Group in the results and net assets of the Company’s subsidiaries.

2.2 IMPACT OF NEw AND REVISED HKFRSs

The Group has adopted the following new and revised HKFRSs for the first time for the current year’s financial statements. Except for in certain cases, giving rise to new and revised accounting policies and additional disclosures, the adoption of these new and revised standards and interpretations has had no material effect on these financial statements.

I - 10 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

HKFRS 7 Financial Instruments: Disclosures HKAS 1 Amendment Capital Disclosures HK(IFRIC)-Int 8 Scope of HKFRS 2 HK(IFRIC)-Int 9 Reassessment of Embedded Derivatives HK(IFRIC)-Int 10 Interim Financial Reporting and Impairment HK(IFRIC)-Int 11 HKFRS 2 – Group and Treasury Share Transactions

The principal effects of adopting these new and revised HKFRSs are as follows:

(a) HKFRS 7 Financial Instruments: Disclosures

This standard requires disclosures that enable users of the financial statements to evaluate the significance of the Group’s financial instruments and the nature and extent of risks arising from those financial instruments. The new disclosures are included throughout the financial statements. While there has been no effect on the financial position or results of operations of the Group, comparative information has been included/revised where appropriate.

(b) Amendment to HKAS 1 Presentation of Financial Statements – Capital Disclosures

This amendment requires the Group to make disclosures that enable users of the financial statements to evaluate the Group’s objectives, policies and processes for managing capital. These new disclosures are shown in note 44 to the financial statements.

(c) HK(IFRIC)-Int 8 Scope of HKFRS 2

This interpretation requires HKFRS 2 to be applied to any arrangement in which the Group cannot identify specifically some or all of the goods or services received, for which equity instruments are granted or liabilities (based on a value of the Group’s equity instruments) are incurred by the Group for a consideration, and which appears to be less than the fair value of the equity instruments granted or liabilities incurred. As the Company has only issued equity instruments to the Group’s employees in accordance with the Group’s share option scheme, the interpretation has had no effect on these financial statements.

(d) HK(IFRIC)-Int 9 Reassessment of Embedded Derivatives

This interpretation requires that the date to assess whether an embedded derivative is required to be separated from the host contract and accounted for as a derivative is the date that the Group first becomes a party to the contract, with reassessment only if there is a change to the contract that significantly modifies the cash flows. As the Group’s existing policy of accounting for derivatives complies with the requirements of the interpretation, the interpretation has had no material impact on the financial position or results of operations of the Group.

(e) HK(IFRIC)-Int 10 Interim Financial Reporting and Impairment

The Group has adopted this interpretation as of 1 April 2007, which requires that an impairment loss recognised in a previous interim period in respect of goodwill or an investment in either an equity instrument classified as available for sale or a financial asset carried at cost is not subsequently reversed. As the Group had no impairment losses previously reversed in respect of such assets, the interpretation has had no impact on the financial position or results of operations of the Group.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

(f) HK(IFRIC)-Int 11 HKFRS 2 – Group and Treasury Share Transactions

This interpretation requires arrangements whereby an employee is granted rights to the Group’s equity instruments, to be accounted for as an equity-settled scheme, even if the Group acquires the instruments from another party, or the shareholders provide the equity instruments needed. This interpretation also addresses the accounting for share-based payment transactions involving two or more entities within the Group. As the Group’s current policy for share-based payment transactions aligns with the requirements of the interpretation, the interpretation has had no effect on these financial statements.

2.3 IMPACT OF ISSUED BUT NOT yET EFFECTIVE HKFRSs

The Group has not applied the following new and revised HKFRSs, that have been issued but are not yet effective, in these financial statements,

HKFRS 2 Amendments Share-based Payment – Vesting Conditions and Cancellations[1] HKFRS 3 (Revised) Business Combinations[4] HKFRS 8 Operating Segments[1] HKAS 1 (Revised) Presentation of Financial Statements[1] HKAS 23 (Revised) Borrowing Costs[1] HKAS 27 (Revised) Consolidated and Separate Financial Statements[4] HKAS 32 and HKAS 1 Puttable Financial Instruments and Obligations Arising on Amendments Liquidation[1] HK(IFRIC)-Int 12 Service Concession Arrangements[3] HK(IFRIC)-Int 13 Customer Loyalty Programmes[2] HK(IFRIC)-Int 14 HKAS 19 – The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction[3]

1 Effective for annual periods beginning on or after 1 January 2009
2 Effective for annual periods beginning on or after 1 July 2008 3 Effective for annual periods beginning on or after 1 January 2008 4 Effective for annual periods beginning on or after 1 July 2009

HKFRS 2 has been amended to restrict the definition of “vesting condition” to a condition that includes an explicit or implicit requirement to provide services. Any other conditions are non-vesting conditions, which have to be taken into account to determine the fair value of the equity instruments granted. In the case that the award does not vest as the result of a failure to meet a non-vesting condition that is within the control of either the entity or the counterparty, this must be accounted for as a cancellation. The Group has not entered into share-based payment schemes with non-vesting conditions attached and, therefore, does not expect significant implications on its accounting for share-based payments.

HKFRS 3 has been revised to introduce a number of changes in the accounting for business combinations that will have impact on the amount of goodwill recognised, the reported results in the period that an acquisition occurs, and future reported results.

HKAS 27 has been revised to require a change in the ownership interest of a subsidiary is accounted for as an equity transaction. Therefore, such a change will have no impact on goodwill, nor will it give rise to a gain or loss. Furthermore, the amended standard changes the accounting for losses incurred by the subsidiary as well as the loss of control of a subsidiary.

The changes introduced by HKFRS 3 (revised) and HKAS 27 (revised) must be applied prospectively and will affect future acquisitions and transactions with minority interests.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

HKFRS 8, which will replace HKAS 14 Segment Reporting , specifies how an entity should report information about its operating segments, based on information about the components of the entity that is available to the chief operating decision maker for the purposes of allocating resources to the segments and assessing their performance. The standard also requires the disclosure of information about the products and services provided by the segments, the geographical areas in which the Group operates, and revenue from the Group’s major customers. The Group expects to adopt HKFRS 8 from 1 April 2009.

HKAS 1 has been revised to introduce changes in presentation and disclosures of financial statements and does not change the recognition, measurement or disclosure of specific transactions and other events required by other HKFRSs.

HKAS 23 has been revised to require capitalisation of borrowing costs when such costs are directly attributable to the acquisition, construction or production of a qualifying asset. As the Group’s current policy for borrowing costs aligns with the requirements of the revised standard, the revised standard is unlikely to have any financial impact on the Group.

HKAS 32 and HKAS 1 Amendments have been revised to require puttable financial instruments and instruments or components of instruments that impose on the entity an obligation to deliver to another party a pro rata rate of the share of the net assets of the entity only on liquidation to be classified as equity. The Group expects to adopt HKAS 32 and HKAS 1 Amendments from 1 April 2009.

HK(IFRIC)-Int 12 requires an operator under public-to-private service concession arrangements to recognise the consideration received or receivable in exchange for the construction services as a financial asset and/or an intangible asset, based on the terms of the contractual arrangements. HK(IFRIC)-Int 12 also addresses how an operator shall apply existing HKFRSs to account for the obligations and the rights arising from service concession arrangements by which a government or a public sector entity grants a contract for the construction of infrastructure used to provide public services and/or for the supply of public services. As the Group currently has no such arrangements, the interpretation is unlikely to have any financial impact on the Group.

HK(IFRIC)-lnt 13 requires that loyalty award credits granted to customers as part of a sales transaction are accounted for as a separate component of the sales transaction. The consideration received in the sales transaction is allocated between the loyalty award credits and the other components of the sale. The amount allocated to the loyalty award credits is determined by reference to their fair value and is deferred until the awards are redeemed or the liability is otherwise extinguished.

HK(IFRIC)-lnt 14 addresses how to assess the limit under HKAS 19 Employee Benefits, on the amount of a refund or a reduction in future contributions in relation to a defined benefit scheme that can be recognised as an asset, in particular, when a minimum funding requirement exists.

As the Group currently has no customer loyalty award credits and defined benefit scheme, HK(IFRIC)-Int 13 and HK(IFRIC)-Int 14 are not applicable to the Group and therefore are unlikely to have any financial impact on the Group.

2.4 SUMMARy OF SIGNIFICANT ACCOUNTING POLICIES

Subsidiaries

A subsidiary is an entity 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 income statement to the extent of dividends received and receivable. The Company’s interests in subsidiaries are stated at cost less any impairment losses.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Joint ventures

A joint venture is an entity set up by contractual arrangement, whereby the Group and other parties undertake an economic activity. The joint venture operates as a separate entity in which the Group and the other parties have an interest.

The joint venture agreement between the venturers stipulates the capital contributions of the joint venture parties, the duration of the joint venture entity and the basis on which the assets are to be realised upon its dissolution. The profits and losses from the joint venture’s operations and any distributions of surplus assets are shared by the venturers, either in proportion to their respective capital contributions, or in accordance with the terms of the joint venture agreement.

A joint venture is treated as:

(a) a subsidiary, if the Group has unilateral control, directly or indirectly, over the joint venture;
(b) a jointly-controlled entity, if the Group does not have unilateral control, but has joint control, directly or indirectly, over the joint venture;
(c) an associate, if the Group does not have unilateral or joint control, but holds, directly or indirectly, generally not less than 20% of the joint venture’s registered capital and is in a position to exercise significant influence over the joint venture; or
(d) an equity investment accounted for in accordance with HKAS 39, if the Group holds, directly or indirectly, less than 20% of the joint venture’s registered capital and has neither joint control of, nor is in a position to exercise significant influence over, the joint venture.

Jointly-controlled entities

A joint-controlled entity is a joint venture that is subject to joint control, resulting in none of the participating parties having unilateral control over the economic activity of the jointly-controlled entity.

The Group’s interests in its jointly-controlled entities are accounted for by proportionate consolidation, which involves recognising its share of the jointly-controlled entities’ assets, liabilities, income and expenses with similar items in the consolidated financial statements on a line-by-line basis. Unrealised gains and losses resulting from transactions between the Group and its jointly-controlled entities are eliminated to the extent of the Group’s interests in the jointly-controlled entities, except where unrealised losses provide evidence of an impairment of the asset transferred.

Gain or loss arising from assets contributed or sold by the Group to its jointly-controlled entities recognised in the consolidated income statement to the extent that such gain or loss is attributable to the interests of other venturers when significant risks and rewards of ownership of the assets have been passed to the jointly-controlled entities and the assets are retained by the jointly-controlled entities.

Associates

An associate is an entity, 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.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

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. The Group’s share of the postacquisition results and reserves of associates is included in the consolidated income statement and consolidated reserves, respectively. Unrealised gains and losses resulting from transactions between the Group and its associates are eliminated to the extent of the Group’s interests in the associates, except where unrealised losses provide evidence of an impairment of the asset transferred. 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 income statement to the extent of dividends received and receivable. The Company’s interests in associates are treated as non-current 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.

Goodwill

Goodwill arising on the acquisition of subsidiaries, associates and a jointly-controlled entity represents the excess of the cost of the business combination over the Group’s interest in the net fair value of the acquirees’ identifiable assets acquired, and liabilities and contingent liabilities assumed as at the date of acquisition.

Goodwill arising on acquisition is recognised in the consolidated balance sheet as an asset, initially measured at cost and subsequently at cost less any accumulated impairment losses. In the case of associates and jointly-controlled entities, goodwill is included in the carrying amount thereof, rather than as a separately identified asset on the consolidated balance sheet.

The carrying amount of goodwill is reviewed for impairment annually or more frequently if events or changes in circumstances indicate that the carrying value may be impaired. The Group performs its annual impairment test of goodwill as at 31 March.

For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Group’s cash-generating units, or groups of cash-generating units, that are expected to benefit from the synergies of the combination, irrespective of whether other assets or liabilities of the Group are assigned to those units or groups of units.

Impairment is determined by assessing the recoverable amount of the cash-generating unit (group of cashgenerating units) to which the goodwill relates. Where the recoverable amount of the cash-generating unit (group of cash-generating units) is less than the carrying amount, an impairment loss is recognised. An impairment loss recognised for goodwill is not reversed in a subsequent period.

Where goodwill forms part of a cash-generating unit (group of cash-generating units) and part of the operation within that unit is 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 this circumstance is measured based on the relative values of the operation disposed of and the portion of the cash-generating unit retained.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Goodwill previously eliminated against consolidated reserves

Prior to the adoption the HKICPA’s Statement of Standard Accounting Practice 30 “Business Combinations” (“SSAP 30”) in 2001, goodwill arising on acquisition was eliminated against consolidated reserves in the year of acquisition. On the adoption of HKFRS 3, such goodwill remains eliminated against the consolidated reserves and is not recognised in the income statement when all or part of the business to which the goodwill relates is disposed of or when a cash-generating unit to which the goodwill relates becomes impaired.

Excess over the cost of business combinations

Any excess of the Group’s interest in the net fair value of the acquirees’ identifiable assets, liabilities and contingent liabilities over the cost of acquisition of subsidiaries and associates (previously referred to as negative goodwill), after reassessment, is recognised immediately in the income statement.

The excess for associates is included in the Group’s share of the associates’ profit or loss in the period in which the investments are acquired.

Impairment of non-financial assets other than goodwill

Where an indication of impairment exists, or when annual impairment testing for an asset is required (other than inventories, deferred tax assets, financial assets, investment properties, goodwill and non-current assets classified as held for sale), the asset’s recoverable amount is estimated. An asset’s recoverable amount is the higher of the asset’s or cash-generating unit’s value in use and its fair value less costs to sell, 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, in which case the recoverable amount is determined for the cash-generating unit to which the asset belongs.

An impairment loss is recognised only if the carrying amount of an asset exceeds its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. An impairment loss is charged to the income statement in the period in which it arises in those expense categories consistent with the function of the impaired asset, unless the asset is carried at a revalued amount, in which case the impairment loss is accounted for in accordance with the relevant accounting policy for that revalued asset.

An assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. If such indication exists, the recoverable amount is estimated. A previously recognised impairment loss of an asset other than goodwill and certain financial assets is reversed only if there has been a change in the estimates used to determine the recoverable amount of that asset, but 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 such impairment loss is credited to the income statement in the period in which it arises, unless the asset is carried at a revalued amount, in which case the reversal of the impairment loss is accounted for in accordance with the relevant accounting policy for that revalued asset.

Intangible assets (other than goodwill)

The useful lives of intangible assets are assessed to be either finite or indefinite. Intangible assets with finite lives are amortised over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method for an intangible asset with a finite useful life are reviewed at least at each balance sheet date.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Marketplace operating right

Purchased marketplace operating right is stated at cost less any impairment losses and is amortised on the straight-line basis over its estimated useful life of five years.

Related parties

A party is considered to be related to the Group if:

(a) the party, directly or indirectly through one or more intermediaries, (i) controls, is controlled by, or is under common control with, the Group; (ii) has an interest in the Group that gives it significant influence over the Group; or (iii) has joint control over the Group;
(b) the party is an associate;
(c) the party is a jointly-controlled entity;
(d) the party is a member of the key management personnel of the Group or its parent;
(e) the party is a close member of the family of any individual referred to in (a) or (d);
(f) the party is an entity that is controlled, jointly controlled or significantly influenced by or for which significant voting power in such entity resides with, directly or indirectly, any individual referred to in (d) or (e); or
(g) the party is a post-employment benefit plan for the benefit of the employees of the Group, or of any entity that is a related party of the Group.

Property, plant and equipment and depreciation

Property, plant and equipment, other than construction in progress, are stated at cost less accumulated depreciation and any impairment losses. The cost of an item of property, plant and equipment 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 items of property, plant and equipment have been put into operation, such as repairs and maintenance, is normally charged to the income statement 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 an item of property, plant and equipment, and where the cost of the item can be measured reliably, the expenditure is capitalised as an additional cost of that asset or as a replacement.

Depreciation is calculated on the straight-line basis to write off the cost of each item of property, plant and equipment to its residual value over its estimated useful life. The principal annual rates used for this purpose are as follows:

Building	5%
Leasehold improvements	15% – 33% or over the lease term
Plant and machinery	15% – 50%
Furniture, fixtures and office equipment	15% – 50%
Motor vehicles	20%
Computer equipment	15% – 33%

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Where parts of an item of property, plant and equipment have different useful lives, the cost of that item is allocated on a reasonable basis among the parts and each part is depreciated separately.

Residual values, useful lives and the depreciation methods are reviewed, and adjusted if appropriate, at each balance sheet date.

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss on disposal or retirement recognised in the income statement in the year the asset is derecognised is the difference between the net sales proceeds and the carrying amount of the relevant asset.

Construction in progress represents an agricultural by-products wholesale market under construction, which is stated at cost less any impairment losses, and is not depreciated. Cost comprises land costs, the direct costs of construction and capitalised borrowing costs on related borrowed funds during the period of construction. Construction in progress is reclassified to the appropriate category of property, plant and equipment or investment properties when completed and ready for use.

Investment properties

Investment properties are interests in land and buildings (including the leasehold interest under an operating lease for a property which would otherwise meet the definition of an investment property) held to earn rental income and/or for capital appreciation, rather than for use in the production or supply of goods or services or for administrative purposes; or for sale in the ordinary course of business. Such properties are measured initially at cost, including transaction costs. Subsequent to initial recognition, investment properties are stated at fair value, which reflects market conditions at the balance sheet date.

Gains or losses arising from changes in the fair values of investment properties are included in the income statement in the year in which they arise.

Any gains or losses on the retirement or disposal of an investment property are recognised in the income statement in the year of the retirement or disposal.

Operating leases

Leases where substantially all the rewards and risks of ownership of assets remain with the lessor are accounted for as operating leases. Where the Group is the lessor, assets leased by the Group under operating leases are included in non-current assets, and rentals receivable under the operating leases are credited to the income statement on the straight-line basis over the lease terms. Where the Group is the lessee, rentals payable under the operating leases are charged to the income statement on the straight-line basis over the lease terms.

Prepaid land lease payments under operating leases are initially stated at cost and subsequently recognised on the straight-line basis over the lease terms.

Properties under development

Properties under development represent properties developed for sale and are stated at the lower of cost and net realisable value. Cost comprises prepaid land lease payments together with borrowing costs, professional fees and any other direct costs attributable to the development of the properties incurred during the development period.

Properties under development which have been pre-sold and/or are expected to be completed within 12 months from the balance sheet date are classified as current assets.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Properties held for sale

Properties held for sale are stated at the lower of cost and net realisable value. Cost is determined by an apportionment of the total land and building costs attributable to unsold properties. Net realisable value is estimated by the directors based on the prevailing market prices, on an individual property basis.

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. The 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 and other financial assets

Financial assets in the scope of HKAS 39 are classified as financial assets at fair value through profit or loss, loans and receivables and held to maturity investments, as appropriate. When financial assets are recognised initially, they are measured at fair value, plus, in the case of investments not at fair value through profit or loss, directly attributable transaction costs.

The Group assesses whether a contract contains an embedded derivative when the Group first becomes a party to it and assesses whether an embedded derivative is separated from the host contract when the analysis shows that the economic characteristics and risks of the embedded derivative is not closely related to those of the host contract. Reassessment only occurs if there is a change in the terms of the contract that significantly modifies the cash flows that would otherwise be required under the contract.

The Group determines the classification of its financial assets after initial recognition and, where allowed and appropriate, re-evaluates this designation at the balance sheet date.

All regular way purchases and sales of financial assets are recognised on the trade date, that is the date that the Group commits to purchase or sell the asset. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the period generally established by regulation or convention in the marketplace.

Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss include financial assets held for trading and financial assets designated upon initial recognition as at fair value through profit or loss. Financial assets are classified as held for trading if they are acquired for the purpose of sale in the near term. Derivatives, including separated embedded derivatives, are also classified as held for trading unless they are designated as effective hedging instruments or financial guarantee contracts. Gains or losses on these financial assets are recognised in the income statement. The net fair value gain or loss recognised in the income statement does not include any dividends on these financial assets, which are recognised in accordance with the policy set out for “Revenue recognition” below.

Financial assets may be designated upon initial recognition as at fair value through profit or loss if the following criteria are met: (i) the designation eliminates or significantly reduces the inconsistent treatment that would otherwise arise from measuring the assets or recognising gains or losses on them on a different basis; (ii) the assets are part of a group of financial assets which are managed and their performance evaluated on a fair value basis, in accordance with a documented risk management strategy; or (iii) the financial asset contains an embedded derivative that would need to be separately recorded.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Such assets are subsequently carried at amortised cost using the effective interest method less any allowance for impairment. Amortised cost is calculated taking into account any discount or premium on acquisition and includes fees that are an integral part of the effective interest rate and transaction costs. Gains and losses are recognised in the income statement when the loans and receivables are derecognised or impaired, as well as through the amortisation process.

Held to maturity investments

Non-derivative financial assets with fixed or determinable payments and fixed maturity are classified as held to maturity when the Group has the positive intention and ability to hold to maturity. Held-to-maturity investments are subsequently measured at amortised cost less any allowance for impairment. Amortised cost is computed as the amount initially recognised minus principal repayments, plus or minus the cumulative amortisation using the effective interest method of any difference between the initially recognised amount and the maturity amount. Gains and losses are recognised in the income statement when the investments are derecognised or impaired, as well as through the amortisation process.

Fair value

The fair value of investments that are actively traded in organised financial markets is determined by reference to quoted market bid prices at the close of business at the balance sheet date. 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; a discounted cash flow analysis; and option pricing models.

Impairment of financial assets

The Group assesses at each balance sheet date whether there is any objective evidence that a financial asset or a group of financial assets is impaired.

Assets carried at amortised cost

If there is objective evidence that an impairment loss on loans and receivables carried at amortised cost has been incurred, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate (i.e., the effective interest rate computed at initial recognition). The carrying amount of the asset is reduced either directly or through the use of an allowance account. The amount of the impairment loss is recognised in the income statement. Loans and receivables together with any associated allowance are written off when there is no realistic prospect of future recovery.

If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed by adjusting the allowance account. Any subsequent reversal of an impairment loss is recognised in the income statement, to the extent that the carrying value of the asset does not exceed its amortised cost at the reversal date.

In relation to trade and other receivables, a provision for impairment is made when there is objective evidence (such as the probability of insolvency or significant financial difficulties of the debtor and significant changes in the technological, market economic or legal environment that have an adverse effect on the debtor) that the Group will not be able to collect all of the amounts due under the original terms of an invoice. The carrying amount of the receivables is reduced through the use of an allowance account. Impaired debts are derecognised when they are assessed as uncollectible.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Assets carried at cost

If there is objective evidence that an impairment loss has been incurred on an unquoted equity instrument that is not carried at fair value because its fair value cannot be reliably measured, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the current market rate of return for a similar financial asset. Impairment losses on these assets are not reversed.

Derecognition of financial assets

A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is derecognised where:

the rights to receive cash flows from the asset have expired;
the Group retains the rights to receive cash flows from the asset, but has assumed an obligation to pay them in full without material delay to a third party under a “pass-through” arrangement; or
the Group has transferred its rights to receive cash flows from the asset and either (a) has transferred substantially all the risks and rewards of the asset, or (b) has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

Where the Group has transferred its rights to receive cash flows from an asset and has neither transferred nor retained substantially all the risks and rewards of the asset nor transferred control of the asset, the asset is recognised to the extent of the Group’s continuing involvement in the asset. Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Group could be required to repay.

Where continuing involvement takes the form of a written and/or purchased option (including a cashsettled option or similar provision) on the transferred asset, the extent of the Group’s continuing involvement is the amount of the transferred asset that the Group may repurchase, except in the case of a written put option (including a cash-settled option or similar provision) on an asset measured at fair value, where the extent of the Group’s continuing involvement is limited to the lower of the fair value of the transferred asset and the option exercise price.

Financial liabilities at amortised cost (including interest-bearing loans and borrowings)

Financial liabilities including trade and other payables and interest-bearing loans and borrowings are initially stated at fair value less directly attributable transaction costs and are subsequently measured at amortised cost, using the effective interest method unless the effect of discounting would be immaterial, in which case they are stated at cost. The related interest expense is recognised within “finance costs” in the income statement.

Gains and losses are recognised in the income statement when the liabilities are derecognised as well as through the amortisation process.

Financial guarantee contracts

Financial guarantee contracts in the scope of HKAS 39 are accounted for as financial liabilities. A financial guarantee contract is recognised initially at its fair value less transaction costs that are directly attributable to the acquisition or issue of the financial guarantee contract, except when such contract is recognised at fair value through profit or loss. Subsequent to initial recognition, the Group measures the financial guarantee contract at the higher of: (i) the amount determined in accordance with HKAS 37 Provisions, Contingent Liabilities and Contingent Assets; and (ii) the amount initially recognised less, when appropriate, cumulative amortisation recognised in accordance with HKAS 18 Revenue.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Convertible notes

The component of convertible notes that exhibits characteristics of a liability is recognised as a liability in the balance sheet, net of transaction costs. On issuance of 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 initially recognised.

Derecognition of financial liabilities

A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires.

When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and a recognition of a new liability, and the difference between the respective carrying amounts is recognised in the income statement.

Derivative financial instruments

The Group uses derivative financial instruments such as equity accumulator contracts. Such derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently remeasured at fair value. Derivatives are carried as assets when the fair value is positive and as liabilities when the fair value is negative.

Any gains or losses arising from changes in fair value on derivatives are taken directly to the income statement.

The fair value of equity accumulator contracts is calculated by reference to equity prices of the underlying instruments.

Inventories

Inventories are stated at the lower of cost and net realisable value. Cost is determined on the first-in, first-out basis. 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 that are readily convertible into known amounts of cash, 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 sheets, 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.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

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 income statement.

Provision for onerous contracts represents provision for 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 fulfill the contracts, discounted to their present value as appropriate.

Income tax

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

Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities.

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 goodwill or the initial recognition of an asset or liability and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and
in respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, 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 credits 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 credits 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 in a transaction that is not a business combination 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, associates and interests in joint ventures, 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.
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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

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 reassessed at each balance sheet date and 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.

Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.

Government grants

Government grants are recognised at their fair value where there is reasonable assurance that the grant will be received and all attaching conditions will be complied with. When the grant relates to an expense item, it is recognised as income over the periods necessary to match the grant on a systematic basis to the costs that it is intended to compensate. Where the grant relates to an asset, the fair value is credited to a deferred income account and is released to the income statement over the expected useful life of the relevant asset by equal annual instalments.

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 a time proportion basis over the lease terms;
(b) from the provision of services, when the services are rendered;
(c) from the sale of goods, 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 sold;
(d) from the sale of properties, when the sale agreement becomes unconditional;
(e) interest income, on an accrual basis using the effective interest method by applying the rate that discounts the estimated future cash receipts through the expected life of the financial instrument to the net carrying amount of the financial asset;
(f) on the trading of securities, on the date when the transaction takes place; and
(g) dividend income, where the shareholders’ right to receive payment has been established.
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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Employee benefits

Pension schemes

The Group operates a defined contribution Mandatory Provident Fund retirement benefits scheme (the “MPF Scheme”) under the Mandatory Provident Fund Schemes Ordinance, for those employees who are eligible to participate in the MPF Scheme. Contributions are made based on a percentage of the employees’ basic salaries and are charged to the income statement as they become payable in accordance with the rules of the MPF Scheme. The assets of the MPF 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 MPF Scheme.

The employees of the Group’s subsidiaries and jointly-controlled entities in Mainland China are required to participate in a central pension scheme (the “PRC Pension Scheme”) operated by the local municipal government. The subsidiaries and jointly-controlled entities are required to contribute certain percentage of their payroll costs to the PRC Pension Scheme. The only obligation of the Group with respect to the PRC Pension Scheme is to pay the ongoing contributions under the PRC Pension Scheme. The contributions are charged to the income statement as they become payable in accordance with the rules of the PRC Pension Scheme.

Share-based payment transactions

The Company operates a share option scheme for the purpose of providing incentives and rewards to eligible participants who contribute to the success of the Group’s operations. Employees (including directors) of the Group receive remuneration in the form of share-based payment transactions, whereby employees render services as consideration for equity instruments (“equity-settled transactions”).

The cost of equity-settled transactions with employees is measured by reference to the fair value at the date at which they are granted. The fair value is determined by an external valuer using a binomial model, further details of which are given in note 37 to the financial statements. 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 (“market conditions”), if applicable.

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 the 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.

Where the terms of an equity-settled award are modified, as a minimum an expense is recognised as if the terms had not been modified. In addition, an expense is recognised for any modification, which increases the total fair value of the share-based payment arrangement, or is otherwise beneficial to the employee as measured at the date of modification.

Where an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any expense not yet recognised for the award is recognised immediately. However, if a new award is substituted for the cancelled award, and is designated as a replacement award on the date that it is granted, the cancelled and new awards are treated as if they were a modification of the original award, as described in the previous paragraph.

I - 25 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

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

Dividends

Final dividends proposed by the directors are classified as a separate allocation of retained profits within the equity 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 by-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

These financial statements are presented in Hong Kong dollars, which is the Company’s functional and presentation currency. Each entity in the Group determines their own functional currencies and items included in the financial statements of each entity are measured using that functional currency. Foreign currency transactions are initially recorded using the functional currency rates ruling at the date of the transactions. Monetary assets and liabilities denominated in foreign currencies are retranslated at the functional currency rates of exchange ruling at the balance sheet date. All differences are taken to the income statement. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined.

The functional currencies of certain overseas subsidiaries, jointly-controlled entities and an associate are currencies other than the Hong Kong dollar. As at the balance sheet date, the assets and liabilities of these entities are translated into the presentation currency of the Company at the exchange rates ruling at the balance sheet date and, their income statements are translated into Hong Kong dollars at the weighted average exchange rates for the year. The resulting exchange differences are included in a separate component of equity. On disposal of a foreign entity, the deferred cumulative amount recognised in equity relating to that particular foreign operation is recognised in the income statement.

For the purpose of the consolidated cash flow statement, the cash flows of overseas subsidiaries and the jointly-controlled entities 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 and the jointly-controlled entities which arise throughout the year are translated into Hong Kong dollars at the weighted average exchange rates for the year.

3. SIGNIFICANT ACCOUNTING JUDGEMENT AND ESTIMATES

The preparation of the Group’s financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expense, assets and liabilities, and the disclosure of contingent liabilities, at the reporting date. However, uncertainty about these assumptions and estimates could result in outcomes that could require a material adjustment to the carrying amounts of the assets or liabilities affected in the future.

I - 26 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Judgement

In the process of applying the Group’s accounting policies, management has made the following judgement, apart from those involving estimations, which has the most significant effect on the amounts recognised in the financial statements:

Operating lease commitments – Group as lessor

The Group has entered into leases on its investment property portfolio. The Group has determined that it retains all the significant risks and rewards of ownership of these properties which are leased out on operating leases.

Estimation uncertainty

The key assumptions concerning the future and other key sources of estimation uncertainty at the balance sheet date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are discussed below.

Impairment of goodwill

The Group determines whether goodwill is impaired at least on an annual basis. This requires an estimation of the value in use of the cash-generating units to which the goodwill is allocated. Estimating the value in use requires the Group to make an estimate of the expected future cash flows from the cash-generating unit and also to choose a suitable discount rate in order to calculate the present value of those cash flows. The carrying amount of goodwill at 31 March 2008 was HK$7,820,000 (2007: HK$12,037,000). More details are given in note 18.

Impairment of non-financial assets (other than goodwill)

The Group assesses whether there are any indicators of impairment for all non-financial assets at each reporting date. Non-financial assets are tested for impairment when there are indicators that the carrying amounts may not be recoverable. When value in use calculations are undertaken, management must estimate the expected future cash flows from the asset or cash-generating unit and choose a suitable discount rate in order to calculate the present value of those cash flows.

Impairment of properties under development

The Group assessed the recoverable amount of each property under development based on its value in use or net selling price, depending on the anticipated future plans for the property. Estimating the value in use of an asset involves estimating the future cash flows to be derived from continuing use of the asset and from its ultimate disposal and applying the appropriate discount rate to these future cash flows.

The carrying amount of properties under development at 31 March 2008 was HK$288,405,000 (2007: HK$470,680,000) (note 17).

Estimation of fair value of investment properties

In the absence of current prices in an active market for similar properties, the Group considers information from a variety of sources, including:

(a) current prices in an active market for properties of a different nature, condition or location (or subject to different leases or other contracts), adjusted to reflect those differences;
I - 27 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

(b) recent prices of similar properties on less active markets, with adjustments to reflect any changes in economic conditions since the date of the transactions that occurred at those prices; and
(c) discounted cash flow projections based on reliable estimates of future cash flows, supported by the terms of any existing lease and other contracts and (when possible) by external evidence such as current market rents for similar properties in the same location and condition, and using discount rates that reflect current market assessments of the uncertainty in the amount and timing of the cash flows.

The principal assumptions for the Group’s estimation of the fair value include those related to current market rents for similar properties in the same location and condition, appropriate discount rates, expected future market rents and future maintenance costs.

The carrying amount of investment properties at 31 March 2008 was HK$555,199,000 (2007: HK$315,143,000) (note 16).

Useful lives and impairment of property, plant and equipment

The Group’s management determines the estimated useful lives and related depreciation charges for its items of property, plant and equipment. This estimate is based on the historical experience of the actual useful lives of items of property, plant and equipment of similar nature and functions. It could change significantly as a result of technical innovations and its competitor actions. Management will increase the depreciation charge where useful lives are less than previously estimates, or it will write off or write down technically obsolete assets that have been abandoned.

The carrying value of an item of property, plant and equipment is reviewed for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable in accordance with the accounting policy as disclosed in the relevant part of this section. The recoverable amount of an item of property, plant and equipment is calculated as the higher of its fair value less costs to sell and value in use, the calculations of which involve the use of estimates.

Deferred tax assets

Deferred tax assets are recognised for all unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilised. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and level of future taxable profits together with future tax planning strategies. The carrying value of deferred tax assets relating to recognised tax losses was HK$3,062,000 (2007: HK$2,733,000) as at 31 March 2008. Further details are contained in note 35 to the financial statements.

Allowance on trade and other receivables

The provision policy for doubtful debts of the Group is based on the ongoing evaluation of the collectibility and aged analysis of the outstanding receivables and on management’s estimation. A considerable amount of judgement is required in assessing the ultimate realisation of these receivables, including the creditworthiness and the past collection history of each customer. If the financial conditions of the customers of the Group were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required.

I - 28 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

PRC corporate income tax (“CIT”)

The Group is subject to income taxes in the People’s Republic of China (the “PRC”). As a result of the fact that certain matters relating to the income taxes have not been confirmed by the local tax bureau, objective estimate and judgement based on currently enacted tax laws, regulations and other related policies are required in determining the provision for income taxes to be made. Where the final tax outcome of these matters is different from the amounts originally recorded, the differences will impact on the income tax and tax provisions in the period in which the differences realise.

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.

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 agricultural by-products wholesale markets segment engages in the operations and management of agricultural by-products wholesale markets; and
(f) the corporate and others segment comprises the Group’s management service business. This segment also includes corporate income and expense items.

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.

I - 29 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

(a) Business segments

The following tables present revenue, profit/(loss) and certain asset, liability and expenditure information for the Group’s business segments for the years ended 31 March 2008 and 2007.

									Agricultural	Agricultural	Unallocated	Unallocated
	Property		Property		Chinese		Shopping centres		by-products		corporate
	development		investment		wet markets		and car parks		wholesale markets		and	others	Eliminations		Consolidated
	2008	2007	2008	2007	2008	2007	2008	2007	2008	2007	2008	2007	2008	2007	2008	2007
	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000 HK$’000		HK$’000 HK$’000		HK$’000	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000
Segment revenue:
Sales to external customers	302,998	242,242	22,826	42,090	170,742	144,048	12,893	27,262	34,395	–	2,028	43,846	–	–	545,882	499,488
Intersegment sales	9,848	–	–	2,772	–	4,091	440	791	–	–	9,696	1,854	(19,984)	(9,508)	–	–
Other revenue	8	7	9,614	39,945	5,600	2,616	515	1,038	4,740	379	80,358	18,773	(2,553)	(1,975)	98,282	60,783
Total	312,854	242,249	32,440	84,807	176,342	150,755	13,848	29,091	39,135	379	92,082	64,473	(22,537)	(11,483)	644,164	560,271
Segment results	49,565	28,205	26,590	48,472	13,478	31,028	2,283	3,688	(583)	(9,309)	11,050	7,334	(2,973)	2,089	99,410	111,507
Unallocated expenses															–	(16,753)
Interest income															10,430	10,928
Finance costs															(14,906)	(13,828)
Share of profits and losses of associates															27,643	4,578
Profit before tax															122,577	96,432
Tax															(25,963)	(13,254)
Profit for the year															96,614	83,178
									Agricultural		Unallocated
	Property		Property		Chinese		Shopping centres		by-products		corporate
	development		investment		wet markets		and car parks		wholesale markets		and	others	Eliminations		Consolidated
	2008	2007	2008	2007	2008	2007	2008	2007	2008	2007	2008	2007	2008	2007	2008	2007
	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000
Assets and liabilities
Segment assets	751,325	575,474	436,214	394,268	204,092	108,870	47,072	52,488	432,077	54,028	2,462,613	2,103,447	(2,611,586) (1,878,458)		1,721,807	1,410,117
Interests in associates	–	–	–	–	–	–	–	–	–	–	305,825	321,364	–	–	305,825	321,364
Deferred tax assets	3,062	2,171	244	–	1,036	562	–	–	–	–	–	–	–	–	4,342	2,733
Total assets															2,031,974	1,734,214
Segment liabilities	570,813	317,630	292,567	222,581	203,920	131,183	15,030	17,649	352,326	68,651	1,386,003	1,247,362	(2,611,586) (1,878,458)		209,073	126,598
Interest-bearing bank loans	150,650	242,050	94,904	88,528	–	896	–	–	49,429	–	251,250	166,750	–	–	546,233	498,224
Tax payable	9,433	7,173	949	478	845	3,667	210	2,026	2,079	–	14,311	2,532	–	–	27,827	15,876
Convertible notes	–	–	–	–	–	–	–	–	–	–	–	45,756	–	–	–	45,756
Deferred tax liabilities	–	–	8,593	5,454	–	–	–	–	–	–	33	–	–	–	8,626	5,454
Total liabilities															791,759	691,908
Other segment information:
Depreciation and amortisation	796	4	12	12	6,734	3,693	11	491	6,669	6	840	952	–	–	15,062	5,158
Impairment losses recognised
in the income statement	14,925	–	–	–	–	–	70	–	–	–	6,333	–	–	–	21,328	–
Capital expenditure	181,641	30	118,357	18,752	16,653	2,077	–	17	210,128	30,764	1,392	1,361	–	–	528,171	53,001

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

(b) Geographical segments

The following table presents revenue and certain asset and expenditure information for the Group’s geographical segments for the year ended 31 March 2008 and 2007.

Segment revenue: Sales to external customers Other segment information: Segment assets Capital expenditure	Hong 2008 HK$’000 496,331	Kong 2007 HK$’000 494,673 3,544,096 51,656	Mainland China 2008 2007 HK$’000 HK$’000 49,551 4,815 867,863 68,576 392,285 1,345	Eliminations 2008 2007 HK$’000 HK$’000 – – (2,611,586) (1,878,458) – –	Eliminations 2008 2007 HK$’000 HK$’000 – – (2,611,586) (1,878,458) – –	Consolidated 2008 2007 HK$’000 HK$’000 545,882 499,488 2,031,974 1,734,214 528,171 53,001	Consolidated 2008 2007 HK$’000 HK$’000 545,882 499,488 2,031,974 1,734,214 528,171 53,001
	3,775,697 135,886				(1,878,458) –		1,734,214 53,001

5. REVENUE, OTHER INCOME AND GAINS

Revenue, which is also the Group’s turnover, represents sub-licensing and management 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 sale of properties during the year.

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

Revenue Sub-licensing fee income Property management fee income Sale of goods Rendering of services Gross rental income Sale of properties Other income Bank interest income Interest income from unlisted investments Interest income from loans receivable Dividend income from listed securities Management fee income Others	Group 2008 2007 HK$’000 HK$’000 145,024 155,084 16,609 16,228 22,606 40,092 3,781 3,752 43,366 10,603 314,496 273,729 545,882 499,488 8,189 7,116 1,195 2,436 1,046 1,376 404 267 2,190 1,116 5,757 4,481 18,781 16,792	Group 2008 2007 HK$’000 HK$’000 145,024 155,084 16,609 16,228 22,606 40,092 3,781 3,752 43,366 10,603 314,496 273,729 545,882 499,488 8,189 7,116 1,195 2,436 1,046 1,376 404 267 2,190 1,116 5,757 4,481 18,781 16,792
		499,488
		7,116 2,436 1,376 267 1,116 4,481
		16,792

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Gains Gain on disposal of a land use right Gain on disposal of financial assets at fair value through profit or loss, net Fair value gains on financial assets at fair value through profit or loss, net Exchange gains, net Recognition of a deferred gain Gain on disposal and write-off of items of property, plant and equipment Gain on disposal of investment properties Other income and gains	Group 2008 2007 HK$’000 HK$’000 62,969 – 11,522 4,120 – 489 3,242 4,306 799 3,769 16 163 – 8,000 78,548 20,847 97,329 37,639	Group 2008 2007 HK$’000 HK$’000 62,969 – 11,522 4,120 – 489 3,242 4,306 799 3,769 16 163 – 8,000 78,548 20,847 97,329 37,639
		20,847
		37,639

6. PROFIT BEFORE TAX

The Group’s profit before tax is arrived at after charging/(crediting):

Notes Auditors’ remuneration Cost of inventories sold Cost of services provided Cost of properties sold Depreciation 14 Less: Government grants released# Minimum lease payments under operating leases for land and buildings Amortisation of prepaid land lease payments 15 Amortisation of other intangible asset 23 Employee benefits expense (including directors’ remuneration –note 8): Wages and salaries Pension scheme contributions Equity-settled share option expense	Group 2008 2007 HK$’000 HK$’000 2,700 1,900 17,016 24,522 156,037 137,665 211,504 218,304 8,290 5,158 (440 ) – 7,850 5,158 90,586 94,697 712 – 6,060 – 61,920 53,907 2,992 1,642 64 7,633 64,976 63,182	Group 2008 2007 HK$’000 HK$’000 2,700 1,900 17,016 24,522 156,037 137,665 211,504 218,304 8,290 5,158 (440 ) – 7,850 5,158 90,586 94,697 712 – 6,060 – 61,920 53,907 2,992 1,642 64 7,633 64,976 63,182
		5,158
		94,697 – – 53,907 1,642 7,633
		63,182

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I


		2008	2007
	Notes	HK$’000	HK$’000
Fair value losses/(gains) net:
Financial assets at fair value through profit or loss*		6,663	(489 )
Derivative financial instruments*		2,338	–
Compensation paid to a minority shareholder
of a subsidiary*		9,971	–
Impairment of trade receivables*	25	–	467
Impairment of goodwill*	18	11,558	–
Impairment of a land use right*	15	9,700	–
Impairment of other receivables*		70	–
Loss on disposal of items of property, plant
and equipment*		67	–
Loss on partial/deemed disposal of an associate*		4,855	–
Amount provided/(released) for onerous contracts, net	33	3,281	(1,566 )
Net rental income		(8,951 )	(10,480 )

The expenses are included in “Other expenses” on the face of the consolidated income statement.
Certain government grants have been received for renovating and upgrading certain Chinese wet markets operated by the Group’s jointly-controlled entity in Shenzhen, the PRC. The government grants released have been deducted from the depreciation cost to which they relate. Government grants received for which related expenditure has not yet been undertaken are included in deferred income under other payables and accruals in the balance sheet. There are no unfulfilled conditions or contingencies relating to these grants.

7. FINANCE COSTS

Interest on convertible notes_(note 34)_ Interest on bank loans and overdrafts Total interest expense on financial liabilities not at fair value through profit or loss Less: Interest capitalised	Group 2008 2007 HK$’000 HK$’000 1,144 2,966 24,490 21,682 25,634 24,648 (10,728 ) (10,820 ) 14,906 13,828

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

8. DIRECTORS’ REMUNERATION

Directors’ remuneration for the year, disclosed pursuant to the Rules Governing the Listing of Securities (the “Listing Rules”) on The Stock Exchange of Hong Kong Limited (the “Stock Exchange”) and Section 161 of the Hong Kong Companies Ordinance, is as follows:

Fees Other emoluments for executive directors: Salaries, allowances and benefits in kind Performance related bonuses* Employee share option benefits Pension scheme contributions	Group 2008 2007 HK$’000 HK$’000 771 845 10,067 9,499 1,944 1,413 12 – 84 81 12,107 10,993 12,878 11,838	Group 2008 2007 HK$’000 HK$’000 771 845 10,067 9,499 1,944 1,413 12 – 84 81 12,107 10,993 12,878 11,838
		9,499 1,413 – 81
		10,993
		11,838

Certain executive directors of the Company are entitled to bonus payments which are based on the performance of the Group.

During the year, a director was granted share options, in respect of his services to the Group, under the share option scheme of the Company, further details of which are set out in note 37 to the financial statements. The fair value of such options which has been recognised in the income statement over the vesting period, was determined as at the date of grant and the amount included in the financial statements for the current year is included in the above director’s remuneration disclosures.

Executive directors and independent non-executive directors

2008 Executive directors: Mr. Tang Ching Ho Ms. Yau Yuk Yin Mr. Chan Chun Hong, Thomas Independent non-executive directors: Dr. Lee Pang Fei, Allen, CBE, BS, FHKIE, JP Mr. Wong Chun, Justein, MBE, JP Mr. Siu Yim Kwan, Sidney, S.B.St.J. Mr. Siu Kam Chau	Fees HK$’000 – – – – 297 217 117 140 771 771	Salaries, allowances and benefits in kind HK$’000 4,030 4,094 1,943 10,067 – – – – – 10,067	Performance related bonuses HK$’000 336 240 1,368 1,944 – – – – – 1,944	Employee share option benefits HK$’000 – – 12 12 – – – – – 12	Pension scheme contributions HK$’000 12 12 60 84 – – – – – 84	Total remuneration HK$’000 4,378 4,346 3,383
						12,107
						297 217 117 140
						771
						12,878

I - 34 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

2007 Executive directors: Mr. Tang Ching Ho Ms. Yau Yuk Yin Mr. Chan Chun Hong, Thomas Independent non-executive directors: Dr. Lee Pang Fei, Allen, CBE, BS, FHKIE, JP Mr. Wong Chun, Justein, MBE, JP Mr. Siu Yim Kwan, Sidney, S.B.St.J. Mr. Siu Kam Chau	Fees HK$’000 – – – – 313 240 140 152 845 845	Salaries, allowances and benefits in kind HK$’000 3,894 4,029 1,576 9,499 – – – – – 9,499	Performance related bonuses HK$’000 324 232 857 1,413 – – – – – 1,413	Employee share option benefits HK$’000 – – – – – – – – – –	Pension scheme contributions HK$’000 12 12 57 81 – – – – – 81	Total remuneration HK$’000 4,230 4,273 2,490
						10,993
						313 240 140 152
						845
						11,838

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 (2007: three) directors, details of whose remuneration are disclosed in note 8 above. Details of the remuneration of the remaining two (2007: two) non-director, highest paid employees for the year are as follows:

paid employees for the year are as follows:
		Group
	2008		2007
	HK$’000		HK$’000
Salaries and allowances	2,199		3,043
Performance related bonuses	333		224
Employee share option benefits	4		898
Pension scheme contributions	24		24
	2,560		4,189

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

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


HK$1,000,001 to HK$1,500,000 HK$1,500,001 to HK$2,000,000 HK$2,000,001 to HK$2,500,000	Number of employees 2008 2007 2 – – 1 – 1 2 2
		2

During the year, share options were granted to the non-director, highest paid employees, in respect of their services to the Group, under the share option scheme of the Company, further details of which are set out in note 37 to the financial statements. The fair value of such options which has been recognised in the income statement over the vesting period, was determined as at the date of grant and the amount included in the financial statements for the current year is included in the above remuneration disclosures.

10. TAX

Hong Kong profits tax has been provided at the rate of 17.5% (2007: 17.5%) on the estimated assessable profits arising in Hong Kong during the year. Taxes on profits assessable elsewhere have been calculated at the rates of tax prevailing in the jurisdictions in which the Group operates, based on existing legislation, interpretations and practices in respect thereof.

Group: Current – Hong Kong Charge for the year Overprovision in prior years Current – PRC Charge for the year Deferred_(note 35)_ Total tax charge for the year	2008 HK$’000 24,645 (1,297 ) 1,052 1,563 25,963	2007 HK$’000 15,249 (2,243 ) 137 111
		13,254

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

A reconciliation of the tax expense applicable to profit before tax using the statutory rates for the jurisdictions in which the Company and the majority of its subsidiaries and jointly-controlled entities are domiciled to the tax expense at the effective tax rate is as follows:

Profit before tax Tax at the statutory tax rates of different jurisdictions Lower tax rate for specific provinces or local authority Adjustments in respect of current tax of previous periods Profits and losses attributable to associates Income not subject to tax Expenses not deductible for tax Tax losses utilised from previous periods Tax losses not recognised Others Tax charge at the Group’s effective rate	Group 2008 2007 HK$’000 HK$’000 122,577 96,432 21,505 17,054 (997 ) (207 ) (1,297 ) (2,243 ) (5,773 ) (801 ) (3,240 ) (5,005 ) 8,836 2,973 (3,930 ) (2,605 ) 6,373 5,367 4,486 (1,279 ) 25,963 13,254	Group 2008 2007 HK$’000 HK$’000 122,577 96,432 21,505 17,054 (997 ) (207 ) (1,297 ) (2,243 ) (5,773 ) (801 ) (3,240 ) (5,005 ) 8,836 2,973 (3,930 ) (2,605 ) 6,373 5,367 4,486 (1,279 ) 25,963 13,254
		17,054 (207 ) (2,243 ) (801 ) (5,005 ) 2,973 (2,605 ) 5,367 (1,279 )
		13,254

The share of tax attributable to associates amounting to HK$864,000 (2007: HK$361,000), is included in “Share of profits and losses of associates” on the face of the consolidated income statement.

11. PROFIT ATTRIBUTABLE TO EQUITy HOLDERS OF THE PARENT

The consolidated profit attributable to equity holders of the parent for the year ended 31 March 2008 includes a profit of HK$180,187,000 (2007: profit of HK$127,230,000) which has been dealt with in the financial statements of the Company (note 38(b)).

12. DIVIDENDS

DIVIDENDS
Additional final dividend for 2006 Interim – HK0.16 cents (2007: HK0.15 cents) per ordinary share Proposed final – HK0.10 cents (2007: HK0.33 cents) per ordinary share	2008 HK$’000 – 10,319 7,868 18,187	2007 HK$’000 126 7,073 19,540
		26,739

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

The dividend per ordinary share amounts for the prior year have been adjusted to reflect the bonus issue during that year and the subdivision of the Company’s shares subsequent to the balance sheet date.

I - 37 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

13. EARNINGS PER SHARE ATTRIBUTABLE TO ORDINARy EQUITy HOLDERS OF THE PARENT

The calculation of basic earnings per share is based on the profit for the year attributable to ordinary equity holders of the parent and the weighted average number of ordinary shares in issue during the year, as adjusted to reflect the share subdivision during the year.

The calculation of diluted earnings per share is based on the profit for the year attributable to ordinary equity holders of the parent adjusted to reflect the interest on the convertible bonds, where applicable. The weighted average number of ordinary shares used in the calculation is the number of ordinary shares in issue during the year, as used in the basic earnings per share calculation, and the weighted average number of ordinary shares assumed to have been issued at no consideration on the deemed exercise or conversion of all dilutive potential ordinary shares into ordinary shares, as adjusted for the share subdivision during the year.

The calculations of basic and diluted earnings per share amounts are based on:

Earnings Profit attributable to ordinary equity holders of the parent, used in basic earnings per share calculation Interest on convertible notes Profit for the purpose of diluted earnings per share calculation Shares Weighted average number of ordinary shares in issue during the year used in basic earnings per share calculation Effect of dilution – weighted average number of ordinary shares: Convertible notes Share options	2008 2007 HK$’000 HK$’000 96,089 83,170 1,144 2,966 97,233 86,136 Number of shares 2008 2007 6,205,325,115 4,728,929,492 219,278,689 541,288,970 398,588,922 175,381,903 6,823,192,726 5,445,600,365	2007 HK$’000 83,170 2,966
		86,136
		5,445,600,365

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

14. PROPERTy, PLANT AND EQUIPMENT

Group

31 March 2008 At 31 March 2007 and at 1 April 2007: Cost Accumulated depreciation Net carrying amount At 1 April 2007, net of accumulated depreciation Additions Acquisition of a subsidiary_(note 39(b))_ Disposals and write-off Depreciation provided during the year Exchange realignment At 31 March 2008, net of accumulated depreciation At 31 March 2008: Cost Accumulated depreciation Net carrying amount	Building HK$’000 – – – – – 505 – (16) 37 526 638 (112) 526	Leasehold improvements HK$’000 48,415 (39,094) 9,321 9,321 15,966 – (1,860) (5,964) 424 17,887 62,558 (44,671) 17,887	Plant and machinery HK$’000 364 (349) 15 15 289 10,388 (46) (503) 760 10,903 13,863 (2,960) 10,903	Furniture, fixtures and office equipment HK$’000 32,811 (32,182) 629 629 833 15 (77) (539) 12 873 33,611 (32,738) 873	Motor vehicles HK$’000 1,658 (288) 1,370 1,370 1,971 163 – (794) 36 2,746 3,825 (1,079) 2,746	Computer equipment HK$’000 2,891 (2,241) 650 650 548 – (7) (474) – 717 3,368 (2,651) 717	Construction in progress HK$’000 – – – – 126,268 898 – – 66 127,232 127,232 – 127,232	Total HK$’000 86,139 (74,154)
								11,985
								11,985 145,875 11,969 (1,990) (8,290) 1,335
								160,884
								245,095 (84,211)
								160,884

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

31 March 2007 At 31 March 2006 and at 1 April 2006: Cost Accumulated depreciation Net carrying amount At 1 April 2006, net of accumulated depreciation Additions Acquisition of a jointly-controlled entity Disposals and write-off Disposals of subsidiaries_(note 39(c))_ Depreciation provided during the year Exchange realignment At 31 March 2007, net of accumulated depreciation At 31 March 2007: Cost Accumulated depreciation Net carrying amount	Building HK$’000 – – – – – – – – – – – – – –	Leasehold improvements HK$’000 47,300 (41,366) 5,934 5,934 2,097 4,906 (38) (56) (3,571) 49 9,321 48,415 (39,094) 9,321	Plant and machinery HK$’000 5,532 (4,422) 1,110 1,110 21 – (762) (5) (349) – 15 364 (349) 15	Furniture, fixtures and office equipment HK$’000 49,563 (48,912) 651 651 340 345 (51) (119) (542) 5 629 32,811 (32,182) 629	Motor vehicles HK$’000 742 (631) 111 111 1,244 193 (38) – (143) 3 1,370 1,658 (288) 1,370	Computer equipment HK$’000 2,651 (1,695) 956 956 247 – – – (553) – 650 2,891 (2,241) 650	Construction in progress HK$’000 – – – – – – – – – – – – – –	Total HK$’000 105,788 (97,026)
								8,762
								8,762 3,949 5,444 (889) (180) (5,158) 57
								11,985
								86,139 (74,154)
								11,985

The leasehold land with an aggregate carrying amount of HK$95,835,000 (2007: Nil) and included in the Group’s construction in progress is held under medium term leases and situated in Mainland China.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

15. PREPAID LAND LEASE PAyMENTS

Group

Carrying amount at 1 April Additions Transfer from properties under development_(note 17) Amortisation for the year Impairment Exchange realignment Carrying amount at 31 March Current portion included in prepayments, deposits and other receivables(note 26)_ Non-current portion	2008 HK$’000 – 181,183 3,422 (712 ) (9,700 ) 6,298 180,491 (2,589 ) 177,902	2007 HK$’000 – – – – – –
		– –
		–

The Group’s leasehold land is situated in Hong Kong and Mainland China and is held under the following lease terms:

Long term leases: – Mainland China Medium term leases: – Hong Kong – Mainland China	2008 HK$’000 176,908 3,337 246 3,583 180,491	2007 HK$’000 –
		– –
		–
		–

I - 41 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

16. INVESTMENT PROPERTIES

Group

Carrying amount at 1 April Additions Acquisition of a jointly-controlled entity Acquisition of a subsidiary_(note 39(b)) Disposals Disposal of subsidiaries(note 39(c)) Net profit from a fair value adjustment(Note)_ Exchange realignment Carrying amount at 31 March	2008 HK$’000 315,143 201,113 – 20,019 – – 11,383 7,541 555,199	2007 HK$’000 297,500 18,752 62,593 – (85,600 ) (10,200 ) 31,548 550
		315,143

Note:

Included in the net profit from a fair value adjustment is an adjustment to the revenue which amounted to HK$82,000 (2007: Nil) and was resulted from the incentive being granted during the year.

The Group’s investment properties are situated in Hong Kong and Mainland China and are held under the following lease terms:

Long term leases: – Hong Kong Medium term leases: – Hong Kong – Mainland China	2008 HK$’000 60,600 319,300 175,299 494,599 555,199	2007 HK$’000 31,500
		220,500 63,143
		283,643
		315,143

The investment properties of the Group were revalued on 31 March 2008 by Savills Valuation and Professional Services Limited, independent professionally qualified valuers, on an open market, existing use basis. The investment properties are leased to a director of the Company and third parties under operating leases, further details of which are included in notes 41 and 43 to the financial statements.

At 31 March 2008, the Group’s investment properties with an aggregate carrying value of HK$348,900,000 (2007: HK$252,000,000) and certain rental income generated therefrom were pledged to secure the Group’s general banking facilities, of which approximately HK$201,504,000 (2007: HK$89,424,000) had been utilised as at 31 March 2008 (note 32).

Further particulars of the Group’s investment properties are included on pages 121 and 122.

I - 42 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

17. PROPERTIES UNDER DEVELOPMENT

Group

Carrying amount at 1 April Additions (including development cost and capitalised interest) Transfer to prepaid land lease payments_(note 15) Transfer to properties held for sale(note 24)_ Carrying amount at 31 March Less: Portion classified as current assets Long term portion	2008 HK$’000 470,680 59,081 (3,422 ) (237,934 ) 288,405 (288,405 ) –	2007 HK$’000 293,222 177,458 – – 470,680 (222,811 ) 247,869

At 31 March 2008, the Group’s properties under development with an aggregate carrying value of HK$282,197,000 (2007: HK$449,670,000) were pledged to secure the Group’s general banking facilities, of which approximately HK$150,650,000 (2007: HK$242,050,000) had been utilised as at 31 March 2008 (note 32).

Further particulars of the Group’s properties under development are included on page 123.

18. GOODwILL

Group

		Goodwill
		arising on		Goodwill
	Goodwill	acquisition		arising on
	arising on	of a jointly-		acquisition
	acquisition of	controlled		of associates
	subsidiaries	entity	Total	(Note 20)
	HK$’000	HK$’000	HK$’000	HK$’000
Cost and net carrying amount:
At 1 April 2006	4,987	–	4,987	9,718
Arising on acquisition of an
interest in a jointly-controlled entity	–	1,376	1,376	–
Disposal of subsidiaries_(note 39(c))_	(4,044 )	–	(4,044 )	–
At 31 March 2007 and 1 April 2007	943	1,376	2,319	9,718
Arising on acquisition of
a subsidiary_(note 39(b))_	11,444	–	11,444	–
Impairment during the year	(5,943 )	–	(5,943 )	(5,615 )
Partial/deemed disposal of an associate	–	–	–	(4,103 )
At 31 March 2008	6,444	1,376	7,820	–

I - 43 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

The Group applied the transitional provisions of SSAP 30 that permitted goodwill and negative goodwill in respect of acquisitions which occurred prior to the adoption of the standard, to remain eliminated against consolidated reserves or credited to the capital reserve, respectively.

The amount of goodwill remaining in the consolidated reserves, arising from the acquisition of subsidiaries prior to the adoption of SSAP 30 in 2001, was HK$21,775,000 (2007: HK$21,775,000) as at 31 March 2008.

Impairment testing of goodwill

Goodwill acquired through business combinations has been allocated to the following cash-generating units, which are reportable segments, for impairment testing:

Property development cash-generating unit;
Agricultural by-products wholesale markets cash-generating unit;
A jointly-controlled entity – Shenzhen traditional wet markets cash-generating unit; and
Associates – pharmaceutical products cash-generating unit.

The carrying amount of goodwill allocated to each of the cash-generating units is as follows:

==> picture [370 x 96] intentionally omitted <==

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

A jointly-controlled
Agricultural Associates – entity – Shenzhen
Property by-products pharmaceutical traditional
development wholesale markets products wet markets Total
2008 2007 2008 2007 2008 2007 2008 2007 2008 2007
HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000
Carrying amount
of goodwill – 943 6,444 – – 9,718 1,376 1,376 7,820 12,037
----- End of picture text -----

Property development cash-generating unit

The recoverable amount of the property development cash-generating unit has been determined based on a value in use calculation using cash flow projections based on financial budgets.

An impairment loss of HK$943,000 (2007: Nil) was recognised during the year due to the completion of respective property projects and management did not expect the relevant subsidiaries will further generate positive cashflow to the Group.

Agricultural by-products wholesale markets cash-generating unit

The recoverable amount of the agricultural by-products wholesale markets cash-generating unit has been determined based on a value in use calculation using cash flow projections based on financial budgets covering a five-year period approved by senior management. The discount rate applied to cash flow projections is 16%.

An impairment loss of HK$5,000,000 (2007: Nil) was recognised during the year due to higher than expected capital expenditure required to modernise the agricultural by-products wholesale markets of the relevant subsidiary.

A jointly-controlled entity – Shenzhen traditional wet markets cash-generating unit

The recoverable amount of the Shenzhen traditional wet markets cash-generating unit has been determined based on a value in use calculation using cash flow projections based on financial budgets covering a five-year period approved by senior management. The discount rate applied to cash flow projections is 16% (2007: 5%).

I - 44 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Associates – pharmaceutical products cash-generating unit

The recoverable amount of the pharmaceutical products cash-generating unit has been determined based on a value in use calculation using cash flow projections based on financial budgets covering a five-year period approved by senior management. The discount rates applied to cash flow projections range from 13% to 16% (2007: 11% to 15%) and cash flows beyond the five-year period are extrapolated using a zero growth rate (2007: zero), which do not exceed the estimated long term average growth rates of the relevant markets.

An impairment loss of HK$5,615,000 (2007: Nil) was recognised during the year due to the increase in market competition and operating expenses which affect adversely the future growth and profits of the Group’s pharmaceutical products business.

Management has determined the budgeted gross margins based on past performance and its expectation for market development. The discount rates used are before tax and reflect specific risks relating to the relevant units.

19. INTERESTS IN SUBSIDIARIES

Unlisted shares, at cost Due from subsidiaries –Note (i) Loans to subsidiaries –Note (ii) Due to subsidiaries –Note (i) Impairment –Note (iii)	Company 2008 2007 HK$’000 HK$’000 71,000 71,000 1,441,026 1,047,377 20,529 80,481 (230,258 ) (190,412 ) 1,302,297 1,008,446 (110,876 ) (297,824 ) 1,191,421 710,622

Notes:

(i) The amounts are unsecured, interest-free and have no fixed terms of repayment. The carrying amounts of these amounts approximate to their fair values.
(ii) The amounts are unsecured and have no fixed terms of repayment. Except for loans to subsidiaries amounting to HK$15,878,000 (2007: HK$15,878,000) and Nil (2007: HK$48,657,000) which bear interest at 3% and 1.5%, respectively over the best lending rate per annum offered by banks, the balances are interest-free. The carrying amounts of the loans to subsidiaries approximate to their fair values.
(iii) The impairment relates primarily to amounts due from subsidiaries and loans to subsidiaries that had suffered losses for years or ceased operations. The reversal of impairment during the year was due to some of the relevant subsidiaries are expected by the management to generate positive cashflow and profit to the Group based on their current year’s performance and latest budgets.
I - 45 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

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

			Percentage	Percentage
			of equity
	Place of	Nominal value of	attributable to
	incorporation/	issued/registered	the Company
Name	operations	share capital	Direct	Indirect	Principal activities
Buildstart Investments Limited	British Virgin	Ordinary US$1	–	100	Investment holding
	Islands/
	Hong Kong
Champford Investment Limited	Hong Kong	Ordinary HK$1	–	100	Property investment
Charter Golden Design	Hong Kong	Ordinary HK$2	–	100	Property development
& Contracting Limited
China Coin Management Limited	Hong Kong	Ordinary HK$1,000	–	100	Property investment
Conway Consultants Limited	Hong Kong	Ordinary HK$1,400,000	–	70	Provision of medical
		Non-voting preference			consultation
		_(Note 2)_HK$600,000			services
Denox Management Limited	Hong Kong	Ordinary HK$2	–	100	Management and
					sub-letting of
					properties
Easy Kingdom Limited	Hong Kong	Ordinary HK$2	–	100	Property investment
Extra Power Limited	Hong Kong	Ordinary HK$1	–	100	Money lending
Fulling Limited	Hong Kong	Ordinary HK$100	–	100	Money lending and
					securities investment
First World Investments Limited	Hong Kong	Ordinary HK$1	–	100	Property investment
Goodtech Management Limited	Hong Kong	Ordinary HK$2,800,100	–	100	Management of
					shopping centres
Grand Quality Development Limited	Hong Kong	Ordinary HK$2	–	100	Property investment
Hanwin Investment Limited	Hong Kong	Ordinary HK$1	–	100	Property investment
Info World Investment Limited	Hong Kong	Ordinary HK$1	–	100	Property investment
Join China Investment Limited	Hong Kong	Ordinary HK$2	–	100	Investment holding
Kartix Investment Limited	Hong Kong	Ordinary HK$1	–	100	Property development
King Channel Limited	Hong Kong	Ordinary HK$1	–	100	Property development
Kova Investments Limited	Hong Kong	Ordinary HK$1	–	100	Property investment
Lead Fortune Limited	Hong Kong	Ordinary HK$1,000	–	100	Property investment
Lica Parking Company Limited	Hong Kong	Ordinary HK$25,500,000	–	99	Management and
					sub-licensing
					of car parks
Longable Limited	Hong Kong	Ordinary HK$1	–	100	Property investment
Mailful Investments Limited	British Virgin	Ordinary US$1	–	100	Investment holding
	Islands/
	Hong Kong

I - 46 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

			Percentage	Percentage
			of equity
	Place of	Nominal value of	attributable to
	incorporation/	issued/registered	the Company
Name	operations	share capital	Direct	Indirect	Principal activities
Majorluck Limited	Hong Kong	Ordinary HK$10,000	–	100	Management and
					sub-licensing of
					Chinese wet
					markets
New Shiny Investment Limited	Hong Kong	Ordinary HK$1	–	100	Property investment
Poly Talent Investment Limited	Hong Kong	Ordinary HK$1	–	100	Property development
Richly Gold Limited	Hong Kong	Ordinary HK$2	–	100	Property investment
Rich Time Strategy Limited	British Virgin	Ordinary US$1	–	100	Investment holding
	Islands/
	Hong Kong
Shiny World Investment Limited	Hong Kong	Ordinary HK$1	–	100	Property investment
Smart First Investment Limited	Hong Kong	Ordinary HK$1	–	100	Property investment
Suitbest Investments Limited	British Virgin	Ordinary US$1	–	100	Investment holding
	Islands/
	Hong Kong
Ventix Investment Limited	Hong Kong	Ordinary HK$1	–	100	Property investment
Wang Hing Fruits and	Hong Kong	Ordinary HK$1	–	100	Wholesale of
Vegetables Wholesale Limited					agricultural
					products
Wang Hing Vegetables	Hong Kong	Ordinary HK$100	–	51	Wholesale of
Wholesale Company					agricultural
Limited					products
Wang On Agricultural	Hong Kong	Ordinary HK$1	–	100	Wholesale of
Wholesale (HK) Limited					agricultural
					products
Wang On Commercial	British Virgin	Ordinary US$2	–	100	Investment holding
Management Limited	Islands/
	Hong Kong
Wang On Enterprises	British Virgin	Ordinary US$1	100	–	Investment holding
(BVI) Limited	Islands/
	Hong Kong
Wang On Majorluck	Hong Kong	Ordinary HK$1,000	–	100	Management and
Limited					sub-licensing of
					Chinese wet
					markets
Wang On Shopping Centre	Hong Kong	Ordinary HK$2	–	100	Management and
Management Limited					sub-licensing of
					shopping centres
WEH Investments Limited	Hong Kong	Ordinary HK$477	–	100	Property investment
		Non-voting
		deferred_(Note 3)_
		HK$1,262,523

I - 47 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

==> picture [388 x 207] intentionally omitted <==

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

Percentage
of equity
Place of Nominal value of attributable to
incorporation/ issued/registered the Company
Name operations share capital Direct Indirect Principal activities
Willing Dental Consultants Hong Kong Ordinary HK$100 – 100 Provision of dental
Limited consultation
services
Xuzhou Yuan Yang Trading PRC RMB61,220,000 – 51 Management and
Development Company sub-licensing of
Limited agricultural
by-products
wholesale market
Yulin Hong-Jin Agricultural PRC RMB76,230,000 – 65 Management and
By-products Wholesale sub-licensing of
Marketplace Limited agricultural
by-products
wholesale market
----- End of picture text -----

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 dividends.
(3) The non-voting deferred shares carry no voting rights or rights to dividends. On the winding-up of the company, 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.
I - 48 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

20. INTERESTS IN ASSOCIATES

Share of net assets Deferred gains Goodwill on acquisition_(note 18) Due from associates –_Note (i) Due to associates –Note (i) Provision for impairment Market value of listed shares at 31 March –Note (ii) Notes:	Group 2008 2007 HK$’000 HK$’000 307,664 319,474 (3,320 ) (7,129 ) – 9,718 304,344 322,063 2,362 263 (878 ) (959 ) 305,828 321,367 (3 ) (3 ) 305,825 321,364 98,161 212,105	Company 2008 2007 HK$’000 HK$’000 – – – – – – – – 2,089 219 – (27 ) 2,089 192 – – 2,089 192 N/A N/A

(i) The amounts are unsecured, interest-free and have no fixed terms of repayment. The carrying amounts of these amounts approximate to their fair values.
(ii) The market value of the listed shares of an associate, Wai Yuen Tong Medicine Holdings Limited (“WYTH”), held by the Group was approximately HK$106,697,000 at the date of approval of these financial statements.

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

==> picture [390 x 197] intentionally omitted <==

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

Percentage
of ownership
Particulars Place of interest
of issued shares/ incorporation/ attributable
Name registered capital operations to the Group Principal activities
2008 2007
WYTH (Note 2) Ordinary shares Hong Kong 28.31 49 Production and sale of
of HK$0.01 each traditional Chinese and
Western pharmaceutical
health food products and
property holding
Changzhou Ling Jia Paid-up capital of PRC 40 – Agricultural by-products
Tang Hong-Jin Logistic US$14,020,176 wholesale market
Development
Company Limited
----- End of picture text -----*

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes:

(1) The above table lists the associates of the Group which, in the opinion of the directors, principally affected the results for the year or formed a substantial portion of the net assets of the Group. To give details of other associates would, in the opinion of the directors, result in particulars of excessive length.
(2) The financial statements of WYTH and its subsidiaries were not audited by Ernst & Young Hong Kong or other member firms of the Ernst & Young global network.
Listed on the Stock Exchange

The following table illustrates the summarised financial information of the Group’s associates extracted from their financial statements/management accounts:

	2008	2007
	HK$’000	HK$’000
Assets	1,375,285	792,911
Liabilities	(364,152 )	(135,213 )
Revenue	477,021	381,266
Profit	81,392	9,895

21. INTERESTS IN JOINTLy-CONTROLLED ENTITIES

Particulars of the jointly-controlled entities are as follows:

Paid-up

registered capital/nominal Place of value of issued registration/ Name share capital incorporation Shenzhen Jimao RMB31,225,000 PRC Market Co., Limited Vast Time Limited HK$1,000 Hong Kong Fuzhou Wang On RMB340,000,000 PRC Property Development Co., Ltd.	Percentage of Ownership Voting Profit interest power sharing Principal activities 50 50 50 Operations and management of traditional wet markets 50 50 50 Investment holding 50 50 50 Property development

I - 50 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

The amounts of the assets, liabilities, revenue and expenses of the Group’s jointly-controlled entities attributable to the Group are as follows:

Non-current assets Current assets Current liabilities Net assets Total revenue Total expenses Profit for the year	2008 HK$’000 245,906 11,267 (6,054 ) 251,119 16,844 (12,129 ) 4,715	2007 HK$’000 68,649 2,098 (5,485 )
		65,262
		3,476 (2,462 )
		1,014

On 23 November 2007, the Group entered into an acquisition agreement with an independent third party for the acquisition of an 50% equity interest in Vast Time Limited (“Vast Time”) at a consideration of RMB11,250,000 (equivalent to HK$12,285,000).

Vast Time and its subsidiary have not commenced any operations as at the date of acquisition saved for obtaining the right to acquire a parcel of land in Fuzhou, the PRC.

22. HELD-TO-MATURITy FINANCIAL ASSET

	Group	and Company
	2008	2007
	HK$’000	HK$’000
Unlisted debt investment, at amortised cost	1,943	–

23. OTHER INTANGIBLE ASSET

Carrying amount at 1 April Addition Amortisation for the year Carrying amount at 31 March	Group Marketplace operating right 2008 2007 HK$’000 HK$’000 30,300 – – 30,300 (6,060 ) – 24,240 30,300	Group Marketplace operating right 2008 2007 HK$’000 HK$’000 30,300 – – 30,300 (6,060 ) – 24,240 30,300
		30,300

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

24. PROPERTIES HELD FOR SALE

Carrying amount at 1 April Transfer from properties under development_(note 17)_ Sale Carrying amount at 31 March	Group 2008 HK$’000 1,455 237,934 (211,504 ) 27,885	2007 HK$’000 135,634 – (134,179 )
		1,455

At 31 March 2008, the Group’s properties held for sale with an aggregate carrying value of HK$10,334,497 (2007: Nil) were pledged to secure the Group’s general banking facilities of which approximately HK8,400,000 (2007: Nil) had been utilised as at 31 March 2008 (note 32).

Further particulars of the Group’s properties held for sale are included on page 123.

25. TRADE RECEIVABLES

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

		Group
	2008		2007
	HK$’000	Percentage	HK$’000	Percentage
Within 90 days	3,948	94	6,278	88
91 days to 180 days	165	4	441	6
Over 180 days	76	2	425	6
	4,189	100	7,144	100
Less: impairment	(88 )		(548 )
	4,101		6,596

The Group generally grants 15 to 30 days credit period to customers for its sub-leasing business. The Group generally does not grant any credit to customers of other businesses.

The Group seeks to maintain strict control over its outstanding receivables and has a credit control department to minimise credit risk. Overdue balances are reviewed regularly by senior management. In view of the aforementioned and that the Group’s trade receivables relate to a large number of diversified customers, there is no significant concentration of credit risk. Trade receivables are non-interest-bearing.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

The movements in provision for impairment of trade receivables are as follows:

Balance at 1 April Impairment losses reversed Impairment losses recognised Amount written off as uncollectible Balance at 31 March	Group 2008 HK$’000 548 (244 ) – (216 ) 88	2007 HK$’000 636 – 467 (555 )
		548

The above provision for impairment of trade receivables is related to individually impaired trade receivables, the customers of which were in financial difficulties and only a portion of the receivables is expected to be recovered. The Group does not hold any collateral or other credit enhancements over these balances.

The aged analysis of the trade receivables that are not considered to be impaired is as follows:

Neither past due nor impaired Less than 90 days past due 91 – 180 days past due Over 180 days past due	Group 2008 HK$’000 2,116 1,832 138 15 4,101	2007 HK$’000 6,140 138 275 43
		6,596

Receivables that were neither past due nor impaired relate to a large number of diversified customers for whom there were no recent history of default.

Receivables that were past due but not impaired relate to a number of independent customers that have a good track record with the Group. Based on past experience, the directors of the Company are of the opinion that no provision for impairment is necessary in respect of these balances as there has not been a significant change in credit quality and the balances are still considered fully recoverable. The Group does not hold any collateral or other credit enhancements over these balances.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

26. PREPAyMENTS, DEPOSITS AND OTHER RECEIVABLES

Prepayments Prepaid land lease payments_(note 15)_ Deposits Other receivables Loans receivable, secured Loans receivable, unsecured Less: Impairment Less: Loans receivable classified as non-current assets Rental deposits classified as non-current assets	Group 2008 2007 HK$’000 HK$’000 7,600 3,336 2,589 – 19,369 11,329 15,053 25,954 23,565 24,719 120 402 68,296 65,740 (7,522 ) (7,452 ) 60,774 58,288 (12,989 ) (13,987 ) (4,595 ) (5,343 ) 43,190 38,958	Company 2008 2007 HK$’000 HK$’000 771 430 – – 162 100 47 228 – – – – 980 758 – – 980 758 – – – – 980 758	Company 2008 2007 HK$’000 HK$’000 771 430 – – 162 100 47 228 – – – – 980 758 – – 980 758 – – – – 980 758
			758 –
			758 – –
			758

Included in the Group’s deposits are amounts due from the Group’s associate of HK$160,000 (2007: HK$

Nil).

The Group’s loans receivable are stated at amortised cost at effective interest rates ranging from 2% to 12% and the credit terms of which range from 4 months to 15 years. As the Group’s loans receivable relate to a number of different borrowers, the directors are of the opinion that there is no concentration of credit risk over these loans receivable. The carrying amounts of the loans receivable approximate to their fair values.

As at 31 March 2008, certain loans receivable and other receivables are secured by contra deposits of HK$2,232,000 received by the Group and a retail shop located in Mongkok, Kowloon, Hong Kong.

Included in the above provision for impairment of other receivables and loans receivable are provision for individually impaired receivables of HK$7,522,000 (2007: HK$7,452,000) with an aggregate carrying amount of HK$9,833,000 (2007: HK$10,446,000). The individually impaired other receivables related to customers or debtors that were in financial difficulties and only portion secured by cash deposit received and property are expected to be recovered.

Other than the aforementioned impaired other receivables, none of the above assets is either past due or impaired. The financial assets included in the above balances relate to the receivables for which there was no recent history of default.

I - 54 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

27. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS

	Group		Company
	2008	2007	2008	2007
	HK$’000	HK$’000	HK$’000	HK$’000
Listed equity investments, at fair value:
Hong Kong	27,882	24,721	8,915	15,416
Elsewhere	9,819	5,868	5,556	5,333
Unlisted debt securities, at fair value	7,577	16,178	–	16,178
	45,278	46,767	14,471	36,927

The market values of the Group’s and the Company’s listed equity investments at the date of approval of these financial statements were approximately HK$31,742,000 and HK$12,934,000, respectively.

The effective interest rate of the unlisted debt securities was 6% (2007: 5% to 7%), and they mature in 20 years (2007: 4 to 10 years).

28. CASH AND CASH EQUIVALENTS AND PLEDGED DEPOSITS

Cash and bank balances Time deposits Less: Pledged time deposits Cash and cash equivalents	Group 2008 2007 HK$’000 HK$’000 81,307 135,757 249,512 330,827 330,819 466,584 – (78,000 ) 330,819 388,584	Company 2008 2007 HK$’000 HK$’000 6,129 86,457 218,218 304,027 224,347 390,484 – (78,000 ) 224,347 312,484	Company 2008 2007 HK$’000 HK$’000 6,129 86,457 218,218 304,027 224,347 390,484 – (78,000 ) 224,347 312,484
			390,484 (78,000 )
			312,484

Cash at banks earns interest at floating rates based on daily bank deposit rates. Short term time deposits are made for varying periods of between one day and three months depending on the immediate cash requirements of the Group, and earn interest at the respective short term time deposit rates. The bank balances and pledged deposits are deposited with creditworthy banks with no recent history of default. The carrying amounts of the cash and cash equivalents and the pledged deposits approximate to their fair values.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

29. TRADE PAyABLES

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


			2008	2007
			HK$’000	HK$’000
Within	90	days	24,624	23,246

The trade payables are non-interest-bearing and have an average term of 30 days. The carrying amounts of the trade payables approximated to their fair values.

30. OTHER PAyABLES AND ACCRUALS

	Group		Company
	2008	2007	2008	2007
	HK$’000	HK$’000	HK$’000	HK$’000
Other payable_s (Note)_	114,298	11,077	67,542	688
Accruals	14,125	10,018	2,102	51
	128,423	21,095	69,644	739

Note: Included in other payables was subscription monies of approximately HK$65,470,000 received for the Top-up Subscription discussed in note 36(e) to financial statements.

Other payables are non-interest-bearing and there are generally no credit terms. The carrying amounts of the other payables approximate to their fair values.

31. DERIVATIVE FINANCIAL INSTRUMENTS


	2008	2007
	HK$’000	HK$’000
Stock accumulator contracts	2,338	–

I - 56 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

32. INTEREST-BEARING BANK LOANS

Group 2008 Contractual interest rate(%) Maturity Current: Bank loans – secured HIBOR+ 2009 (0.85 – 1.625)/ P – (2.25 – 3.15) Bank loans – unsecured HIBOR+ 2009 (0.85 – 1.625) Non-current: Bank loans – secured HIBOR+ 2009-2025 (0.85 – 1.0) P – (2.25 – 3.15)/ Bank loans – unsecured HIBOR+ 2009-2022 (0.85 – 1.0) Company 2008 Contractual interest rate(%) Maturity Current: Bank loans – secured HIBOR+ 2009 (0.85 – 1.0) Bank loans – unsecured HIBOR+ 2009 (0.85 – 1.625) Non-current: Bank loans – secured HIBOR+ 2009-2023 (0.85 – 1.0) Bank loans – unsecured HIBOR+ 2009-2022 (0.85 – 1.0)	2007 Contractual interest HK$’000 rate(%) Maturity 244,240 HIBOR+ 2008 (0.91 – 1.625) 102,875 HIBOR+ 2008 (1.0 – 1.625) 347,115 165,743 HIBOR+ 2008-2025 (0.91-1.625)/ P – 2.25 33,375 199,118 546,233 2007 Contractual interest HK$’000 rate(%) Maturity 30,400 HIBOR+ 2008 (1.0 – 1.625) 102,875 HIBOR+ 2008 (1.3 – 1.425) 133,275 84,600 HIBOR+ 2008 – 2011 (1.0 – 1.625) 33,375 117,975 251,250	HK$’000 364,425 25,000
		389,425
		108,799 –
		108,799
		498,224
		HK$’000 112,000 25,000
		137,000
		29,750 –
		29,750
		166,750

I - 57 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

	Group		Company
	2008	2007	2008	2007
	HK$’000	HK$’000	HK$’000	HK$’000
Analysed into:
Bank loans repayable:
Within one year	347,115	389,425	133,275	137,000
In the second year	42,483	20,871	35,500	16,250
In the third to fifth years, inclusive	74,122	40,687	70,475	13,500
Beyond five years	82,513	47,241	12,000	–
	546,233	498,224	251,250	166,750

Notes:

(a) Certain bank loans of the Group and the Company are secured by the Group’s investment properties and certain rental income generated therefrom (note 16), properties under development (note 17) and properties held for sale (note 24).

In addition, the Company has guaranteed certain of the Group’s bank loans up to HK$577,371,000 (2007: HK$483,162,000) as at the balance sheet date.

(b) All bank loans of the Group and the Company bear interest at floating interest rates.

33. PROVISIONS FOR ONEROUS CONTRACTS

Carrying amount at 1 April Additional provision/(write-back of provision) Amount utilised during the year Carrying amount at 31 March Portion classified as current liabilities Long term portion	Group 2008 HK$’000 369 3,650 (369 ) 3,650 (1,690 ) 1,960	2007 HK$’000 1,935 (688 ) (878 )
		369 (369 )
		–

I - 58 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

34. CONVERTIBLE NOTES

	Group	and Company
	2008	2007
	HK$’000	HK$’000
Convertible notes	–	45,756

In 2005, the Company issued convertible notes with an aggregate principal amount 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$0.005 each of the Company on any business day prior to the maturity of the convertible notes at a conversion price of HK$0.0909 per share (as adjusted after the bonus issue of the Company in prior year and subdivision of shares during the year).

The principal amounts of the convertible notes bear interest at a rate of 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.

All the convertible notes outstanding as at 1 April 2007 were converted into shares of the Company (note 36) during the year.

The fair value of the liability component was estimated at the issue date using an equivalent market interest rate for a similar note without a conversion option. The residual amount is assigned as the equity component and is included in shareholders’ equity.

	Liability component	Equity component
	of convertible notes	of convertible notes
	HK$’000	HK$’000
Balance at 1 April 2006	46,860	6,077
Interest expense_(note 7)_	2,966	–
Interest paid	(492 )	–
Conversion of convertible notes	(3,578 )	(424 )
Balance at 31 March and 1 April 2007	45,756	5,653
Interest expense_(note 7)_	1,144	–
Interest paid	(201 )	–
Conversion of convertible notes	(46,699 )	(5,653 )
Balance at 31 March 2008	–	–

I - 59 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

35. DEFERRED TAX

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

Deferred tax liabilities

Group At 1 April 2006 Deferred tax charged to the income statement during the year_(note 10) At 31 March and 1 April 2007 Deferred tax charged to the income statement during the year(note 10) Deferred tax liabilities at 31 March 2008 Deferred tax assets Group Depreciation in excess of related depreciation allowance _HK$’000 At 1 April 2006 – Deferred tax credited to the income statement during the year_(note 10) – At 31 March and 1 April 2007 – Deferred tax credited to the income statement during the year(note 10)_ 397 Deferred tax assets at 31 March 2008 397	Depreciation allowance Revaluation in excess gain of of related investment depreciation properties HK$’000 HK$’000 798 2,374 335 1,947 1,133 4,321 388 2,784 1,521 7,105 Losses Revaluation available Provision loss of for offset for onerous investment against future contracts properties taxable profit HK$’000 HK$’000 HK$’000 – – 562 – – 2,171 – – 2,733 639 244 329 639 244 3,062		Total HK$’000 3,172 2,282
			5,454 3,172
			8,626
			Total HK$’000 562 2,171
			2,733 1,609
			4,342

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

The Group has tax losses arising in Hong Kong of approximately HK$61,524,000 (2007: HK$47,729,000) 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 lossmaking for some time.

At 31 March 2008, there was no significant unrecognised deferred tax liability (2007: Nil) for taxes that would be payable on the unremitted earnings of certain of the Group’s subsidiaries, associates or jointly-controlled entities 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.

36. SHARE CAPITAL

Shares Authorised: 40,000,000,000 (2007: 2,000,000,000) ordinary shares of HK$0.005 (2007: HK$0.10) each Issued and fully paid: 6,410,233,640 (2007: 294,178,882) ordinary shares of HK$0.005 (2007: HK$0.10) each	2008 HK$’000 200,000 32,051	2007 HK$’000 200,000
		29,418

During the year, the movements in share capital were as follows:

(a) The subscription rights attaching to 1,887,600 and 141,504,000 share options were exercised at the subscription prices of HK$0.97 and HK$0.0485, respectively, per share (note 37), resulting in the issue of 1,887,600 shares of HK$0.10 each and 141,504,000 shares of HK$0.005 each, respectively for a total consideration, before issue expenses, of HK$8,694,000.
(b) Pursuant to an ordinary resolution passed on 17 May 2007, the existing issued and unissued ordinary shares with the nominal value of HK$0.10 each in the share capital of the Company were subdivided into 20 ordinary shares with the nominal value of HK$0.005 each.
(c) During the year, the conversion rights attaching to the convertible notes issued by the Company with an aggregate nominal value of HK$48,000,000 were exercised at the conversion price of HK$0.0909 per share, resulting in the issue of 528,000,000 shares of HK$0.005 each.
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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

(d) During the year, the Company repurchased its own shares on the Stock Exchange as follows:

	Number of	Highest	Lowest	Aggregate
	shares	price paid	price paid	price
Month/year	repurchased	per share	per share	paid
		HK$	HK$	HK$’000
Jan to Feb 2008	180,600,000	0.152	0.108	21,506

The repurchased shares were cancelled and accordingly the issued share capital of the Company was reduced by the nominal value of these shares.

(e) On 26 March 2008, Accord Power Limited (“Accord Power”), a substantial shareholder of the Company which is wholly-owned by Trustcorp Limited in its capacity as the trustee of the Tang’s Family Trust, entered into a Top-up Placing and Subscription Agreement with Kingston Securities Limited (the “Placing Agent”) and the Company and pursuant to which, Accord Power agreed to place, through the Placing Agent, an aggregate of 900 million existing ordinary shares of the Company to certain private investors at a price of HK$0.075 each (the “Top-up Placing”) and subscribe for an aggregate of 900 million new ordinary shares of the Company at a price of HK$0.075 each (the “Top-up Subscription”).

The Top-up Placing and the Top-up Subscription were completed on 31 March 2008 and 2 April 2008, respectively, and the Group raised a total of HK$67,500,000 (before expenses) (note 45(a)).

(f) On 22 April 2008, the Company placed an aggregate of 460,000,000 new ordinary shares, through the Placing Agent, to certain private investors at a price of HK$0.075 per share, raising a total of HK$34,500,000 (before expenses) (note 45(b)).

A summary of the transactions during the year with reference to the above movements in the Company’s issued ordinary share capital is as follows:

		Issued	Share
	Number of	share	premium
	shares in issue	capital	account	Total
		HK$’000	HK$’000	HK$’000
At 1 April 2006	224,544,439	22,454	422,291	444,745
Conversion of convertible notes	1,800,000	180	3,822	4,002
Bonus issue	22,634,443	2,264	(2,264 )	–
Repurchases of shares	(19,300,000 )	(1,930 )	(43,087 )	(45,017 )
Placements of shares	64,500,000	6,450	174,150	180,600
Share issue expenses	–	–	(5,300 )	(5,300 )
At 31 March and 1 April 2007	294,178,882	29,418	549,612	579,030
Exercise of share options_(a)_	143,391,600	896	7,798	8,694
Subdivision of shares_(b)_	5,625,263,158	–	–	–
Conversion of convertible_notes (c)_	528,000,000	2,640	49,712	52,352
Repurchases of shares_(d)_	(180,600,000 )	(903 )	(20,603 )	(21,506 )
Share issue expenses	–	–	(160 )	(160 )
At 31 March 2008	6,410,233,640	32,051	586,359	618,410

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Share options

Details of the Company’s share option scheme are set out in note 37 to the financial statements.

warrants

On 15 May 2007, the Company entered into a warrant agreement (the “Warrant Agreement”) with Lehman Brothers Commercial Corporation Asia Limited and pursuant to which the Company agreed to issue a total of 10 million warrants attaching the rights to subscribe for 10 million ordinary shares (before the share subdivision as discussed in note 36(b) above) of the Company for a total warrants’ issue price of HK$4,500,000.

The Warrant Agreement was completed on 31 May 2007 and a total of 200 million warrants (adjusted for the effect of the share subdivision as discussed in note 36(b) above) attaching the rights to subscribe for 200 million ordinary shares of the Company were issued.

No warrants was exercised during the year and all the 200 million warrants were outstanding at 31 March 2008. The exercise in full of such warrants would, under the present capital structure of the Company, result in the issue of 200 million additional shares of HK$0.005 each.

37. SHARE OPTION SCHEME

The Company operates a share option scheme for the purpose of providing incentives and rewards to eligible participants who contribute to the success of the Group’s operations. On 3 May 2002, the Company approved a share option scheme (the “Scheme”) under which 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, licensee (including any sub-licensee) 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 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 Scheme, the maximum number of share options that may be granted under the 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.

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 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 nonexecutive 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 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 nonexecutive director (or any of their respective associates) is also required to be approved by shareholders.

I - 63 -

FINANCIAL INFORMATION OF 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 Scheme during the year:


	weighted		weighted
	average	Number	average	Number
	exercise price	of options	exercise price	of options
	HK$	’000	HK$	’000
	per share
At 1 April	2.0502	32,547	1.0670	12,588
Adjustment arising from bonus issue	–	–	–	1,259
Adjustment arising from subdivision
of shares	–	582,525	–	–
Granted during the year	0.1670	7,150	2.8500	18,700
Exercised during the year	0.0606	(143,392 )	–	–
At 31 March	0.1237	478,830	2.0502	32,547

The exercise prices and exercise periods of the share options outstanding as at that balance sheet date are as follows:

2008

Number of options	Exercise price*	Exercise period
’000	HK$
	per share
97,680	0.0485	12/11/2004 to 11/11/2014
374,000	0.1425	1/3/2007 to 28/2/2017
7,150	0.1670	2/1/2009 to 1/1/2013
478,830

I - 64 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

2007

Number of options	Exercise price*	Exercise period
’000	HK$
	per share
13,847	0.9700	12/11/2004 to 11/11/2014
18,700	2.8500	1/3/2007 to 28/2/2017
32,547

The exercise price of the share options is subject to adjustment in case of rights or bonus issues, or other similar changes in the Company’s share capital.

The fair value of the share options granted during the year was HK$467,000 (2007: HK$7,633,000) of which the Group recognised a share option expense of HK$64,000 (2006: HK$7,633,000) during the year ended 31 March 2008.

The fair value of equity-settled share options granted in the current year was estimated as at the date of grant, using a binomial model, taking into account the terms and conditions upon which the options were granted. The following table lists the inputs to the model used for the year ended 31 March 2008:

	2008	2007
Expected dividend yield (%)	1.00	4.73
Expected volatility (%)	57.00	23.29
Risk-free interest rate (%)	2.60 - 3.10	4.00
Exit rate of employees (%)	–	15.00

The expected volatility reflects the assumption that the historical volatility is indicative of future trends, which may also not necessarily be the actual outcome. No other feature of the options granted was incorporated into the measurement of fair value.

The 143,391,600 share options exercised during the year resulted in the issue of 143,391,600 ordinary shares of the Company and new share capital of HK$896,000 and share premium of HK$7,798,000 (before issue expenses), as further detailed in note 36 to the financial statements.

At the balance sheet date, the Company had 478,830,000 (2007: 32,546,800) share options outstanding under the Scheme. The exercise in full of these share options would, under the then capital structure of the Company, result in the issue of 478,830,000 (2007: 32,546,800) additional ordinary shares of the Company and additional share capital of HK$2,394,000 (2007: HK$3,255,000) and share premium of HK$56,832,000 (2007: HK$63,472,000) (before issue expenses).

At the date of approval of these financial statements, the Company had 584,982,964 share options available for issue under the Scheme which represented approximately 7.4% of the Company’s shares in issue as at that date.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

38. 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 page 32 of the financial statements.

Certain amounts of goodwill arising on the acquisition of subsidiaries and associates in prior years remain eliminated against consolidated reserves, as explained in note 18 to the financial statements.

(b) Company

Share premium account Notes HK$’000 At 1 April 2006 422,291 Final 2006 dividend declared 12 – Conversion of convertible notes 36 3,822 Bonus issue 36 (2,264 ) Repurchases of shares 36 (43,087 ) Placements of shares 36 174,150 Share issue expenses 36 (5,300 ) Equity-settled share option arrangements 37 – Profit for the year – Interim 2007 dividend 12 – Proposed final 2007 dividend 12 – At 31 March and 1 April 2007 549,612 Final 2007 dividend declared – Conversion of convertible notes 36 49,712 Issue of warrants 36 – Exercise of share options 36 7,798 Repurchases of shares 36 (20,603 ) Share issue expenses 36 (160 ) Equity-settled share option arrangements 37 – Profit for the year – Interim 2008 dividend 12 – Proposed final 2008 dividend 12 – At 31 March 2008 586,359	Contributed surplus (Note) HK$’000 121,364 – – – – – – – – – – 121,364 – – – – – – – – – – 121,364	Share option reserve HK$’000 – – – – – – – 7,633 – – – 7,633 – – – – – – 64 – – – 7,697	warrant reserve HK$’000 – – – – – – – – – – – – – – 4,500 – – – – – – – 4,500	Retained profits HK$’000 92,027 (126 ) – – – – – – 127,230 (7,073 ) (19,540 ) 192,518 – – – – – – – 180,187 (10,319 ) (7,868 ) 354,518	Proposed final dividend HK$’000 15,718 (15,718 ) – – – – – – – – 19,540 19,540 (19,540 ) – – – – – – – – 7,868 7,868	Total HK$’000 651,400 (15,844 ) 3,822 (2,264 ) (43,087 ) 174,150 (5,300 ) 7,633 127,230 (7,073 ) – 890,667 (19,540 ) 49,712 4,500 7,798 (20,603 ) (160 ) 64 180,187 (10,319 ) – 1,082,306

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

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’s 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.

39. NOTES TO THE CONSOLIDATED CASH FLOw STATEMENT

(a) Major non-cash transaction

During the year, all the outstanding convertible notes with a face value of HK$48,000,000 (2007: HK$3,600,000) were converted into 528,000,000 (2007: 1,800,000) new shares of the Company.

(b) Acquisition of a subsidiary

Pursuant to the Shareholder Agreement dated 6 January 2007 entered into between the Group and the existing shareholders of Xuzhou Yuan Yang Trading Development Company Limited (“Xuzhou Yuan Yang”), the Group injected capital amounting to RMB35.7 million into Xuzhou Yuan Yang and obtained a 51% stake in the enlarged capital of Xuzhou Yuan Yang (the “Capital Injection”). Xuzhou Yuan Yang is principally engaged in the development, operation and management of an agricultural by-products wholesale market and related facilities, and rental of properties.

The Capital Injection was completed in August 2007 and Xuzhou Yuan Yang became a 51%-owned subsidiary of the Group.

The fair values of the identifiable assets and liabilities of Xuzhou Yuan Yang as at the date of acquisition and the corresponding carrying amounts immediately before the acquisition were as follows:

Notes Net assets acquired: Property, plant and equipment 14 Investment properties 16 Trade receivables Other receivables Cash and cash equivalents Other payables and accruals Minority interests Goodwill on acquisition 18 Satisfied by cash	2008 Fair value recognised on acquisition HK$’000 11,969 20,019 201 6,429 39,886 (28,704 ) 49,800 (24,402 ) 11,444 36,842	Carrying amount HK$’000 11,776 19,678 201 6,429 39,886 (28,704 ) 49,266

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

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

Cash consideration Cash and bank balances acquired Net inflow of cash and cash equivalents in respect of the acquisition of a subsidiary	2008 HK$’000 (36,842 ) 39,886 3,044

Since its acquisition, Xuzhou Yuan Yang contributed HK$11,913,000 to the Group’s turnover and HK$4,091,000 to the consolidated profit for the year ended 31 March 2008.

There would have been no significant differences to the Group’s consolidated profit for the year had the acquisition taken place at the beginning of the year.

(c) Disposal of subsidiaries

Notes Net assets disposed of: Property, plant and equipment 14 Investment properties 16 Inventories Trade receivables Deposits and other receivables Cash and cash equivalents Trade and other payables Tax payable Dividends payable Goodwill released on disposal 18 Gain on disposal of subsidiaries Satisfied by: Cash Expenses incurred	2007 HK$’000 180 10,200 10 43 1,339 1,978 (1,315 ) (195 ) (633 ) 11,607 4,044 2,524 18,175 18,200 (25 ) 18,175

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

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

Cash consideration Dividends received Expenses incurred Cash and cash equivalents disposed of Net inflow of cash and cash equivalents in respect of the disposal of subsidiaries	2007 HK$’000 18,200 633 (25 ) (1,978 )
	16,830

40. CONTINGENT LIABILITIES

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

(a) Company

	2008	2007
	HK$’000	HK$’000
Guarantees given to financial institutions in connection
with facilities granted to subsidiaries	577,371	483,162

(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$799,000 (2007: HK$714,000) as at 31 March 2008, as further explained under the heading “Employee benefits” in note 2.4 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.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

41. OPERATING LEASE ARRANGEMENTS

(a) As lessor

The Group leases it investment properties (note 16), 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 After five years	Group 2008 HK$’000 95,137 13,791 1,660 110,588	2007 HK$’000 64,937 88,835 12,430
		166,202

(b) As lessee

The Group leases certain 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 2008 HK$’000 65,042 101,366 10,949 177,357	2007 HK$’000 110,710 91,551 –
		202,261

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

42. COMMITMENTS

In addition to the operating lease commitments detailed in note 41(b) above, the Group had the following capital commitments at the balance sheet date:

Contracted, but not provided for: Capital expenditure on property, plant and equipment Capital expenditure for properties under development Capital expenditure for construction of investment properties in Mainland China Acquisition of investment properties Investment in a subsidiary Investment in an associate Acquisition of a subsidiary Acquisition of associates	Group 2008 HK$’000 803 10,856 53,643 49,842 – 18,787 – 63,470 197,401	2007 HK$’000 – 31,693 – – 39,190 – 36,218 –
		107,101

At the balance sheet date, the Company did not have any significant commitments.

43. RELATED PARTy TRANSACTIONS

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

(a) Transactions with related parties

		2008	2007
	Notes	HK$’000	HK$’000
Rental income received from a director	(i)	802	600
Income from associates:	(ii)
Management fee		996	996
Rental		1,657	1,044
Management fee income from companies
that were significantly influenced by
an executive director of the Company	(ii)	960	–
Rental expenses paid to an associate	(ii)	1,920	1,845

Notes:

(i) Certain investment properties of the Group were leased to a director at an agreed monthly rental range from HK$50,000 to HK$82,000 (2007: HK$50,000). The rental was determined with reference to the prevailing market rates.
(ii) The transactions were based on terms mutually agreed between the Group and the related parties.
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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

(b) On 7 January 2008, the Group entered into an agreement (the “Land Disposal Agreement”) with Joyful Leap Investments Limited (“Joyful”), a wholly-owned subsidiary of LeRoi Holdings Limited (an associate of WYTH and significantly influenced by an executive director of the Company), for the disposal of the entire equity interest in Brightest Investments Limited (“Brightest Investments”), a wholly-owned subsidiary of the Group, at an aggregate consideration of HK$240 million. Brightest Investments and its subsidiaries (collectively the “Disposal Group”) are established by the Group solely for the purpose of acquiring a parcel of land in Dongguan (the “Dongguan Land”) from the Dongguan Bureau of Land and Resources and have not commenced any operations other than matters in relation to obtaining the right to acquire the Dongguan Land.

The Land Disposal Agreement was completed on 10 January 2008 when the Disposal Group obtained the land use right certificate of the Dongguan Land.

(c) Details of the Group’s balances with associates as at the balance sheet date are disclosed in note 20 to the financial statements.

(d) Compensation of key management personnel of the Group

Short term employment benefits Post-employment benefits	2008 HK$’000 4,172 75 4,247	2007 HK$’000 5,509 82
		5,591

The above compensation of key management personnel excludes the directors’ remuneration, details of which are set out in note 8 to the financial statements.

44. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

The Group’s principal financial instruments, other than derivatives, comprise bank loans and overdrafts, convertible notes, and cash and short term deposits. The main purpose of these financial instruments is to raise finance for the Group’s operations. The Group has various other financial assets and liabilities such as trade receivables and trade payables, which arise directly from its operations.

The main risks arising from the Group’s financial instruments are interest rate risk, foreign currency risk, credit risk, liquidity risk and equity price risk. The board of directors reviews and agrees policies for managing each of these risks and they are summarised below. The Group’s accounting policies in relation to derivatives are set out in note 2.4 to the financial statements.

Interest rate risk

The Group’s exposure to the risk of changes in market interest rates relates primarily to the Group’s debt obligations with a floating interest rate.

The following table demonstrates the sensitivity to a reasonably possible change in interest rates, with all other variables held constant, of the Group’s profit before tax (through the impact on floating rate borrowings). There is no material impact on other components of the Group’s equity.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

2008 Hong Kong dollar Renminbi Hong Kong dollar Renminbi 2007 Hong Kong dollar Hong Kong dollar	Group Increase/ Increase/ (decrease) (decrease) in in profit basis points before tax HK$’000 100 (4,968 ) 100 (499 ) (100 ) 4,968 (100 ) 499 100 (4,982 ) (100 ) 4,982

Foreign currency risk

The Group has minimal transactional currency exposure arising from sales or purchases by operating units in currencies other than the units’ functional currency, and hence it does not have any foreign currency hedging policies.

Part of the Group’s turnover and operating expenses are denominated in Renminbi (“RMB”), which is currently not a freely convertible currency. The PRC Government imposes controls on the convertibility of RMB into foreign currencies and, in certain cases, the remittance of currency out of Mainland China. Shortages in the availability of foreign currencies may restrict the ability of the Group’s PRC subsidiaries and jointly-controlled entities to remit sufficient foreign currencies to pay dividends or other amounts to the Group.

Under existing PRC foreign exchange regulations, payments of current account items, including dividends, trade and service-related foreign exchange transactions, can be made in foreign currencies without prior approval from the State Administration for Foreign Exchange Bureau by complying with certain procedural requirements. However, approval from appropriate PRC governmental authorities is required where RMB is to be converted into a foreign currency and remitted out of Mainland China to pay capital account items, such as the repayment of bank loans denominated in foreign currencies.

Currently, the Group’s PRC subsidiaries and jointly-controlled entities may purchase foreign exchange for settlement of current account transactions, including payment of dividends to the Company, without prior approval of the State Administration for Foreign Exchange Bureau. The Group’s PRC subsidiaries and jointly-controlled entities may also retain foreign currencies in their current accounts to satisfy foreign currency liabilities or to pay dividends. Since foreign currency transactions on the capital account are still subject to limitations and require approval from the State Administration for Foreign Exchange Bureau, this could affect the Group’s subsidiaries and jointly-controlled entities’ ability to obtain required foreign exchange through debt or equity financing, including by means of loans or capital contributions from us.

There are limited hedging instruments available in the PRC to reduce the Group’s exposure to exchange rate fluctuations between RMB and other currencies. To date, the Group has not entered into any hedging transactions in an effort to reduce the Group’s exposure to foreign currency exchange risks. While the Group may decide to enter into hedging transactions in the future, the availability and effectiveness of these hedges may be limited and the Group may not be able to hedge the Group’s exposure successfully, or at all.

I - 73 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

The following table demonstrates the sensitivity at the balance sheet date to a reasonably possible change in the RMB exchange rate, with all other variables held constant, of the Group’s profit before tax (due to changes in the fair value of monetary assets and liabilities).

	Group
	Increase/	Increase/
	(decrease) in	(decrease)
	basis points	in profit
	rate	before tax
	%	HK$’000
2008
If Euro strengthens against HK$	17.058	1,750
If Euro weakens against HK$	(17.058 )	(1,750 )
If HK$ strengthens against RMB	9.023	3,989
If HK$ weakens against RMB	(9.023 )	(3,989 )
2007
If GBP strengthens against HK$	8.734	1,199
If GBP weakens against HK$	(8.734 )	(1,199 )

Credit risk

The Group trades only with recognised and creditworthy third parties. It is the Group’s policy that all customers who wish to trade on credit terms are subject to credit verification procedures. In addition, receivable balances are monitored on an ongoing basis and the Group’s exposure to bad debts is not significant.

The credit risk of the Group’s other financial assets, which comprise cash and cash equivalents, availablefor-sale financial assets, financial assets at fair value through profit or loss, amounts due from associates, other receivables and certain derivative instruments, arises from default of the counterparty, with a maximum exposure equal to the carrying amounts of these instruments.

Since the Group trades only with recognised and creditworthy third parties, there is no requirement for collateral. Concentrations of credit risk are managed by customer/counterparty and by industry sector. There are no significant concentrations of credit risk within the Group as the customer bases of the Group’s trade receivables are widely dispersed in different sectors and industries.

Further quantitative data in respect of the Group’s exposure to credit risk arising from trade and other receivables are disclosed in notes 25 and 26 respectively, to the financial statements.

Liquidity risk

The Group monitors its risk to a shortage of funds using a recurring liquidity planning tool. This tool considers the maturity of both its financial instruments and financial assets (e.g. trade receivables) and projected cash flows from operations.

The Group’s objective is to maintain a balance between continuity of funding and flexibility through the use of bank overdrafts, bank loans and convertible notes.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

The maturity profile of the Group’s financial liabilities as at the balance sheet date, based on the contracted undiscounted payments, was as follows:

		2008
	within
	1 year or	1 to 2	3 to 5	Over
	on demand	years	years	5 years	Total
	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000
Interest-bearing bank loans	358,552	48,224	83,327	93,621	583,724
Trade payables_(note 29)_	24,624	–	–	–	24,624
Other payables_(note 30)_	114,298	–	–	–	114,298
	497,474	48,224	83,327	93,621	722,646
		2007
	within
	1 year or	1 to 2	3 to 5	Over
	on demand	years	years	5 years	Total
	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000
Convertible notes	–	48,200	–	–	48,200
Interest-bearing bank loans	403,517	22,916	43,208	47,618	517,259
Trade payables_(note 29)_	23,246	–	–	–	23,246
Other payables_(note 30)_	11,077	–	–	–	11,077
	437,840	71,116	43,208	47,618	599,782

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

The maturity profile of the Company’s financial liabilities as at the balance sheet date, based on the contracted undiscounted payments, was as follows:

		2008
	within
	1 year or	1 to 2	3 to 5	Over
	on demand	years	years	5 years	Total
	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000
Interest-bearing bank loans	138,342	39,157	75,419	17,503	270,421
Due to subsidiaries
(note 19)	–	–	–	230,258	230,258
	138,342	39,157	75,419	247,761	500,679
		2007
	within
	1 year or	1 to 2	3 to 5	Over
	on demand	years	years	5 years	Total
	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000
Convertible notes	–	48,200	–	–	48,200
Interest-bearing bank loans	139,693	17,029	14,486	–	171,208
Due to subsidiaries
(note 19)	–	–	–	190,412	190,412
	139,693	65,229	14,486	190,412	409,820

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Equity price risk

Equity price risk is the risk that the fair values of equity securities decrease as a result of changes in the levels of equity indices and the value of individual securities. The Group is exposed to equity price risk arising from individual equity investments classified as trading equity investments (note 27) as at 31 March 2008. The Group’s listed investments are listed on the Hong Kong, London, Paris, Tokyo and Singapore stock exchanges and are valued at quoted market prices at the balance sheet date.

The market equity indices for the following stock exchanges, at the close of business of the nearest trading day in the year to the balance sheet date, and their respective highest and lowest points during the year were as follows:

	31 March	High/low	31 March	High/low
	2008	2008	2007	2007
Hong Kong – Hang Seng Index	22,849	31,650/19,904	19,801	20,951/15,205
London – FTSE 100	5,702	6,752/5,414	6,308	6,435/5,467
Paris – CAC 40 Index	4,707	6,168/4,417	5,634	5,772/4,565
Tokyo – Nikkei 225	12,526	18,297/11,691	17,288	18,300/14,046
Singapore – Straits Times Index	3,007	3,831/2,746	3,231	3,236/2,252

The following table demonstrates the sensitivity to a reasonably possible change in the fair values of the equity investments, with all other variables held constant and before any impact on tax, based on their carrying amounts at the balance sheet date.

		Increase/	Increase/
	Carrying amount	(decrease)	(decrease)
	of equity	in equity	in profit
	investments	price	before tax
	HK$’000	%	HK$’000
2008
Investments held-for-trading listed in:
Hong Kong	27,882	54	15,140
Hong Kong	27,882	(54 )	(15,140 )
London	2,338	15	355
London	2,338	(15 )	(355 )
Paris	1,925	23	441
Paris	1,925	(23 )	(441 )
Singapore	5,556	22	1,203
Singapore	5,556	(22 )	(1,203 )

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

		Increase/	Increase/
	Carrying amount	(decrease)	(decrease)
	of equity	in equity	in profit
	investments	price	before tax
	HK$’000	%	HK$’000
2007
Investments held-for-trading listed in:
Hong Kong	24,721	27	6,623
Hong Kong	24,721	(27 )	(6,623 )
London	2,243	10	229
London	2,243	(10 )	(229 )
Tokyo	536	14	74
Tokyo	536	(14 )	(74 )
Singapore	3,089	36	1,098
Singapore	3,089	(36 )	(1,098 )

Capital management

The primary objective of the Group’s capital management is to safeguard the Group’s ability to continue as a going concern and to maintain healthy capital ratios in order to support its business and maximise shareholder value.

The Group manages its capital structure and makes adjustments to it, in light of changes in economic conditions. To maintain or adjust the capital structure, the Group may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. No changes were made in the objectives, policies or processes during the years ended 31 March 2008 and 31 March 2007.

The Group monitors capital using a gearing ratio, which is net debt divided by the capital. The Group’s policy is to maintain the gearing ratio not exceeding 40%. Net debt is calculated as a total of interest-bearing bank borrowings and liability component of convertible notes, less cash and cash equivalents (including pledged deposits). Capital includes equity attributable to equity holders of the parent (including the equity component of convertible notes). The gearing ratios as at the balance sheet dates were as follows:

Interest-bearing bank borrowings_(note 32) Liability component of convertible notes(note 34) Less: Cash and cash equivalents(note 28)_ Net debt Equity attributable to equity holders Gearing ratio	Group 2008 HK$’000 546,233 – (330,819 ) 215,414 1,182,569 18.2%	2007 HK$’000 498,224 45,756 (466,584 ) 77,396 1,041,834 7.4%

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

45. POST BALANCE SHEET EVENTS

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

(a) On 26 March 2008, Accord Power entered into a Top-up Placing and Subscription Agreement with the Placing Agent and the Company and pursuant to which Accord Power agreed to subscribe for an aggregate of 900 million new ordinary shares of the Company at a price of HK$0.075 each (the “Top-up Subscription”).

The Top-up Subscription was completed on 2 April 2008 and the Company raised a total of HK$67,500,000 (before expenses) (note 36(e)) .

(b) On 22 April 2008, the Company placed an aggregate of 460 million new ordinary shares, through the Placing Agent, to certain private investors at a price of HK$0.075 per share pursuant to the agreement entered into between the Company and the Placing Agent on 26 March 2008 and raised a total of HK$34.5 million (before expenses) (note 36(f)) .
(c) On 7 May 2008, Rich Time Strategy Limited (“Rich Time”), an indirect wholly-owned subsidiary of the Company, entered into a Top-up Placing and Subscription Agreement with the Placing Agent and WYTH and pursuant to which, Rich Time agreed to place, through the Placing Agent, an aggregate of 335,004,000 existing ordinary shares of WYTH to certain private investors at a price of HK$0.165 each (the “WYTH Top-up Placing”) and subscribe conditionally for an aggregate of 335,004,000 new ordinary shares of WYTH at a price of HK$0.165 each (the “WYTH Top-up Subscription”).

The WYTH Top-up Placing and the WYTH Top-up Subscription were completed on 15 May 2008 and 19 May 2008, respectively. Upon completion of the WYTH Top-up Placing and WYTH Top-up Subscription, the Group’s interests in WYTH were diluted from 28.31% to 23.59%.

46. COMPARATIVE AMOUNTS

As further explained in note 2.2 to the financial statements, due to the adoption of the new and revised HKFRSs during the current year, certain comparative amounts have been adjusted to conform with the current year’s presentation and to show separately comparative amounts in respect of items disclosed for the first time in 2008.

47. APPROVAL OF THE FINANCIAL STATEMENTS

The financial statements were approved and authorised for issue by the board of directors on 15 July 2008.

I - 79 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

3. UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2008

Set out below are the unaudited consolidated financial statements of the Group for the six months ended 30 September 2008 which are published in the Company’s interim report 2008:

Consolidated Income Statement

For the six months ended 30 September 2008

Notes
REVENUE
3
Cost of sales
Gross profit
Other income and gains
4
Selling and distribution costs
Administrative expenses
Other expenses
5
Fair value gains/(losses) on financial
assets at fair value through profit
and loss
Fair value gains on revaluation
of investment properties, net
Finance costs
6
Share of profits and losses of associates
PROFIT/(LOSS) BEFORE TAX
7
Tax
8
PROFIT/(LOSS) FOR THE PERIOD
ATTRIBUTABLE TO:
Equity holders of the parent
Minority interests
EARNINGS/(LOSS) PER SHARE
9
Basic

Diluted
DIVIDEND PER SHARE
10

For the six months ended
30 September
2008
2007
(Unaudited)
(Unaudited)
HK$’000
HK$’000
181,789
296,413
(131,028 )
(232,362 )
50,761
64,051
22,405
17,323
(1,348 )
(3,854 )
(41,619 )
(43,400 )
(36,521 )
(1,702 )
(23,640 )
15,511
15,767
2,382
(4,098 )
(6,285 )
(42,026 )
6,266
(60,319 )
50,292
(10,398 )
(12,547 )
(70,717 )
37,745
(82,917 )
37,757
12,200
(12 )
(70,717 )
37,745
(HK1.06)cents
HK0.63 cent
N/A
HK0.56 cent
NIL
HK0.16 cent

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Consolidated Balance Sheet

30 September 2008

30 September 2008 (Unaudited) Notes HK$’000 NON-CURRENT ASSETS Property, plant and equipment 11 204,449 Prepaid land lease payments 3,337 Investment properties 612,545 Goodwill 7,820 Interests in associates 13 255,881 Held-to-maturity financial assets 6,094 Other intangible assets 21,210 Loans receivable 12,739 Rental deposits paid 10,423 Deposits for the acquisition of investment properties and associates – Deferred tax assets 4,342 Total non-current assets 1,138,840 CURRENT ASSETS Properties held for sale 14,361 Properties under development 11 313,052 Inventories 4,305 Trade receivables 14 2,523 Prepayments, deposits and other receivables 40,594 Financial assets at fair value through profit or loss 23,648 Tax recoverable 883 Cash and cash equivalents 443,208 Total current assets 842,574 CURRENT LIABILITIES Trade payables 15 8,729 Other payables and accruals 82,799 Deposits received and receipts in advance 45,270 Derivative financial instruments 718 Interest-bearing bank loans 127,742 Provisions for onerous contracts 1,090 Tax payable 29,489 Total current liabilities 295,837	31 March 2008 (Audited) HK$’000 160,884 177,902 555,199 7,820 305,825 1,943 24,240 12,989 4,595 35,674 4,342
	1,291,413
	27,885 288,405 – 4,101 43,190 45,278 883 330,819
	740,561
	24,624 128,423 50,038 2,338 347,115 1,690 27,827
	582,055

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes NET CURRENT ASSETS TOTAL ASSETS LESS CURRENT LIABILITIES NON-CURRENT LIABILITIES Interest-bearing bank loans Provisions for onerous contracts Deferred tax liabilities Total non-current liabilities Net assets EQUITY Equity attributable to equity holders of the parent Issued capital 16 Reserves Proposed dividends Minority interests Total equity	30 September 2008 (Unaudited) HK$’000 546,737 1,685,577 401,672 1,960 15,104 418,736 1,266,841 39,339 1,151,531 – 1,190,870 75,971 1,266,841	31 March 2008 (Audited) HK$’000 158,506
		1,449,919
		199,118 1,960 8,626
		209,704
		1,240,215
		32,051 1,142,650 7,868
		1,182,569 57,646
		1,240,215

I - 82 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Consolidated Statement of Changes in Equity

For the six months ended 30 September 2008

				Attributable to	Attributable to	equity holders of the parent	equity holders of the parent
				Equity
				component
	Issued	Share		of	Share	Exchange				Proposed
	share	premium	Contributed	convertible	option	fluctuation	warrant	Other	Retained	final		Minority	Total
	capital	account	surplus	notes	reserve	reserve	reserve	reserve	profits	dividend	Total	interests	equity
	(Unaudited)	(Unaudited)	(Unaudited)	(Unaudited)	(Unaudited)	(Unaudited) (Unaudited) (Unaudited)			(Unaudited)	(Unaudited)	(Unaudited)	(Unaudited)	(Unaudited)
	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000
At 1 April 2007	29,418	549,612	106,329	5,653	7,633	378	–	–	323,271	19,540	1,041,834	472	1,042,306
Final 2007 dividend declared	–	–	–	–	–	–	–	–	–	(19,540)	(19,540)	–	(19,540)
	29,418	549,612	106,329	5,653	7,633	378	–	–	323,271	–	1,022,294	472	1,022,766
Exchange realignment
recognized directly in equity	–	–	–	–	–	21	–	–	–	–	21	–	21
Profit for the period	–	–	–	–	–	–	–	–	37,757	–	37,757	(12)	37,745
Total income and expense
for the period	–	–	–	–	–	21	–	–	37,757	–	37,778	(12)	37,766
Conversion of convertible notes	2,640	49,712	–	(5,653)	–	–	–	–	–	–	46,699	–	46,699
Exercise of share options	189	1,588	–	–	–	–	–	–	–	–	1,777	–	1,777
Issue of warrants	–	–	–	–	–	–	4,500	–	–	–	4,500	–	4,500
Acquisition of a subsidiary	–	–	–	–	–	–	–	–	–	–	–	24,402	24,402
Capital contribution from a minority
shareholder of a subsidiary	–	–	–	–	–	–	–	–	–	–	–	11,179	11,179
At 30 September 2007	32,247	600,912	106,329	–	7,633	399	4,500	–	361,028	–	1,113,048	36,041	1,149,089
At 1 April 2008	32,051	586,359	106,329	–	7,697	23,167	4,500	13,425	401,173	7,868	1,182,569	57,646	1,240,215
Final 2008 dividend declared	–	–	–	–	–	–	–	–	–	(7,868)	(7,868)	–	(7,868)
	32,051	586,359	106,329	–	7,697	23,167	4,500	13,425	401,173	–	1,174,701	57,646	1,232,347
Exchange realignment recognized
directly in equity	–	–	–	–	–	6,391	–	–	–	–	6,391	6,125	12,516
Profit/(loss) for the period	–	–	–	–	–	–	–	–	(82,917)	–	(82,917)	12,200	(70,717)
Total income and expense
for the period	–	–	–	–	–	6,391	–	–	(82,917)	–	(76,526)	18,325	(58,201)
Exercise of share options	488	4,249	–	–	–	–	–	–	–	–	4,737	–	4,737
Placements of shares	6,800	95,200	–	–	–	–	–	–	–	–	102,000	–	102,000
Share issue expenses	–	(2,965)	–	–	–	–	–	–	–	–	(2,965)	–	(2,965)
Disposal of a subsidiary	–	–	–	–	–	(11,077)	–	–	–	–	(11,077)	–	(11,077)
At 30 September 2008	39,339	682,843	106,329	–	7,697	18,481	4,500	13,425	318,256	–	1,190,870	75,971	1,266,841

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Condensed Consolidated Cash Flow Statement

For the six months ended 30 September 2008

NET CASH INFLOW/(OUTFLOW) FROM
OPERATING ACTIVITIES
NET CASH INFLOW FROM INVESTING ACTIVITIES
NET CASH INFLOW/(OUTFLOW) FROM
FINANCING ACTIVITIES
INCREASE/(DECREASE) IN CASH AND CASH
EQUIVALENTS
Cash and cash equivalents at beginning of period
Effect of foreign exchange rate changes, net
CASH AND CASH EQUIVALENTS AT END OF PERIOD
ANALYSIS OF BALANCES OF CASH AND
CASH EQUIVALENTS
Cash and bank balances
Non-pledged time deposits with original maturity
of less than three months when acquired

Six months ended
30 September
2008
2007
(Unaudited)
(Unaudited)
HK$’000
HK$’000
14,902
(183,538 )
83,275
53,076
9,517
(15,817 )
107,694
(146,279 )
330,819
388,584
4,695
–
443,208
242,305
92,105
88,106
351,103
154,199
443,208
242,305

I - 84 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the six months ended 30 September 2008

1. BASIS OF PREPARATION

The unaudited interim condensed consolidated financial statements have been prepared in accordance with the applicable disclosure requirements of Appendix 16 to the Listing Rules and Hong Kong Accounting Standards (“HKAS”) 34 “Interim Financial Reporting” issued by the Hong Kong Institute of Certified Public Accountants (“HKICPA”).

2. PRINCIPAL ACCOUNTING POLICIES

The unaudited interim condensed consolidated financial statements have been prepared under the historical cost convention, except for investment properties, certain derivative financial instruments and equity investments, which have been measured at fair values.

The accounting polices used in the unaudited interim condensed consolidated financial statements are consistent with those followed in the preparation of the Group’s annual financial statements for the year ended 31 March 2008 and in accordance with Hong Kong Financial Reporting Standards (“HKFRSs”) (which include all Hong Kong Financial Reporting Standards, HKASs and Interpretations) issued by HKICPA, except that the Group has in the current period applied, for the first time, the following new HKFRSs, which are effective for the Group’s financial year beginning on 1 April 2008.

HKAS 39 and HKFRS 7 Reclassification of Financial Assets Amendments HK(IFRIC) – INT 12 Service Concession Arrangements HK(IFRIC) – INT 14 HKAS 19 – The Limit on a Defined Benefit Asset, Minimum Funding Requirements and Their Interaction

The adoption of these new HKFRSs had no significant impact on the Group’s unaudited interim condensed consolidated financial statements.

The Group has not early applied the following new and revised HKFRSs that have been issued but are not yet effective, in the unaudited interim condensed consolidated financial statements.

HKAS 1 (Revised) Presentation of Financial Statements[1] HKAS 23 (Revised) Borrowing Costs[1] HKAS 27 (Revised) Consolidated and Separate Financial Statements[3] HKAS 32 and HKAS 1 Puttable Financial Instruments and Obligations Arising on Liquidation[1] HKAS 39 Amendments Cash Flow Hedge Accounting of Forecast Intergroup Transactions[3] HKAS 39 Amendments The Fair Value Option[3] HKFRS 2 Amendments Share-based Payment – Vesting Conditions and Cancellations[1] HKFRS 3 (Revised) Business Combinations[3] HKFRS 8 Operating Segments[1] HK(IFRIC) – Int 13 Customer Loyalty Programmes[2] HK(IFRIC) – Int 15 Agreements for the Construction of Real Estate[1] HK(IFRIC) – Int 16 Hedges of a Net Investment in a Foreign Operation[4]

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

2 Effective for annual periods beginning on or after 1 July 2008

3 Effective for annual periods beginning on or after 1 July 2009

4 Effective for annual periods beginning on or after 1 October 2008

The Group expects that while the adoption of the HKAS 1 and HKFRS 8 may result in new or amended disclosures, these new and revised HKFRSs will not have any significant impact on the Group’s financial statements in the period of initial applications.

I - 85 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

3. SEGMENT INFORMATION

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

(a) Business segments

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

2008

Property development (Unaudited) HK$’000 19,246 – –	Property investment (Unaudited) HK$’000 6,972 – 130	Chinese wet markets (Unaudited) HK$’000 79,303 – 1,591	Shopping centres (Unaudited) HK$’000 6,158 – 87	Agricultural by-products wholesale markets (Unaudited) HK$’000 23,993 – 360	Trading of agricultural by-products (Unaudited) HK$’000 45,612 – –	Unallocated corporate and others (Unaudited) HK$’000 505 1,122 18,310	Eliminations Consolidated (Unaudited) HK$’000 – (1,122 ) (270 )	(Unaudited) HK$’000 181,789 – 20,208
19,246	7,102	80,894	6,245	24,353	45,612	19,937	(1,392 )	201,997
1,260	(16,071 )	9,625	1,287	32,507	72	(44,892)	(180 )	(16,392 ) 2,197 (4,098 ) (42,026 )
199,466 – 3	5,363 – 2,381	70,817 – 1,330	5,652 340 101	12,564 – 329	– – –	2,551 933 24,636	– (1,273) (1,046)
								(60,319 ) (10,398 )
								(70,717 )

								296,413 – 27,734
199,469	7,744	72,147	6,093	12,893	–	28,120	(2,319)	324,147
29,474	4,725	6,191	1,929	(7,501)	–	1,364	7,116	43,298 (469 ) 7,482 (6,285) 6,266

								50,292 (12,547 )
								37,745

I - 86 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

(b) Geographical segments

The following table presents revenue information for the Group’s geographical segment for the six months ended 30 September.

		Hong Kong	Hong Kong		Mainland China	Mainland China	Mainland China		Consolidated	Consolidated
		2008	2007		2008		2007		2008	2007
	(Unaudited)		(Unaudited)	(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)
		HK$’000	HK$’000		HK$’000		HK$’000		HK$’000	HK$’000
Segment revenue:
Sales to external
customers		161,399	287,193		20,390		9,220		181,789	296,413

4. OTHER INCOME AND GAINS

Bank interest income Other interest income Gain on disposal of financial assets at fair value through profit or loss Gain on disposal of a subsidiary_(note 20(b))_ Dividend income from listed securities Recognition of a deferred gain Others	For the six months ended 30 September 2008 2007 (Unaudited) (Unaudited) HK$’000 HK$’000 1,682 6,054 515 1,428 396 3,129 11,470 – 951 57 902 986 6,489 5,669 22,405 17,323	For the six months ended 30 September 2008 2007 (Unaudited) (Unaudited) HK$’000 HK$’000 1,682 6,054 515 1,428 396 3,129 11,470 – 951 57 902 986 6,489 5,669 22,405 17,323
		17,323

5. OTHER EXPENSES

Loss on deemed disposal of interest in an associate Loss on disposal of an investment property Others	For the six months ended 30 September 2008 2007 (Unaudited) (Unaudited) HK$’000 HK$’000 31,764 – 4,520 – 237 1,702 36,521 1,702	For the six months ended 30 September 2008 2007 (Unaudited) (Unaudited) HK$’000 HK$’000 31,764 – 4,520 – 237 1,702 36,521 1,702
		1,702

I - 87 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

6. FINANCE COSTS

Interest on convertible notes Interest on bank loans and overdrafts	For the six months ended 30 September 2008 2007 (Unaudited) (Unaudited) HK$’000 HK$’000 – 1,143 4,098 5,142 4,098 6,285	For the six months ended 30 September 2008 2007 (Unaudited) (Unaudited) HK$’000 HK$’000 – 1,143 4,098 5,142 4,098 6,285
		6,285

7. PROFIT/(LOS) BEFORE TAX

The Group’s profit/(loss) before tax is arrived at after charging/(crediting):

	For the six months ended	For the six months ended
	30 September
	2008	2007
	(Unaudited)	(Unaudited)
	HK$’000	HK$’000
Cost of inventories sold	42,914	1,763
Cost of services provided	74,380	77,751
Cost of properties sold	13,734	152,848
Depreciation	3,008	3,925
Amortization of prepaid land lease payments	1,878	–
Amortization of other intangible assets	3,030	–
Amount released from onerous contracts, net	(600 )	(377 )

8. TAX

Hong Kong profits tax has been provided at the rate of 16.5% (2007: 17.5%) on the estimated assessable profits arising in Hong Kong during the period. Taxes on profits assessable elsewhere has been calculated at the rate of tax prevailing in the jurisdictions in which the Group operates, based on existing legislation, interpretation and practices in respect thereof.

Group: Current tax charge for the period: Hong Kong Mainland China Deferred Tax charge for the period	For the six months ended 30 September 2008 2007 (Unaudited) (Unaudited) HK$’000 HK$’000 3,636 9,941 284 595 6,478 2,011 10,398 12,547	For the six months ended 30 September 2008 2007 (Unaudited) (Unaudited) HK$’000 HK$’000 3,636 9,941 284 595 6,478 2,011 10,398 12,547
		12,547

Share of tax attributable to associates amounting to HK$284,000 (2007: HK$611,000) is included in “Share of profits and losses of associates” on the face of the unaudited consolidated income statement.

I - 88 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

9. EARNINGS/(LOS) PER SHARE

The calculation of basic and diluted earnings/(loss) per share attributable to the equity holders of the Company is based on the following data:

Earnings/(loss) Earnings/(loss) for the purpose of basic earnings per share Effect of dilutive potential ordinary shares Earnings/(loss) for the purpose of diluted earnings per share Shares Weighted average number of ordinary shares for the purpose of basic earnings/(loss) per share Effect of dilutive potential ordinary shares Weighted average number of ordinary shares for the purpose of diluted earnings/(loss) per share	For the six months ended 30 September 2008 2007 (Unaudited) (Unaudited) HK$’000 HK$’000 (82,917 ) 37,757 – 1,143 (82,917 ) 38,900 Number of Shares for the six months ended 30 September 2008 2007 (Unaudited) (Unaudited) 7,807,846,387 6,007,677,837 – 913,140,647 7,807,846,387 6,920,818,484	For the six months ended 30 September 2008 2007 (Unaudited) (Unaudited) HK$’000 HK$’000 (82,917 ) 37,757 – 1,143 (82,917 ) 38,900 Number of Shares for the six months ended 30 September 2008 2007 (Unaudited) (Unaudited) 7,807,846,387 6,007,677,837 – 913,140,647 7,807,846,387 6,920,818,484
		6,920,818,484

A diluted loss per share amount for the period ended 30 September 2008 has not been disclosed as no diluting events existed during that period.

10. DIVIDENDS PAID AND DECLARED

Dividend declared and paid during the six month period: Final dividend for 2007 of HK0.1 cents per share (2006: HK0.33 cents per share) Dividend proposed for approval: No interim dividend for 2008 (2007: HK0.16 cents per share)	For the six months ended 30 September 2008 2007 (Unaudited) (Unaudited) HK$’000 HK$’000 7,868 19,540 – 10,319	For the six months ended 30 September 2008 2007 (Unaudited) (Unaudited) HK$’000 HK$’000 7,868 19,540 – 10,319
		10,319

The directors do not recommend the payment of any interim dividend for the six months ended 30 September 2008 (2007: HK0.16 cents per share).

I - 89 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

11. ADDITIONS TO PROPERTy, PLANT AND EQUIPMENT AND PROPERTIES UNDER DEVELOPMENT

During the six months ended 30 September 2008, the Group incurred HK$54,522,000 (2007: HK$12,420,000) on the additions of items of property, plant and equipment.

During the six months ended 30 September 2008, the Group incurred HK$29,400,000 (2007: HK$6,800,000) on the additions of properties under development.

12. PLEDGE OF ASSETS

As at 30 September 2008, the Group’s properties under development with an aggregate carrying value of HK$306,700,000 (As at 31 March 2008: HK$282,197,000), and investment properties with an aggregate carrying value of HK$388,100,000 (As at 31 March 2008: HK$348,900,000) and certain rental income generated therefrom were pledged to secure certain of the Group’s general banking facilities.

13. INTERESTS IN ASSOCIATES

Share of net assets Deferred gains Due from associates –Note Due to associates –Note Provisions for impairment	30 September 2008 (Unaudited) HK$’000 253,808 (2,418 ) 251,390 5,381 (887 ) 255,884 (3 ) 255,881	31 March 2008 (Audited) HK$’000 307,664 (3,320 ) 304,344 2,362 (878 ) 305,828 (3 ) 305,825

Note:

The balances with associates are unsecured, interest-free and have no fixed terms of repayment. The carrying amounts of these balances approximate to their fair values.

I - 90 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

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

	Particulars of
	issued capital/	Place of	Percentage
	registered	incorporation/	of ownership interest
Name	capital	operation	attributable to the		Group	Principal activities
		30 September		31	March
			2008		2008
WYTH*	Ordinary shares	Bermuda/	23.59		28.31	Production and
	of HK$0.01 each	Hong Kong				sales of traditional
						Chinese and Western
						pharmaceutical,
						health food products
						and property holding
Changzhou Ling Jia	Paid-up	PRC	40		40	Agricultural by-products
Tang Hong-Jin Logistic	capital of					wholesale market
Development Company	US$14,020,176
Limited

Listed on the Stock Exchange

On 7 May 2008, Rich Time Strategy Limited (“Rich Time”), an indirect wholly-owned subsidiary of the Company, entered into a Top-up Placing and Subscription Agreement with Kingston Securities Limited (the “Placing Agent”) and WYTH and pursuant to which, Rich Time agreed to place, through the Placing Agent, an aggregate of 335,004,000 existing ordinary shares of WYTH to certain private investors at a price of HK$0.165 each (the “WYTH Top-up Placing”) and subscribe conditionally for an aggregate of 335,004,000 new ordinary shares of WYTH at a price of HK$0.165 each (the “WYTH Top-up Subscription”).

14. TRADE RECEIVABLES

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

Within 90 days 91 days to 180 days Over 180 days Less: Provision for impairment	30 September 2008 (Unaudited) HK$’000 1,989 560 54 2,603 (80 ) 2,523	31 March 2008 (Audited) HK$’000 3,948 165 76 4,189 (88 ) 4,101

The Group generally grants 14 to 45 days credit period to customers for its sub-leasing business. The Group generally does not grant any credit to customers of other businesses.

I - 91 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

15. TRADE PAyABLES

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

Within 90 days	30 September 2008 (Unaudited) HK$’000 8,729	31 March 2008 (Audited) HK$’000 24,624

The trade payables are non-interest bearing and have an average terms of 30 days. The carrying amount of the trade payables approximate to their fair values.

16. SHARE CAPITAL

40,000,000,000 (31 March 2008: 40,000,000,000) ordinary shares of HK$0.005 each Issued and fully paid: 7,867,913,640 (31 March 2008: 6,410,233,640) ordinary shares of HK$0.005 each	30 September 2008 (Unaudited) HK$’000 200,000 39,339	31 March 2008 (Audited) HK$’000 200,000
		32,051

(a) During the period, the subscription rights attaching to 97,680,000, share options were exercised at an exercise price of HK$0.0485 per share, resulting in the issue of 97,680,000 shares of HK$0.005 each for a total cash consideration, before expenses, of approximately HK$4,737,000.
(b) On 26 March 2008, Accord Power Limited (“Accord Power”), a substantial shareholder of the Company which is wholly-owned by Trustcorp Limited in its capacity as the trustee of the Tang’s Family Trust, entered into a placing and subscription agreement with a placing agent and the Company and pursuant to which Accord Power agreed to place, through the placing agent, an aggregate of 900,000,000 existing ordinary shares of the Company to certain private investors at a price of HK$0.075 each (the “Top-up Placing”) and subscribe for an aggregate of 900,000,000 new ordinary shares of the Company at a price of HK$0.075 each (the “Top-up Subscription”).

The Top-up Placing and the Top-up Subscription were completed on 31 March 2008 and 2 April 2008, respectively, and the Company raised a total of HK$67,500,000 (before expenses).

(c) On 22 April 2008, the Company placed an aggregate of 460,000,000 new ordinary shares, through the placing agent, to certain private investors at a price of HK$0.075 per share, raising the gross proceeds of HK$34,500,000 (before expenses).

Share options

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

I - 92 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

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$1,318,000 (31 March 2008: HK$799,000). 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.

18. OPERATING LEASE ARRANGEMENTS

(a) As lessor

The Group leases its investment properties, sub-leases Chinese wet markets, shopping centres, car parks and agricultural by-products wholesale markets 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.

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 After five years	30 September 2008 (Unaudited) HK$’000 109,777 76,763 – 186,540	31 March 2008 (Audited) HK$’000 95,137 13,791 1,660
		110,588

(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	30 September 2008 (Unaudited) HK$’000 60,927 100,310 7,350 168,587	31 March 2008 (Audited) HK$’000 65,042 101,366 10,949
		177,357

I - 93 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

19. COMMITMENTS

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

Contracted, but not provided for: Capital expenditure on property, plant and machinery Capital expenditure for properties under development Capital expenditure for construction of investment properties in Mainland China Acquisition of investment properties Investment in an associate Acquisition of associates	30 September 2008 (Unaudited) HK$’000 1,738 9,806 29,068 – – – 40,612	31 March 2008 (Audited) HK$’000 803 10,856 53,643 49,842 18,787 63,470
		197,401

20. RELATED PARTy TRANSACTIONS

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

(a) Transactions with related parties

Notes Rental income received from a director (i) Income from associates: (ii) Management fee Rental Rental expenses paid to an associate (ii)	For the six months ended 30 September 2008 2007 (Unaudited) (Unaudited) HK$’000 HK$’000 492 300 349 282 4,022 2,261 960 960

(i) An investment property of the Group was leased to a director of the Company, Mr. Tang Ching Ho, at an agreed monthly rental of HK$82,000. The rentals were determined with reference to the prevailing market rates.

(ii) The transactions were based on terms mutually agreed between both parties.

I - 94 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

(b) On 31 July 2008, the Group entered into an agreement (the “Disposal Agreement”) with Joyful Leap Investments Limited (“Joyful Leap”), a wholly-owned subsidiary of LeRoi Holdings Limited (an associate of WYTH) for the disposal of the entire equity interest in Strengthen Investments Limited (“Strengthen Investments”), a wholly-owned subsidiary of the Group, and the assignment of the amount advanced by the Group to Strengthen Investments at an aggregate consideration of HK$197,800,000. Strengthen Investments and its jointly-controlled entities have not commenced any operations other than matters in relation to obtaining a parcel of land in Fuzhou, Jiangxi Province, the PRC.

The Disposal Agreement was completed on 16 September 2008.

(c) Compensation of key management personnel of the Group

Short term employment benefits Post-employment benefits	For the six months ended 30 September 2008 2007 (Unaudited) (Unaudited) HK$’000 HK$’000 1,927 2,505 40 42 1,967 2,547	For the six months ended 30 September 2008 2007 (Unaudited) (Unaudited) HK$’000 HK$’000 1,927 2,505 40 42 1,967 2,547
		2,547

21. POST BALANCE SHET EVENT

On 26 November 2008, Accord Power entered into a placing and subscription agreement with the placing agent and the Company, and pursuant to which Accord Power agreed to place, through the placing agent, up to 900,000,000 existing ordinary shares of the Company to not fewer than six private investors at a price of HK$0.022 each (the “Top-up Placing”) and to subscribe for up to 900,000,000 new ordinary shares of the Company at a price of HK$0.022 each (the “Top-up Subscription”). The gross proceeds from the Top-up Subscription will be HK$19,800,000.

On the same day, the Company entered into another placing agreement with the placing agent, and pursuant to which the Company agreed conditionally to place, through the placing agent, up to 672,600,000 new ordinary shares of the Company at a price of HK$0.022 each (the “New Placing”). The gross proceeds from the New Placing will be approximately HK$14,800,000.

22. APPROVAL OF THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The unaudited interim condensed consolidated financial statements were approved and authorised for issue by the Board on 26 November 2008.

I - 95 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

4. FINANCIAL AND TRADING PROSPECTS

The Group has embarked on various diversification projects from 2007. It achieved considerable progress in the past year in laying a more solid foundation for future growth by extending its business to cover new areas, such as property investment and development and retailing. Looking forward, the Group will maintain its steady development and yet remain strategically focused on future expansion.

As a niche player focused on improving property rental returns in Hong Kong, the Group are well positioned to benefit from the growing opportunities in this sector. Having carried out a series of fund-raising activities and restructure of business including disposal of Yulin Hong-Jin and Xu Zhou Yuan Yang, the Group has boosted its capital base which has given the Group substantial investment capability and can streamline its business. The Group is optimistic about the growth prospects of the rental business of the investment properties in Hong Kong. The Group is believed that the acquisition of 54 investment properties in Hong Kong will strengthen the Group’s recurring income base in the coming years.

Despite the sluggish economic outlook, the Group remains strong on liquidity and will continue to search for attractive investment opportunities to ensure the Group’s further long-term earnings.

5. INDEBTEDNESS OF THE ENLARGED GROUP

As at the close of business on 31 January 2009, being the latest practicable date for the purpose of ascertaining information contained in this indebtedness statement prior to the printing of this circular, the Enlarged Group had outstanding bank loans of approximately HK$509,070,000 and all of which were secured by the Enlarged Group’s investment properties and certain rental income generated therefrom, properties under development and properties held for sale.

Save as aforesaid and apart from intra-group liabilities and normal trade payables, as at the close of business 31 January 2009, the Enlarged Group did not have any other debt securities issued and outstanding or authorized or otherwise created but unissued, any other term loans, any other borrowings or indebtedness in the nature of borrowings including bank overdrafts and liabilities under acceptance (other than normal trade bills) or acceptance credits or hire purchase commitments, any other mortgages and charges or any guarantees or material contingent liabilities.

6. wORKING CAPITAL STATEMENT

The Directors are satisfied after due and careful enquiry that after taking into account the existing banking and other borrowing facilities available and the existing cash and bank balances, the Enlarged Group has sufficient working capital for its present requirements, that is for at least the next 12 months from the date of publication of this circular, in the absence of unforeseeable circumstances.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

7. PROPOSED ACQUISITION

As disclosed in the announcement of the Company dated 13 February 2009, Wang On Enterprises (BVI) Limited, a wholly owned subsidiary of the Company, has entered into an agreement with Loyal Fame International Limited for the acquisition of the entire issued share capital of Everlong Limited at an aggregate consideration of HK$63.4 million, which shall be settled by cash in full by internal resources of the Group upon completion. Everlong Limited is an investment holding company which through its subsidiaries beneficially owns a portfolio of investment properties in Hong Kong. Upon completion of the acquisition, Everlong Limited will become an indirect wholly owned subsidiary of the Company. The Directors do not anticipate that there will be any variation to the aggregate remuneration payable to and benefits in kind receivable by the directors of the Company in consequence of the acquisition.

As at the Latest Practicable Date, the proposed acquisition of Everlong Limited had not yet been completed. For further details of the acquisition, please refer to the announcement of the Company dated 13 February 2009.

8. MATERIAL ADVERSE CHANGE

As set out in the interim report of the Company for the six months ended 30 September 2008, the Company recorded an unaudited loss attributable to equity holders of the Company of approximately HK$82.9 million for the six months ended 30 September 2008.

Save as disclosed above, as at the Latest Practicable Date, the Directors were not aware of any material adverse change in the financial or trading position of the Group since 31 March 2008, the date on which the latest published audited consolidated financial statements of the Company were made up.

I - 97 -

UnAUdited pro formA finAnciAl informAtion of the groUp

Appendix ii

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18th Floor

Two International Finance Centre 8 Finance Street Central Hong Kong

The Directors Wang On Group Limited

3 March 2009

Unaudited pro forma Statement of Adjusted consolidated net tangible Assets

Dear Sirs

We report on the unaudited pro forma statement of adjusted consolidated net tangible assets (the “Unaudited Pro Forma Financial Information”) of Wang On Group Limited (the “Company”) and its subsidiaries and jointly-controlled entities (hereafter collectively referred to as the “Group”) set out on pages II-3 to II-5 in Appendix II of the Company’s circular dated 3 March 2009 (the “Circular”) in connection with the proposed open offer of the Company (the “Open Offer”). The Unaudited Pro Forma Financial Information has been prepared by the directors of the Company, for illustrative purposes only, to provide information about how the Open Offer might have affected the consolidated net tangible assets of the Group if the Open Offer had taken place at 30 September 2008.

reSpective reSponSibilitieS of directorS of the compAny And reporting AccoUntAntS

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

It is our responsibility to form an opinion, as required by paragraph 4.29(7) of the Listing Rules, on the Unaudited Pro Forma Financial Information and to report our opinion to you. We do not accept any responsibility for any reports previously given by us on any financial information used in the compilation of the Unaudited Pro Forma Financial Information beyond that owed to those to whom those reports were addressed by us at the dates of their issue.

bASiS of opinion

We conducted our engagement in accordance with the Hong Kong Standard on Investment Circular Reporting Engagements 300 “Accountants’ Reports on Pro Forma Financial Information in Investment Circulars” issued by the Hong Kong Institute of Certified Public Accountants. Our work consisted primarily of comparing the unadjusted financial information with source documents, considering the evidence supporting the adjustments and discussing the Unaudited Pro Forma Financial Information with the directors of the Company. This engagement did not involve independent examination of any underlying financial information.

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UnAUdited pro formA finAnciAl informAtion of the groUp

Appendix ii

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

The Unaudited Pro Forma Financial Information is for illustrative purposes only, based on the judgments and assumptions of the directors of the Company, and, because of its hypothetical nature, does not provide any assurance or indication that any event will take place in the future and may not be indicative of: i) the financial position of the Group as at 30 September 2008 or any future dates; or ii) the consolidated net tangible assets per share of the Group as at 30 September 2008 or any future dates.

opinion

In our opinion:

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

Yours faithfully ernst & young Certified Public Accountants Hong Kong

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UnAUdited pro formA finAnciAl informAtion of the groUp

Appendix ii

(A) UnAUdited pro formA StAtement of AdJUSted conSolidAted net tAngible ASSetS of the groUp

introduction

The unaudited pro forma statement of adjusted consolidated net tangible assets of the Group has been prepared by the directors of the Company in accordance with paragraph 4.29 of The Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited to illustrate the effect of the Open Offer (including the associated Bonus Issue) on the unaudited consolidated net tangible assets of the Group as if the Open Offer had taken place on 30 September 2008.

The unaudited pro forma statement of adjusted consolidated net tangible assets of the Group is prepared based on the unaudited equity attributable to equity holders of the parent as at 30 September 2008, as extracted from the published interim report of the Company for the period ended 30 September 2008 as set out in Appendix I to this Circular, after incorporating the unaudited pro forma adjustments described in the accompanying notes.

The unaudited pro forma statement of adjusted consolidated net tangible assets of the Group has been prepared for illustrative purposes only and, because of its hypothetical nature, it may not give a true picture of the consolidated net tangible assets of the Group following the Open Offer.

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of the groUp

Appendix ii

UnAUdited pro formA finAnciAl informAtion

Based on the Minimum Number of Offer Shares and Bonus Shares to be issued_(Note 2) Based on the Maximum Number of Offer Shares and Bonus Shares to be issued(Note 2) Unaudited pro forma adjusted consolidated net tangible assets per Consolidated Share as at 30 September 2008 and prior to the completion of the Open Offer(Note 5) Unaudited pro forma adjusted consolidated net tangible assets per Consolidated Share upon the completion of the Open Offer (based on the minimum number of Offer Shares and Bonus Shares to be issued)(Note 6) Unaudited pro forma adjusted consolidated net tangible assets per Consolidated Share upon the completion of the Open Offer (based on the maximum number of Offer Shares Bonus Shares to be issued)(Note 7)_	consolidated net assets of the group attributable to the equity holders of the company as at 30 September 2008 HK$’000 (Note 1) 1,190,870 1,190,870	Unaudited pro forma adjusted consolidated net tangible assets of the group attributable to the equity holders of less: the company intangible as at assets and 30 September goodwill 2008 HK$’000 HK$’000 (Note 2) (29,030 ) 1,161,840 (29,030 ) 1,161,840	estimated net proceeds from the issue of offer Shares and bonus Shares HK$’000 (Note 3) 108,200 112,900	Unaudited pro forma adjusted consolidated net tangible assets of the group attributable to the equity holders of the company after estimated completion net proceeds of the issue from the of offer Share Shares and option bonus Shares HK$’000 HK$’000 (Note 4 ) N/A 1,270,040 54,948 1,329,688 3.692 0.577 0.579	Unaudited pro forma adjusted consolidated net tangible assets of the group attributable to the equity holders of the company after estimated completion net proceeds of the issue from the of offer Share Shares and option bonus Shares HK$’000 HK$’000 (Note 4 ) N/A 1,270,040 54,948 1,329,688 3.692 0.577 0.579

					1,329,688

					3.692

					0.577

					0.579

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UnAUdited pro formA finAnciAl informAtion of the groUp

Appendix ii

Notes:

The unaudited equity attributable to equity holders of the parent as at 30 September 2008 is extracted from the published interim report of the Company for the period ended 30 September 2008 as set out in Appendix I to this Circular.
Goodwill and other intangible assets represent the Group’s goodwill and other intangible assets of HK$7,820,000 and HK$21,210,000, respectively, as at 30 September 2008. These figures are extracted from the published interim report of the Company for the period ended 30 September 2008 as set out in Appendix I to this Circular.
The estimated net proceeds from the Open Offer of the minimum number of Offer Shares of approximately HK$108.2 million are based on 1,132,861,635 Offer Shares to be issued at the subscription price of HK$0.1 per Offer Share and after deduction of estimated related expenses of HK$5.1 million. The estimated net proceeds from the Open Offer of the maximum number of Offer Shares of approximately HK$112.9 million are based on 1,180,639,635 Offer Shares to be issued at the subscription price of HK$0.1 per Offer Share and after deduction of estimated related expenses of HK$5.2 million.
The estimated net proceeds from the exercise of Share Options is calculated based on the assumption that all rights attaching to the outstanding Share Options are exercised in full before the Record Date.
The number of shares used for the calculation of unaudited pro forma adjusted consolidated net tangible assets per Consolidated Share is based on 314,716,545 Consolidated Shares in issue as at 30 September 2008 (as adjusted by the Capital Reorganization).
The number of shares used for the calculation of unaudited pro forma adjusted consolidated net tangible assets per Consolidated Share after the completion of the Open Offer (based on the minimum number of Offer Shares to be issued and including the issue of Bonus Shares) is calculated based on 2,202,819,269 Consolidated Shares in issue upon completion of the Open Offer, which comprise the existing 314,716,545 Consolidated Shares in issue as at 30 September 2008, 1,132,861,635 Consolidated Shares to be issued pursuant to the Open Offer and 755,241,089 Consolidated Shares upon the issue of Bonus Shares.
The number of shares used for the calculation of unaudited pro forma adjusted consolidated net tangible assets per Consolidated Share after the completion of the Open Offer (based on the maximum number of Offer Shares to be issued and including the issue of Bonus Shares) is calculated based on 2,298,375,270 Consolidated Shares in issue upon completion of the Open Offer, which comprise the existing 314,716,545 Consolidated Shares in issue as at 30 September 2008, 15,926,000 Consolidated Shares to be issued to the holders of the outstanding Share Options assuming all rights attaching to the outstanding Share Options are exercised in full before the Record Date, 1,180,639,635 Consolidated Shares to be issued pursuant to the Open Offer and 787,093,090 Consolidated Shares upon the issue of Bonus Shares.
No adjustment has been made to reflect any trading results or other transactions of the Group entered into subsequent to 30 September 2008, including, inter alia, the placing of new shares by the Company, the proposed disposal of 100% interest in Shiney Day Investments Limited and the proposed acquisition of Everlong Limited.
II - 5 -

SUMMARY OF THE CONSTITUTION OF THE COMPANY AND BERMUDA COMPANY LAW

APPENDIX III

Set out below is a summary of certain provisions of the memorandum of association (the “ Memorandum of Association ”) and bye-laws (the “ Bye-laws ”) of the Company and of certain aspects of Bermuda company law.

1. MEMORANDUM OF ASSOCIATION

The Memorandum of Association states, inter alia, that the liability of members of the Company is limited to the amount, if any, for the time being unpaid on the Shares respectively held by them and that the Company is an exempted company as defined in the Companies Act. The Memorandum of Association also sets out the objects for which the Company was formed including acting as a holding company and investment company, and its powers, including the powers set out in the First Schedule to the Companies Act, excluding paragraph 8 thereof. As an exempted company, the Company will be carrying on business outside Bermuda from a place of business within Bermuda.

In accordance with and subject to section 42A of the Companies Act, the Memorandum of Association empowers the Company to purchase its own shares and pursuant to its Bye-laws, this power is exercisable by the board of Directors (the “ board ”) upon such terms and subject to such conditions as it thinks fit.

2. BYE-LAWS

The Bye-laws were adopted on 6 February, 1995. The following is a summary of certain provisions of the Bye-laws:

(a) Directors

(i) Power to allot and issue shares and warrants

Subject to any special rights conferred on the holders of any shares or class of shares, any share may be issued with or have attached thereto such rights, or such restrictions, whether with regard to dividend, voting, return of capital, or otherwise, as the Company may by ordinary resolution determine (or, in the absence of any such determination or so far as the same may not make specific provision, as the board may determine). Subject to the Companies Act, any preference shares may be issued or converted into shares that are liable to be redeemed, at a determinable date or at the option of the Company or, if so authorised by the Memorandum of Association, at the option of the holder, on such terms and in such manner as the Company before the issue or conversion may by ordinary resolution determine. The board may issue warrants conferring the right upon the holders thereof to subscribe for any class of shares or securities in the capital of the Company on such terms as it may from time to time determine.

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SUMMARY OF THE CONSTITUTION OF THE COMPANY AND BERMUDA COMPANY LAW

APPENDIX III

Subject to the provisions of the Companies Act, the Bye-laws, any direction that may be given by the Company in general meeting and, where applicable, the rules of any Designated Stock Exchange (as defined in the Bye-laws) and without prejudice to any special rights or restrictions for the time being attached to any shares or any class of shares, all unissued shares in the Company shall be at the disposal of the board, which may offer, allot, grant options over or otherwise dispose of them to such persons, at such times, for such consideration and on such terms and conditions as it in its absolute discretion thinks fit, but so that no shares shall be issued at a discount.

Neither the Company nor the board shall be obliged, when making or granting any allotment of, offer of, option over or disposal of shares, to make, or make available, any such allotment, offer, option or shares to members or others with registered addresses in any particular territory or territories being a territory or territories where, in the absence of a registration statement or other special formalities, this would or might, in the opinion of the board, be unlawful or impracticable. Members affected as a result of the foregoing sentence shall not be, or be deemed to be, a separate class of members for any purpose whatsoever.

(ii) Power to dispose of the assets of the Company or any of its subsidiaries

There are no specific provisions in the Bye-laws relating to the disposal of the assets of the Company or any of its subsidiaries.

Note: The Directors may, however, exercise all powers and do all acts and things which may be exercised or done or approved by the Company and which are not required by the Bye-laws or the Companies Act to be exercised or done by the Company in general meeting.

(iii) Compensation or payments for loss of office

Payments to any Director or past Director of any sum by way of compensation for loss of office or as consideration for or in connection with his retirement from office (not being a payment to which the Director is contractually entitled) must be approved by the Company in general meeting.

(iv) Loans and provision of security for loans to Directors

There are no provisions in the Bye-laws relating to the making of loans to Directors. However, the Companies Act contains restrictions on companies making loans or providing security for loans to their directors, the relevant provisions of which are summarised in the paragraph headed “Bermuda Company Law” in this Appendix.

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SUMMARY OF THE CONSTITUTION OF THE COMPANY AND BERMUDA COMPANY LAW

APPENDIX III

(v) Financial assistance to purchase shares of the Company

Neither the Company nor any of its subsidiaries shall directly or indirectly give financial assistance to a person who is acquiring or proposing to acquire shares in the Company for the purpose of that acquisition whether before or at the same time as the acquisition takes place or afterwards, provided that the Bye-laws shall not prohibit transactions permitted under the Companies Act.

(vi) Disclosure of interests in contracts with the Company or any of its subsidiaries

A Director may hold any other office or place of profit with the Company (except that of auditor of the Company) in conjunction with his office of Director for such period and, subject to the Companies Act, upon such terms as the board may determine, and may be paid such extra remuneration (whether by way of salary, commission, participation in profits or otherwise) in addition to any remuneration provided for by or pursuant to any other Bye-laws. A Director may be or become a director or other officer of, or a member of, any company promoted by the Company or any other company in which the Company may be interested, and shall not be liable to account to the Company or the members for any remuneration, profits or other benefits received by him as a director, officer or member of, or from his interest in, such other company. Subject as otherwise provided by the Bye-laws, the board may also cause the voting power conferred by the shares in any other company held or owned by the Company to be exercised in such manner in all respects as it thinks fit, including the exercise thereof in favour of any resolution appointing the Directors or any of them to be directors or officers of such other company, or voting or providing for the payment of remuneration to the directors or officers of such other company.

Subject to the Companies Act and to the Bye-laws, no Director or proposed or intending Director shall be disqualified by his office from contracting with the Company, either with regard to his tenure of any office or place of profit or as vendor, purchaser or in any other manner whatsoever, nor shall any such contract or any other contract or arrangement in which any Director is in any way interested be liable to be avoided, nor shall any Director so contracting or being so interested be liable to account to the Company or the members for any remuneration, profit or other benefits realised by any such contract or arrangement by reason of such Director holding that office or the fiduciary relationship thereby established. A Director who to his knowledge is in any way, whether directly or indirectly, interested in a contract or arrangement or proposed contract or arrangement with the Company shall declare the nature of his interest at the meeting of the board at which the question of entering into the contract or arrangement is first taken into consideration, if he knows his interest then exists, or in any other case, at the first meeting of the board after he knows that he is or has become so interested.

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SUMMARY OF THE CONSTITUTION OF THE COMPANY AND BERMUDA COMPANY LAW

APPENDIX III

A Director shall not be entitled to vote (nor be counted in the quorum) on any resolution of the board approving any contract or arrangement or other proposal in which he or any of his associates is materially interested but this prohibition shall not apply to any of the following matters, namely:

(aa) any contract or arrangement for giving to such Director or his associate(s) any security or indemnity in respect of money lent by him or any of his associates or obligations incurred or undertaken by him or any of his associates at the request of or for the benefit of the Company or any of its subsidiaries;
(bb) any contract or arrangement for the giving of any security or indemnity to a third party in respect of a debt or obligation of the Company or any of its subsidiaries for which the Director or his associate(s) has himself/themselves assumed responsibility in whole or in part whether alone or jointly under a guarantee or indemnity or by the giving of security;
(cc) any contract or arrangement concerning an offer of shares or debentures or other securities of or by the Company or any other company which the Company may promote or be interested in for subscription or purchase, where the Director or his associate(s) is/are or is/are to be interested as a participant in the underwriting or sub underwriting of the offer;
(dd) any contract or arrangement in which the Director or his associate(s) is/are interested in the same manner as other holders of shares or debentures or other securities of the Company by virtue only of his/their interest in shares or debentures or other securities of the Company;
(ee) any contract or arrangement concerning any other company in which the Director or his associate(s) is/are interested only, whether directly or indirectly, as an officer or executive or a shareholder or in which the Director and any of his associates are not in aggregate beneficially interested in 5 percent. or more of the issued shares or of the voting rights of any class of shares of such company (or of any third company through which his interest or that of any of his associates is derived); or
(ff) any proposal or arrangement concerning the adoption, modification or operation of a share option scheme, a pension fund or retirement, death, or disability benefits scheme or other arrangement which relates both to Directors, his associates and employees of the Company or of any of its subsidiaries and does not provide in respect of any Director, or his associate(s), as such any privilege or advantage not accorded generally to the class of persons to which such scheme or fund relates.
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SUMMARY OF THE CONSTITUTION OF THE COMPANY AND BERMUDA COMPANY LAW

APPENDIX III

(vii) Remuneration

The ordinary remuneration of the Directors shall from time to time be determined by the Company in general meeting, such remuneration (unless otherwise directed by the resolution by which it is voted) to be divided amongst the Directors in such proportions and in such manner as the board may agree or, failing agreement, equally, except that any Director holding office for part only of the period in respect of which the remuneration is payable shall only rank in such division in proportion to the time during such period for which he held office. The Directors shall also be entitled to be prepaid or repaid all travelling, hotel and incidental expenses reasonably incurred or expected to be incurred by them in attending any board meetings, committee meetings or general meetings or separate meetings of any class of shares or of debentures of the Company or otherwise in connection with the discharge of their duties as Directors.

Any Director who, by request, goes or resides abroad for any purpose of the Company or who performs services which in the opinion of the board go beyond the ordinary duties of a Director may be paid such extra remuneration (whether by way of salary, commission, participation in profits or otherwise) as the board may determine and such extra remuneration shall be in addition to or in substitution for any ordinary remuneration provided for by or pursuant to any other Bye-law. A Director appointed to be a managing director, joint managing director, deputy managing director or other executive officer shall receive such remuneration (whether by way of salary, commission or participation in profits or otherwise or by all or any of those modes) and such other benefits (including pension and/or gratuity and/or other benefits on retirement) and allowances as the board may from time to time decide. Such remuneration may be either in addition to or in lieu of his remuneration as a Director.

The board may establish or concur or join with other companies (being subsidiary companies of the Company or companies with which it is associated in business) in establishing and making contributions out of the Company’s monies to any schemes or funds for providing pensions, sickness or compassionate allowances, life assurance or other benefits for employees (which expression as used in this and the following paragraph shall include any Director or ex Director who may hold or have held any executive office or any office of profit with the Company or any of its subsidiaries) and ex employees of the Company and their dependants or any class or classes of such persons.

The board may pay, enter into agreements to pay or make grants of revocable or irrevocable, and either subject or not subject to any terms or conditions, pensions or other benefits to employees and ex employees and their dependants, or to any of such persons, including pensions or benefits additional to those, if any, to which such employees or ex employees or their dependants are or may become entitled under any such scheme or fund as is mentioned in the previous paragraph. Any such pension or benefit may, as the board considers desirable, be granted to an employee either before and in anticipation of, or upon or at any time after, his actual retirement.

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SUMMARY OF THE CONSTITUTION OF THE COMPANY AND BERMUDA COMPANY LAW

APPENDIX III

(viii) Retirement, appointment and removal

Subject to the rules and regulations of the Designated Stock Exchange and notwithstanding any contractual or other terms of appointment, at each annual general meeting, one third of the Directors for the time being (or if their number is not a multiple of three, then the number nearest to but not less than one third) will retire from office by rotation provided that every Director shall be subject to retirement at least once every three years. The Directors to retire in every year shall include any Director who wishes to retire and not offer himself for re-election and further, those who have been longest in office since their last re-election or appointment but as between persons who became or were last re-elected Directors on the same day those to retire will (unless they otherwise agree among themselves) be determined by lot.

Note: There are no provisions relating to retirement of Directors upon reaching any age limit.

The Directors shall have the power from time to time and at any time to appoint any person as a Director either to fill a casual vacancy on the board or, subject to authorisation by the members in general meeting, as an addition to the existing board but so that the number of Directors so appointed shall not exceed any maximum number determined from time to time by the members in general meeting. Any Director appointed by the Board shall hold office until the next following general meeting of the Company and shall then be eligible for re-election. Neither a Director nor an alternate Director is required to hold any shares in the Company by way of qualification.

A Director may be removed by an ordinary resolution of the Company before the expiration of his period of office (but without prejudice to any claim which such Director may have for damages for any breach of any contract between him and the Company) provided that the notice of any such meeting convened for the purpose of removing a Director shall contain a statement of the intention to do so and be served on such Director fourteen (14) days before the meeting and, at such meeting, such Director shall be entitled to be heard on the motion for his removal. Unless otherwise determined by the Company in general meeting, the number of Directors shall not be less than two. There is no maximum number of Directors unless otherwise determined from time to time by members of the Company.

The board may from time to time appoint one or more of its body to be managing director, joint managing director, or deputy managing director or to hold any other employment or executive office with the Company for such period (subject to their continuance as Directors) and upon such terms as the board may determine and the board may revoke or terminate any of such appointments (but without prejudice to any claim for damages that such Director may have against the Company or vice versa). The board may delegate any of its powers, authorities and discretions to committees consisting of such Director or Directors and other persons as the board thinks fit, and it may from time to time revoke such delegation or revoke the appointment of and discharge any such committees either

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SUMMARY OF THE CONSTITUTION OF THE COMPANY AND BERMUDA COMPANY LAW

APPENDIX III

wholly or in part, and either as to persons or purposes, but every committee so formed shall, in the exercise of the powers, authorities and discretions so delegated, conform to any regulations that may from time to time be imposed upon it by the board.

(ix) Borrowing powers

The board may from time to time at its discretion exercise all the powers of the Company to raise or borrow money, to mortgage or charge all or any part of the undertaking, property and assets (present and future) and uncalled capital of the Company and, subject to the Companies Act, to issue debentures, bonds and other securities of the Company, whether outright or as collateral security for any debt, liability or obligation of the Company or of any third party.

Note: These provisions, in common with the Bye-laws in general, can be varied with the sanction of a special resolution of the Company.

(b) Alterations to constitutional documents

The Bye-laws may be rescinded, altered or amended by the Directors subject to the confirmation of the Company in general meeting. The Bye-laws state that a special resolution shall be required to alter the provisions of the Memorandum of Association, to confirm any such rescission, alteration or amendment to the Bye-laws or to change the name of the Company.

(c) Alteration of capital

The Company may from time to time by ordinary resolution in accordance with the relevant provisions of the Companies Act:

(i) increase its capital by such sum, to be divided into shares of such amounts as the resolution shall prescribe;
(ii) consolidate and divide all or any of its capital into shares of larger amount than its existing shares;
(iii) divide its shares into several classes and without prejudice to any special rights previously conferred on the holders of existing shares as the directors may determine;
(iv) sub-divide its shares or any of them into shares of smaller amount than is fixed by the Memorandum of Association;
(v) change the currency denomination of its share capital;
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APPENDIX III

SUMMARY OF THE CONSTITUTION OF THE COMPANY AND BERMUDA COMPANY LAW

(vi) make provision for the issue and allotment of shares which do not carry any voting rights; and
(vii) cancel any shares which, at the date of passing of the resolution, have not been taken, or agreed to be taken, by any person, and diminish the amount of its capital by the amount of the shares so cancelled.

The Company may, by special resolution, subject to any confirmation or consent required by law, reduce its authorised or issued share capital or, save for the use of share premium as expressly permitted by the Companies Act, any share premium account or other undistributable reserve.

(d) Variation of rights of existing shares or classes of shares

Subject to the Companies Act, all or any of the special rights attached to the shares or any class of shares may (unless otherwise provided for by the terms of issue of that class) be varied, modified or abrogated either with the consent in writing of the holders of not less than three fourths of the issued shares of that class or with the sanction of a special resolution passed at a separate general meeting of the holders of the shares of that class. To every such separate general meeting the provisions of the Bye-laws relating to general meetings will mutatis mutandis apply, but so that the necessary quorum (other than at an adjourned meeting) shall be two persons or (in the case of a member being a corporation) its duly authorised representative holding or representing by proxy not less than one third in nominal value of the issued shares of that class and at any adjourned meeting two holders present in person or (in the case of a member being a corporation) its duly authorised representative or by proxy whatever the number of shares held by them shall be a quorum. Every holder of shares of the class shall be entitled on a poll to one vote for every such share held by him, and any holder of shares of the class present in person or by proxy may demand a poll.

(e) Special resolution majority required

A special resolution of the Company must be passed by a majority of not less than three fourths of the votes cast by such members as, being entitled so to do, vote in person or, in the case of such members as are corporations, by their duly authorised representatives or, where proxies are allowed, by proxy at a general meeting of which not less than twenty-one (21) clear days’ notice specifying the intention to propose the resolution as a special resolution, has been duly given. Provided that, except in the case of an annual general meeting, if it is so agreed by a majority in number of the members having a right to attend and vote at such meeting, being a majority together holding not less than ninety-five per cent. (95%) in nominal value of the shares giving that right and, in the case of an annual general meeting, if so agreed by all members entitled to attend and vote thereat, a resolution may be proposed and passed as a special resolution at a meeting of which less than twenty-one (21) clear days’ notice has been given.

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(f) Voting rights (generally and on a poll) and rights to demand a poll

Subject to any special rights or restrictions as to voting for the time being attached to any shares by or in accordance with the Bye-laws, at any general meeting on a show of hands, every member who is present in person or (being a corporation) is present by its duly authorised representative or by proxy shall have one vote and on a poll every member present in person or by proxy or (being a corporation) by its duly authorised representative shall have one vote for every fully paid share of which he is the holder but so that no amount paid up or credited as paid up on a share in advance of calls or installments is treated for the foregoing purposes as paid up on the share.

Notwithstanding anything contained in the Bye-laws, where more than one proxy is appointed by a member which is a clearing house (as defined in the Bye-laws) (or its nominee(s)), each such proxy shall have one vote on a show of hands. On a poll, a member entitled to more than one vote need not use all his votes or cast all the votes he uses in the same way.

At any general meeting a resolution put to the vote of the meeting is to be decided on a show of hands unless voting by way of a poll is required by the rules of the Designated Stock Exchange (as defined in the Bye-laws) or (before or on the declaration of the result of the show of hands or on the withdrawal of any other demand for a poll) a poll is demanded by (i) the chairman of the meeting or (ii) at least three members present in person or (in the case of a member being a corporation) by its duly authorised representative or by proxy for the time being entitled to vote at the meeting or (iii) any member or members present in person or (in the case of a member being a corporation) by its duly authorised representative or by proxy and representing not less than one tenth of the total voting rights of all the members having the right to vote at the meeting or (iv) a member or members present in person or (in the case of a member being a corporation) by its duly authorised representative or by proxy and holding shares in the Company conferring a right to vote at the meeting being shares on which an aggregate sum has been paid equal to not less than one tenth of the total sum paid up on all the shares conferring that right or (v) by any Director or Directors (including the chairman of a general meeting of the Company) who, individually or collectively, hold proxies in respect of shares representing five per cent. (5%) or more of the total voting rights at such meeting and if on a show of hands such meeting votes in the opposite manner to that instructed in those proxies.

If a recognised clearing house (or its nominee(s)) is a member of the Company it may authorise such persons as it thinks fit to act as its representative(s) at any meeting of the Company or at any meeting of any class of members of the Company provided that, if more than one person is so authorised, the authorisation shall specify the number and class of shares in respect of which each such person is so authorised. A person authorised pursuant to this provision shall be deemed to have been duly authorised without further evidence of the facts and be entitled to exercise the same powers on behalf of the recognised clearing house (or its nominee(s)) as if such person was the registered holder of the shares held by that clearing house (or its nominee(s)).

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Where any shareholder is, under the rules of the Designated Stock Exchange (as defined in the Bye-laws), required to abstain from voting on any particular resolution or restricted to voting only for or only against any particular resolution, any votes cast by or on behalf of such shareholder in contravention of such requirement or restriction shall not be counted.

(g) Requirements for annual general meetings

An annual general meeting of the Company must be held in each year other than the year in which its statutory meeting is convened at such time (within a period of not more than 15 months after the holding of the last preceding annual general meeting unless a longer period would not infringe the rules of any Designated Stock Exchange (as defined in the Bye-laws)) and place as may be determined by the board.

(h) Accounts and audit

The board shall cause true accounts to be kept of the sums of money received and expended by the Company, and the matters in respect of which such receipt and expenditure take place, and of the property, assets, credits and liabilities of the Company and of all other matters required by the provisions of the Companies Act or necessary to give a true and fair view of the Company’s affairs and to explain its transactions.

The accounting records shall be kept at the registered office or, subject to the Companies Act, at such other place or places as the board decides and shall always be open to inspection by any Director. No member (other than a Director) shall have any right of inspecting any accounting record or book or document of the Company except as conferred by law or authorised by the board or the Company in general meeting.

Subject to the Companies Act, a printed copy of the Directors’ report, accompanied by the balance sheet and profit and loss account, including every document required by law to be annexed thereto, made up to the end of the applicable financial year and containing a summary of the assets and liabilities of the Company under convenient heads and a statement of income and expenditure, together with a copy of the auditors’ report, shall be sent to each person entitled thereto at least twenty-one (21) days before the date of the general meeting and laid before the Company in general meeting in accordance with the requirements of the Companies Act provided that this provision shall not require a copy of those documents to be sent to any person whose address the Company is not aware or to more than one of the joint holders of any shares or debentures; however, to the extent permitted by and subject to compliance with all applicable laws, including the rules of the Designated Stock Exchange (as defined in the Bye-laws), the Company may send to such persons summarised financial statements derived from the Company’s annual accounts and the directors’ report instead provided that any such person may by notice in writing served on the Company, demand that the Company sends to him, in addition to summarised financial statements, a complete printed copy of the Company’s annual financial statement and the directors’ report thereon.

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Subject to the Companies Act, at the annual general meeting or at a subsequent special general meeting in each year, the members shall appoint an auditor to audit the accounts of the Company and such auditor shall hold office until the members appoint another auditor. Such auditor may be a member but no Director or officer or employee of the Company shall, during his continuance in office, be eligible to act as an auditor of the Company. The remuneration of the auditor shall be fixed by the Company in general meeting or in such manner as the members may determine.

The financial statements of the Company shall be audited by the auditor in accordance with generally accepted auditing standards. The auditor shall make a written report thereon in accordance with generally accepted auditing standards and the report of the auditor shall be submitted to the members in general meeting. The generally accepted auditing standards referred to herein may be those of a country or jurisdiction other than Bermuda. If the auditing standards of a country or jurisdiction other than Bermuda are used, the financial statements and the report of the auditor should disclose this fact and name such country and jurisdiction.

(i) Notices of meetings and business to be conducted thereat

An annual general meeting and any special general meeting at which it is proposed to pass a special resolution shall (save as set out in sub paragraph (e) above) be called by at least twenty-one (21) clear days’ notice in writing, and any other special general meeting shall be called by at least fourteen (14) clear days’ notice (in each case exclusive of the day on which the notice is given or deemed to be given and of the day for which it is given or on which it is to take effect). The notice must specify the time and place of the meeting and, in the case of special business, the general nature of that business. The notice convening an annual general meeting shall specify the meeting as such.

(j) Transfer of shares

All transfers of shares may be effected by an instrument of transfer in the usual or common form or in a form prescribed by the Designated Stock Exchange or in such other form as the board may approve and which may be under hand or, if the transferor or transferee is a clearing house or its nominee(s), by hand or by machine imprinted signature or by such other manner of execution as the board may approve from time to time. The instrument of transfer shall be executed by or on behalf of the transferor and the transferee provided that the board may dispense with the execution of the instrument of transfer by the transferee in any case in which it thinks fit, in its discretion, to do so and the transferor shall be deemed to remain the holder of the share until the name of the transferee is entered in the register of members in respect thereof. The board may also resolve either generally or in any particular case, upon request by either the transferor or the transferee, to accept mechanically executed transfers.

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The board in so far as permitted by any applicable law may, in its absolute discretion, at any time and from time to time transfer any share upon the principal register to any branch register or any share on any branch register to the principal register or any other branch register.

Unless the board otherwise agrees, no shares on the principal register shall be transferred to any branch register nor may shares on any branch register be transferred to the principal register or any other branch register. All transfers and other documents of title shall be lodged for registration and registered, in the case of shares on a branch register, at the relevant registration office and, in the case of shares on the principal register, at the registered office in Bermuda or such other place in Bermuda at which the principal register is kept in accordance with the Companies Act.

The board may, in its absolute discretion, and without assigning any reason, refuse to register a transfer of any share (not being a fully paid up share) to a person of whom it does not approve or any share issued under any share incentive scheme for employees upon which a restriction on transfer imposed thereby still subsists, and it may also refuse to register any transfer of any share to more than four joint holders or any transfer of any share (not being a fully paid up share) on which the Company has a lien.

The board may decline to recognise any instrument of transfer unless a fee of such maximum sum as any Designated Stock Exchange (as defined in the Bye-laws) may determine to be payable or such lesser sum as the Directors may from time to time require is paid to the Company in respect thereof, the instrument of transfer, if applicable, is properly stamped, is in respect of only one class of share and is lodged at the relevant registration office or registered office or such other place at which the principal register is kept accompanied by the relevant share certificate(s) and such other evidence as the board may reasonably require to show the right of the transferor to make the transfer (and if the instrument of transfer is executed by some other person on his behalf, the authority of that person so to do).

The registration of transfers may be suspended and the register closed on giving notice by advertisement in an appointed newspaper and, where applicable, any other newspapers in accordance with the requirements of any Designated Stock Exchange (as defined in the Byelaws), at such times and for such periods as the board may determine and either generally or in respect of any class of shares. The register of members shall not be closed for periods exceeding in the whole thirty (30) days in any year.

(k) Power for the Company to purchase its own shares

The Bye-laws supplement the Company’s Memorandum of Association (which gives the Company the power to purchase its own shares) by providing that the power is exercisable by the board upon such terms and conditions as it thinks fit.

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(l) Power for any subsidiary of the Company to own shares in the Company

There are no provisions in the Bye-laws relating to ownership of shares in the Company by a subsidiary.

(m) Dividends and other methods of distribution

Subject to the Companies Act, the Company in general meeting may declare dividends in any currency to be paid to the members but no dividend shall be declared in excess of the amount recommended by the board. The Company in general meeting may also make a distribution to its members out of contributed surplus (as ascertained in accordance with the Companies Act). No dividend shall be paid or distribution made out of contributed surplus if to do so would render the Company unable to pay its liabilities as they become due or the realisable value of its assets would thereby become less than the aggregate of its liabilities and its issued share capital and share premium account.

Except in so far as the rights attaching to, or the terms of issue of, any share may otherwise provide, (i) all dividends shall be declared and paid according to the amounts paid up on the shares in respect whereof the dividend is paid but no amount paid up on a share in advance of calls shall for this purpose be treated as paid up on the share and (ii) all dividends shall be apportioned and paid pro rata according to the amount paid up on the shares during any portion or portions of the period in respect of which the dividend is paid. The Directors may deduct from any dividend or other monies payable to a member by the Company on or in respect of any shares all sums of money (if any) presently payable by him to the Company on account of calls or otherwise.

Whenever the board or the Company in general meeting has resolved that a dividend be paid or declared on the share capital of the Company, the board may further resolve either (a) that such dividend be satisfied wholly or in part in the form of an allotment of shares credited as fully paid up, provided that the shareholders entitled thereto will be entitled to elect to receive such dividend (or part thereof) in cash in lieu of such allotment, or (b) that shareholders entitled to such dividend will be entitled to elect to receive an allotment of shares credited as fully paid up in lieu of the whole or such part of the dividend as the board may think fit. The Company may also upon the recommendation of the board by an ordinary resolution resolve in respect of any one particular dividend of the Company that it may be satisfied wholly in the form of an allotment of shares credited as fully paid up without offering any right to shareholders to elect to receive such dividend in cash in lieu of such allotment.

Whenever the board or the Company in general meeting has resolved that a dividend be paid or declared the board may further resolve that such dividend be satisfied wholly or in part by the distribution of specific assets of any kind.

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All dividends or bonuses unclaimed for one year after having been declared may be invested or otherwise made use of by the board for the benefit of the Company until claimed and the Company shall not be constituted a trustee in respect thereof. All dividends or bonuses unclaimed for six years after having been declared may be forfeited by the board and shall revert to the Company.

(n) Proxies

Any member of the Company entitled to attend and vote at a meeting of the Company is entitled to appoint another person as his proxy to attend and vote instead of him. A member who is the holder of two or more shares may appoint more than one proxy to represent him and vote on his behalf at a general meeting of the Company or at a class meeting. A proxy need not be a member of the Company. In addition, a proxy or proxies representing either a member who is an individual or a member which is a corporation shall be entitled to exercise the same powers on behalf of the member which he or they represent as such member could exercise.

(o) Call on shares and forfeiture of shares

Subject to the Bye-laws and to the terms of allotment, the board may from time to time make such calls upon the members in respect of any monies unpaid on the shares held by them respectively (whether on account of the nominal value of the shares or by way of premium). A call may be made payable either in one lump sum or by installments. If the sum payable in respect of any call or instalment is not paid on or before the day appointed for payment thereof, the person or persons from whom the sum is due shall pay interest on the same at such rate not exceeding twenty per cent. (20%) per annum as the board may agree to accept from the day appointed for the payment thereof to the time of actual payment, but the board may waive payment of such interest wholly or in part. The board may, if it thinks fit, receive from any member willing to advance the same, either in money or money’s worth, all or any part of the monies uncalled and unpaid or installments payable upon any shares held by him, and upon all or any of the monies so advanced the Company may pay interest at such rate (if any) as the board may decide.

If a member fails to pay any call on the day appointed for payment thereof, the board may serve not less than fourteen (14) clear days’ notice on him requiring payment of so much of the call as is unpaid, together with any interest which may have accrued and which may still accrue up to the date of actual payment and stating that, in the event of non payment at or before the time appointed, the shares in respect of which the call was made will be liable to be forfeited.

If the requirements of any such notice are not complied with, any share in respect of which the notice has been given may at any time thereafter, before the payment required by the notice has been made, be forfeited by a resolution of the board to that effect.

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Such forfeiture will include all dividends and bonuses declared in respect of the forfeited share and not actually paid before the forfeiture.

A person whose shares have been forfeited shall cease to be a member in respect of the forfeited shares but shall, notwithstanding, remain liable to pay to the Company all monies which, at the date of forfeiture, were payable by him to the Company in respect of the shares, together with (if the board shall in its discretion so require) interest thereon from the date of forfeiture until the date of actual payment at such rate not exceeding twenty per cent. (20%) per annum as the board determines.

(p) Inspection of register of members

The register and branch register of members shall be open to inspection between 10:00 a.m. and 12:00 noon on every business day by members without charge or by any other person, upon a maximum payment of five Bermuda dollars, at the registered office or such other place in Bermuda at which the register is kept in accordance with the Companies Act or upon a maximum payment of ten dollars at the Registration Office (as defined in the Bye-laws), unless the register is closed in accordance with the Companies Act.

(q) Quorum for meetings and separate class meetings

For all purposes the quorum for a general meeting shall be two members present in person or (in the case of a member being a corporation) by its duly authorised representative or by proxy and entitled to vote. In respect of a separate class meeting (other than an adjourned meeting) convened to sanction the modification of class rights the necessary quorum shall be two persons holding or representing by proxy not less than one third in nominal value of the issued shares of that class.

(r) Rights of the minorities in relation to fraud or oppression

There are no provisions in the Bye-laws relating to rights of minority shareholders in relation to fraud or oppression. However, certain remedies are available to shareholders of the Company under Bermuda law, as summarised in paragraph 4(e) of this Appendix.

(s) Procedures on liquidation

A resolution that the Company be wound up by the court or be wound up voluntarily shall be a special resolution.

If the Company shall be wound up (whether the liquidation is voluntary or by the court) the liquidator may, with the authority of a special resolution and any other sanction required by the Companies Act, divide among the members in specie or kind the whole or any part of the assets of the Company whether the assets shall consist of property of one kind or shall

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consist of properties of different kinds and the liquidator may, for such purpose, set such value as he deems fair upon any one or more class or classes of property to be divided as aforesaid and may determine how such division shall be carried out as between the members or different classes of members. The liquidator may, with the like authority, vest any part of the assets in trustees upon such trusts for the benefit of members as the liquidator, with the like authority, shall think fit, but so that no contributory shall be compelled to accept any shares or other property in respect of which there is a liability.

(t) Untraceable members

The Company may sell any of the shares of a member who is untraceable if (i) all cheques or warrants (being not less than three in total number) for any sum payable in cash to the holder of such shares have remained uncashed for a period of 12 years; (ii) upon the expiry of the 12 year period, the Company has not during that time received any indication of the existence of the member; and (iii) the Company has caused an advertisement to be published in accordance with the rules of the Designated Stock Exchange (as defined in the Bye-laws) giving notice of its intention to sell such shares and a period of three months, or such shorter period as may be permitted by the Designated Stock Exchange (as defined in the Bye-laws), has elapsed since such advertisement and the Designated Stock Exchange (as defined in the Bye-laws) has been notified of such intention. The net proceeds of any such sale shall belong to the Company and upon receipt by the Company of such net proceeds, it shall become indebted to the former member of the Company for an amount equal to such net proceeds.

(u) Other provisions

The Bye-laws provide that to the extent that it is not prohibited by and is in compliance with the Companies Act, if warrants to subscribe for shares have been issued by the Company and the Company does any act or engages in any transaction which would result in the subscription price of such warrants being reduced below the par value of a share, a subscription rights reserve shall be established and applied in paying up the difference between the subscription price and the par value of a share on any exercise of the warrants.

The Bye-laws also provide that the Company is required to maintain at its registered office a register of directors and officers in accordance with the provisions of the Companies Act and such register is open to inspection by members of the public without charge between 10:00 a.m. and 12:00 noon on every business day.

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3. VARIATION OF MEMORANDUM OF ASSOCIATION AND BYE-LAWS

The Memorandum of Association may be altered by the Company in general meeting. The Bye-laws may be amended by the Directors subject to the confirmation of the Company in general meeting. The Bye-laws state that a special resolution shall be required to alter the provisions of the Memorandum of Association or to confirm any amendment to the Bye-laws or to change the name of the Company. For these purposes, a resolution is a special resolution if it has been passed by a majority of not less than three fourths of the votes cast by such members of the Company as, being entitled to do so, vote in person or, in the case of such members as are corporations, by their respective duly authorised representatives or, where proxies are allowed, by proxy at a general meeting of which not less than twenty-one (21) clear days’ notice specifying the intention to propose the resolution as a special resolution has been duly given. Except in the case of an annual general meeting, the requirement of twenty-one (21) clear days’ notice may be waived by a majority in number of the members having the right to attend and vote at the relevant meeting, being a majority together holding not less than 95 percent in nominal value of the shares giving that right.

4. BERMUDA COMPANY LAW

The Company is incorporated in Bermuda and, therefore, operates subject to Bermuda law. Set out below is a summary of certain provisions of Bermuda company law, although this does not purport to contain all applicable qualifications and exceptions or to be a complete review of all matters of Bermuda company law and taxation, which may differ from equivalent provisions in jurisdictions with which interested parties may be more familiar:

(a) Share capital

The Companies Act provides that where a company issues shares at a premium, whether for cash or otherwise, a sum equal to the aggregate amount or value of the premiums on those shares shall be transferred to an account, to be called the “share premium account”, to which the provisions of the Companies Act relating to a reduction of share capital of a company shall apply as if the share premium account were paid up share capital of the company except that the share premium account may be applied by the company:

(i) in paying up unissued shares of the company to be issued to members of the company as fully paid bonus shares;
(ii) in writing off:
(aa) the preliminary expenses of the company; or
(bb) the expenses of, or the commission paid or discount allowed on, any issue of shares or debentures of the company; or
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(iii) in providing for the premiums payable on redemption of any shares or of any debentures of the company.

In the case of an exchange of shares the excess value of the shares acquired over the nominal value of the shares being issued may be credited to a contributed surplus account of the issuing company.

The Companies Act permits a company to issue preference shares and subject to the conditions stipulated therein to convert those preference shares into redeemable preference shares.

The Companies Act includes certain protections for holders of special classes of shares, requiring their consent to be obtained before their rights may be varied. Where provision is made by the memorandum of association or bye-laws for authorising the variation of rights attached to any class of shares in the company, the consent of the specified proportions of the holders of the issued shares of that class or the sanction of a resolution passed at a separate meeting of the holders of those shares is required, and where no provision for varying such rights is made in the memorandum of association or bye-laws and nothing therein precludes a variation of such rights, the written consent of the holders of three fourths of the issued shares of that class or the sanction of a resolution passed as aforesaid is required.

(b) Financial assistance to purchase shares of a company or its holding company

A company is prohibited from providing financial assistance for the purpose of an acquisition of its own or its holding company’s shares unless there are reasonable grounds for believing that the company is, and would after the giving of such financial assistance be, able to pay its liabilities as they become due. In certain circumstances, the prohibition from giving financial assistance may be excluded such as where the assistance is only an incidental part of a larger purpose or the assistance is of an insignificant amount such as the payment of minor costs.

(c) Purchase of shares and warrants by a company and its subsidiaries

A company may, if authorised by its memorandum of association or bye-laws, purchase its own shares. Such purchases may only be effected out of the capital paid up on the purchased shares or out of the funds of the company otherwise available for dividend or distribution or out of the proceeds of a fresh issue of shares made for the purpose. Any premium payable on a purchase over the par value of the shares to be purchased must be provided for out of funds of the company otherwise available for dividend or distribution or out of the company’s share premium account. Any amount due to a shareholder on a purchase by a company of its own shares may (i) be paid in cash; (ii) be satisfied by the transfer of any part of the undertaking or property of the company having the same value; or (iii) be satisfied partly under (i) and partly under (ii). Any purchase by a company of its own shares may be authorised by its

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board of directors or otherwise by or in accordance with the provisions of its bye-laws. Such purchase may not be made if, on the date on which the purchase is to be effected, there are reasonable grounds for believing that the company is, or after the purchase would be, unable to pay its liabilities as they become due. The shares so purchased may either be cancelled or held as treasury shares. Any purchased shares that are cancelled will, in effect, revert to the status of authorised but unissued shares. If shares of the company are held as treasury shares, the company is prohibited to exercise any rights in respect of those shares, including any right to attend and vote at meetings, including a meeting under a scheme of arrangement, and any purported exercise of such a right is void. No dividend shall be paid to the company in respect of shares held by the company as treasury shares; and no other distribution (whether in cash or otherwise) of the company’s assets (including any distribution of assets to members on a winding up) shall be made to the company in respect of shares held by the company as treasury shares. Any shares allotted by the company as fully paid bonus shares in respect of shares held by the company as treasury shares shall be treated for the purposes of the Companies Act as if they had been acquired by the company at the time they were allotted.

A company is not prohibited from purchasing and may purchase its own warrants subject to and in accordance with the terms and conditions of the relevant warrant instrument or certificate. There is no requirement under Bermuda law that a company’s memorandum of association or its bye-laws contain a specific provision enabling such purchases.

Under Bermuda law, a subsidiary may hold shares in its holding company and in certain circumstances, may acquire such shares. The holding company is, however, prohibited from giving financial assistance for the purpose of the acquisition, subject to certain circumstances provided by the Companies Act. A company, whether a subsidiary or a holding company, may only purchase its own shares if it is authorised to do so in its memorandum of association or bye-laws pursuant to section 42A of the Companies Act.

(d) Dividends and distributions

A company may not declare or pay a dividend, or make a distribution out of contributed surplus, if there are reasonable grounds for believing that (i) the company is, or would after the payment be, unable to pay its liabilities as they become due; or (ii) the realisable value of the company’s assets would thereby be less than the aggregate of its liabilities and its issued share capital and share premium accounts. Contributed surplus is defined for purposes of section 54 of the Companies Act to include the proceeds arising from donated shares, credits resulting from the redemption or conversion of shares at less than the amount set up as nominal capital and donations of cash and other assets to the company.

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(e) Protection of minorities

Class actions and derivative actions are generally not available to shareholders under the laws of Bermuda. The Bermuda courts, however, would ordinarily be expected to permit a shareholder to commence an action in the name of a company to remedy a wrong done to the company where the act complained of is alleged to be beyond the corporate power of the company or is illegal or would result in the violation of the company’s memorandum of association and bye-laws. Furthermore, consideration would be given by the court to acts that are alleged to constitute a fraud against the minority shareholders or, for instance, where an act requires the approval of a greater percentage of the company’s shareholders than actually approved it.

Any member of a company who complains that the affairs of the company are being conducted or have been conducted in a manner oppressive or prejudicial to the interests of some part of the members, including himself, may petition the court which may, if it is of the opinion that to wind up the company would unfairly prejudice that part of the members but that otherwise the facts would justify the making of a winding up order on just and equitable grounds, make such order as it thinks fit, whether for regulating the conduct of the company’s affairs in future or for the purchase of shares of any members of the company by other members of the company or by the company itself and in the case of a purchase by the company itself, for the reduction accordingly of the company’s capital, or otherwise. Bermuda law also provides that the company may be wound up by the Bermuda court, if the court is of the opinion that it is just and equitable to do so. Both these provisions are available to minority shareholders seeking relief from the oppressive conduct of the majority, and the court has wide discretion to make such orders as it thinks fit.

Except as mentioned above, claims against a company by its shareholders must be based on the general laws of contract or tort applicable in Bermuda.

A statutory right of action is conferred on subscribers of shares in a company against persons, including directors and officers, responsible for the issue of a prospectus in respect of damage suffered by reason of an untrue statement therein, but this confers no right of action against the company itself. In addition, such company, as opposed to its shareholders, may take action against its officers including directors, for breach of their statutory and fiduciary duty to act honestly and in good faith with a view to the best interests of the company.

(f) Management

The Companies Act contains no specific restrictions on the power of directors to dispose of assets of a company, although it specifically requires that every officer of a company, which includes a director, managing director and secretary, in exercising his powers and discharging his duties must do so honestly and in good faith with a view to the best interests of the company and exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances. Furthermore, the Companies Act requires that every officer should

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comply with the Companies Act, regulations passed pursuant to the Companies Act and the byelaws of the company. The directors of a company may, subject to the bye-laws of the company, exercise all the powers of the company except those powers that are required by the Companies Act or the bye-laws to be exercised by the members of the company.

(g) Accounting and auditing requirements

The Companies Act requires a company to cause proper records of accounts to be kept with respect to (i) all sums of money received and expended by the company and the matters in respect of which the receipt and expenditure takes place; (ii) all sales and purchases of goods by the company and (iii) the assets and liabilities of the company.

Furthermore, it requires that a company keeps its records of account at the registered office of the company or at such other place as the directors think fit and that such records shall at all times be open to inspection by the directors or the resident representative of the company. If the records of account are kept at some place outside Bermuda, there shall be kept at the office of the company in Bermuda such records as will enable the directors or the resident representative of the company to ascertain with reasonable accuracy the financial position of the company at the end of each three month period, except that where the company is listed on an appointed stock exchange, there shall be kept such records as will enable the directors or the resident representative of the company to ascertain with reasonable accuracy the financial position of the company at the end of each six month period.

The Companies Act requires that the directors of the company must, at least once a year, lay before the company in general meeting financial statements for the relevant accounting period. Further, the company’s auditor must audit the financial statements so as to enable him to report to the members. Based on the results of his audit, which must be made in accordance with generally accepted auditing standards, the auditor must then make a report to the members. The generally accepted auditing standards may be those of a country or jurisdiction other than Bermuda or such other generally accepted auditing standards as may be appointed by the Minister of Finance of Bermuda under the Companies Act; and where the generally accepted auditing standards used are other than those of Bermuda, the report of the auditor shall identify the generally accepted auditing standards used. All members of the company are entitled to receive a copy of every financial statement prepared in accordance with these requirements, at least five (5) days before the general meeting of the company at which the financial statements are to be tabled. A company the shares of which are listed on an appointed stock exchange may send to its members summarised financial statements instead. The summarised financial statements must be derived from the company’s financial statements for the relevant period and contain the information set out in the Companies Act. The summarised financial statements sent to the company’s members must be accompanied by an auditor’s report on the summarised financial statements and a notice stating how a member may notify the company of his election to receive financial statements for the relevant period and/or for subsequent periods.

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The summarised financial statements together with the auditor’s report thereon and the accompanied notice must be sent to the members of the company not less than twenty-one (21) days before the general meeting at which the financial statements are laid. Copies of the financial statements must be sent to a member who elects to receive the same within seven (7) days of receipt by the company of the member’s notice of election.

(h) Auditors

At each annual general meeting, a company must appoint an auditor to hold office until the close of the next annual general meeting; however, this requirement may be waived if all of the shareholders and all of the directors, either in writing or at the general meeting, agree that there shall be no auditor.

A person, other than an incumbent auditor, shall not be capable of being appointed auditor at an annual general meeting unless notice in writing of an intention to nominate that person to the office of auditor has been given not less than twenty-one (21) days before the annual general meeting. The company must send a copy of such notice to the incumbent auditor and give notice thereof to the members not less than seven (7) days before the annual general meeting. An incumbent auditor may, however, by notice in writing to the secretary of the company waive the requirements of the foregoing.

Where an auditor is appointed to replace another auditor, the new auditor must seek from the replaced auditor a written statement as to the circumstances of the latter’s replacement. If the replaced auditor does not respond within fifteen (15) days, the new auditor may act in any event. An appointment as auditor of a person who has not requested a written statement from the replaced auditor is voidable by a resolution of the shareholders at a general meeting. An auditor who has resigned, been removed or whose term of office has expired or is about to expire, or who has vacated office is entitled to attend the general meeting of the company at which he is to be removed or his successor is to be appointed; to receive all notices of, and other communications relating to, that meeting which a member is entitled to receive; and to be heard at that meeting on any part of the business of the meeting that relates to his duties as auditor or former auditor.

(i) Exchange control

An exempted company is usually designated as “non-resident” for Bermuda exchange control purposes by the Bermuda Monetary Authority. Where a company is so designated, it is free to deal in currencies of countries outside the Bermuda exchange control area which are freely convertible into currencies of any other country. The permission of the Bermuda Monetary Authority is required for the issue of shares and securities by the company and the subsequent transfer of such shares and securities. In granting such permission, the Bermuda Monetary Authority accepts no responsibility for the financial soundness of any proposals or for the correctness of any statements made or opinions expressed in any document with regard

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to such issue. Before the company can issue or transfer any further shares and securities in excess of the amounts already approved, it must obtain the prior consent of the Bermuda Monetary Authority.

The Bermuda Monetary Authority has granted general permission for the issue and transfer of shares and securities to and between persons regarded as resident outside Bermuda for exchange control purposes without specific consent for so long as any equity securities, including shares, are listed on an appointed stock exchange (as defined in the Companies Act). Issues to and transfers involving persons regarded as “resident” for exchange control purposes in Bermuda will be subject to specific exchange control authorisation.

(j) Taxation

Under present Bermuda law, no Bermuda withholding tax on dividends or other distributions, nor any Bermuda tax computed on profits or income or on any capital asset, gain or appreciation will be payable by an exempted company or its operations, nor is there any Bermuda tax in the nature of estate duty or inheritance tax applicable to shares, debentures or other obligations of the company held by non residents of Bermuda. Furthermore, a company may apply to the Minister of Finance of Bermuda for an assurance, under the Exempted Undertakings Tax Protection Act 1966 of Bermuda, that no such taxes shall be so applicable until 28th March 2016, although this assurance will not prevent the imposition of any Bermuda tax payable in relation to any land in Bermuda leased or let to the company or to persons ordinarily resident in Bermuda.

(k) Stamp duty

An exempted company is exempt from all stamp duties except on transactions involving “Bermuda property”. This term relates, essentially, to real and personal property physically situated in Bermuda, including shares in local companies (as opposed to exempted companies). Transfers of shares and warrants in all exempted companies are exempt from Bermuda stamp duty.

(l) Loans to directors

Bermuda law prohibits the making of loans by a company to any of its directors or to their families or companies in which they hold more than a twenty per cent. (20%) interest, without the consent of any member or members holding in aggregate not less than nine tenths of the total voting rights of all members having the right to vote at any meeting of the members of the company. These prohibitions do not apply to (a) anything done to provide a director with funds to meet the expenditure incurred or to be incurred by him for the purposes of the company, provided that the company gives its prior approval at a general meeting or, if not, the loan is made on condition that it will be repaid within six months of the next following annual general meeting if the loan is not approved at or before such meeting, (b) in the case of

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a company whose ordinary business includes the lending of money or the giving of guarantees in connection with loans made by other persons, anything done by the company in the ordinary course of that business, or (c) any advance of moneys by the company to any officer or auditor under Section 98(2)(c) of the Companies Act which allows the company to advance moneys to an officer or auditor of the company for the costs incurred in defending any civil or criminal proceedings against them, on condition that the officer or auditor shall repay the advance if any allegation of fraud or dishonesty is proved against them. If the approval of the company is not given for a loan, the directors who authorised it will be jointly and severally liable for any loss arising therefrom.

(m) Inspection of corporate records

Members of the general public have the right to inspect the public documents of a company available at the office of the Registrar of Companies in Bermuda which will include the company’s certificate of incorporation, its memorandum of association (including its objects and powers) and any alteration to the company’s memorandum of association. The members of the company have the additional right to inspect the bye-laws of a company, minutes of general meetings and the company’s audited financial statements, which must be presented to the annual general meeting. Minutes of general meetings of a company are also open for inspection by directors of the company without charge for not less than two (2) hours during business hours each day. The register of members of a company is open for inspection by members of the public without charge. The company is required to maintain its share register in Bermuda but may, subject to the provisions of the Companies Act, establish a branch register outside Bermuda. Any branch register of members established by the company is subject to the same rights of inspection as the principal register of members of the company in Bermuda. Any person may on payment of a fee prescribed by the Companies Act require a copy of the register of members or any part thereof which must be provided within fourteen (14) days of a request. Bermuda law does not, however, provide a general right for members to inspect or obtain copies of any other corporate records.

A company is required to maintain a register of directors and officers at its registered office and such register must be made available for inspection for not less than two (2) hours in each day by members of the public without charge. If summarised financial statements are sent by a company to its members pursuant to section 87A of the Companies Act, a copy of the summarised financial statements must be made available for inspection by the public at the registered office of the company in Bermuda.

(n) Winding up

A company may be wound up by the Bermuda court on application presented by the company itself, its creditors or its contributors. The Bermuda court also has authority to order winding up in a number of specified circumstances including where it is, in the opinion of the Bermuda court, just and equitable that such company be wound up.

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A company may be wound up voluntarily when the members so resolve in general meeting, or, in the case of a limited duration company, when the period fixed for the duration of the company by its memorandum expires, or the event occurs on the occurrence of which the memorandum provides that the company is to be dissolved. In the case of a voluntary winding up, such company is obliged to cease to carry on its business from the time of passing the resolution for voluntary winding up or upon the expiry of the period or the occurrence of the event referred to above. Upon the appointment of a liquidator, the responsibility for the company’s affairs rests entirely in his hands and no future executive action may be carried out without his approval.

Where, on a voluntary winding up, a majority of directors make a statutory declaration of solvency, the winding up will be a members’ voluntary winding up. In any case where such declaration has not been made, the winding up will be a creditors’ voluntary winding up.

In the case of a members’ voluntary winding up of a company, the company in general meeting must appoint one or more liquidators within the period prescribed by the Companies Act for the purpose of winding up the affairs of the company and distributing its assets. If the liquidator at any time forms the opinion that such company will not be able to pay its debts in full, he is obliged to summon a meeting of creditors.

As soon as the affairs of the company are fully wound up, the liquidator must make up an account of the winding up, showing how the winding up has been conducted and the property of the company has been disposed of, and thereupon call a general meeting of the company for the purposes of laying before it the account and giving an explanation thereof. This final general meeting requires at least one month’s notice published in an appointed newspaper in Bermuda.

In the case of a creditors’ voluntary winding up of a company, the company must call a meeting of creditors of the company to be summoned on the day following the day on which the meeting of the members at which the resolution for winding up is to be proposed is held. Notice of such meeting of creditors must be sent at the same time as notice is sent to members. In addition, such company must cause a notice to appear in an appointed newspaper on at least two occasions.

The creditors and the members at their respective meetings may nominate a person to be liquidator for the purposes of winding up the affairs of the company provided that if the creditors nominate a different person, the person nominated by the creditors shall be the liquidator. The creditors at the creditors’ meeting may also appoint a committee of inspection consisting of not more than five persons.

If a creditors’ winding up continues for more than one year, the liquidator is required to summon a general meeting of the company and a meeting of the creditors at the end of each year to lay before such meetings an account of his acts and dealings and of the conduct of the

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winding up during the preceding year. As soon as the affairs of the company are fully wound up, the liquidator must make an account of the winding up, showing how the winding up has been conducted and the property of the company has been disposed of, and thereupon shall call a general meeting of the company and a meeting of the creditors for the purposes of laying the account before such meetings and giving an explanation thereof.

5. GENERAL

Conyers Dill & Pearman, the Company’s legal advisers on Bermuda law, have sent to the Company a letter of advice summarising certain aspects of Bermuda company law. This letter, together with a copy of the Companies Act, is available for inspection as referred to in the paragraph headed “Documents available for inspection” in Appendix IV. Any person wishing to have a detailed summary of Bermuda company law or advice on the differences between it and the laws of any jurisdiction with which he is more familiar is recommended to seek independent legal advice.

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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 contained in this circular misleading.

2. SHARE CAPITAL

The authorised and issued share capital of the Company as at the Latest Practicable Date and immediately following the Capital Reorganisation, the Open Offer and the Bonus Issue (assuming the Capital Reorganisation, the Open Offer, and the Bonus Issue becoming unconditional, no Share Options are exercised on or before the Record Date and all Offer Shares are subscribed for by the Qualifying Shareholders) were or will be as follows:

Authorised 40,000,000,000 Shares (Equivalent to 20,000,000,000 Adjusted Shares) Issued and to be issued as fully paid 377,620,545 Adjusted Shares as at the Latest Practicable Date (assuming Capital Reorganisation becoming effective) 1,132,861,635 Offer Shares to be issued pursuant to the Open Offer 755,241,090 Bonus Shares to be issued pursuant to the Bonus Issue 2,265,723,270 Adjusted Shares	HK$ 200,000,000.00

	3,776,205.45 11,328,616.35 7,552,410.90
	22,657,232.70

No part of the share capital or any other securities of the Company is listed or dealt in on any stock exchange other than the Stock Exchange and no application is being made or is currently proposed or sought for the Shares, the Adjusted Shares, the Offer Shares or the Bonus Shares or any other securities of the Company to be listed or dealt in on any other stock exchanges.

The Adjusted Shares will be identical in all respects and rank pari passu in all respects with each other as to all future dividends and distributions which are declared, made or paid. The Offer Shares and the Bonus Shares (when allotted, fully paid or credited as fully paid and issued) will rank pari passu in all respects with the Adjusted Shares in issue on the date of allotment and issue of the Offer Shares and the Bonus Shares. Holders of the Offer Shares and the Bonus Shares will be entitled to receive all future dividends and distributions which are declared, made or paid on or after the date of allotment and issue of the Offer Shares and the Bonus Shares.

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As at the Latest Practicable Date, there were outstanding Share Options which entitle the holders thereof to subscribe for 398,150,000 Shares. Save for the outstanding Share Options, the Company had no derivatives, options, warrants and conversion rights or other similar rights which are convertible or exchangeable into Shares as at the Latest Practicable Date.

3. DISCLOSURE OF INTERESTS

(a) Interests of Directors

Save as disclosed below, as at the Latest Practicable Date, none of the Directors or chief executive of the Company and/or any of their respective associates had any interest or short position in the Shares, underlying Shares or debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) (a) 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 or short positions which they were taken or deemed to have under such provisions of the SFO); or (b) which were required, pursuant to Section 352 of the SFO, to be entered in the register referred to therein; or (c) which were required, pursuant to Part XV of the SFO and the Model Code for Securities Transactions by Directors of Listed Issuers in the Listing Rules, to be notified to the Company and the Stock Exchange:

Long positions in the Shares or underlying Shares

Name of Directors
Mr. Tang Ching Ho
Ms. Yau Yuk Yin
Mr. Chan Chun Hong,
Thomas

Approximate
percentage
of the
Number of Adjusted Shares or underlying Adjusted Shares
Company’s
held, capacity and nature of interest (Note(a))
total
Personal
Family
Corporate
Other
issued share
interest
interest
interest
interest
Total
capital
3,892,550
3,892,540
14,238,426
552,667,749
574,691,265
24.34%
(Note (b))
(Note (c))
(Note (d))
3,892,540
18,130,976
–
552,667,749
574,691,265
24.34%
(Note (e))
(Note (f))
156,000
–
–
–
156,000
0.007%
(Note (g))

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Notes:

(a) The interests are based on (i) the Capital Reorganisation has become effective; (ii) the Open Offer and the Bonus Issue have completed on the basis that the Share Options have been exercised in full on the Record Date; and (iii) 2,361,279,270 Adjusted Shares will be in issue upon the Capital Reorganisation, the Open Offer and the Bonus Issue becoming effective.
(b) Mr. Tang Ching Ho was taken to be interested in those Adjusted Shares in which his spouse, Ms. Yau Yuk Yin, was interested.
(c) Mr. Tang Ching Ho was taken to be interested in those Adjusted Shares in which Caister Limited, a company which is wholly and beneficially owned by him, was interested.
(d) Mr. Tang Ching Ho was taken to be interested in those Adjusted Shares by virtue of being the founder of a discretionary trust, namely Tang’s Family Trust.
(e) Ms. Yau Yuk Yin was taken to be interested in those Adjusted Shares in which her spouse, Mr. Tang Ching Ho, was interested.
(f) Ms. Yau Yuk Yin was taken to be interested in those Adjusted Shares by virtue of being a beneficiary of Tang’s Family Trust.
(g) These Adjusted Shares represent such shares of the Company which may fall to be issued upon the exercise of the Share Options granted to Mr. Chan Chun Hong, Thomas exercisable during the period from 2 January 2009 to 7 January 2019, which number and exercise price thereof are subject to adjustment in accordance with the Share Option Scheme as a result of the Capital Reorganisation.
(b) Persons who have interests or short positions in the Shares or underlying Shares which is discloseable under Divisions 2 and 3 of Part XV of the SFO

Save as disclosed below, as at the Latest Practicable Date, so far as is known to the Directors, no person (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 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 10% or more of the nominal value of any class of share capital carrying rights to vote in all

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APPENDIX IV

circumstances at general meetings of any other member of the Group or had any option in respect of such capital:

(i) Long Positions in the Shares

				Approximate
				percentage of
			Number of the	the Company’s
			Adjusted Shares	total issued
Name of Shareholders	Note	Capacity	(Note (a)	share capital
Accord Power	(b)	Beneficial owner	552,667,749	23.41%
Trustcorp Limited	(b)	Interest of controlled	552,667,749	23.41%
		corporation
Newcorp Ltd.	(c)	Interest of controlled	552,667,749	23.41%
		corporation
Newcorp Holdings Ltd.	(d)	Interest of controlled	552,667,749	23.41%
		corporation
Mr. David Henry	(e)	Interest of controlled	552,667,749	23.41%
Christopher Hill		corporation
Ms. Rebecca Ann Hill	(f)	Family interest	552,667,749	23.41%
Mr. David William	(g)	Interest of controlled	552,667,749	23.41%
Roberts		corporation
Kingston Securities	(h)	Beneficial owner	20
		Other	1,433,267,781
			1,433,267,801	60.69%
Ms. Chu Yuet Wah	(h)	Interest of controlled	1,433,267,801	60.69%
		corporation
Ms. Ma Siu Fong	(h)	Interest of controlled	1,433,267,801	60.69%
		corporation

Notes:

(a) The interests are based on (i) the Capital Reorganisation has become effective; (ii) the Open Offer and the Bonus Issue have completed on the basis that the Share Options have been exercised in full on the Record Date; and (iii) 2,361,279,270 Adjusted Shares will be in issue upon the Capital Reorganisation, the Open Offer and the Bonus Issue becoming effective.
(b) Accord Power 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 Adjusted Shares held by Accord Power.
(c) Trustcorp Limited is a wholly-owned subsidiary of Newcorp Ltd. and accordingly, Newcorp Ltd. was taken to be interested in those Adjusted Shares in which Trustcorp Limited was interested.
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(d) Newcorp Ltd. is a wholly-owned subsidiary of Newcorp Holdings Ltd. and accordingly, Newcorp Holdings Ltd. was taken to be interested in those Adjusted Shares in which Newcorp Ltd. was interested.
(e) Mr. David Henry Christopher Hill owned 35% interest in the issued share capital of Newcorp Holdings Ltd. and was therefore taken to be interested in those Adjusted Shares in which Newcorp Holdings Ltd. was interested.
(f) Ms. Rebecca Ann Hill is taken to be interested in those Adjusted Shares in which her spouse, Mr. David Henry Christopher Hill, was interested.
(g) Mr. David William Roberts owned 35% interest in the issued share capital of Newcorp Holdings Ltd. and was therefore taken to be interested in those Adjusted Shares in which Newcorp Holdings Ltd. was interested.
(h) These Adjusted Shares are held by Kingston Securities as an underwriter of the Open Offer with the Bonus Issue. Ms. Chu Yuet Wah and Ms. Ma Siu Fong owned 51% and 49% interest in Kingston Securities respectively.
(ii) Interests in a subsidiary of the Company

Name of			Shareholding
subsidiary	Name	Capacity	percentage
Wang Hing Vegetables	Lam Mei Ki	Beneficial owner	49%
Wholesale Company
Limited

4. DIRECTORS’ SERVICE CONTRACTS

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

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APPENDIX IV

5. EXPERTS AND CONSENTS

The following is the qualification of the experts who have been named in this circular or have given opinions, letters or advice contained in this circular:

Name Qualification Nuada Limited A licensed corporation under the SFO to conduct type 6 (advising on corporate finance) regulated activity Ernst & Young Certified public accountants

Each of Nuada and Ernst & Young has given and has not withdrawn its written consent to the issue of this circular with the inclusion therein of its letter and/or references to its name, in the form and context in which it appears.

As at the Latest Practicable Date, each of Nuada and Ernst & Young was not beneficially interested in the share capital of the Company or any member of the Group nor has any right, whether legally enforceable or not, to subscribe for or to nominate persons to subscribe for securities in the Company or any member of the Group, nor did it have any interest, either directly or indirectly, in the assets which have been acquired or disposed of by or leased to the Company or any member of the Group since 31 March 2008, being the date to which the latest published audited consolidated financial statements of the Group were made up.

6. LITIGATION

As at the Latest Practicable Date, so far as the Directors are aware, neither the Company nor any of its subsidiaries was engaged in any litigation or arbitration or claim which is in the opinion of the Directors of material importance and no litigation or claim which is in the opinion of the Directors of material importance was known to the Directors to be pending or threatened by or against any member of the Group.

7. DIRECTORS’ INTERESTS IN COMPETING BUSINESS

To the best knowledge of the Directors, as at the Latest Practicable Date, so far as the Directors are aware, none of the Directors or their respective associates had any interest in a business which competes or is likely to compete either directly or indirectly with the business of the Group which would be required to be disclosed under Rule 8.10 of the Listing Rules if the Directors were controlling Shareholders.

8. DIRECTORS’ INTERESTS IN CONTRACTS

Save as disclosed herein, the Directors confirm that there was no contract or arrangement subsisting as at the Latest Practicable Date in which a Director was materially interested which was significant in relation to the business of the Group.

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9. DIRECTORS’ INTERESTS IN ASSETS

As at the Latest Practicable Date, none of the Directors had any interest, direct or indirect, in any assets which had been, since 31 March 2008, being the latest published audited accounts of the Company were made up, 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.

10. MATERIAL CONTRACTS

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

(a) The Underwriting Agreement.
(b) A conditional sale and purchase agreement dated 13 February 2009 entered into between Loyal Fame International Limited and Wang On Enterprises (BVI) Limited, a direct wholly-owned subsidiary of the Company, in respect of the sale and purchase of the entire issued share capital in Everlong Limited and the assignment of a loan of approximately HK$81.9 million at an aggregate consideration of HK$63.4 million.
(c) A conditional sale and purchase agreement dated 12 February 2009 entered into between Active Day Investments Limited, an indirect wholly-owned subsidiary of the Company, and Super Treasure Holdings Limited in respect of the sale and purchase of the entire issued share capital in Shiney Day Investments Limited at a consideration of HK$150 million.
(d) A top-up placing and top-up subscription agreement dated 26 November 2008 entered into between Accord Power, the Company and Kingston Securities in connection with the placing of an aggregate of up to 900,000,000 Shares to independent third parties at a price of HK$0.022 per Share. The net proceeds of approximately HK$18.81 million were raised.
(e) A placing agreement entered into between the Company and Kingston Securities on 26 November 2008 in connection with the placing of an additional 672.6 million Shares to independent third parties at a price of HK$0.022 per Share. The net proceeds of approximately HK$14.43 million were raised.
(f) A loan agreement dated 21 November 2008 entered into between Fully Finance Limited, an indirect wholly-owned subsidiary of the Company, and LeRoi Holdings Limited (“LeRoi”) in connection with the grant to LeRoi of a loan facility of not exceeding a sum of HK$40 million.
(g) A loan agreement dated 3 November 2008 entered into between Rich Time Strategy Limited (“Rich Time”), an indirect wholly-owned subsidiary of the Company, and WYT in connection with a loan facility of not exceeding a sum of HK$30 million.
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(h) A loan agreement entered into between Rich Time and WYT on 2 October 2008 relating to the advance to WYT of a loan of HK$5 million for a period of one year.
(i) A loan agreement entered into between Rich Time and WYT on 5 September 2008 relating to the advance to WYT of a loan of HK$5 million for a period of one year.
(j) A conditional agreement dated 31 July 2008 entered into between Suitbest Investments Limited (“Suitbest”), an indirect wholly-owned subsidiary of the Company, and Joyful Leap Investments Limited (“Joyful Leap”) in respect of the sale and purchase of the entire issued share capital in Strengthen Investments Limited (“Strengthen Investments”) and the assignment of a loan of HK$196.6 million at an aggregate consideration of HK$198.8 million.
(k) A top-up placing and top-up subscription agreement entered into between Rich Time, an indirect wholly-owned subsidiary of the Company, Kingston Securities and WYT on 7 May 2008 in connection with the placing of an aggregate of 335,004,000 shares of WYT held by Rich Time to independent third parties at a price of HK$0.165 per share.
(l) A top-up placing and top-up subscription agreement entered into between Accord Power, Kingston Securities and the Company on 26 March 2008 in connection with the placing of an aggregate of 900 million Shares at a price of HK$0.075 per Share. The net proceeds of approximately HK$65.3 million were raised.
(m) A placing agreement entered into between the Company and Kingston Securities on 26 March 2008 in connection with the placing of an additional 460 million Shares at a price of HK$0.075 per Share. The net proceeds of approximately HK$33.6 million were raised.
(n) A sale and purchase agreement entered into between Joyful Leap and Suitbest on 7 January 2008 in connection with the sale and purchase of the entire issued share capital of Brightest Investments Limited and the assignment of a loan of approximately HK$177.2 million at an aggregate consideration of HK$240 million.
(o) A sale and purchase dated 23 November 2007 entered into between Jumbo Sun Investments Limited, its guarantor, Strengthen Investments, its guarantor, an independent third party and its guarantor to purchase 50% of the issued share capital of Vast Time Limited at a consideration of RMB11.25 million.
(p) A conditional agreement entered into between Well Victory Investments Limited, a then wholly-owned subsidiary of the Company, and an independent third party in the PRC as the joint venture partner on 16 November 2007 in connection with the formation of a sino-foreign joint venture company for development, operations and management of agricultural by-products wholesaling marketplace and related facilities, and sale and rental of properties in Zhengzhou, the PRC. A termination notice was served by the Group on the joint venture partner for certain conditions could not be fulfilled as scheduled.
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APPENDIX IV

(q) A conditional agreement entered into between Makwin Investment Limited, an indirect wholly-owned subsidiary of the Company, and independent third parties on 3 July 2007 in connection with the acquisition of a 20% equity interest in each of the three companies established in the PRC engaging in the wholesaling of agricultural by-products for an aggregate cash consideration of HK$73,470,000. A deposit of HK$10 million was paid upon signing of the agreement.
(r) A placing agreement entered into between Rich Time and DBS Asia Capital Limited on 11 June 2007 in connection with the placing of an aggregate of 210 million shares of WYT held by the Group to independent third parties at a price of HK$0.46 per share.
(s) An agreement entered into between the Company and Lehman Brothers Commercial Corporation Asia Limited (“Lehman Brothers”) on 15 May 2007 in connection with the issue of a total of 200 million unlisted warrants to Lehman Brothers entitling the holder thereof the right to subscribe for 200,000,000 subdivided Shares of the Company of HK$0.005 each at a subscription price of HK$0.34 per Share (as adjusted). The net proceeds of HK$4.0 million were raised.
(t) A shareholder agreement entered into between Mega Day Limited, an indirect whollyowned subsidiary of the Company, and certain independent parties in the PRC on 24 March 2007 in connection with the formation of a joint venture company, namely Changzhou Ling Jia Tang Wang Jin Development Company Limited (“Changzhou Ling Jia Tang”) for developing an agricultural by-products wholesaling marketplace and ancillary facilities in Changzhou. The registered capital of Changzhou Ling Jia Tang amounts to US$20 million, to which Mega Day Limited will contribute US$8 million.
(u) A top-up placing and subscription agreement entered into between Accord Power, Kingston Securities and the Company on 13 March 2007 in connection with the placing of an aggregate of 53 million shares of HK$0.10 each at a price of HK$2.8 per share. The net proceeds of approximately HK$144.2 million were raised.
(v) A placing agreement entered into between the Company and Kingston Securities on 13 March 2007 in connection with the placing of an additional 11.5 million new shares of HK$0.10 each at a price of HK$2.8 per share. The net proceeds of approximately HK$31.1 million were raised.

Save as disclosed above, none of the members of the Group had entered into any contracts after the date falling two years prior to the issue of this circular and up to the Latest Practicable Date which are not in the ordinary course of business and which are or may be material.

IV - 9 -

GENERAL INFORMATION

APPENDIX IV

11. CORPORATE INFORMATION

Board of Directors

Executive Directors

Mr. Tang Ching Ho 5/F., Wai Yuen Tong Medicine Building 9 Wang Kwong Road Kowloon Bay Kowloon Hong Kong

Ms. Yau Yuk Yin 5/F., Wai Yuen Tong Medicine Building 9 Wang Kwong Road . Kowloon Bay Kowloon Hong Kong

Audit Committee

Mr. Siu Yim Kwan, Sidney, S.B.St.J. , Chairman Mr. Wong Chun, Justein , MBE, JP Mr. Siu Kam Chau

Remuneration Committee

Mr. Wong Chun, Justein, MBE, JP, Chairman Dr. Lee Peng Fei, Allen, CBE, BS, FHKIE, JP Mr. Siu Yim Kwan, Sidney, S.B.St.J. Mr. Siu Kam Chau Mr. Tang Ching Ho Ms. Yau Yuk Yin Mr. Chan Chun Hong, Thomas

Nomination Committee

Mr. Chan Chun Hong, Thomas 5/F., Wai Yuen Tong Medicine Building 9 Wang Kwong Road Kowloon Bay Kowloon Hong Kong

Independent Non-executive Directors

Dr. Lee Peng Fei, Allen, CBE, BS, FHKIE , JP 5/F., Wai Yuen Tong Medicine Building 9 Wang Kwong Road Kowloon Bay Kowloon Hong Kong

Dr. Lee Peng Fei, Allen, CBE, BS, FHKIE, JP , Chairman Mr. Wong Chun, Justein, MBE, JP Mr. Siu Yim Kwan, Sidney, S.B.St.J . Mr. Siu Kam Chau Mr. Tang Ching Ho Ms. Yau Yuk Yin Mr. Chan Chun Hong, Thomas

Company Secretary

Ms. Mak Yuen Ming, Anita, ACIS, ACS

Registered Office

Mr. Wong Chun, Justein, MBE, JP 5/F., Wai Yuen Tong Medicine Building 9 Wang Kwong Road Kowloon Bay Kowloon Hong Kong

Mr. Siu Yim Kwan, Sidney, S.B.St.J. 5/F., Wai Yuen Tong Medicine Building 9 Wang Kwong Road Kowloon Bay Kowloon Hong Kong

Mr. Siu Kam Chau 5/F., Wai Yuen Tong Medicine Building 9 Wang Kwong Road Kowloon Bay Kowloon Hong Kong

Clarendon House 2 Church Street Hamilton HM 11 Bermuda

Head Office and Principal Place of Business in Hong Kong

5/F., Wai Yuen Tong Medicine Building 9 Wang Kwong Road Kowloon Bay Kowloon Hong Kong

Branch Share Registrar and Transfer Office in Hong Kong

Tricor Tengis Limited 26/F., Tesbury Centre 28 Queen’s Road East Wanchai Hong Kong

IV - 10 -

GENERAL INFORMATION

APPENDIX IV

Principal Bankers

The Hongkong and Shanghai Banking Corporation Limited 2/F, HSBC Building Mongkok 673 Nathan Road Mongkok, Kowloon Hong Kong China Construction Bank Corporation 44-45/F, Tower One Lippo Centre 89 Queensway, Admiralty Hong Kong DBS Bank (Hong Kong) Limited Unit 1209-18, Miramar Tower 132-134 Nathan Road Tsimshatsui Hong Kong

Authorised Representatives

Mr. Tang Ching Ho 5/F., Wai Yuen Tong Medicine Building 9 Wang Kwong Road Kowloon Bay Kowloon Hong Kong Mr. Chan Chun Hong, Thomas 5/F., Wai Yuen Tong Medicine Building 9 Wang Kwong Road Kowloon Bay Kowloon Hong Kong

Homepage

http://www.wangon.com

Auditors

Stock Code

Ernst & Young 18/F., Two International Finance Centre 8 Finance Street, Central Hong Kong

01222

Legal Advisers

Mallesons Stephen Jaques 37th Floor, Two International Finance Centre 8 Finance Street, Central Hong Kong

Morrison & Foerster 41/F., Edinburgh Tower The Landmark 15 Queen’s Road Central Hong Kong

Gallant Y.T. Ho & Co. 5/F., Jardine House 1 Connaught Place Central, Hong Kong K & L Gates 35/F, Two International Finance Centre 8 Finance Street Central, Hong Kong

IV - 11 -

GENERAL INFORMATION

APPENDIX IV

12. PARTIES INVOLVED IN THE OPEN OFFER AND THE BONUS ISSUE

Financial adviser to the Company Kingston Corporate Finance Limited Suite 2801, 28th Floor One International Finance Centre 1 Harbour View Street Central, Hong Kong Underwriters Kingston Securities Limited Suite 2801, 28th Floor One International Finance Centre 1 Harbour View Street Central, Hong Kong Accord Power Limited 5/F., Wai Yuen Tong Medicine Building 9 Wang Kwong Road, Kowloon Bay Kowloon, Hong Kong Legal adviser to the Company As to Hong Kong Law: K & L Gates 35/F, Two International Finance Centre 8 Finance Street Central, Hong Kong As to Bermuda Law: Conyers Dill & Pearman 2901 One Exchange Square 8 Connaught Place Central, Hong Kong Reporting accountants Ernst & Young 18/F., Two International Finance Centre 8 Finance Street Central, Hong Kong Share registrar and Tricor Tengis Limited transfer office in Hong Kong 26/F., Tesbury Centre 28 Queen’s Road East Wanchai, Hong Kong

IV - 12 -

GENERAL INFORMATION

APPENDIX IV

13. PROFILES OF DIRECTORS

Executive Directors

Mr. Tang Ching Ho , aged 46, is a co-founder of the Group (which was established in 1987), and the Chairman of the Company since November 1993. He is responsible for the strategic planning, policy making and business development of the Group. He has extensive experience in corporate management. He is also the chairman of WYT, a company listed on the main board of the Stock Exchange. He is the husband of Ms. Yau Yuk Yin. Mr. Tang together with his associates is currently holding 1,005,658,060 Shares.

Ms. Yau Yuk Yin , aged 46, is a co-founder of the Group and Deputy Chairman of the Company since November 1993. She is responsible for the overall human resources and administration of the Group. She has over 10 years’ experience in human resources and administration management. She is the wife of Mr. Tang Ching Ho. Ms. Yau together with his associates is currently holding 1,005,658,060 Shares.

Mr. Chan Chun Hong, Thomas , aged 44, joined the Group in March 1997 as an Executive Director and was re-designated as the Managing Director of the Company in September 2005. He is currently responsible for managing the overall operations of the Group. He graduated from the Hong Kong Polytechnic University with a degree in Accountancy and is a fellow member of the Association of Chartered Certified Accountants and an associate member of the Hong Kong Institute of Certified Public Accountants. He is also the managing director of WYT, the chairman and managing director of LeRoi Holdings Limited, the chairman of China Agri-Products Exchange Limited and an independent non-executive director of Shanghai Prime Machinery Company Limited, all of which are companies listed on the main board of the Stock Exchange. Mr. Chan is currently holding 3,900,000 Share Options granted by the Company.

Independent Non-executive Directors

Dr. Lee Peng Fei, Allen , CBE, BS, FHKIE, JP , aged 68, joined the Group in November 1993 as an Independent Non-executive Director of the Company. He is a member of remuneration committee and the chairman of nomination committee of the Company. Dr. Lee holds an honorary doctoral degree in engineering from The Hong Kong Polytechnic University and an honorary doctoral degree in laws from The Chinese University of Hong Kong. Dr. Lee was a deputy of Hong Kong SAR, the 9th and 10th National People’s Congress, PRC. He is currently an independent non-executive director of AMS Public Transport Holdings Limited, Giordano International Limited, ITE (Holdings) Limited, Playmates Holdings Limited, Sam Woo Holdings Limited and VXL Capital Limited, all of which are companies listed on the Stock Exchange. During the past three years, Dr. Lee was also an independent non-executive Director of Interchina Holdings Company Limited.

Mr. Wong Chun, Justein , MBE, JP , aged 55, joined the Group in November 1993 as an Independent Non-executive Director of the Company. He is a member of audit committee and nomination committee of the Company and the chairman of the remuneration committee of the Company. Mr. Wong holds a bachelor’s degree in Commerce and Computing Science from Simon Fraser University, Canada. He is a fellow of Institute of Canadian Bankers. He was a member of the Fight Crime Committee, the Independent Police Complaints Council, the Legal Aid Services Council, Chairman of Quality Education Fund Assessment and Monitoring Committee and is currently a member of Joint Committee of Student Finance and other government advisory bodies.

IV - 13 -

GENERAL INFORMATION

APPENDIX IV

Mr. Siu Yim Kwan, Sidney , S.B.St.J. , aged 62, joined the Group in November 1993 as an Independent Non-executive Director of the Company. He is the chairman of audit committee of the Company and a member of nomination committee and remuneration committee of the Company. Mr. Siu is also an executive member of a number of charitable organisations and sports associations and an independent non-executive director of B.A.L. Holdings Limited.

Mr. Siu Kam Chau , aged 44, joined the Group in September 2004 as an Independent Nonexecutive Director of the Company. He is a member of audit committee, nomination committee and remuneration committee of the Company. Mr. Siu is a Certified Public Account (Practising) and a fellow of the Association of Chartered Certified Accountants and the Hong Kong Institute of Certified Public Accountants. He is also an executive director of Hong Kong Health Check and Laboratory Holdings Company Limited, a listed company in Hong Kong.

Senior Management

Mr. Cheung Wai Kai , aged 53, joined the Group in July 1998 and is the General Manager of the Group’s commercial management division. He had more than 12 years of experience in general management and 11 years specialising in the market management. Mr. Cheung is an executive director of LeRoi Holdings Limited, a company listed on the main board of the Stock Exchange.

Mr. Kwok Tze Chiu , aged 50, joined the Group in September 1997 and is the General Manager of the Group and responsible for quantity surveying and cost control of the Group’s project management department. Prior to joining the Group, he had over 21 years’ experience in the building industry. He graduated from the Hong Kong Polytechnic University with a higher certificate in Building Studies.

Mr. Leong Weng Kin , aged 43, join the Group in July 2004 and is the Group Financial Controller of the Group. He is the qualified accountant of the Company. He holds a Master degree in Business Administration from the Chinese University of Hong Kong. Prior to joining the Group, he had over 10 years’ experience in key financial position in a Hong Kong listed Group and more than four years working experience in an international firm of Certified Public Accountants. Mr. Leong is an executive director of China Agri-Products Exchange Limited, a company listed on the main board of the Stock Exchange.

Mr. Ying Yat Man , aged 49, joined the Group in January 2007 and is the General Manager of the Group and the head of the Group’s agricultural wholesale markets management department. Prior to joining the Group, he had over 25 years of experience in real estate development and general business management in Hong Kong and the PRC working in both the private and public sectors. He is a professional qualified real estate surveyor. He holds a Bachelor degree in Laws from the University of London and a Master degree in Chinese Laws from the University of Hong Kong. Mr. Ying is an executive director of China Agri-Products Exchange Limited, a company listed on the main board of the Stock Exchange.

IV - 14 -

GENERAL INFORMATION

APPENDIX IV

14. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents are available for inspection at the head office and principal place of business of the Company in Hong Kong at 5/F., Wai Yuen Tong Medicine Building, 9 Wang Kwong Road, Kowloon Bay, Kowloon, Hong Kong on any business day (excluding public and statutory holidays and Saturdays), from the date of this circular up to and including the date of the SGM:

(a) the memorandum of association of the Company and the Bye-laws;
(b) the letter from the Board, the text of which is set out on pages 10 to 29 of this circular;
(c) the letter from the Independent Board Committee, the text of which are set out on page 30 of this circular;
(d) the letter from the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders, the text of which are set out on pages 31 to 43 of this circular;
(e) the letter from Ernst & Young, the reporting accountants, on the unaudited pro forma financial information of the Group, the text of which are set out on pages II-1 to II-5 of this circular;
(f) the material contracts referred to in the section headed “Material contracts” in this appendix;
(g) the written consents of the experts referred to in the section headed “Experts and consents” in this appendix;
(h) the annual reports of the Company for the two years ended 31 March 2007 and 2008;
(i) the interim report of the Company for the six months ended 30 September 2008;
(j) a copy of each of the circular(s) which has/have been issued by the Company pursuant to the requirements set out in Chapter 14 and/or 14A of the Listing Rules since 31 March 2008, being the date to which the latest published audited consolidated financial statements of the Group were made up;
(k) the letter of advice from Conyers Dill & Pearman, the Company’s legal advisers on Bermuda law, summarising certain aspects of Bermuda company law; and
(l) a copy of the Companies Act.
IV - 15 -

NOTICE OF ThE SGM

==> picture [81 x 60] intentionally omitted <==

**WANG ON GROUP LIMITED （宏安集團有限公司）[*]**

(Incorporated in Bermuda with limited liability)

(Stock Code: 01222)

NOTICE OF SPECIAL GENERAL MEETING

NOTICE IS hEREBY GIVEN that the special general meeting of Wang On Group Limited (宏安集團有限公司) (the “ Company* ”) will be held at 35th Floor, Two International Finance Centre, 8 Finance Street, Central, Hong Kong on Monday, 30 March 2009 at 10:00 a.m. for the purpose of considering and, if thought fit, passing the following resolutions with or without amendments as resolutions of the Company:

SPECIAL RESOLUTION

“ ThAT , conditional upon (i) the Listing Committee of The Stock Exchange of Hong Kong Limited (the “ Stock Exchange ”) granting the listing of, and permission to deal in, the Adjusted Shares (as defined below); and (ii) the compliance with the requirements of section 46(2) of the Companies Act 1981 of Bermuda (as amended), with effect from 9:30 a.m. on the business day (as defined in the Rules Governing the Listing of Securities on the Stock Exchange) next following the day on which this resolution is passed by the shareholders of the Company (the “ Shareholders ”):
(a) every twenty-five (25) issued shares of HK$0.005 each be consolidated into one (1) issued share of HK$0.125 each (the “ Consolidated Shares ”) and every two (2) authorised but unissued shares of HK$0.005 each be consolidated into one (1) authorised but unissued share of HK$0.01 each (the consolidation of the issued shares and unissued shares in the manner described, the “ Share Consolidation ”);
(b) the total number of the Consolidated Shares in the issued share capital of the Company immediately following the Share Consolidation will be rounded down to a whole number by canceling the fractional Consolidated Share arising from the Share Consolidation;
(c) the par value of each issued Consolidated Share be reduced (together with subparagraph (b) above are hereinafter referred to as the “ Capital Reduction ” and together with the Share Consolidation, the “ Capital Reorganisation ”) from HK$0.125 to HK$0.01 by canceling HK$0.115 of the paid-up capital on each issued Consolidated Share to form issued share of HK$0.01 each (the “ Adjusted Shares ”);

For identification purpose only

SGM - 1 -

NOTICE OF ThE SGM

(d) the credit arising from the Capital Reduction be credited to the contributed surplus account of the Company and the directors of the Company (the “ Directors ”) be and are hereby authorised to apply the amount in the contributed surplus account of the Company in any manner permitted by the laws of Bermuda and the bye-laws of the Company (the “ Bye-laws ”) without further authorisation from the Shareholders; and
(e) any Director be and is hereby authorised to sign and execute such documents and do all such acts and things incidental to any of the foregoing or as he/she considers necessary, desirable or expedient in connection with the implementation of or giving effect to any of the foregoing and the transactions contemplated thereunder including without limitation to aggregate all of the fractional shares and to sell them for the benefit of the Company.”

ORDINARY RESOLUTIONS

“ ThAT
(a) subject to the passing of the resolutions numbered 1 and 3 and conditional upon fulfillment of the conditions of the Underwriting Agreement (as defined below), the Open Offer (as defined below) and the transactions contemplated thereunder be and are hereby approved;
- For the purpose of this resolution, “ Open Offer ” means the proposed issue by way of open offer of not less than 1,132,861,635 Adjusted Shares and not more than 1,180,639,635 Adjusted Shares (the “ Offer Shares ”) at a subscription price of HK$0.10 per Offer Share to the qualifying shareholders (the “ Qualifying Shareholders ”) of the Company whose names appear on the date by reference to which entitlement under the Open Offer will be determined (other than those shareholders (the “ Excluded Shareholders ”) with addresses on the register of members of the Company are outside Hong Kong whom the Directors, after making enquiries, consider their exclusion from the Open Offer to be necessary or expedient on account either of the legal restrictions under the laws of the relevant place or the requirements of the relevant regulatory body or stock exchange in that place) on the basis of three (3) Offer Shares for every one (1) Adjusted Share then held and otherwise pursuant to and subject to the fulfillment of the conditions set out in the underwriting agreement (the “ Underwriting Agreement ” including all supplemental agreements relating thereto) (a copy of which has been produced to this Meeting marked “A” and signed by the chairman of this Meeting for the purpose of identification) dated 10 February 2009 and made between the Company, and Accord Power Limited and Kingston Securities Limited as underwriters (the “ Underwriters ”);
SGM - 2 -

NOTICE OF ThE SGM

(b) any Director be and is hereby authorised to allot and issue the Offer Shares pursuant to and in connection with the Open Offer notwithstanding that (a) the Offer Shares the same may be offered, allotted or issued otherwise than pro rata to the Qualifying Shareholders and, in particular, the Directors be and are hereby authorised to make such exclusions or other arrangements in relation to fractional entitlements and/or Excluded Shareholders as they deem necessary, desirable or expedient having regard to any restrictions or obligations under the Bye-laws or the laws of, or the rules and regulations of any recognised regulatory body or any stock exchange in, any territory outside Hong Kong; and (b) no Offer Shares which would otherwise have been made available for application by the Qualifying Shareholders or the Excluded Shareholders (as the case may be) will be made available for subscription under forms of application for excess Offer Shares;
(c) the entering into of Underwriting Agreement by the Company be and is hereby approved, confirmed and ratified and the performance of the transactions contemplated thereunder by the Company (including but not limited to the arrangements for taking up of the underwritten Offer Shares, if any, by the Underwriters) be and are hereby approved; and
(d) any Director be and is hereby authorised to sign and execute such documents and do all such acts and things incidental to the Open Offer or as he/she considers necessary, desirable or expedient in connection with the implementation of or giving effect to the Open Offer, the Underwriting Agreement and the transactions contemplated thereunder.”
“ ThAT
(a) subject to the passing of the resolutions numbered 1 and 2 and conditional upon the Listing Committee of the Stock Exchange granting the listing of, and permission to deal in the Bonus Shares (as defined below), the issue (the “ Bonus Issue ”) of new Adjusted Shares (the “ Bonus Shares ”), credited as fully paid, to the first registered holders of the Offer Shares on the basis of two (2) Bonus Shares for every three (3) Offer Share taken up under the Open Offer be and is hereby approved;
(b) any Director be and is hereby authorised to allot and issue the Bonus Shares pursuant to or in connection with the Bonus Issue notwithstanding that the same may be offered, allotted or issued otherwise than pro rata to the existing shareholders of the Company and, in particular, the Directors be and are hereby authorised to make such exclusion or other arrangements in relation to fractional entitlements or Excluded Shareholders as they deem necessary, desirable or expedient having regard to any restrictions or obligations under the Bye-laws or the laws of, or the rules and regulations of any recognised regulatory body or any stock exchange in, any territory outside Hong Kong; and
SGM - 3 -

NOTICE OF ThE SGM

(c) any Director be and is hereby authorised to sign and execute such documents and do all such acts and things incidental to the Bonus Issue (including the appropriation of such sum from the share premium account of the Company in paying up in full the Bonus Shares) or as he/she considers necessary, desirable or expedient in connection with the implementation of or giving effect to the Bonus Issue and the transactions contemplated thereunder.”

By Order of the Board WANG ON GROUP LIMITED (宏安集團有限公司)* Mak Yuen Ming, Anita Company Secretary

Hong Kong, 3 March 2009

Registered office: Head office and principal Clarendon House place of business: 2 Church Street 5/F., Wai Yuen Tong Medicine Building Hamilton HM 11 9 Wang Kwong Road Bermuda Kowloon Bay Kowloon Hong Kong

Notes:

(1) A member entitled to attend and vote at the special general meeting convened by the above notice is entitled to appoint one or more than one proxy to attend and to vote in his stead. A proxy need not be a member of the Company.
(2) In order to be valid, a form of proxy, together with any power of attorney or other authority, if any, under which it is signed, or a notarially certified copy of such power or authority, must be deposited at the Company’s branch share registrar and transfer office in Hong Kong, Tricor Tengis Limited, 26/F., Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong, as soon as practicable but in any event not later than 48 hours before the time for holding of the special general meeting or any adjournment thereof.
(3) Completion and delivery of the form of proxy will not preclude members from attending and voting at the special general meeting or any adjournment thereof (as the case may be) and in such event, the form of proxy will be deemed to be revoked.

For identification purpose only

SGM - 4 -

AI assistant

Wang On Group Limited — Proxy Solicitation & Information Statement 2009

49778_rns_2009-03-02_eeac5fc4-beeb-478f-8a3e-68fffd45857b.pdf

WANG ON GROUP LIMITED （宏安集團有限公司）[*]

CONTENTS

Definitions

Definitions

Definitions

Parallel trading in the Adjusted Shares

Dealings in the Offer Shares and

Notes:

termination of the underwriting agreement

WaNG oN GroUP LImIted （宏安集團有限公司）[*]

(1) ProPoSed CaPItaL reorGaNISatIoN;

(4) NotICe of SPeCIaL GeNeraL meetING

INtrodUCtIoN

ProPoSed CaPItaL reorGaNISatIoN

effects of the Capital reorganisation

reasons for the Capital reorganisation

Conditions of the Capital reorganisation

Listing and dealings

free exchange of Share certificates

ProPoSed ChaNGe IN Board Lot SIZe

arraNGemeNt for odd Lot tradING

ProPoSed oPeN offer aNd BoNUS ISSUe

Issue statistics

Bonus Issue

Qualifying Shareholders

rights of overseas Shareholders

Letter from the Board

No transfer of nil-paid entitlements and no application for excess offer Shares

Closure of register of members

Subscription Price

Status of the offer Shares and the Bonus Shares

Certificates of the offer Shares and the Bonus Shares

fractions of the Bonus Shares

application for listing

Irrevocable Undertaking

UNderWrItING arraNGemeNtS

the Underwriting agreement

Letter from the Board

termination of the Underwriting agreement

Letter from the Board

Conditions of the open offer and the Bonus Issue

ChaNGeS IN the SharehoLdING StrUCtUre of the ComPaNY arISING from the oPeN offer aNd the BoNUS ISSUe

(i) assuming no exercise of the outstanding Share options before the record date.

Letter from the Board

reaSoNS for the oPeN offer aNd USe of ProCeedS

PoSSIBLe adJUStmeNt to the Share oPtIoNS

PreVIoUS fUNd raISING eXerCISe IN the PrIor 12-moNth PerIod

WarNING of the rISKS of deaLING IN the ShareS

SGm

Letter from the Board

reCommeNdatIoN

addItIoNaL INformatIoN

WANG ON GROUP LIMITED （宏安集團有限公司）[*]

PROPOSED OPEN OFFER ON THE BASIS OF THREE OFFER SHARES FOR EVERY ONE ADJUSTED SHARE HELD ON THE RECORD DATE WITH BONUS ISSUE ON THE BASIS OF TWO BONUS SHARES FOR EVERY THREE OFFER SHARES TAKEN UP UNDER THE OPEN OFFER

PROPOSED OPEN OFFER ON THE BASIS OF THREE OFFER SHARES FOR EVERY ONE ADJUSTED SHARE HELD ON THE RECORD DATE WITH BONUS ISSUE ON THE BASIS OF TWO BONUS SHARES FOR EVERY THREE OFFER SHARES TAKEN UP UNDER THE OPEN OFFER

INTRODUCTION

LETTER FROM NUADA

BASIS OF OUR OPINION

PRINCIPAL FACTORS AND REASONS CONSIDERED

Principal businesses of the Group and reasons for the Open Offer

LETTER FROM NUADA

Terms of the Open Offer and the Bonus Issue

Subscription Price

Liquidity of the Shares

Historical trading volume of the Adjusted Shares

Comparison with other open offers

LETTER FROM NUADA

Absence of arrangement for application for excess Offer Shares

LETTER FROM NUADA

Alternative to the Open Offer

Potential dilution effect on the shareholding interests of the Independent Shareholders

LETTER FROM NUADA

Financial effects of the Open Offer and the Bonus Issue

RECOMMENDATION

FINANCIAL SUMMARy

1. THREE-yEAR FINANCIAL SUMMARy

RESULTS

Wang On Group Limited Proxy Solicitation & Information Statement 2009

**WANG ON GROUP LIMITED （宏安集團有限公司）[*]**

**WaNG oN GroUP LImIted （宏安集團有限公司）[*]**

**WANG ON GROUP LIMITED （宏安集團有限公司）[*]**