Wanjia Group Holdings Limited - Proxy Solicitation & Information Statement 2004

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 stockbroker or other registered dealer in securities, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your shares in Min Xin Holdings Limited , you should at once hand this circular and the accompanying form of proxy to the purchaser or the transferee or to the bank or stockbroker or other agent through whom the sale or transfer was effected for transmission to the purchaser or transferee.

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

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MIN XIN HOLDINGS LIMITED

(incorporated in Hong Kong with limited liability)

(Stock Code: 222)

VERY SUBSTANTIAL ACQUISITION AND CONNECTED TRANSACTION

Independent financial adviser to the independent board committee of Min Xin Holdings Limited

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Goldbond Capital (Asia) Limited

A letter from the Board is set out on pages 4 to 20 of this circular. A letter from the Independent Board Committee is set out on page 21 of this circular.

A letter from Goldbond Capital (Asia) Limited, the independent financial adviser, containing its advice to the Independent Board Committee is set out on pages 22 to 34 of this circular.

A notice convening the EGM of Min Xin Holdings Limited to be held at Taishan Room, Level 5, Island Shangri-La, Pacific Place, Supreme Court Road, Central, Hong Kong on Friday, 17 September 2004 at 3:00 p.m. is set out on pages 99 to 100 to this circular.

Whether or not you are able to attend the EGM, you are requested to complete and return the accompanying form of proxy in accordance with the instructions printed thereon as soon as possible and in any event not less than 48 hours before the time appointed for holding of the EGM or any adjournment thereof. Completion and return of the form of proxy will not preclude you from attending and voting in person at the EGM or any adjournment thereof should you so wish.

1 September 2004

Pages	Pages
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
The Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
Information on the Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8
Information on the Vendor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	9
Information on the Asset . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	9
Information on the Huaneng Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	9
Reasons for the Acquisition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	11
Financial effects of the Acquisition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	12
Risks in relation to the Asset . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	12
Financial and trading prospects of the Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	13
Management discussion and analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	14
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	18
The Independent Board Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	18
The EGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	18
Poll procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	19
Recommendation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	20
Further information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	20
Letter from the Independent Board Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	21
Letter from Goldbond Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	22
Appendix I — Financial information on the Group . . . . . . . . . . . . . . . . . . . . . . . . . . .	35
Appendix II — Unaudited pro forma financial information . . . . . . . . . . . . . . . . . . . . .	83
Appendix III — General information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	93
Notice of extraordinary general meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	99

— i —

DEFINITIONS

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

“Acquisition”	transaction contemplated under the Agreement
“Agreement”	agreement dated 19 July 2004 entered into between the
	Vendor and the Company for the acquisition of the Asset by
	the Company at the consideration of RMB358,560,000
	(equivalent to approximately HK$338,936,000)
“Announcement”	announcement dated 19 July 2004 made by the Company
	which announced that the Company had entered into the
	Agreement for the acquisition of the Asset and set out details
	of the Acquisition
“Asset”	108,000,000 Huaneng Domestic Shares
“associates”	has the same meaning as ascribed to it under the Listing Rules
“Board”	board of Directors
“Company”	Min Xin Holdings Limited, a company incorporated in Hong
	Kong with limited liability and the securities of which are
	listed on the Stock Exchange
“connected person(s)”	has the same meaning as ascribed to it under the Listing Rules
“controlling shareholder”	has the same meaning as ascribed to it under the Listing Rules
“Director(s)”	director(s) of the Company
“EGM”	an extraordinary general meeting of the Company to be held
	at 3:00 p.m. on Friday, 17 September 2004 to consider the
	ordinary resolution to be proposed to approve the Agreement
	and the transaction contemplated thereunder
“FITIC”	(for identification purposes, in English,
	Fujian International Trust & Investment Corporation), a
	company incorporated in the PRC with limited liability
“Goldbond Capital”	Goldbond Capital (Asia) Limited, a licensed corporation
	under the transitional arrangement within the meaning of the
	SFO to carry out Types 1 and 6 regulated activities under the
	SFO
“Group”	the Company, its subsidiaries and associated companies
“Hong Kong”	the Hong Kong Special Administrative Region of the PRC

— 1 —

DEFINITIONS

“Huaneng” Huaneng Power International, Inc., a Sino-foreign joint stock limited company incorporated in the PRC whose Huaneng H Shares are listed on the Stock Exchange “Huaneng Domestic Share(s)” ordinary domestic shares in the existing issued share capital of Huaneng, with a nominal value of RMB1.00, which are not traded in any stock exchange “Huaneng Group” Huaneng and its subsidiaries “Huaneng H Share(s)” overseas listed foreign shares in the existing issued share capital of Huaneng, with a nominal value of RMB1.00, which are traded in Hong Kong dollars and listed on the Stock Exchange “Huaneng Share(s)” Huaneng Domestic Share(s), Huaneng H Share(s) and Renminbi-denominated domestic share(s) in the ordinary share capital of Huaneng with a nominal value of RMB1.00 which are listed on the Shanghai Stock Exchange “Huaneng Unlisted Foreign Huaneng Domestic Shares to be re-designated whose reShares” designation would take place upon completion of the Acquisition, and for the avoidance of doubt, Huaneng Unlisted Foreign Shares exclude Huaneng H Shares “Independent Board Committee” an independent committee of the Board comprising Mr. Ip Kai Ming and Mr. Robert Tsai To Sze, all being independent non-executive Directors, established for the purpose of reviewing the Acquisition “Independent Shareholders” Shareholders who are not involved in or interest in the transaction and other than the Vendor, FITIC and their respective associates

“Latest Practicable Date” 20 August 2004, being the latest practicable date prior to the printing of this circular for ascertaining certain information referred to in this circular
“Listing Rules” Rules Governing the Listing of Securities on the Stock Exchange
“Long Stop Date” 18 July 2005, being the date of the expiry of 12 months from the signing of the Agreement or, such later date as the parties to the Agreement may agree in writing
“Percentage Ratios” the percentage ratios (other than the equity capital ratio) under Rule 14.07 of the Listing Rules
“PRC” People’s Republic of China

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

|||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
|DEFINITIONS|
|“SFO”|Securities|and|Futures|Ordinance|(Chapter|571|of|the|Laws|of|
|Hong|Kong)|
|“Share(s)”|ordinary|share(s)|of|HK$1.00|each|in|the|existing|issued|share|
|capital|of|the|Company|
|“Shareholder(s)”|holder(s)|of|the|Shares|
|“Stock|Exchange”|The|Stock|Exchange|of|Hong|Kong|Limited|
|“Vendor”|(for|identification|purposes,|in|
|English,|the|liquidation|team|of|FITIC),|the|vendor|of|the|
|Asset|and|is|responsible|for|the|liquidation|of|FITIC,|which|
|was|set|up|by|the|Fujian|Provincial|Government|
|“HK$”|and|“cents”|Hong|Kong|dollars|and|cents|respectively,|the|lawful|currency|
|of|Hong|Kong|
|“RMB”|Renminbi,|the|lawful|currency|of|the|PRC|

----- End of picture text -----

Translation of Renminbi into Hong Kong dollars in this circular is based on the exchange rate of HK$1.00 = RMB1.0579

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LETTER FROM THE BOARD

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MIN XIN HOLDINGS LIMITED

(incorporated in Hong Kong with limited liability)

(Stock Code: 222)

Board of Directors

Executive Directors:

Mr. Ding Shi Da (Chairman) Mr. Chen Gui Zong (Vice Chairman) Mr. Yang Sheng Ming Mr. Zhu Xue Lun Mr. Shang Jian Guang

Registered Office: 17th Floor, Fairmont House 8 Cotton Tree Drive Central Hong Kong

Independent non-executive Directors:

Mr. Ip Kai Ming Mr. Robert Tsai To Sze

1 September 2004

To the Shareholders

Dear Sir or Madam,

VERY SUBSTANTIAL ACQUISITION AND CONNECTED TRANSACTION

INTRODUCTION

On 20 July 2004, the Company announced that on 19 July 2004, the Company and the Vendor had entered into the Agreement.

The Vendor is the liquidation team of FITIC. As the consideration for the Acquisition represents more than 100% under one of the Percentage Ratios, the Acquisition constitutes a very substantial acquisition for the Company under the Listing Rules. As the Asset is beneficially owned by FITIC, the controlling shareholder (as defined in the Listing Rules) of the Company holding approximately 41.96% interest in the existing share capital of the Company and hence a connected person of the Company under the Listing Rules, the Acquisition is also a connected transaction for the Company under the Listing Rules and will be subject to the approval of the Independent Shareholders by poll at the EGM.

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LETTER FROM THE BOARD

THE AGREEMENT

Date

19 July 2004

Parties

Vendor: the liquidation team of FITIC. FITIC was principally engaged in, among other businesses, financial services and investments before the liquidation.

Purchaser: the Company

Subject matter of the Acquisition

The Asset, being 108,000,000 Huaneng Domestic Shares, represents approximately 0.90% of the existing issued share capital of Huaneng.

As the Asset is beneficially owned by FITIC, the controlling shareholder (as defined in the Listing Rules) of the Company and hence a connected person of the Company under the Listing Rules, the Acquisition will be treated as a connected transaction for the Company under the Listing Rules.

As at 31 December 2003, the net asset value per Huaneng Share under PRC Accounting Standards amounted to RMB5.77 (equivalent to approximately HK$5.45) (before adjustment for the issue of bonus Huaneng Shares and the conversion of the additional paid-in capital of Huaneng, details of which are set out in the announcement of Huaneng dated 16 March 2004) ; after such adjustments, the net asset value per Huaneng Share under PRC Accounting Standards as at 31 December 2003 amounted to RMB2.885 (equivalent to approximately HK$2.727).

Terms of the Agreement

Pursuant to the Agreement, the Vendor had agreed to sell (and procure the successor/ transferee (if any) of the Asset to sell as the Vendor, being the liquidation team of FITIC), and the Company had agreed to purchase from the Vendor (or the successor/ transferee (if any) of the Asset) the Asset at the consideration of RMB358,560,000 (equivalent to approximately HK$338,936,000). The liquidation of FITIC may be completed before or after the completion of the Acquisition. Based on usual liquidation process in the PRC, should the liquidation of FITIC be completed before completion of the Acquisition, the Vendor, being the liquidation team of FITIC, will be required to transfer the Asset to its successor/ transferee upon completion of the liquidation process. Should the liquidation of FITIC be completed after completion of the Acquisition, the Vendor shall transfer the Asset to the Company at completion of the Acquisition.

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LETTER FROM THE BOARD

Pursuant to the terms and conditions of the Agreement, the Vendor had warranted and undertaken with the Company that it would obtain prior approval of the Company if the Vendor transfers the legal title to the Huaneng Domestic Shares beneficially held by FITIC to a new shareholder upon completion of the liquidation process but before completion of the Acquisition. In addition, the Vendor had warranted and undertaken with the Company that it would procure such successor/ transferee (if any) to sell the Asset to the Company in accordance with the terms and conditions of the Agreement.

Pursuant to the Agreement, the Company should pay the Vendor a pro-rata entitlement in terms of the appreciation in the net asset value of the Asset during the period from 1 January 2004 until the date of actual payment of the consideration of the Acquisition with reference to the audited accounts to be issued by Huaneng for the year ending 31 December 2004 and thereafter (if applicable) under PRC Accounting Standards (the “NAV Appreciation”). Therefore, the consideration of the Acquisition is subject to adjustment arising from the NAV Appreciation.

The following sets out the formula for the calculation of the NAV Appreciation:

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A i = Net asset value attributable to the Asset as at the end of the financial year i of Huaneng
B i = Dividend attributable to the Asset declared by Huaneng during the financial year i of Huaneng
C i = Number of days from 1 January of financial year i of Huaneng until the Payment Date (subject to a maximum of 365 days)
D i = Dividend attributable to the Asset declared by Huaneng during the financial year i of Huaneng and received by the Vendor
i = Financial year of Huaneng
n = Financial year of Huaneng which the Payment Date falls under

As the consideration of the Acquisition is based on the net asset value of the Asset as at 31 December 2003 and will not become due until all the conditions precedent to the Agreement are fulfilled, any appreciation (if any) in terms of the net asset value of the Asset during the period from 1 January 2004 until completion of the Acquisition should belong to the Vendor. Further, upon completion of the Acquisition, the Company will record the Asset at a value equivalent to the consideration of the Acquisition together with the NAV Appreciation. The Directors consider that it is fair and reasonable to pay the Vendor the NAV Appreciation.

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LETTER FROM THE BOARD

The amount of the NAV Appreciation to be paid by the Company (if any) cannot be ascertained until completion of the Acquisition takes place which is expected to be on or before the Long Stop Date. The Company intends to finance the NAV Appreciation (if any) by internal resources of the Group. Furthermore, the Company will make proper announcement upon ascertaining amount of the NAV Appreciation and completion of the Acquisition, and details of which will also be disclosed in the annual report of the Company.

Consideration

The consideration of the Acquisition of RMB358,560,000 (equivalent to approximately HK$338,936,000) was agreed after arm’s length negotiations between the Vendor and the Company by reference to the net asset value of the Huaneng Group as at 31 December 2003 (under PRC Accounting Standards), business potential and growth prospect of the Huaneng Group. The consideration and all calculations are based on the accounts of Huaneng Group (under PRC Accounting Standards) unless stated otherwise.

Based on the net asset value per Huaneng Share under PRC Accounting Standards as at 31 December 2003, the net asset value attributable to such 108,000,000 Huaneng Domestic Shares amounted to approximately RMB311,580,000 (equivalent to approximately HK$294,527,000). The consideration of the Acquisition of RMB358,560,000 (equivalent to approximately HK$338,936,000) represents a premium of approximately 15.08% over the net asset value attributable to the Asset.

The consideration of the Acquisition would be satisfied in cash within 20 days from the date when all of the conditions set out in the section headed “Conditions precedent” below are being satisfied. The Group intends to fund the Acquisition primarily from internal cash resources with the remaining balance by bank borrowings.

Acquisition cost of each share in the Asset

The Asset comprises 108,000,000 Huaneng Domestic Shares. Based on the consideration of the Acquisition of RMB358,560,000 (equivalent to approximately HK$338,936,000), acquisition cost per Huaneng Domestic Share under the Acquisition is RMB3.32 (equivalent to approximately HK$3.14). The acquisition cost per Huaneng Domestic Share represents:

a discount of approximately 54.16% to HK$6.85, the closing price of Huaneng H Share on the Stock Exchange on 28 June 2004, being the last trading day before the suspension of trading in the Shares prior to the date of Announcement;
a discount of approximately 44.42% to HK$5.65, the closing price of Huaneng H Share on the Stock Exchange on the Latest Practicable Date;
a premium of approximately 15.08% to the audited net asset value of the Huaneng Group per Huaneng Share as at 31 December 2003 (under PRC Accounting Standards) of RMB2.885 (equivalent to approximately HK$2.727); and

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LETTER FROM THE BOARD

a premium of approximately 13.87% arrived at by dividing the aggregate of the consideration of the Acquisition and the appreciation in net asset value for the six months ended 30 June 2004 (adjusted for the final dividend declared by Huaneng for the year ended 31 December 2003 of RMB0.25 per share paid on 28 May 2004 (“2003 Dividend”)) of RMB0.21 per Huaneng Share (equivalent to approximately HK$0.20) (under PRC Accounting Standards) by the unaudited net asset value (adjusted for 2003 Dividend) per Huaneng Share as at 30 June 2004 (under PRC Accounting Standards) of RMB3.10 (equivalent to approximately HK$2.93).

Conditions precedent

Completion of the Agreement is subject to the fulfillment of the following conditions:

the approval by the Independent Shareholders at the EGM by way of a poll of the Acquisition and the approval by the Stock Exchange on the Announcement and this circular; and
the provision by the Vendor (or the successor/ transferee of the Asset (if any)) of certified true copies of all the necessary approvals required by Hong Kong and PRC laws and regulations (including the relevant regulatory authorities in Hong Kong, the People’s Government of the Fujian Province, the State-owned Assets Supervision and Administration Commission and the Department of Commerce of the State Council of the PRC having approved the Acquisition) for effecting the transaction contemplated thereunder.

The above conditions cannot be waived by any party. The above conditions precedent shall be fulfilled by the Long Stop Date. If the aforesaid conditions have not been fulfilled by the Long Stop Date, the Agreement shall cease to have any effect and no party shall have any liability thereunder (but without prejudice to the rights of any party against the others for antecedent breaches of the Agreement).

Warranty

Pursuant to the Agreement, the Vendor had warranted and undertaken with the Company that, should the Asset be succeeded by/ transferred to another party(ies) with the consent of the Company, the Vendor shall procure such successor/ transferee (if any) to sell the Asset to the Company in accordance with the terms and conditions of the Agreement.

INFORMATION ON THE GROUP

The principal activities of the Group are financial services, investment holding, property development and investment, and infrastructure investment.

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LETTER FROM THE BOARD

INFORMATION ON THE VENDOR

The Vendor is the liquidation team of FITIC. FITIC was principally engaged in, among other businesses, financial services and investments before the liquidation.

On 28 December 2001, the Company announced that The Shanghai Branch of The People’s Bank of China had released an announcement (the “PBC Announcement”) to deregister FITIC and to terminate all its financial activities with effect from the date of the PBC Announcement. After such deregistration, a liquidation team was set up by the Fujian Provincial Government. During the liquidation process, the subsidiaries of FITIC would continue to operate its usual course of business under the supervision of the liquidation team, the Vendor to the Acquisition. The liquidation process is carried out in accordance with Document Min Zheng Ban ( ) [2001] No. 234 issued by the Fujian Provincial Government. The legal adviser to the Company on PRC law has advised that during the liquidation process of FITIC, the liquidation team of FITIC (i.e. the Vendor) has among other rights, the right to the sale and/or transfer of the whole or any part of the Asset.

INFORMATION ON THE ASSET

The Asset, being 108,000,000 Huaneng Domestic Shares, represents approximately 0.90% of the existing issued share capital of Huaneng. Pursuant to the promoters’ agreement entered into between, among others, the former shareholder of the Asset (“Former Holder”) and the controlling shareholder of Huaneng (namely, Huaneng International Power Development Corporation (“HIPDC”)) dated 31 May 1994, the Former Holder granted its voting rights attached to the Asset to HIPDC, which any successor of the Asset has to abide by. Thus, the Asset will not carry any voting rights. The Asset is under liquidation by the liquidation team of FITIC. FITIC is the beneficial owner of the Asset. Please refer to the section headed “Risks in relation to the Asset” for the risks attached to the Asset.

INFORMATION ON THE HUANENG GROUP

The Huaneng Group is principally engaged in developing, constructing, operating and managing large-scale coal-fired power plants throughout the PRC. The Huaneng Group is also one of the largest independent power producers in the PRC with equity-based generation capacity of 15,736 megawatt (MW) and a total capacity of 3,060 megawatt (MW) under construction as at 31 December 2003.

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LETTER FROM THE BOARD

The management team of the Company has undertaken legal and financial assessments and analyses on the Huaneng Group (including comparisons between the Huaneng Group and other power stations in the PRC) and a feasibility report on the Acquisition (including financial comparisons) was prepared for the Board’s consideration. Set out below is some of the key financial information of the Huaneng Group for the three years ended 31 December 2003 and the six months ended 30 June 2004:

Based on International Financial Reporting Standards:

				For the
				six months
				ended
	For the	year ended 31	December	30 June
	2001	2002	2003	2004
		(Audited)		(Unaudited)
		(RMB million)
Net operating revenue	15,791	18,474	23,388	12,964
Profits after taxation	3,522	4,077	5,614	2,573
Net profits	3,451	3,921	5,430	2,481
Net profits margin	21.9%	21.2%	23.2%	19.1%
Fully diluted earnings per Huaneng
Share (Approximate) (Note)	RMB0.30	RMB0.33	RMB0.45	RMB0.21
Dividends paid per Huaneng Share
(Approximate) (Note)	RMB0.15	RMB0.17	RMB0.25	—
Dividend payout ratio	50.0%	52.3%	55.6%	N/A
*Based on PRC Accounting Standards:*
				For the
				six months
				ended
	For the	year ended 31	December	30 June
	2001	2002	2003	2004
		(Audited)		(Unaudited)
		(RMB million)
Revenue from principal operations	15,817	18,725	23,480	13,040
Profit before taxation and minority
interests	4,423	5,212	6,774	3,141
Net profits	3,636	4,082	5,457	2,531
Net profits margin	23.0%	21.8%	23.2%	19.4%
Fully diluted earnings per Huaneng
Share (Approximate) (Note)	RMB0.30	RMB0.34	RMB0.45	RMB0.21
Dividends paid per Huaneng Share
(Approximate) (Note)	RMB0.15	RMB0.17	RMB0.25	—
Dividend payout ratio	50.0%	50.0%	55.6%	N/A

Note: Adjusted for the issue of bonus Huaneng Shares and the conversion of additional paid-in capital of Huaneng, details of which are set out in the announcement of Huaneng dated 16 March 2004.

— 10 —

LETTER FROM THE BOARD

REASONS FOR THE ACQUISITION

The Asset represents approximately 0.90% equity interest in the existing issued share capital of Huaneng. As disclosed above, the acquisition cost per Huaneng Domestic Share represents a discount of approximately 54.16% to the closing price per Huaneng H Share on 28 June 2004 being the last trading day before the suspension of trading in the Shares prior to the date of the Announcement and a discount of approximately 44.42% to the closing price per Huaneng H Share on the Latest Practicable Date. Further, for each of the three years ended 31 December 2003, net profits margin and dividends payout ratio were over 20% and 50% respectively. Huaneng declared and paid dividend of RMB0.15, RMB0.17 and RMB0.25 per Huaneng Share for the three years ended 31 December 2003 respectively (Note: adjusted for the issue of bonus Huaneng Shares and the conversion of additional paid-in capital of Huaneng). Based on the 2004 interim results announcement made by Huaneng on 11 August 2004, Huaneng did not declare an interim dividend and the net profit margin for the six months ended 30 June 2004 was over 19%.

The management team of the Company has undertaken legal and financial assessments and analyses on the Huaneng Group (including comparisons between the Huaneng Group and other power stations in the PRC) and a feasibility report on the Acquisition (including financial comparisons) was prepared for the Board’s consideration. As one of the principal activities of the Group is investment holding, the Directors believe that the Acquisition will allow the Group to diversify its investment portfolios.

According to the PRC law and as confirmed by the Company’s PRC legal adviser in its legal opinion, the Asset will be re-designated as Huaneng Unlisted Foreign Shares upon completion of the Acquisition. The Articles of Association of Huaneng provide that Huaneng shall declare dividends in RMB and holders of Huaneng Domestic Shares shall be paid dividends in RMB, holders of foreign shares of Huaneng shall be paid dividends in United States dollars whilst holders of foreign shares of Huaneng which are listed on the Stock Exchange shall be paid dividends in HK$.

Although the Asset, being 108,000,000 Huaneng Domestic Shares, cannot be freely transferable nor traded on any stock exchange and there may be risks associated with the Acquisition (the details of which are set out in the section headed “Risks in relation to the Asset” below), the Directors (including the independent non-executive Directors) consider that the Acquisition represents a good opportunity for the Company to diversify its investment portfolio into a large scale enterprise with a sound profit track record and a relatively high dividend payout ratio at a steep discount to the trading price of such equity interest.

The Directors noted that the Acquisition shall constitute a connected transaction and accordingly an independent financial adviser has been appointed to advise the Independent Board Committee and the Independent Shareholders on the Agreement and the transaction contemplated thereunder. For further information on the establishment of the Independent Board Committee and the appointment of the independent financial adviser, please refer to the section headed “The Independent Board Committee” below.

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LETTER FROM THE BOARD

As set out in different sections of this circular, the management team of the Company has undertaken legal and financial assessments and analyses on the Huaneng Group (including comparisons between the Huaneng Group and other power stations in the PRC) and a feasibility report on the Acquisition (including financial comparisons) was prepared for the Board’s consideration. The Board has sought legal advice from the Company’s PRC legal adviser and requested guidance from Huaneng as to the rights of holders of Huaneng Unlisted Foreign Shares and was referred to the rights of holders of ordinary shares of Huaneng as set out in the Articles of Association of Huaneng. Based on the workdone by the management team of the Company and after considering the risks in relation to the Asset as disclosed below, the Directors (including all independent non-executive Directors) consider sufficient work has been done to ascertain the rights of the Assets and notwithstanding the risks in relation to the Asset (as set out in the section headed “Risks in relation to the Asset” below), the Directors consider the Acquisition represents a good investment for the Company and is in the interest of the Company. Further, the Directors (including all independent non-executive Directors) consider that the terms and conditions of the Agreement are based on arm’s length negotiations and the Agreement is on normal commercial terms.

FINANCIAL EFFECTS OF THE ACQUISITION

As of the date of completion of the Acquisition, the consolidated net asset value of the Group shall remain unchanged as the increase in long term investments of the Group will be offset by the decrease in cash and bank balances and an increase in bank borrowings by the Group.

RISKS IN RELATION TO THE ASSET

As advised by the Company’s PRC legal adviser, upon completion of the Acquisition, the Asset will be re-designated as Huaneng Unlisted Foreign Shares according to the PRC law. The Articles of Association of Huaneng do not contain express provisions as to whether Huaneng Unlisted Foreign Shares constitute a separate class of ordinary shares of Huaneng. The Company has however liaised with a number of PRC authorities to understand the legality and viability of the Acquisition. Furthermore, the Company’s PRC legal adviser has issued a legal opinion as to PRC law on the legality of the Acquisition and the rights attached to Huaneng Unlisted Foreign Shares which states that the Acquisition is valid upon completion of all relevant approval and registration procedures under the PRC law. The Company’s PRC legal adviser has confirmed in its opinion that the Acquisition is legitimate and the Company is permitted under PRC law to hold the Asset after satisfying the conditions precedent of the Agreement and upon completion of the Acquisition.

In relation to the rights attached to Huaneng Unlisted Foreign Shares, the PRC legal opinion stated that at present, there are no clear applicable PRC laws and regulations governing the rights attached to Huaneng Unlisted Foreign Shares and until new laws or regulations are introduced in this respect, the Company as a holder of Huaneng Unlisted Foreign Shares after completion of the Acquisition will enjoy all the rights of the holders of ordinary shares of Huaneng under the Articles of Association of Huaneng, such as:

(a) to be treated as if it is in the same class as holders of Huaneng Domestic Shares, to attend and vote at general meetings and class meetings and to receive notice of such meetings in the same manner as the holders of Huaneng Domestic Shares;

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LETTER FROM THE BOARD

(b) to be paid dividends declared by Huaneng in United States dollars (note: the dividends are paid in United States dollars as they are foreign shares of Huaneng) ; and
(c) in the event of the winding up of Huaneng, to remit their respective shares in the remaining assets (if any) of Huaneng out of the PRC in accordance with the applicable foreign exchange control laws and regulations in the PRC.

No provision is made for the settlement of disputes between holders of Huaneng Unlisted Foreign Shares and holders of Huaneng Domestic Shares in the Articles of Association of Huaneng. Therefore, as to disputes between holders of Huaneng Unlisted Foreign Shares and holders of Huaneng Domestic Shares, if there is no settlement after negotiation or mediation, either party could choose an arbitration commission in the PRC or any other arbitration commission to conduct arbitration agreement; if there is no prior arbitration agreement and the parties are not able to reach agreement to arbitrate their disputes, either party could bring suit in a PRC court with competent jurisdiction.

According to the above legal opinion, in general, disputes between holders of Huaneng H Shares and holders of Huaneng Domestic Shares can be settled through arbitration. Such dispute resolution method is equally applicable to disputes between holders of Huaneng H Shares and holders of Huaneng Unlisted Foreign Shares.

If any related laws or regulations are newly introduced in the PRC, the rights attaching to Huaneng Unlisted Foreign Shares may be clarified and/or varied and the Articles of Association of Huaneng may have to be amended in connection therewith.

As the Articles of Association of Huaneng do not contain express provisions governing the rights of Huaneng Unlisted Foreign Shares, there is no assurance that any subsequent holders of such Huaneng Unlisted Foreign Shares including the Company or other classes of shares would not dispute the rights attaching to Huaneng Unlisted Foreign Shares as set out above, and such rights may be affected as a result. Pursuant to the promoters’ agreement entered into between, among others, the Former Holder and HIPDC, the Former Holder granted its voting rights attached to the Asset to HIPDC. Accordingly, the Asset will not carry any voting rights.

The Directors (including the independent non-executive Directors) are aware that the Acquisition is the acquisition of the Asset without the voting rights being attached thereto. Notwithstanding the above, the Directors (including the independent non-executive Directors) consider the Acquisition represents a good opportunity for the Company to diversify its investment portfolio.

FINANCIAL AND TRADING PROSPECTS OF THE GROUP

As mentioned in the annual report of the Company for the year ended 31 December 2003, it is the goal of the Group to enhance its asset value and corporate competitiveness. In addition, the Board believes that with the cash in hand and a sound financial position, the Directors have every confidence and capability to capture market opportunities and take on quality investments. The Directors shall continue to actively search for quality investments for the Group’s future development. The Directors believe the continuous increase in the number of quality investments will enable the Group to achieve attractive results in the future.

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LETTER FROM THE BOARD

MANAGEMENT DISCUSSION AND ANALYSIS

For the year ended 31 December 2003

Results

The Group recorded a profit attributable to Shareholders of HK$56.79 million for the year with earnings per Share of 12.36 cents.

Business review

Banking business

The Group’s major investment, a 36.75% interest in Xiamen International Bank (“XIB”), maintained steady growth in its profits during the year. It has attained satisfactory performance in various aspects including business development, asset quality and internal management, and has met its established goal. According to the statutory accounts of XIB prepared under PRC Accounting Standards, a consolidated profit after tax of approximately HK$116.30 million was recorded for the year. Being a commercial bank with international shareholders, XIB will capitalise on new opportunities to enhance its efficiencies, set up new branches, initiate new businesses and enhance its capital strength with a view to pursuing stable and healthy long-term development in order to generate favourable returns to its shareholders.

Insurance business

Min Xin Insurance Company Limited (“MXIC”), a wholly-owned subsidiary of the Company, achieved a net profit after tax of approximately HK$4.82 million for the year. Apart from maintaining its core business in the private car insurance sector, MXIC will strive to explore business opportunities in the commercial vehicle insurance sector in order to maintain its premium and profit growth momentum.

Toll road investments

The Group’s toll road investment, through its associated company in Maanshan, Anhui Province, the PRC, continued to operate satisfactorily in 2003 and generated an increase of approximately 11.2% in toll revenue as compared with last year. The Directors anticipated that the traffic flow and revenue of this toll road will continue the rising trend in 2004. However, the Group’s toll road investment, through its associated company in Fenghua, Zhejiang Province, the PRC, recorded an impairment loss of approximately HK$13.03 million in 2003 due to the adverse effect arising from neighbouring competing routes.

Property investments

In 2003, the Group’s property project in Jinan, Shandong Province, the PRC, achieved prominent growth in its profits and recorded a profit after tax of approximately RMB8.14 million. The Directors expect this project will continue to contribute a steady return to the Group in 2004.

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LETTER FROM THE BOARD

High-tech investments

The Group together with Charm Faith Hi-Tech Limited set up a joint-venture company, Min Faith Investments Limited (“MFIL”), of which the Group holds a 40% interest, by investing approximately HK$16.33 million in Hong Kong in January 2003. The wholly owned subsidiary of MFIL, Fuzhou Charm Faith Autosystem Co., Ltd., is principally engaged in the manufacturing of digital instruments for industrial auto-control. It has performed remarkably in 2003 and reported a net profit after tax of approximately RMB11.45 million. The Directors envisage promising growth in this investment.

Financial position

The Group maintained a sound financial position. As at 31 December 2003, the Group had current assets and current liabilities of HK$559.97 million and HK$152.81 million respectively with a current ratio of 3.7.

As at 31 December 2003, the Group had no bank borrowings.

The gearing ratio (long term liabilities (including deferred tax liabilities) divided by net asset value) of the Group as at 31 December 2003 was approximately 0.4%.

As at 31 December 2003, bank deposits of the Group amounted to HK$478.47 million which included deposits of RMB143.05 million (equivalent to approximately HK$134.71 million) placed with certain banks in the PRC.

As at 31 December 2003, a non-wholly owned subsidiary of the Group in the PRC has issued guarantees amounting to approximately HK$13.80 million for mortgage loan facilities obtained by certain buyers for purchasing properties from such non-wholly owned subsidiary. Such guarantees will be released upon receipt of the title deeds of the properties by the relevant banks.

The Company has made appropriate disclosures in the Company’s 2003 annual report and the Company’s announcement dated 21 April 2004 pursuant to Rules 13.13 to 13.16 of the Listing Rules.

Employees and remuneration policy

As at 31 December 2003, the Group had 85 employees. The remuneration of the employees is based on individual merits and experience. The Group also provides other benefits to the employees including retirement benefits and medical scheme.

For the year ended 31 December 2002

Results

The Group recorded a profit attributable to Shareholders of HK$45.98 million for the year with earnings per Share of 10.01 cents.

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LETTER FROM THE BOARD

Business review

Banking business

XIB achieved prominent growth in its profits during the year. According to the statutory accounts of XIB prepared in accordance with PRC Accounting Standards, a consolidated net profit of approximately HK$114.92 million was registered for the year. During the year, XIB was the first sino-foreign bank in PRC authorised to operate full-range foreign exchange business, paving the way for its long-term development amidst the increasingly competitive operating environment.

Insurance business

The Hong Kong general insurance market has shown a turnaround in year 2002. Following the improving trend of the market, MXIC achieved a net profit after tax of approximately HK$3.58 million for the year.

Toll road investments

In 2002, the performance of the Group’s toll road project in Maanshan, Anhui Province, the PRC, was better than expected with an increase of approximately 15.7% in the toll revenue as compared with last year. The Group’s toll road investment in Fenghua, Zhejiang Province, the PRC, on the other hand, recorded a decrease of approximately 42.3% in toll revenue as compared with last year owing to the diversion effect.

Property investments

In 2002, the Group’s property project in Jinan, Shandong Province, the PRC, maintained a steady growth and recorded a profit after tax of approximately RMB5.44 million.

Financial position

As at 31 December 2002, the Group had current assets and current liabilities of HK$549.21 million and HK$152.01 million respectively with a current ratio of 3.6.

As at 31 December 2002, the Group was debt free.

At 31 December 2002, bank deposits of the Group amounted to HK$451.69 million which included deposits of RMB117.34 million (equivalent to approximately HK$110.48 million) placed with certain banks in the PRC.

For the year ended 31 December 2001

Results

The Group recorded a profit attributable to Shareholders of HK$73.09 million with earnings per Share amounted to 15.91 cents.

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LETTER FROM THE BOARD

Business review

Banking business

According to the statutory accounts of XIB prepared in accordance with PRC Accounting Standards, a consolidated profit after tax of approximately HK$69.77 million was achieved for the year.

Insurance business

Despite the adverse market environment, MXIC improved its operating profit as a result of its fine-tuned underwriting standard and reduced operating cost. A net profit after tax of approximately HK$2.69 million was recorded for the year.

Toll road investments

The Group disposed its toll road investment in Zhangzhou, Fujian Province, the PRC, during the year, the Group’s toll road investments (including those through the Group’s associates) recorded a total profit of approximately HK$14.9 million.

Property investments

In 2001, the Group’s property project in Jinan, Shandong Province, the PRC, continued to attain satisfactory results which showed a profit after tax of approximately RMB5.74 million. During the year, the project was among one of the first project rated as “quality house” in Jinan.

As the property market in Hong Kong remained sluggish, the joint venture property project at Pik Sha Wan incurred a loss of approximately HK$46.75 million in 2001.

Financial position

As at 31 December 2001, the Group had current assets and current liabilities of HK$563.7 million and HK$189.76 million respectively with a current ratio of 3.

As at 31 December 2001, the Group was debt free.

At 31 December 2001, bank deposits of the Group amounted to HK$410.62 million which included deposits of RMB142.34 million (equivalent to approximately HK$134.09 million) placed with certain banks in the PRC.

— 17 —

LETTER FROM THE BOARD

GENERAL

The Vendor is the liquidation team of FITIC. As the consideration for the Acquisition represents more than 100% under one of the Percentage Ratios, the Acquisition constitutes a very substantial acquisition for the Company under the Listing Rules. As the Asset is beneficially owned by FITIC, the controlling shareholder (as defined in the Listing Rules) of the Company holding approximately 41.96% interest in the existing share capital of the Company and hence a connected person of the Company under the Listing Rules, the Acquisition will be treated as a connected transaction for the Company under the Listing Rules and will be subject to the approval of the Independent Shareholders by poll at the EGM. The Vendor, FITIC and their respective associates will abstain from voting in relation to the ordinary resolution to be put forward at the EGM for the purpose of approving the transaction contemplated under the Agreement.

Shareholders and potential investors should note that the Acquisition, which is subject to a number of conditions precedent, may or may not be completed. Shareholders and potential investors are reminded to exercise caution when dealing in the securities of the Company.

THE INDEPENDENT BOARD COMMITTEE

The Independent Board Committee comprising the independent non-executive Directors has been formed to advise the Independent Shareholders regarding the fairness and reasonableness of the terms of the Agreement and the transaction contemplated thereunder so far as the Independent Shareholders are concerned and are in the interests of the Company as a whole.

Goldbond Capital has been appointed as the independent financial adviser to advise the Independent Board Committee regarding the fairness and reasonableness of the terms of the Agreement and the transaction contemplated thereunder so far as the Independent Shareholders are concerned and are in the interests of the Company as a whole. The letter of Goldbond Capital is set out in the section headed “Letter from Goldbond Capital” of this circular.

THE EGM

As at the Latest Practicable Date, FITIC was beneficially interested in approximately 41.96% of the existing share capital of the Company and the controlling shareholder and a connected person of the Company. As the Asset is beneficially owned by FITIC, the controlling shareholder of the Company and hence a connected person of the Company under the Listing Rules, the Acquisition will be treated as a connected transaction for the Company under the Listing Rules and will be subject to the approval of the Independent Shareholders by poll at the EGM.

The Vendor, FITIC and their respective associates will abstain from voting in relation to the ordinary resolution to be put forward at the EGM for the purpose of approving the Acquisition.

— 18 —

LETTER FROM THE BOARD

A notice convening the EGM to be held at Taishan Room, Level 5, Island Shangri-La, Pacific Place, Supreme Court Road, Central, Hong Kong on Friday, 17 September 2004 at 3:00 p.m. for the purpose of considering and, if thought fit, approving the terms of the Agreement and the transaction contemplated thereunder by way of poll is set out on pages 99 to 100 of this circular.

Shareholders of the Company whose names appear on the register of members of the Company on Wednesday, 15 September 2004 are entitled to attend and vote at the EGM. The register of members of the Company will be closed from Thursday, 16 September 2004 to Friday, 17 September 2004, both days inclusive, during such period no share transfer will be registered.

POLL PROCEDURE

As at the Latest Practicable Date, FITIC was beneficially interested in 41.96% of the existing share capital of the Company and a connected person of the Company. In view of the interest of FITIC and its associates in the Acquisition, the Vendor, FITIC, and their respective associates will abstain from voting at the EGM in this regard. The votes to be taken at the EGM will be taken by poll, the results of which will be announced after the EGM.

Under the Articles of Association of the Company, a poll can be demanded by:

(a) the chairman of the meeting; or
(b) at least three Shareholders present in person or by proxy and entitled to vote; or
(c) any Shareholder or Shareholders present in person or by proxy and representing in the aggregate not less than one-tenth of the total voting rights of all Shareholders having the right to attend and vote at the meeting; or
(d) any Shareholder or Shareholders present in person or by proxy and holding Shares conferring a right to attend and vote at the meeting on which there have been paid up sums in the aggregate equal to not less than one-tenth of the total sum paid up on all Shares conferring that right.

The Chairman will demand a poll at the EGM.

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LETTER FROM THE BOARD

RECOMMENDATION

Your attention is drawn to the letter from the Independent Board Committee set out on page 21 which contains its recommendation to the Independent Shareholders on the terms of the Agreement, and the letter of advice from Goldbond Capital, the text of which is set out on pages 22 to 34 of this circular containing its advice to the Independent Board Committee.

For the reasons set out above, the Board considers the terms of Agreement and the transaction contemplated thereunder are fair and reasonable and in the interests of the Company and the Shareholders as a whole, and therefore recommends the Independent Shareholders to vote in favour of the resolution to be proposed at the EGM for approving the terms of the Agreement and the transaction contemplated thereunder. You are advised to read the aforesaid letters before deciding as to how to vote at the EGM.

FURTHER INFORMATION

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

Yours faithfully, Ding Shi Da Chairman

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LETTER FROM THE INDEPENDENT BOARD COMMITTEE

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MIN XIN HOLDINGS LIMITED

(incorporated in Hong Kong with limited liability)

Registered office: 17th Floor, Fairmont House 8 Cotton Tree Drive Central Hong Kong

1 September 2004

To the Independent Shareholders

Dear Sir or Madam,

VERY SUBSTANTIAL ACQUISITION AND CONNECTED TRANSACTION

We have been appointed as members of the Independent Board Committee to advise you in respect of the Acquisition, details of which are set out in the letter from the Board in the circular dated 1 September 2004 (the “Circular”) to the Shareholders, of which this letter forms part. Terms defined in the Circular shall have the same meanings when used in this letter unless the context otherwise requires.

Having taken into account the principal factors and reasons considered by Goldbond Capital, we consider that the Acquisition is fair and reasonable so far as the interests of the Independent Shareholders are concerned and conducting the Acquisition with the party thereto is in the interests of the Company and the Shareholders as a whole. Accordingly, we recommend the Independent Shareholders to vote in favour of the ordinary resolution which will be proposed at the EGM to approve the Acquisition.

Yours faithfully,

Mr. Ip Kai Ming Mr. Robert Tsai To Sze

Independent Board Committee

— 21 —

LETTER FROM GOLDBOND CAPITAL

==> picture [109 x 57] intentionally omitted <==

Goldbond Capital (Asia) Limited 3902 B, 39th Floor, Tower 1 Lippo Centre 89 Queensway Hong Kong

1 September 2004

The Independent Board Committee

Dear Sirs,

VERY SUBSTANTIAL ACQUISITION AND CONNECTED TRANSACTION

INTRODUCTION

We refer to our appointment to advise the Independent Board Committee in relation to the Acquisition. Details of the Acquisition are set out in the circular dated 1 September 2004 issued by the Company (the “Circular”) to the Shareholders, of which this letter forms part. This letter contains our advice to the Independent Board Committee as to whether or not the Acquisition is fair and reasonable and is in the interests of the Company and the Shareholders as a whole. Unless the context otherwise requires, terms used in this letter shall have the same meanings as those defined in the Circular.

In formulating our opinions and recommendations, we have relied on the statements, information and facts supplied by, the opinions expressed by and the representations of the Directors and management of the Group concerning the Acquisition, including those set out in the Circular. We have also relied on the assumptions described in the Circular, details of which are also set forth in this letter, being materialised in deriving our opinions and recommendations. We have assumed that all statements, information and facts supplied by, the opinions expressed by and the representations of the Directors and management of the Group concerning the Acquisition, including those set out in the Circular were true, complete and accurate in all aspects at the time they were made and given and continue to be so in all respects at the date of despatch of the Circular. We have also assumed that all statements of beliefs, opinions, assumptions and intentions made by the Directors in the Circular were reasonably made after due and careful enquiry and were based on honestly-held opinions. We have no reason to doubt the truth, accuracy and completeness of the information and representation provided to us by the Directors and we have been advised by the Directors that no material facts have been omitted from the information and representations provided in and referred to in the Circular.

We consider that we have been provided with sufficient information to enable us to reach an independent view to justify our reliance on the accuracy of the information and representations contained in the Circular and to provide a reasonable basis for our recommendations. We have no reason to suspect that any relevant information or reports have been withheld, nor are we aware of any facts or circumstances which would render the information provided and the representations made to

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LETTER FROM GOLDBOND CAPITAL

us to be untrue, inaccurate, or misleading. We have not, however, carried out any independent verification of the information provided to us by the Directors, nor have we conducted any independent investigation into any related transactions referred to in the Circular, the businesses, affairs and prospects of the Group.

PRINCIPAL FACTORS AND REASONS CONSIDERED

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

1. Background information

Background of the Group

The principal activities of the Group are financial services, investment holding, property development and investment, and infrastructure investment.

According to the annual report of the Company for the year ended 31 December 2003 and as advised by the Directors, the major investments of the Group are as follow:

		Interest held
Name of business	Nature of business	by the Group
Xiamen International Bank	Banking and investment holding	36.75%
Min Xin Insurance Company Limited	Insurance	100.00%
Jinan Pacific Real Estate Development	Property development and sales	51.00%
Co., Ltd.
Maanshan Huan Tung Highway	Toll road	21.00%
Development Limited
Min Faith Investments Limited	Investment in high technology	40.00%
	manufacturing companies

In addition to the above, the Group is interested in various properties in the PRC and Hong Kong.

We note from the annual report of the Company for the year ended 31 December 2003 that profit attributable to the Shareholders during the year amounted to approximately HK$56,787,000.

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LETTER FROM GOLDBOND CAPITAL

Background of the Huaneng Group

The Huaneng Group is principally engaged in development, construction, ownership and operation of large coal-fired power plants throughout the PRC.

Since the listing of the Huaneng H Shares on the Stock Exchange, Huaneng has declared and paid dividends for each of its financial years. For each of the three years ended 31 December 2003, net profits margin and dividends payout ratio was over 20% and 50% respectively. Net profit of the Huaneng Group (under International Financial Reporting Standards) amounted to approximately RMB1,868 million, RMB2,516 million, RMB3,451 million, RMB3,921 million and RMB5,430 million for the five years ended 31 December 2003 respectively, represented a compounded annual growth rate (“CAGR”) of approximately 30.6%.

Huaneng declared and paid dividend of approximately RMB0.15, RMB0.17 and RMB0.25 per Huaneng Share for the three years ended 31 December 2003 respectively (Note: adjusted for the issue of the bonus Huaneng Shares and the conversion of the additional paid-in capital of Huaneng, details of which are set out in the letter from the Board of the Circular and the interim report of Huaneng for the six months ended 30 June 2004).

Pursuant to the promoters’ agreement entered into between, among others, the former shareholder of the Asset (namely, (for identification purposes, in English, Fujian Investment and Development Company, the “Former Holder”)) and the controlling shareholder of Huaneng (namely, Huaneng International Power Development Corporation (“HIPDC”)) dated 31 May 1994, the Former Holder granted its voting rights (the “Voting Rights”) attached to the Asset to HIPDC, and any successor(s) as holder(s) of the Asset has to abide by such agreement. Details of the detachment of Voting Rights from the Asset have been disclosed in the prospectus of Huaneng dated 19 January 1998.

2. Background and particulars of the Acquisition

As referred to in the letter from the Board, the Acquisition constitutes a very substantial acquisition and connected transaction of the Company. As the Acquisition constitutes a connected transaction of the Company, therefore it is subject to disclosure and shareholders’ approval requirements under Chapter 14A of the Listing Rules. As confirmed by the Directors, the Acquisition is carried out in the ordinary and usual course of business of the Group and is negotiated on arm’s length basis based on normal commercial terms between the Company and the Vendor. In this regard, we have reviewed and evaluated below the nature of the Acquisition.

The Vendor is the liquidation team of FITIC, which was principally engaged in, among other businesses, financial services and investments before the liquidation. As FITIC is the controlling shareholder of the Company, beneficially holding 41.96% of the existing issued share capital of the Company, FITIC is a connected person of the Company under Chapter 14A of the Listing Rules. Accordingly, the transaction contemplated under the Agreement shall constitute connected transaction of the Company and is subject to the disclosure and shareholders’ approval requirements under Chapter 14A of the Listing Rules.

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LETTER FROM GOLDBOND CAPITAL

Pursuant to the Agreement, the Company had agreed to purchase and the Vendor had agreed to sell (or procure its successor/ transferee (if any) to sell) the Asset at the consideration of RMB358,560,000 (equivalent to approximately HK$338,936,000). The Asset, being 108,000,000 Huaneng Domestic Shares, represents approximately 0.90% of the issued share capital of Huaneng as at 31 December 2003.

We have reviewed the prospectus of Huaneng dated 19 January 1998 regarding the detachment of the Voting Rights and have discussed with the PRC legal advisers of the Company and the Directors in relation to such detachment. As advised by the Directors, they have taken into account the effect of the detachment of the Voting Rights, and still consider the Acquisition represents a good investment for the Company and in the interests of the Company and the Shareholders as a whole.

Pursuant to the Agreement, the Company should pay the Vendor the pro-rata entitlement in terms of the appreciation in the net asset value of the Asset during the period from 1 January 2004 until the date of actual payment (the “Payment Date”) of the consideration of the Acquisition with reference to the audited accounts to be issued by Huaneng for the year ending 31 December 2004 and thereafter (if applicable) under PRC Accounting Standards (the “NAV Appreciation”). Therefore, the consideration of the Acquisition is subject to adjustment arising from the NAV Appreciation. The following sets out the formula for the calculation of the NAV Appreciation:

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A i = Net asset value attributable to the Asset as at the end of the financial year i of Huaneng

B i = Dividend attributable to the Asset declared by Huaneng during the financial year i of Huaneng
C i = Number of days from 1 January of financial year i of Huaneng until the Payment Date (subject to a maximum of 365 days)
D i = Dividend attributable to the Asset declared by Huaneng during the financial year i of Huaneng and received by the Vendor
i = Financial year of Huaneng
n = Financial year of Huaneng which the Payment Date falls under

The amount of the NAV Appreciation to be paid by the Company (if any) cannot be ascertained until the completion of the Acquisition takes place, which is expected to be on or before the Long Stop Date. As it is stated in the letter from the Board, the Company intends to finance the NAV Appreciation (if any) by internal resources of the Group. Furthermore, the Company will make proper announcement upon ascertaining amount of the NAV Appreciation and completion of the Acquisition, and details of which will also be disclosed in the annual report of the Company.

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LETTER FROM GOLDBOND CAPITAL

3. Reasons for the Acquisition

The consideration of the Acquisition of RMB358,560,000 (equivalent to approximately HK$338,936,000) was agreed after arm’s length negotiations between the Vendor and the Company by reference to the net asset value of the Huaneng Group as at 31 December 2003 (under PRC Accounting Standards), business potential and growth prospect of the Huaneng Group. The consideration of the Acquisition represents a premium of approximately 15.08% over the net asset value of the Asset as at 31 December 2003.

The following tables set out the key financial information of the Group as extracted from the annual report of the Company as at 31 December 2003:

Consolidated profit and loss account

Turnover Profit before tax Profit attributable to shareholders Basic earnings per Share *Consolidated Assets, Liabilities and Minority Interests* Non-current assets Current assets - Cash and bank balances - Others Current liabilities Long term liabilities Minority interests Net asset value Net asset value per Share	Year ended 31 December 2003 2002 HK$ HK$ 116,544,198 120,198,823 74,938,581 60,750,443 56,786,807 45,975,297 12.36 cents 10.01 cents As at 31 December 2003 2002 HK$ HK$ 832,014,763 781,492,640 --------------- --------------- 478,469,483 451,688,557 81,501,160 97,521,389 559,970,643 549,209,946 --------------- --------------- 152,807,632 152,008,499 --------------- --------------- 4,547,468 3,803,715 --------------- --------------- 13,503,689 12,207,338 --------------- --------------- 1,221,126,617 1,162,683,034 2.66 2.53	Year ended 31 December 2003 2002 HK$ HK$ 116,544,198 120,198,823 74,938,581 60,750,443 56,786,807 45,975,297 12.36 cents 10.01 cents As at 31 December 2003 2002 HK$ HK$ 832,014,763 781,492,640 --------------- --------------- 478,469,483 451,688,557 81,501,160 97,521,389 559,970,643 549,209,946 --------------- --------------- 152,807,632 152,008,499 --------------- --------------- 4,547,468 3,803,715 --------------- --------------- 13,503,689 12,207,338 --------------- --------------- 1,221,126,617 1,162,683,034 2.66 2.53	Year ended 31 December 2003 2002 HK$ HK$ 116,544,198 120,198,823 74,938,581 60,750,443 56,786,807 45,975,297 12.36 cents 10.01 cents As at 31 December 2003 2002 HK$ HK$ 832,014,763 781,492,640 --------------- --------------- 478,469,483 451,688,557 81,501,160 97,521,389 559,970,643 549,209,946 --------------- --------------- 152,807,632 152,008,499 --------------- --------------- 4,547,468 3,803,715 --------------- --------------- 13,503,689 12,207,338 --------------- --------------- 1,221,126,617 1,162,683,034 2.66 2.53
			60,750,443 45,975,297
			10.01 cents December 2002 HK$ 781,492,640 ------------- 451,688,557 97,521,389
		549,209,946 --------------- 152,008,499 --------------- 3,803,715 --------------- 12,207,338 --------------- 1,162,683,034
		2.53

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LETTER FROM GOLDBOND CAPITAL

For each of the two years ended 31 December 2003, the Group has maintained a “cash and bank balances” level of over HK$450 million. As advised by the Directors, such liquid assets are mainly used as working capital of the Group. The Directors therefore consider that the Acquisition would provide the opportunity for the Group to diversify its investment portfolios and at the same time, to generate revenue for the Group.

As advised by the Directors, based on a report prepared by the management of the Company in June 2004, in which evaluation and analysis of the effect of the Acquisition are mentioned, they expect that nationwide power consumption demand would continue to rise in the future. As such, the Directors are of the view that the Acquisition will provide the Company the opportunity to invest in a sector with growth potentials.

According to the annual report of the Company for the year ended 31 December 2003, “interest income from loans and bank deposits” for the two years ended 31 December 2003 amounted to HK$7,039,576 and HK$4,890,891 respectively. Such interest income represented a yield of approximately 1.63% and 1.05% per annum (average of approximately 1.34% per annum) based on the cash level as at 31 December 2002 and 2003 respectively. For information purposes only, had the Company completed the Acquisition before the record date for entitlement of the dividends to be paid by Huaneng for the year ended 31 December 2003, the Company would have received a dividend payout of RMB27.0 million (equivalent to approximately HK$25.5 million) for its interest in the Asset. Such dividend payout represents a return on investment of approximately 7.53% (before adjustment for the NAV Appreciation as mentioned below) based on the consideration of the Acquisition of RMB358,560,000 (equivalent to approximately HK$338,936,000), which would be much favourable to the Group than the average yield of approximately 1.34% per annum as mentioned above.

As advised by the Directors, it is their intention to hold the Asset as long term investments. The Directors believe that the Asset will provide a steady income stream, from dividends to be paid by Huaneng, to the Group and also in addition, the long term capital appreciation potentials of the Asset.

Regarding the NAV Appreciation, the Company has to pay the Vendor the pro-rata entitlement in terms of the appreciation in the net asset value of the Asset during the period from 1 January 2004 until the date of actual payment of the consideration of the Acquisition. As the consideration of the Acquisition is based on the net asset value of the Asset as at 31 December 2003 and will not become due until after all the conditions precedent to the Agreement are being fulfilled, therefore any appreciations (if any) in terms of the net asset value of the Asset during the period from 1 January 2004 until the Payment Date should be enjoyed by the Vendor rather than the Company. Furthermore, upon completion of the Acquisition, the Company will record the Asset at a value equivalent to the consideration of the Acquisition together with the NAV Appreciation. Therefore, the Directors consider that it is fair and reasonable to pay the Vendor the NAV Appreciation. In addition, the absolute amount of premium over the net asset value of Huaneng to be paid by the Company (which has been agreed between the parties to the

— 27 —

LETTER FROM GOLDBOND CAPITAL

Agreement) will not change but the percentage premium to be paid will be less as it is expected the net asset value of the Asset would increase. In view of the above and despite the fact that the amount of the NAV Appreciation to be paid by the Company (if any) cannot be ascertained until the completion of the Acquisition takes place which is expected to be on or before the Long Stop Date, we concur with the Directors’ view that the payment for the NAV Appreciation (including the formula for calculating the NAV Appreciation) by the Company to the Vendor is fair and reasonable so far as the Company and the Shareholders are concerned.

Taking into consideration of the above, we are of the view that the Acquisition provides an opportunity for the Group to diversify its investment portfolios and to enhance its earnings capacity.

4. Consideration of the Acquisition

(i) Acquisition cost of each share in the Asset

As it is set out in the letter from the Board, the Asset comprises 108,000,000 Huaneng Domestic Shares. Based on the consideration of the Acquisition of RMB358,560,000 (equivalent to approximately HK$338,936,000), acquisition cost per Huaneng Domestic Share under the Acquisition is RMB3.32 (equivalent to approximately HK$3.14) (the “Average Acquisition Price”).

Although the Average Acquisition Price represents a premium of approximately 15.08% over the audited net asset value of the Huaneng Group per Huaneng Share as at 31 December 2003 (under PRC Accounting Standards) of RMB2.885, the Average Acquisition Price represents a steep discount to the current share prices of the Huaneng H Shares and the Huaneng A Shares. Furthermore, the Average Acquisition Price represents a price to earnings multiple of approximately 7.38 times with reference to the earnings per Huaneng Share of approximately RMB0.45 for the year ended 31 December 2003.

The following table sets out, for information purposes only and in comparable format, the Average Acquisition Price (i.e. RMB3.32 (equivalent to approximately HK$3.14) as compared to the share prices of the Huaneng H Shares and the Huaneng A Shares. The Independent Shareholders should, however, note that the Huaneng Domestic Shares, the Huaneng H Shares and the Huaneng A Shares are not identical as the Huaneng Domestic

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LETTER FROM GOLDBOND CAPITAL

Shares are not traded inany stock exchangewhile the Huaneng H Shares and the Huaneng A Shares are traded on the Stock Exchange and the Shanghai Stock Exchange respectively.

		Discount of		Discount of
		the Average		the Average
		Acquisition		Acquisition
		Price to the		Price to the
	Average price	average price	Average price	average price
	per Huaneng	per Huaneng	per Huaneng	per Huaneng
Period	H Share	H Share	A Share	A Share
	(HK$)		(RMB)
One month average	6.87	54.3%	10.20	67.5%
(29 May 2004 -
28 June 2004*)
Three months	7.25	56.7%	10.69	68.9%
average (29
March 2004 -
28 June 2004*)
Six months average	7.12	55.9%	10.09	67.1%
(29 December
2003 - 28 June
2004*)
12 months average	6.28	50.0%	8.83	62.4%
(29 June 2003 -
28 June 2004*)
20 July 2004**	6.30	50.2%	9.22	64.0%
20 August 2004	5.65	44.4%	8.97	63.0%
(the Latest
Practicable Date)

28 June 2004, being the last trading day before suspension of trading in the Shares prior to the date of the Announcement
** 20 July 2004, being the first trading day after the resumption of trading in the Shares on the date of the publication of the Announcement

The Directors consider that the Acquisition represents a good opportunity for the Group to diversify its investment portfolios as the acquisition cost per Huaneng Domestic Shares represents a discount of over 50% to the share price of Huaneng H Share.

The Directors are of the view that the consideration of the Acquisition is fair and reasonable and is in the interests of the Company and the Shareholders as a whole.

— 29 —

LETTER FROM GOLDBOND CAPITAL

(ii) Comparable listed companies

In formulating our opinion, we have analysed and considered the current market multiples of various comparable listed companies in Hong Kong principally engaged in the generation and sale of power based in the PRC. The comparable companies were principally selected based on their size, nature and location of the business and the availability of their financial information to the general public.

Based on the above selection criteria, we set out in the following table the relevant multiples of the selected comparable listed companies in Hong Kong based on their share prices as at the Latest Practicable Date and their latest published annual reports, being the year ended 31 December 2003. The Independent Shareholders should, however, note that the comparable companies are not identical to the Huaneng Group and that the selection of these comparable companies is for information purposes only.

		Net asset value
	Net profit	as at the end			Dividend
	for the latest	of the latest	CAGR of	Return	payout
Company name	financial year	financial year	net profit	on equity	ratio
	Approximate		(Note 1)
Huaneng Power	RMB5,430	RMB33,955	30.6%	16.0%	55.5%
International,	million	million
Inc (902.HK)	(equivalent to	(equivalent to
(Note 2)	approximately	approximately
	HK$5,133	HK$32,097
	million)	million)
Beijing Datang	RMB1,812	RMB15,721	9.7%	11.5%	49.9%
Power	million	million
Generation	(equivalent to	(equivalent to
Company	approximately	approximately
Limited	HK$1,713	HK$14,861
(991.HK)	million)	million)
(Note 3)
China Resources	HK$589	HK$8,945	N/A	6.6%	N/A
Power Holdings	million	million			(Note 5)
Company
Limited
(836.HK)
(Note 4)

— 30 —

LETTER FROM GOLDBOND CAPITAL

		Net asset value
	Net profit	as at the end			Dividend
	for the latest	of the latest	CAGR of	Return	payout
Company name	financial year	financial year	net profit	on equity	ratio
	Approximate		(Note 1)
Huadian Power	RMB1,029	RMB9,117	(2.8)%	11.3%	17.9%
International,	million	million
Inc (1071.HK)	(equivalent to	(equivalent to
(Note 6)	approximately	approximately
	HK$973	HK$8,618
	million)	million)

Sources: Annual report of the respective comparable companies available on the Latest Practicable Date.

Notes:

CAGR was calculated for the five years ended 31 December 2003. China Resources Power Holdings Company Limited did not have any turnover until the year ended 31 December 2003, therefore it was excluded from the calculation of CAGR.
Huaneng Power International, Inc operates power plants in the provinces of Liaoning, Hebei, Shangdong, Shanghai, Jiangsu, Fujian and Guangdong Provinces of the PRC. Financial data are prepared in accordance with International Financial Reporting Standards.
Beijing Datang Power Generation Company Limited operates power plants in the provinces of Tianjin, Inner Mongolia, Hebei, Shanxi, Yunnan, Gansu and Chongqing of the PRC. Financial data are prepared in accordance with International Standards on Auditing.
China Resources Power Holdings Company Limited operates power plants in the provinces of Guangdong, Jiangsu, Zhejiang, Hebei, Henan and Hubei Provinces of the PRC. Financial data are prepared in accordance with accounting principles generally accepted in Hong Kong.
China Resources Power Holdings Company Limited did not declare any dividend for the year ended 31 December 2003.
Huadian Power International, Inc operates power plants in the Shangdong province of the PRC. Financial data are prepared in accordance with International Financial Reporting Standards.

We have reviewed the latest published financial statements of the abovementioned companies and all of them were profit making in their respective latest financial year. Huaneng had a net asset value of approximately HK$32,097 million as at 31 December 2003 (unaudited net asset value of Huaneng as at 30 June 2004 amounted to approximately HK$31,594 million (under International Financial Reporting Standards)), which was close to the combined net asset value of the three other comparable companies of approximately HK$32,377 million. Huaneng also had a net earning of approximately RMB5,430 million (equivalent to approximately HK$5,123 million) (under International Financial Reporting Standards) for the year ended 31 December 2003, which was more than the combined net earnings of the three other comparable companies of HK$3,269 million. In addition,

— 31 —

LETTER FROM GOLDBOND CAPITAL

Huaneng not only had the highest dividend payout ratio of approximately 55.5% among the four comparable companies, but also had the highest return on equity among them. In terms of the growth rate of the abovementioned comparable companies, Huaneng also had the highest CAGR of approximately 30.6%.

Taking into account of the financial performance of Huaneng, the Directors consider that the Acquisition represents a good opportunity for the Group to diversify its investment portfolios as Huaneng has a solid track record, a steady dividend payout stream, a relatively higher dividend payout ratio and growth potentials in the market. Based on the above, we consider that the Acquisition represents a good infrastructure investment with sound financial performance and a steady dividend payout stream.

Taking into account of the above, we are of the opinion that the consideration of the Acquisition is fair and reasonable.

5. Financial effects of the Acquisition

(i) Profit and loss account

Based on the audited financial statements of the Group for the year ended 31 December 2003, the Group recorded a profit attributable to shareholders of HK$56,786,807. Upon completion of the Acquisition, the Company will account for the dividends to be paid by Huaneng as the Company’s income. As mentioned above, Huaneng declared and paid dividend of RMB0.25 per Huaneng Share for the year ended 31 December 2003. For information purposes only, had the Company completed the Acquisition before the record date for entitlement of the dividends to be paid by Huaneng for the year ended 31 December 2003, the Company would have received a dividend payout of RMB27.0 million (equivalent to approximately HK$25.5 million) for its interest in the Asset. With such track record of Huaneng, the Directors believe that Huaneng will declare and pay dividend every year and as a result, the Acquisition will enhance the profit of the Group. Save and except for the circumstances when Huaneng pays dividends and/or special dividends, the Company disposes its interest in the Asset and the interest income/expenses in relation to the Acquisition, the Acquisition will have no material effect on the profit and loss accounts of the Group upon completion of the Acquisition. In light of the potential steady stream of income, from dividends to be paid by Huaneng, to the Group and the long term capital appreciation potentials of the Asset to be realised, we are of the view that the Acquisition represents a good opportunity for the Group to strengthen its performance and enhance the return to the Shareholders.

(ii) Net asset value

As at 31 December 2003, the audited net asset value of the Group amounted to HK$1,221,126,617. As the Company will settle the costs of the Acquisition (including the NAV Appreciation) by internal resources of the Group and bank borrowings and such amount will be capitalised as cost of non-trading securities, therefore the net asset value of the Group will remain unchanged as at the date of completion of the Acquisition. As advised

— 32 —

LETTER FROM GOLDBOND CAPITAL

by the Company, such non-trading securities will be re-measured at fair value at the end of each subsequent financial period of the Company. Any gain or loss arising from changes in fair value of the Asset will be recognised directly to equity, until the Asset is sold or otherwise disposed of, or until the Asset is determined to be impaired, at which time the cumulative gain or loss should be included in net profit or loss for the period. We consider that, barring any unforeseen circumstances, the long term capital appreciation of the Asset would, to certain extent, lead to an increase in net asset value of the Group. The potential increase in net asset value of the Group is in the interests of the Shareholders and the Company as a whole.

(iii) Working capital

As stated in the Company’s annual report for the year ended 31 December 2003, the Group had cash and bank balances of HK$478,469,483 and had no bank borrowings. As advised by the Directors, the Company will satisfy the consideration of the Acquisition as to HK$120 million by bank borrowings and as to the remaining balance by internal resources of the Group. We note that the Group’s cash and bank balances and bank loan facilities to be obtained by the Group are in excess to satisfy the consideration of the Acquisition. The Directors have also confirmed that the Group has sufficient working capital for its working capital requirements for the next 12 months from the date of the Circular and completion of the Acquisition under the paragraph headed “Working capital” in Appendix I of this circular. We concur with the Directors’ view that the Group has adequate working capital and the business operation of the Group would not be adversely affected.

RISKS IN RELATION TO THE ASSET

It should be noted that as the Articles of Association of Huaneng do not contain express provisions governing the rights of Huaneng Unlisted Foreign Shares, there is no assurance that any subsequent holders of such Huaneng Unlisted Foreign Shares including the Company or other classes of shares would not dispute the rights attaching to Huaneng Unlisted Foreign Shares as set out above, and such rights may be affected as a result.

As mentioned in the letter from the Board, the Asset will be re-designated as Huaneng Unlisted Foreign Shares according to the PRC law upon completion of the Acquisition. As the Articles of Association of Huaneng do not contain express provisions as to whether Huaneng Unlisted Foreign Shares constitute a separate class of ordinary shares of Huaneng, the Company has liaised with a number of PRC authorities to understand the legality and viability of the Acquisition. Furthermore, the Company’s PRC legal adviser has issued a legal opinion as to PRC law on the legality of the Acquisition and the rights attached to Huaneng Unlisted Foreign Shares. We have reviewed such legal opinion which states that the Acquisition is valid upon completion of all relevant approval and registration procedures under the PRC law. The Company’s PRC legal adviser has confirmed in its opinion that the Acquisition is legitimate and the Company is permitted under PRC law to hold the Asset after satisfying the conditions precedent to the Agreement and upon completion of the Acquisition.

Based on the above, we have no reason to believe the Acquisition is illegitimate.

— 33 —

LETTER FROM GOLDBOND CAPITAL

RECOMMENDATION

Taking into account the above principal factors and reasons, we consider that the transaction contemplated under the Agreement is fair and reasonable so far as the Independent Shareholders are concerned and is in the interests of the Company and the Shareholders as a whole. Accordingly, we advise the Independent Board Committee to recommend the Independent Shareholders to vote in favour of the ordinary resolution to be proposed at the EGM to approve the Acquisition.

Yours faithfully, For and on behalf of Goldbond Capital (Asia) Limited Stacey Wong

Managing Director

— 34 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

1. INDEBTEDNESS

At the close of business on 30 June 2004, being the latest practicable date for the purpose of this indebtedness statement prior to the printing of this circular, a non-wholly owned subsidiary of the Group in the PRC has issued guarantees amounting to approximately HK$44.4 million for bank mortgage loan facilities obtained by certain buyers for purchasing properties from such non-wholly owned subsidiary. These guarantees will be released upon the receipt of the title deeds of the properties by the relevant banks.

Save as aforesaid and apart from intra-group liabilities, neither the Company nor any of the companies comprising the Group had, at the close of business on 30 June 2004, any loan capital issued and outstanding or agreed to be issued, bank overdrafts, loans, debt securities or other similar indebtedness, liabilities under acceptance or acceptance credits, debentures, mortgages, charges, hire purchase or other finance lease commitments, guarantees or other material contingent liabilities.

2. MATERIAL ADVERSE CHANGES

As the diversion effect of the neighbouring competing routes of the Group’s toll road investment (through an associated company) in Fenghua, Zhejiang Province has worsened since 31 December 2003, the Directors consider that an impairment loss to be determined against the Group’s investment in the associated company of HK$38.2 million as at 31 December 2003 is necessary for the period ended 30 June 2004.

Save as disclosed above and in the Company’s annual report for the year ended 31 December 2003, an extract of which is set out in note 31 to the Company’s financial statements as set out on page 82 under the paragraph headed “Summary of the audited financial statements of the Group” in Appendix I, the Directors are not aware of any other material adverse changes in the financial or trading position or prospects of the Group since 31 December 2003, being the date to which the latest audited consolidated financial statements of the Group were made up.

3. WORKING CAPITAL

Taking into account the Group’s existing cash and bank balances and the financial resources available, including internally generated funds, additional bank loans of HK$120 million to be obtained to finance the acquisition of the Asset based on an indicative proposal received from a bank and in the absence of unforeseen circumstances, the Directors are of the opinion that the Group has sufficient working capital for its working capital requirements for the next 12 months from the date of this circular and completion of the acquisition of the Asset.

— 35 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

4. SUMMARY OF THE AUDITED FINANCIAL STATEMENTS OF THE GROUP

(A) The following is a summary of the audited financial results of the Group for each of the three years ended 31 December 2003 as extracted from the audited accounts of the Group for the relevant years.

Three Years Financial Summary

Consolidated Profit and Loss Account

Turnover
Profit before taxation
Taxation
Profit after taxation
Minority interests
Profit attributable to shareholders
Consolidated net assets
Non-current assets
Current assets
Current liabilities
Non-current liabilities
Minority interests
Net assets

Year ended 31 December
2003
2002
2001
HK$
HK$
HK$
116,544,198
120,198,823
124,223,204
74,938,581
60,750,443
77,757,601
(14,398,235)
(12,258,168)
(2,224,444)
60,540,346
48,492,275
75,533,157
(3,753,539)
(2,516,978)
(2,446,926)
56,786,807
45,975,297
73,086,231
As at 31 December
2003
2002
2001
HK$
HK$
HK$
832,014,763
781,492,640
764,349,760
559,970,643
549,209,946
563,699,890
(152,807,632)
(152,008,499)
(189,758,673)
(4,547,468)
(3,803,715)
(3,415,586)
(13,503,689)
(12,207,338)
(12,683,237)
1,221,126,617
1,162,683,034
1,122,192,154

— 36 —

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

(B) The following is the audited financial statements of the Group for the year ended 31 December 2003 (the date to which the latest audited accounts were made up), together with the comparative figures for the year ended 31 December 2002 and the accompanying notes to the audited accounts of the Group for the year ended 31 December 2003 as extracted from the annual report of the Company for the year ended 31 December 2003.

In respect of the notes to the following financial statements, references to page numbers are the page numbers of the annual report of the Company for the year ended 31 December 2003.

Consolidated Profit and Loss Account

For the year ended 31 December 2003

Note TURNOVER 2 TOTAL REVENUES 2 COST OF PROPERTIES SOLD NET COMMISSIONS, CLAIMS AND OTHER EXPENSES INCURRED ON INSURANCE BUSINESS 3 STAFF COSTS DEPRECIATION OTHER PROVISIONS AND LOSSES 4 OTHER OPERATING EXPENSES TOTAL OPERATING EXPENSES OPERATING PROFIT 5 SHARE OF RESULTS OF — JOINTLY CONTROLLED ENTITIES 6 — ASSOCIATES 7 PROFIT BEFORE TAXATION TAXATION 9 PROFIT AFTER TAXATION MINORITY INTERESTS PROFIT ATTRIBUTABLE TO SHAREHOLDERS 10 DIVIDEND 11 BASIC EARNINGS PER SHARE 12	2003 HK$ 116,544,198	2002 HK$ As restated (Note 1) 120,198,823 117,484,767 --------------- (34,912,154) (37,331,595) (22,290,899) (2,488,199) 3,838,724 (13,709,882) (106,894,005) --------------- ----------------------------------------------------------- 10,590,762 --------------- 44,725,535 5,434,146 50,159,681 --------------- ----------------------------------------------------------- 60,750,443 (12,258,168) 48,492,275 (2,516,978) 45,975,297 — HK CENTS 10.01
	127,280,343 --------------- (39,285,079) (30,837,638) (22,445,664) (2,525,369) 6,630,754 (13,812,363) (102,275,359) --------------- ----------------------------------------------------------- 25,004,984 --------------- 57,985,181 (8,051,584) 49,933,597 --------------- ----------------------------------------------------------- 74,938,581 (14,398,235) 60,540,346 (3,753,539)	117,484,767 --------------- (34,912,154 (37,331,595 (22,290,899 (2,488,199 3,838,724 (13,709,882
		(106,894,005 --------------- ----------------------------------------------------------- 10,590,762 --------------- 44,725,535 5,434,146
		50,159,681 --------------- ----------------------------------------------------------- 60,750,443 (12,258,168
		48,492,275 (2,516,978
	56,786,807 18,377,146 HK CENTS 12.36

— 37 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

Consolidated Balance Sheet

As at 31 December 2003

Note NON-CURRENT ASSETS Fixed assets 13 Jointly controlled entities 15 Associates 16 Held-to-maturity debt securities, unlisted Other asset 17 CURRENT ASSETS Properties held for sale 18 Deferred acquisition costs Insurance debtors 19 Claims recoverable from reinsurers Other debtors and prepayments Trading securities, listed 20 Cash and bank balances 21 CURRENT LIABILITIES Unearned premiums Unexpired risks Gross outstanding insurance claims Insurance liabilities 22 Other creditors and accruals Taxation NET CURRENT ASSETS TOTAL ASSETS LESS CURRENT LIABILITIES DEFERRED TAX LIABILITIES 23 MINORITY INTERESTS NET ASSETS SHARE CAPITAL 24 OTHER RESERVES 25 RETAINED PROFITS Proposed final dividend 25 Others 25 SHAREHOLDERS’ FUNDS	2003 HK$ 152,023,204 512,426,822 100,505,419 9,009,318 58,050,000	2002 HK$ As restated (Note 1) 171,591,605 450,102,609 101,748,426 — 58,050,000
	832,014,763 --------------- 32,960,761 7,824,360 13,777,314 17,511,179 3,762,450 5,665,096 478,469,483 559,970,643 --------------- 22,096,166 948,000 68,806,753 5,605,631 50,496,335 4,854,747 152,807,632 --------------- ----------------------------------------------------------- 407,163,011 --------------- ----------------------------------------------------------- 1,239,177,774 4,547,468 13,503,689	781,492,640 --------------- 23,685,878 9,045,071 18,460,111 18,779,686 13,521,939 14,028,704 451,688,557
		549,209,946 --------------- 26,749,608 995,000 75,938,453 7,684,838 36,409,627 4,230,973
		152,008,499 --------------- ----------------------------------------------------------- 397,201,447 --------------- ----------------------------------------------------------- 1,178,694,087 3,803,715 12,207,338
	1,221,126,617	1,162,683,034
	459,428,656 674,059,815 18,377,146 69,261,000	459,428,656 677,755,137 — 25,499,241
	1,221,126,617	1,162,683,034

— 38 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

Balance Sheet

As at 31 December 2003

Note NON-CURRENT ASSETS Fixed assets 13 Subsidiaries 14 Jointly controlled entities 15 Associate 16 Other asset 17 CURRENT ASSETS Other debtors and prepayments Dividend receivable from a subsidiary Trading securities 20 Cash and bank balances 21 CURRENT LIABILITIES Other creditors and accruals TOTAL ASSETS LESS CURRENT LIABILITIES NET ASSETS SHARE CAPITAL 24 OTHER RESERVES 25 RETAINED PROFIT/(ACCUMULATED LOSS) Proposed final dividend 25 Others 25 SHAREHOLDERS’ FUNDS	2003 HK$ 27,383,271 226,866,354 205,800,000 10,069,838 58,050,000	2002 HK$ 26,729,681 235,687,349 205,800,000 — 58,050,000 526,267,030 --------------- 11,986,633 — 9,525,768 355,035,864 376,548,265 --------------- 15,842,139 --------------- ----------------------------------------------------------- 360,706,126 --------------- ----------------------------------------------------------- 886,973,156 459,428,656 431,706,414 — (4,161,914) 886,973,156
	528,169,463 --------------- 1,125,965 11,550,000 3,115,096 368,644,286	526,267,030 --------------- 11,986,633 — 9,525,768 355,035,864
	384,435,347 --------------- 2,232,230 --------------- ----------------------------------------------------------- 382,203,117 --------------- ----------------------------------------------------------- 910,372,580
	459,428,656 431,706,414 18,377,146 860,364	459,428,656 431,706,414 — (4,161,914
	910,372,580

— 39 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

Consolidated Cash Flow Statement

for the year ended 31 December 2003

Note NET CASH INFLOW GENERATED FROM OPERATIONS 29 Interest received Tax paid NET CASH INFLOW FROM OPERATING ACTIVITIES INVESTING ACTIVITIES Purchase of fixed assets Short term loan repaid Equity investment in a jointly controlled entity Equity investment in an associate Loans (advanced to)/repaid by a jointly controlled entity Loans repaid by/(advanced to) associates Purchase of held-to-maturity debt securities Withdrawal of insurance regulatory related deposits Dividend received from a jointly controlled entity Dividends received from an associate Dividends received from listed investments Interest income from debt securities Sale of fixed assets Sale of investment properties NET CASH INFLOW FROM INVESTING ACTIVITIES NET CASH INFLOW BEFORE FINANCING FINANCING Dividends paid to minority interests Advances to minority interests NET CASH OUTFLOW FROM FINANCING INCREASE IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS AT 1 JANUARY CASH AND CASH EQUIVALENTS AT 31 DECEMBER ANALYSIS OF THE BALANCES OF CASH AND CASH EQUIVALENTS Cash and bank balances Less: Deposits placed pursuant to insurance regulatory requirements 21	2003 HK$ 19,800,717 4,863,374 (2,572,349)	2002 HK$ 1,649,188 9,637,553 (1,850,791) 9,435,950 --------------- (802,726) 7,420,000 — — 19,790,744 (9,242,991) — 1,648,544 14,251,650 2,541,702 358,764 — 1,100 294,870 36,261,657 --------------- ----------------------------------------------------------- 45,697,607 --------------- (2,761,278) (223,802) (2,985,080) --------------- ----------------------------------------------------------- 42,712,527 387,275,059 429,987,586 451,688,557 (21,700,971) 429,987,586
	22,091,742 --------------- (674,685) — (40) (10,069,838) (15,577,029) 14,208,916 (9,012,500) 463,941 — — 566,663 111,433 — 27,597,570 7,614,431 --------------- ----------------------------------------------------------- 29,706,173 --------------- (1,732,435) (728,871) (2,461,306) --------------- ----------------------------------------------------------- 27,244,867 429,987,586	9,435,950 --------------- (802,726 7,420,000 — — 19,790,744 (9,242,991 — 1,648,544 14,251,650 2,541,702 358,764 — 1,100 294,870
		36,261,657 --------------- ----------------------------------------------------------- 45,697,607 --------------- (2,761,278 (223,802
		(2,985,080 --------------- ----------------------------------------------------------- 42,712,527 387,275,059
	457,232,453
	478,469,483 (21,237,030)	451,688,557 (21,700,971
	457,232,453

— 40 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

Consolidated Statement of Changes in Equity for the year ended 31 December 2003 TOTAL EQUITY AS AT 1 JANUARY - as previously stated CHANGE IN ACCOUNTING POLICY - prior period adjustment on provision for net deferred tax liabilities TOTAL EQUITY AS AT 1 JANUARY, AS RESTATED DEFERRED TAX LIABILITIES RECOGNISED IN RESERVE CHANGE IN FAIR VALUE OF NON-TRADING SECURITIES IMPAIRMENT OF OTHER PROPERTIES EXCHANGE DIFFERENCES ARISING ON TRANSLATION OF THE FINANCIAL STATEMENTS OF FOREIGN SUBSIDIARIES, ASSOCIATES AND JOINTLY CONTROLLED ENTITIES NET GAIN NOT RECOGNISED IN THE PROFIT AND LOSS ACCOUNT PROFIT FOR THE YEAR REALISATION OF RESERVES ON WINDING UP OF SUBSIDIARIES TO THE PROFIT AND LOSS ACCOUNT IMPAIRMENT OF GOODWILL PREVIOUSLY TAKEN DIRECTLY TO RESERVES (note 4) REALISATION OF RESERVE ON DISPOSAL BY A JOINTLY CONTROLLED ENTITY OF A SUBSIDIARY TO THE PROFIT AND LOSS ACCOUNT TOTAL EQUITY AS AT 31 DECEMBER	2003 HK$ 1,176,598,051 (13,915,017)	2002 HK$ 1,128,969,873 (6,777,719) 1,122,192,154 ---------------- (200,565) 2,399,743 (996,235) 19,786 1,222,729 ---------------- 45,975,297 ---------------- (6,747,175) ---------------- — ---------------- 40,029 ---------------- -------------------------------------------------------------- 1,162,683,034
	1,162,683,034 ---------------- (346,862) 562,366 — (18,420)	1,122,192,154 ---------------- (200,565 2,399,743 (996,235 19,786
	197,084 ---------------- 56,786,807 ---------------- — ---------------- 1,459,692 ---------------- — ---------------- -------------------------------------------------------------- 1,221,126,617

— 41 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

Notes to the Accounts

1. PRINCIPAL ACCOUNTING POLICIES

(a) Basis of preparation

The accounts have been prepared in accordance with generally accepted accounting principles in Hong Kong and comply with Statements of Standard Accounting Practice (“SSAPs”) issued by the Hong Kong Society of Accountants. The accounts are prepared under the historical cost convention except that, as disclosed in the accounting policies below, investment properties and investments in securities other than held-to-maturity debt securities are stated at fair value.

(i) In the current year, the Group has changed its accounting policy on deferred taxation following the adoption of the new SSAP 12 “Income taxes” issued by the Hong Kong Society of Accountants which is effective for accounting periods commencing on or after 1 January 2003.

Under the new SSAP 12, deferred taxation is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the accounts. Taxation rates enacted or substantively enacted by the balance sheet date are used to determine deferred taxation.

Deferred tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised.

Deferred taxation is provided on temporary differences arising on investments in subsidiaries, associates and joint ventures, except where the timing of the reversal of the temporary difference can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future.

In prior years, deferred taxation was accounted for at the current taxation rate in respect of timing differences between profit as computed for taxation purposes and profit as stated in the accounts to the extent that a liability or an asset was expected to be payable or recoverable in the foreseeable future. The adoption of the new SSAP 12 represents a change in accounting policy, which has been applied retrospectively so that the comparatives presented herein have been restated to conform to this changed policy.

As detailed in note 25 to the accounts, the Group’s opening retained earnings, investment revaluation reserve and other properties revaluation reserve have been reduced by the net deferred tax liabilities of the Group computed under the changed policy as at those dates, which amounted to HK$1,627,831, HK$1,280,912 and HK$3,868,976 respectively at 1 January 2002 and HK$8,564,564, HK$1,640,874 and HK$3,709,579 respectively at 1 January 2003. The application of the changed policy has resulted in an increase of the Group’s deferred tax liabilities and a decrease of the Group’s minority interests, share of net assets in jointly controlled entities and associates at 31 December 2002 by HK$3,803,715, HK$491,777, HK$7,934,401 and HK$2,668,678 respectively.

The Group’s taxation charges attributable to the Company and its subsidiaries, jointly controlled entities and associates (note 9) for the year ended 31 December 2002 have also increased by HK$547,526, HK$6,136,364 and HK$573,732 respectively, resulting in a decrease of net profit after minority interests for the year ended 31 December 2002 by HK$6,936,733. In addition, the Group’s investment revaluation reserve and other properties revaluation reserve have also reduced by HK$359,962 and increased by HK$159,397 respectively for the year ended 31 December 2002.

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APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

For the year ended 31 December 2003, the adoption of this changed policy has resulted in a decrease in net profit after minority interests, investment revaluation reserve and other properties revaluation reserve by HK$314,584, HK$84,355 and HK$262,507 respectively.

(ii) Commencing this year, the Group no longer deducts premiums on reinsurance ceded and movements in net unearned insurance premiums and provision for unexpired risks from the gross insurance premiums written in reporting its turnover. The comparative figure for turnover presented herein has been adjusted accordingly. There is no impact on the Group’s revenue or profit before taxation in the current and prior years arising from this reclassification.
(b) Consolidation

The consolidated accounts include the accounts of the Company and its subsidiaries made up to 31 December. Subsidiaries are those entities in which the Company, directly or indirectly, controls the composition of the board of directors, controls more than half the voting power or holds more than half of the issued share capital.

The results of subsidiaries acquired or disposed of during the year are included in the consolidated profit and loss account from the effective date of acquisition or up to the effective date of disposal, as appropriate.

All significant intercompany transactions and balances within the Group are eliminated on consolidation.

The gain or loss on disposal of a subsidiary represents the difference between the proceeds of the sale and the Group’s share of its net assets together with any unamortised goodwill/negative goodwill or goodwill/negative goodwill taken to reserves and which has not been previously charged or recognised in the consolidated profit and loss account and also any related exchange translation reserve.

Minority interests represent the interests of outside shareholders in the operating results and net assets of subsidiaries.

In the Company’s balance sheet the investments in subsidiaries are stated at cost less impairment losses. The results of subsidiaries are accounted for by the Company on the basis of dividends received and receivable.

A jointly controlled entity is an entity which, through contractual arrangements, is subject to joint control of the Group and other parties, and none of the participating parties has unilateral control over the entity.

The consolidated profit and loss account includes the Group’s share of the results of jointly controlled entities for the year, and the consolidated balance sheet includes the Group’s share of the net assets of the jointly controlled entities and goodwill/negative goodwill (net of accumulated amortisation) on acquisition less impairment losses.

Equity accounting is discontinued when the carrying amount of the equtiy investment in a jointly controlled entity reaches zero, unless the Group has incurred obligations or guaranteed obligations in respect of the jointly controlled entity.

In the Company’s balance sheet the investments in jointly controlled entities are stated at cost less impairment losses. The results of jointly controlled entities are accounted for by the Company on the basis of dividends received and receivable.

(d) Associates

An associate is a company, not being a subsidiary or a jointly controlled entity, in which an equity interest is held for the long term and significant influence is exercised in its management by the Group.

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APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

The consolidated profit and loss account includes the Group’s share of the results of associates for the year, and the consolidated balance sheet includes the Group’s share of the net assets of the associates and goodwill/negative goodwill (net of accumulated amortisation) on acquisition less impairment losses.

Equity accounting is discontinued when the carrying amount of the equity investment in an associate reaches zero, unless the Group has incurred obligations or guaranteed obligations in respect of the associate.

In the Company’s balance sheet the investments in associates are stated at cost less impairment losses. The results of associates are accounted for by the Company on the basis of dividends received and receivable.

(e) Revenue recognition
(i) Interest and rental income

Interest income is recognised on a time proportion basis, taking into account the principal amounts outstanding and the interest rates applicable, except for doubtful debts where interest income is recognised on a cash basis.

Rental income from operating leases net of any incentives paid is recognised on a straight-line basis over the life of the lease agreements.

(ii) Gross insurance premiums less reinsurance

Gross insurance premiums less reinsurance are recognised corresponding to the insurance risk covered.

(iii) Sale of properties

Revenue from the sale of properties held for sale in Mainland China is recognised on the transfer of risks and rewards of ownership, which generally coincides with the time when the development and construction of the properties as well as the sale process are completed. Payments received prior to completion are recorded as deposits received and included in other creditors.

(iv) Commission income and management fees

Commission income and management fees are recognised upon the provision of services. Income accrual is ceased in case the collectibility of the income is doubtful.

(v) Dividend income

Dividend income is recognised when the right to receive payment is established.

(f) Fixed assets

Fixed assets other than investment properties (note 1(g)) and other properties are stated at cost less accumulated depreciation and accumulated impairment losses.

Other properties, which are interests in land and buildings, are stated at cost or valuation less accumulated depreciation and accumulated impairment losses. Surpluses arising from valuation of other properties are credited to other properties revaluation reserve; decreases are first set off against increases on earlier valuation of the same piece of other property and thereafter are debited to operating profit. Any subsequent increases are credited to operating profit up to the amount previously debited.

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FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

Effective from 1 January 1993, no further revaluations of the Group’s other properties stated at valuation have been carried out. The Group places reliance on paragraph 80 of SSAP 17 “Property, plant and equipment” issued by the Hong Kong Society of Accountants which provides exemption from the need to make regular revaluations for such assets.

Freehold land is not depreciated. Other fixed assets are depreciated at rates sufficient to write off their cost or valuation less accumulated impairment losses over their estimated useful lives at the following annual rates:

(i)	Straight line method:
	Leasehold land	Over the unexpired term of the lease
	Buildings	Over the shorter of the unexpired term of the lease and
		thirty years
	Computer equipment	20% - 25%
(ii)	Reducing balance method:
	Furniture, fixtures and office equipment	10% - 20%
	Motor vehicles	20% - 25%

Major costs incurred in restoring fixed assets to their normal working condition are charged to the profit and loss account. Improvements are capitalised and depreciated over their expected useful lives to the Group.

The gain or loss on disposal of a fixed asset other than investment properties is the difference between the net sales proceeds and the carrying amount of the relevant asset, and is recognised in the profit and loss account. Any revaluation reserve balance remaining attributable to the relevant asset is transferred to retained earnings and is shown as a movement in reserves.

(g) Investment properties

Investment properties are interests in land and buildings in respect of which construction work and development have been completed and which are held for their investment potential, any rental income being negotiated at arm’s length.

Investment properties held on leases with unexpired periods greater than 20 years are valued annually by independent valuers. The valuations are on an open market value basis related to individual properties and separate values are not attributed to land and buildings. The valuations are incorporated in the annual accounts. Increases in valuation are credited to the investment properties revaluation reserve; decreases are first set off against increases on earlier valuations on a portfolio basis and thereafter are debited to operating profit. Any subsequent increases are credited to operating profit up to the amount previously debited.

Investment properties are not depreciated except for those held on leases with unexpired periods of 20 years or less. In which case, depreciation is provided on the carrying amount over the remaining terms of the leases.

Upon the disposal of an investment property, the relevant portion of the revaluation reserve realised in respect of previous valuations is released and transferred from the revaluation reserve to the profit and loss account.

(h) Impairment of assets

At each balance sheet date, both internal and external sources of information are considered to assess whether there is any indication that assets other than properties held for sale, investment properties and financial assets are impaired. If any such indication exists, the recoverable amount of the asset is estimated and where relevant,

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FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

an impairment loss is recognised to reduce the asset to its recoverable amount. Such impairment losses are recognised in the profit and loss account except where the asset is carried at valuation and the impairment loss does not exceed the revaluation surplus for that same asset, in which case it is treated as a revaluation decrease.

(i) Goodwill/negative goodwill

Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the net assets of the acquired subsidiaries, jointly controlled entities and associates at the date of acquisition. Negative goodwill represents the excess of the fair value of the Group’s share of the net assets acquired over the cost of acquisition. The Group has taken advantage of the transitional provisions in SSAP 30 “Business combinations” for acquisitions undertaken prior to 1 January 2001 that goodwill previously written off against reserves and negative goodwill previously taken to reserves are not restated. However any impairment arising on goodwill is accounted for in the profit and loss account. On the disposal of a subsidiary, a jointly controlled entity or an associate, the related goodwill/negative goodwill is included in calculating the profit and loss on disposal.

(j) Investments in securities

(i) Trading securities

Trading securities are securities which are acquired for the purpose of generating a profit from short-term fluctuations in price and are stated at fair value at the balance sheet date. Fair value is the amount for which an asset can be exchanged, or a liability settled, between knowledgeable willing parties in an arm’s length transaction. Changes in fair value of trading securities are recognised in the profit and loss account as they arise. Profit or loss on disposal of trading securities, representing the difference between the net sale proceeds and the carrying amounts, are recognised in the profit and loss account as they arise.

(ii) Non-trading securities

Non-trading securities other than debt securities intended to be held-to-maturity are stated at fair value at the balance sheet date.

Changes in the fair value of non-trading securities are credited or debited to the investment revaluation reserve until the security is sold or is determined to be impaired. Upon disposal, the cumulative gain or loss representing the difference between the net sales proceeds and the carrying amount of the relevant security, together with any surplus/deficit transferred from the investment revaluation reserve, is dealt with in the profit and loss account. Where there is objective evidence that individual investments are impaired the cumulative loss recorded in the revaluation reserve is taken to the profit and loss account.

(iii) Held-to-maturity securities

Held-to-maturity securities are stated in the balance sheet at cost plus/less any discount/premium amortised to date. The discount or premium is amortised over the period to maturity and included as interest income/ expense in the profit and loss account.

The carrying amounts of individual held-to-maturity securities or holdings of the same securities are reviewed at the balance sheet date in order to assess the credit risk and whether the carrying amounts are expected to be recovered. Provisions are made when there is a diminution in value other than temporary and the carrying amounts are not expected to be recovered. Such provisions are recognised in the profit and loss account as an expense immediately.

— 46 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

(k) Properties held for sale

Properties held for sale are stated at the lower of cost and net realisable value. Cost, calculated on an average basis, includes land cost, development expenditure and other direct expenses. Net realisable value is determined on the basis of anticipated sales proceeds less estimated selling expenses.

(l) Unearned premiums

Unearned premiums represent those portions of premiums written which are related to periods of risk subsequent to the balance sheet date.

(m) Deferred acquisition costs

Acquisition costs consist of commissions and other costs net of reinsurance commission income, which are directly related to the production of insurance revenues. They are deferred and amortised over the terms of the related insurance policies.

(n) Outstanding claims

Full provision is made for outstanding claims including those incurred but not reported at the balance sheet date. Provision is made in the light of available information, after taking into account direct claims handling expenses and possible recoveries from other parties. Indirect expenses relating to the general administration of claims are included as part of outstanding claims.

Claims recoverable from reinsurers are included as an asset in the balance sheet.

(o) Provision for unexpired risks

Provision for unexpired risks represents the estimated amounts required over and above unearned premiums to meet future claims and related expenses on business in force at the end of the year. Provision is made taking into account the losses, management expenses and investment yields expected to occur on the unearned premiums to which the policies relate.

(p) Operating leases

Leases where substantially all the rewards and risks of ownership of assets remain with the leasing company are accounted for as operating leases. Payments made under operating leases net of any incentives received from the leasing company are charged to the profit and loss account on a straight line basis over the lease term.

(q) Foreign currencies

Transactions in foreign currencies are translated at exchange rates ruling at the transaction dates. Monetary assets and liabilities expressed in foreign currencies at the balance sheet date are translated at rates of exchange ruling at the balance sheet date. Exchange differences arising in these cases are dealt with in the profit and loss account.

The balance sheet of subsidiaries, jointly controlled entities and associates expressed in foreign currencies are translated at the rates of exchange ruling at the balance sheet date whilst the profit and loss is translated at an average rate. Exchange differences arising are dealt with as a movement in reserves.

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FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

(r) Employee benefits

(i) Employee leave entitlements

Employee entitlements to annual leave are recognised when they accrue to employees. An accrual is made for the estimated liability for annual leave as a result of services rendered by employees up to the balance sheet date.

Employee entitlements to sick leave and maternity leave are not recognised until the time of leave.

(ii) Retirement benefit costs

The Group’s contributions to staff retirement scheme (note 5(a)) are expensed as incurred and are reduced by contributions forfeited in relation to those employees who leave the scheme prior to vesting fully in the contributions.

(s) Borrowing costs

All borrowing costs are charged to the profit and loss account in the year in which they are incurred.

(t) Segment reporting

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

Unallocated costs represent corporate expenses. Segment assets consist primarily of fixed assets, properties held for sale, receivables, investments in securities, insurance related assets and operating cash. Segment liabilities comprise operating liabilities and exclude items such as taxation, corporate borrowings and accruals for corporate expenses. Capital expenditure comprises additions to fixed assets (note 13). Inter-segment loans and advances employed by the Group as part of the Group’s funding and capital allocation and the resulting interest income and expenses are excluded from the determination of segment assets, liabilities and results.

In respect of geographical segment reporting, sales are based on the country in which the customers are located. Total assets and capital expenditure are based on the country in which the assets are located.

(u) Cash and cash equivalents

Cash and cash equivalents are carried in the balance sheet at cost. For the purposes of the cash flow statement, cash and cash equivalents comprise cash on hand, deposits held at call with banks, cash investments with a maturity of three months or less from the date of investment less bank overdrafts.

(v) Provisions

Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation, and a reliable estimate of the amount can be made. Where the Group expects a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain.

(w) Contingent liabilities and contingent assets

A contingent liability is a possible obligation that arises from past events and whose existence will only be confirmed by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Group. It can also be a present obligation arising from past events that is not recognised because it is not probable that outflow of economic resources will be required or the amount of obligation cannot be measured reliably.

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FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

A contingent liability is not recognised but is disclosed in the notes to the accounts. When a change in the probability of an outflow occurs so that the outflow is probable, it will then be recognised as a provision.

A contingent asset is a possible asset that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain events not wholly within the control of the Group.

A contingent asset is not recognised but is disclosed in the notes to the accounts when an inflow of economic benefits is probable. When inflow is virtually certain, an asset is recognised.

2. TURNOVER AND SEGMENTAL INFORMATION

The Group is principally engaged in property investment, development and sales, financial services, toll road investment, industrial instrument manufacturing and investment holdings.

The amount of each significant category of revenue recognised during the year is as follows:

Turnover Gross insurance premiums Insurance brokerage commission Gross proceeds from disposal of properties held for sale Rental income from investment properties Interest income from loans and bank deposits Management fee Reinsurance premiums ceded Decrease in net unearned insurance premiums written and provision for unexpired risks Other revenues Dividend income from listed equity investments Interest income from debt securities Net realised and unrealised gain on trading securities Gain on winding up of subsidiaries (a) Gain on disposal of investment properties (note 30(c)) Total revenues	2003 HK$ 52,028,034 887,361 53,026,076 5,160,236 4,890,891 551,600	2002 HK$ 62,935,245 507,451 44,252,425 4,935,944 7,039,576 528,182 120,198,823 - - - - - - - - - - - - (10,543,910) - - - - - - - - - - - - 723,915 - - - - - - - - - - - - 358,764 — — 6,747,175 — 7,105,939 - - - - - - - - - - - - ----------------------------------------------- 117,484,767
	116,544,198 - - - - - - - - - - - - (11,869,106) - - - - - - - - - - - - 4,700,442 - - - - - - - - - - - - 566,663 111,433 5,429,143 — 11,797,570	120,198,823 - - - - - - - - - - - - (10,543,910 - - - - - - - - - - - - 723,915 - - - - - - - - - - - - 358,764 — — 6,747,175 —
	17,904,809 - - - - - - - - - - - - ----------------------------------------------- 127,280,343

(a) The prior year amount represented the release of capital reserve and exchange translation reserve attributable to the subsidiaries on their winding up.

— 49 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

Primary reporting format - business segments

The Group’s activities are principally organised under the following business segments:

Property investment, development and sales

investing in and development of properties for sale and for rental income

Financial services — underwriting of general insurance, insurance brokerage, investing in banking business and trading in securities Toll road investment — investing in toll road projects in Mainland China Industrial instrument manufacturing — manufacturing and distribution of digital instruments Investment holdings and others — this comprises other investment activities of the Group

underwriting of general insurance, insurance brokerage, investing in banking business and trading in securities

— 50 —

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

Property investment, development and sales HK$ Total revenues 70,472,910 Segment results 35,477,426 Unallocated costs Operating profit Share of results of - Jointly controlled entities — - Associates — Profit before taxation Taxation Profit after taxation Minority interests Profit attributable to shareholders Segment assets 172,719,053 Investments in jointly controlled entities — Investments in associates 14,763,945 Unallocated assets Total assets Segment liabilities 56,514,376 Unallocated liabilities Total liabilities Capital expenditure — Depreciation 225,920 Impairment of goodwill —	Financial services HK$ 52,555,486 10,155,211 54,940,052 — 188,196,088 493,339,852 — 99,562,557 155,679 630,676 —	For the year ended 31 December 2003 Toll road investment Industrial instrument manufacturing Investment holdings and others HK$ HK$ HK$ — — 4,251,947 (1,459,692) — 3,090,904 — 3,045,129 — (8,069,319) — 17,735 — — 374,340,493 — 19,086,970 — 75,675,266 — 10,066,208 — — 985,498 — — 519,006 — — 1,668,773 1,459,692 — —	Group HK$ 127,280,343
			47,263,849 (22,258,865
			25,004,984 57,985,181 (8,051,584
			74,938,581 (14,398,235
			60,540,346 (3,753,539
			56,786,807
			735,255,634 512,426,822 100,505,419 43,797,531
			1,391,985,406
			157,062,431 13,796,358
			170,858,789
			674,685 2,525,369 1,459,692

— 51 —

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

Property investment, development and sales HK$ Total revenues 49,517,005 Segment results 3,577,793 Unallocated costs Operating profit Share of results of - Jointly controlled entities — - Associates — Profit before taxation Taxation (note 1) Profit after taxation Minority interests Profit attributable to shareholders Segment assets 160,495,768 Investments in jointly controlled entities — Investments in associates 14,960,130 Unallocated assets Total assets Segment liabilities 27,938,057 Unallocated liabilities Total liabilities Capital expenditure — Depreciation 188,210 Impairment charge of other properties —	For the year ended 31 December 2002 (as restated) Financial services Toll road investment Industrial instrument manufacturing Investment holdings and others HK$ HK$ HK$ HK$ 55,130,564 — — 12,837,198 4,135,856 — — 25,372,922 44,725,535 — — — — 5,434,146 — — 201,111,334 — — 372,326,713 450,102,609 — — — — 86,788,296 — — 113,336,004 — — 14,444,339 10,386 — — 792,340 658,532 — — 1,641,457 — — — 996,235	Group HK$ 117,484,767
		33,086,571 (22,495,809
		10,590,762 44,725,535 5,434,146
		60,750,443 (12,258,168
		48,492,275 (2,516,978
		45,975,297
		733,933,815 450,102,609 101,748,426 44,917,736
		1,330,702,586
		155,718,400 12,301,152
		168,019,552
		802,726 2,488,199 996,235

— 52 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

Secondary reporting format - geographical segments

For the year ended 31 December 2003 Total revenues Operating profit/(loss) Total assets Capital expenditure HK$ HK$ HK$ HK$ Hong Kong 53,114,744 (7,880,822) 395,997,615 133,178 Mainland China 55,545,661 19,151,678 349,918,719 448,317 Macau 18,619,938 13,734,128 33,136,831 93,190 127,280,343 25,004,984 779,053,165 674,685 Investments in jointly controlled entities 512,426,822 Investments in associates 100,505,419 1,391,985,406 For the year ended 31 December 2002 Total revenues Operating profit Total assets Capital expenditure HK$ HK$ HK$ HK$ Hong Kong 63,625,328 533,201 478,429,884 483,281 Mainland China 46,702,779 8,161,300 251,187,504 319,445 Macau 7,156,660 1,896,261 49,234,163 — 117,484,767 10,590,762 778,851,551 802,726 Investments in jointly controlled entities 450,102,609 Investments in associates 101,748,426 1,330,702,586	For the year ended 31 December 2003 Total revenues Operating profit/(loss) Total assets Capital expenditure HK$ HK$ HK$ HK$ Hong Kong 53,114,744 (7,880,822) 395,997,615 133,178 Mainland China 55,545,661 19,151,678 349,918,719 448,317 Macau 18,619,938 13,734,128 33,136,831 93,190 127,280,343 25,004,984 779,053,165 674,685 Investments in jointly controlled entities 512,426,822 Investments in associates 100,505,419 1,391,985,406 For the year ended 31 December 2002 Total revenues Operating profit Total assets Capital expenditure HK$ HK$ HK$ HK$ Hong Kong 63,625,328 533,201 478,429,884 483,281 Mainland China 46,702,779 8,161,300 251,187,504 319,445 Macau 7,156,660 1,896,261 49,234,163 — 117,484,767 10,590,762 778,851,551 802,726 Investments in jointly controlled entities 450,102,609 Investments in associates 101,748,426 1,330,702,586	For the year ended 31 December 2003 Total revenues Operating profit/(loss) Total assets Capital expenditure HK$ HK$ HK$ HK$ Hong Kong 53,114,744 (7,880,822) 395,997,615 133,178 Mainland China 55,545,661 19,151,678 349,918,719 448,317 Macau 18,619,938 13,734,128 33,136,831 93,190 127,280,343 25,004,984 779,053,165 674,685 Investments in jointly controlled entities 512,426,822 Investments in associates 100,505,419 1,391,985,406 For the year ended 31 December 2002 Total revenues Operating profit Total assets Capital expenditure HK$ HK$ HK$ HK$ Hong Kong 63,625,328 533,201 478,429,884 483,281 Mainland China 46,702,779 8,161,300 251,187,504 319,445 Macau 7,156,660 1,896,261 49,234,163 — 117,484,767 10,590,762 778,851,551 802,726 Investments in jointly controlled entities 450,102,609 Investments in associates 101,748,426 1,330,702,586	For the year ended 31 December 2003 Total revenues Operating profit/(loss) Total assets Capital expenditure HK$ HK$ HK$ HK$ Hong Kong 53,114,744 (7,880,822) 395,997,615 133,178 Mainland China 55,545,661 19,151,678 349,918,719 448,317 Macau 18,619,938 13,734,128 33,136,831 93,190 127,280,343 25,004,984 779,053,165 674,685 Investments in jointly controlled entities 512,426,822 Investments in associates 100,505,419 1,391,985,406 For the year ended 31 December 2002 Total revenues Operating profit Total assets Capital expenditure HK$ HK$ HK$ HK$ Hong Kong 63,625,328 533,201 478,429,884 483,281 Mainland China 46,702,779 8,161,300 251,187,504 319,445 Macau 7,156,660 1,896,261 49,234,163 — 117,484,767 10,590,762 778,851,551 802,726 Investments in jointly controlled entities 450,102,609 Investments in associates 101,748,426 1,330,702,586
			802,726

	1,330,702,586

There are no sales or other transactions between the business and geographical segments disclosed above.

— 53 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

3. NET COMMISSIONS, CLAIMS AND OTHER EXPENSES INCURRED ON INSURANCE BUSINESS

Gross commissions payable Less: Commissions receivable from reinsurers Net commissions payable Gross claims incurred Less: Claims recovered from reinsurers Net claims incurred Claims handling expenses 4. OTHER PROVISIONS AND LOSSES Net realised and unrealised losses in trading securities Loss on disposal of investment properties Deficit on revaluation of investment properties Impairment of goodwill attributable to an associate Write back of impairment losses for loans to and amounts due from jointly controlled entities and associates (note 31(a))	2003 HK$ 17,093,117 (1,402,756) 15,690,361 - - - - - - - - - 16,953,032 (4,480,808) 12,472,224 - - - - - - - - - 2,675,053 - - - - - - - - - ----------------------------------- 30,837,638 2003 HK$ — — 1,883,790 1,459,692 (9,974,236) (6,630,754)	2002 HK$ 20,347,702 (2,835,114) 17,512,588 - - - - - - - - - 24,829,207 (7,082,204) 17,747,003 - - - - - - - - - 2,072,004 - - - - - - - - - ----------------------------------- 37,331,595 2002 HK$ 1,386,362 26,949 5,859,573 — (11,111,608) (3,838,724)

— 54 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

5. OPERATING PROFIT

	2003	2002
	HK$	HK$
Operating profit is stated after charging the following:
Depreciation	2,525,369	2,488,199
Loss on disposal of fixed assets	34,170	76,284
Net exchange losses	645,495	69,853
Operating lease rentals in respect of land and buildings	344,760	362,760
Auditors’ remuneration	1,887,130	1,894,083
Management fee (note 30(b))	1,880,000	1,880,000
Retirement benefit costs (a)	725,125	790,707

(a) The Group contributed to a defined contribution scheme which was available to all eligible employees. The assets of the scheme were held separately from those of the Group in an independently administered fund. Contributions to the scheme by the Group and employees were calculated at 15% of the employees’ basic salary until 30 November 2000 when the scheme was replaced by a mandatory provident fund scheme (“MPF Scheme”) set up under the Hong Kong Mandatory Provident Fund Schemes Ordinance.

The Group’s monthly contributions (mandatory and voluntary) to the MPF Scheme for each employee is calculated at the lower of HK$2,000 or 10% (or 6% for employees who joined after 30 September 2000) of the monthly basic salary. The Group’s contributions to the MPF Scheme can be reduced by the Group’s voluntary contributions forfeited in relation to those employees who leave the scheme prior to vesting fully in the contributions. At 31 December 2003, there were no material unutilised forfeited contributions.

6. SHARE OF RESULTS OF JOINTLY CONTROLLED ENTITIES

The prior year amount included the Group’s share of the gain on disposal of a subsidiary by a jointly controlled entity of HK$6.97 million.

7. SHARE OF RESULTS OF ASSOCIATES

For the year ended 31 December 2003, the amount included the Group’s share of impairment loss recognised by an associate on its toll road investments of HK$13.03 million (2002: Nil).

— 55 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

8. SENIOR EXECUTIVES’ EMOLUMENTS

(a) Directors’ emoluments

Fees Salaries, housing and other allowances, and benefits in kind Bonuses paid by a subsidiary	2003 HK$ 440,630 989,352 2,500,000 3,929,982	2002 HK$ 393,698 1,006,273 2,250,000
		3,649,971

The emoluments were paid to the directors as follows:

Emoluments Band	Number of Directors	Number of Directors
	2003	2002
HK$ Nil - HK$1,000,000	7	7

Emoluments paid to independent non-executive directors amounted to HK$260,000 during the year (2002: HK$260,000).

(b) Other senior executives’ emoluments

The analysis in note (a) above does not include those individuals who are not directors but whose emoluments were among the five highest in the Group. Details of the emoluments paid to those individuals are as follows:

Salaries, housing and other allowances, and benefits in kind Contributions to retirement benefit scheme Emoluments Band HK$ Nil - HK$1,000,000 HK$1,000,001 - HK$1,500,000	2003 2002 HK$ HK$ 3,627,231 2,608,643 48,000 72,000 3,675,231 2,680,643 Number of Individuals 2003 2002 3 2 1 1	2002 HK$ 2,608,643 72,000
		2,680,643

— 56 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

9. TAXATION

Hong Kong profits tax has been provided at the rate of 17.5% (2002: 16%) on the estimated assessable profit for the year. In 2003, the Hong Kong Government enacted a change in the profits tax rate from 16% to 17.5% starting from the fiscal year 2003/2004. Taxation on Mainland China and Macau profits has been calculated on the estimated assessable profit for the year at the rates of taxation prevailing in Mainland China and Macau.

The amount of taxation charged to the consolidated profit and loss account represents:

Company and subsidiaries: Hong Kong profits tax Mainland China and Macau taxation Over provision in prior years: Hong Kong profits tax Macau taxation Deferred taxation Relating to the origination and reversal of temporary differences (note 23) Jointly controlled entities: Mainland China and Macau taxation Associates: Mainland China taxation Taxation charge	2003 HK$ 187 3,206,409	2002 HK$ As restated (Note 1) 4,300 2,105,181 2,109,481 - - - - - - - - - (63,386) (139,612) (202,998) - - - - - - - - - 547,526 - - - - - - - - - ----------------------------------- 2,454,009 - - - - - - - - - 9,230,427 - - - - - - - - - 573,732 - - - - - - - - - ----------------------------------- 12,258,168
	3,206,596 - - - - - - - - - (438) (10,035)	2,109,481 - - - - - - - - - (63,386 (139,612
	(10,473) - - - - - - - - - 480,823 - - - - - - - - - ----------------------------------- 3,676,946 - - - - - - - - - 12,472,688 - - - - - - - - - (1,751,399) - - - - - - - - - ----------------------------------- 14,398,235

— 57 —

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

The taxation on the group’s profit before taxation differs from the theoretical amount that would arise using the taxation rate of the home country of the company as follows:

For the Company and subsidiaries HK$ Profit/(loss) before taxation 25,004,984 Calculated at a taxation rate of 17.5% 4,375,872 Effect of different taxation rates in other tax jurisdictions 1,773,446 Income not subject to taxation (5,012,055) Expenses not deductible for taxation purposes 1,939,982 Utilisation of previously unrecognised tax losses (780,222) Increase in unrecognised tax losses 1,129,260 Under/(Over) provision in prior years (10,473) Others 261,136 3,676,946 For the Company and subsidiaries HK$ Profit before taxation 10,590,762 Calculated at a taxation rate of 16% 1,694,522 Effect of different taxation rates in other tax jurisdictions 1,366,722 Income not subject to taxation (4,519,230) Expenses not deductible for taxation purposes 2,132,009 Utilisation of previously unrecognised tax losses (418,384) Increase in unrecognised tax losses 2,264,274 Over provision in prior years (65,354) Others (550) 2,454,009	year ended 31 Jointly controlled entities HK$ 57,985,181	December 2003 Associates Total HK$ HK$ (8,051,584) 74,938,581 (1,409,027) 13,114,252 — 5,304,443 (966,185) (8,782,162) 367,101 3,765,968 — (780,222) 256,712 1,580,697 — (10,214) — 205,473 (1,751,399) 14,398,235 December 2002 Associates Total HK$ HK$ 5,434,146 60,750,443 869,463 9,720,071 — 3,804,359 (590,822) (6,919,812) 295,091 3,632,564 — (418,384) — 2,402,643 — (65,354) — 102,081 573,732 12,258,168	December 2003 Associates Total HK$ HK$ (8,051,584) 74,938,581 (1,409,027) 13,114,252 — 5,304,443 (966,185) (8,782,162) 367,101 3,765,968 — (780,222) 256,712 1,580,697 — (10,214) — 205,473 (1,751,399) 14,398,235 December 2002 Associates Total HK$ HK$ 5,434,146 60,750,443 869,463 9,720,071 — 3,804,359 (590,822) (6,919,812) 295,091 3,632,564 — (418,384) — 2,402,643 — (65,354) — 102,081 573,732 12,258,168
4,375,872 1,773,446 (5,012,055) 1,939,982 (780,222) 1,129,260 (10,473) 261,136	10,147,407 3,530,997 (2,803,922) 1,458,885 — 194,725 259 (55,663)	(1,409,027) — (966,185) 367,101 — 256,712 — —	13,114,252 5,304,443 (8,782,162 3,765,968 (780,222 1,580,697 (10,214 205,473
	12,472,688 year ended 31 Jointly controlled entities HK$ 44,725,535
1,694,522 1,366,722 (4,519,230) 2,132,009 (418,384) 2,264,274 (65,354) (550)	7,156,086 2,437,637 (1,809,760) 1,205,464 — 138,369 — 102,631	869,463 — (590,822) 295,091 — — — —	9,720,071 3,804,359 (6,919,812 3,632,564 (418,384 2,402,643 (65,354 102,081
2,454,009	9,230,427	573,732

— 58 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

10. PROFIT ATTRIBUTABLE TO SHAREHOLDERS

The profit attributable to shareholders is dealt with in the accounts of the Company to the extent of HK$23,399,424 (2002: HK$32,650,196).

11. DIVIDENDS

										2003	2002
										HK$	HK$
Final,	proposed,	of	4	cents	(2002:	Nil)	per	ordinary	share	18,377,146	—

At a board meeting held on 23 April 2004, the directors proposed a final dividend of 4 cents per ordinary share. This proposed dividend is not reflected as a dividend payable in these accounts, but will be reflected as an appropriation of retained profit for the year ending 31 December 2004.

12. BASIC EARNINGS PER SHARE

The calculation of basic earnings per share is based on the Group’s profit attributable to shareholders of HK$56,786,807 (2002: HK$45,975,297) and the weighted average number of 459,428,656 (2002: 459,428,656) shares in issue during the year.

The Group has no dilutive potential ordinary shares in issue during the current year and prior year and therefore there is no diluted earnings per share presented in these accounts.

— 59 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

13. FIXED ASSETS

Group

			Furniture,
			fixtures, office
	Investment	Other	and computer	Motor
	properties	properties	equipment	vehicles	Total
	HK$	HK$	HK$	HK$	HK$
Cost or valuation
At 1 January 2003	119,394,720	67,833,765	9,510,889	4,501,290	201,240,664
Translation differences	—	243	238	175	656
Additions	—	—	288,841	385,844	674,685
Revaluation	(1,883,790)	—	—	—	(1,883,790)
Disposals	(15,800,000)	—	(407,091)	—	(16,207,091)
At 31 December 2003	101,710,930	67,834,008	9,392,877	4,887,309	183,825,124
	- - - - - - - - - - - -	- - - - - - - - - - - -	- - - - - - - - - - - -	- - - - - - - - - - - -	- - - - - - - - - - - -
Accumulated depreciation
and impairment losses
At 1 January 2003	—	21,086,204	4,930,047	3,632,808	29,649,059
Translation differences	—	60	205	148	413
Charge for the year	—	1,156,435	1,090,596	278,338	2,525,369
Disposals	—	—	(372,921)	—	(372,921)
At 31 December 2003	—	22,242,699	5,647,927	3,911,294	31,801,920
	- - - - - - - - - - - -	- - - - - - - - - - - -	- - - - - - - - - - - -	- - - - - - - - - - - -	- - - - - - - - - - - -
	-----------------------------------------------	-----------------------------------------------	-----------------------------------------------	-----------------------------------------------	-----------------------------------------------
Net book value
At 31 December 2003	101,710,930	45,591,309	3,744,950	976,015	152,023,204
At 31 December 2002	119,394,720	46,747,561	4,580,842	868,482	171,591,605

— 60 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

Company

			Furniture,
			fixtures, office
	Investment	Other	and computer	Motor
	properties	properties	equipment	vehicles	Total
	HK$	HK$	HK$	HK$	HK$
Cost or valuation
At 1 January 2003	20,694,720	5,219,041	2,890,152	3,771,204	32,575,117
Translation differences	—	213	42	—	255
Additions	—	—	54,888	—	54,888
Revaluation	1,116,210	—	—	—	1,116,210
Disposals	—	—	(202,013)	—	(202,013)
At 31 December 2003	21,810,930	5,219,254	2,743,069	3,771,204	33,544,457
	- - - - - - - - - - - -	- - - - - - - - - - - -	- - - - - - - - - - - -	- - - - - - - - - - - -	- - - - - - - - - - - -
Accumulated depreciation
and impairment losses
At 1 January 2003	—	1,316,846	1,284,846	3,243,744	5,845,436
Translation differences	—	54	47	—	101
Charge for the year	—	65,836	335,254	105,492	506,582
Disposals	—	—	(190,933)	—	(190,933)
At 31 December 2003	—	1,382,736	1,429,214	3,349,236	6,161,186
	- - - - - - - - - - - -	- - - - - - - - - - - -	- - - - - - - - - - - -	- - - - - - - - - - - -	- - - - - - - - - - - -
	-----------------------------------------------	-----------------------------------------------	-----------------------------------------------	-----------------------------------------------	-----------------------------------------------
Net book value
At 31 December 2003	21,810,930	3,836,518	1,313,855	421,968	27,383,271
At 31 December 2002	20,694,720	3,902,195	1,605,306	527,460	26,729,681

— 61 —

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

The analysis of the cost or valuation of the above assets is as follows:

Group

Investment properties HK$ — 101,710,930 101,710,930	Other properties Furniture, fixtures, office and computer equipment HK$ HK$ 14,834,008 9,392,877 53,000,000 — 67,834,008 9,392,877	Other properties Furniture, fixtures, office and computer equipment HK$ HK$ 14,834,008 9,392,877 53,000,000 — 67,834,008 9,392,877	Other properties Furniture, fixtures, office and computer equipment HK$ HK$ 14,834,008 9,392,877 53,000,000 — 67,834,008 9,392,877	Motor vehicles HK$ 4,887,309 — 4,887,309	Total HK$ 29,114,194 154,710,930	Total HK$ 29,114,194 154,710,930
					183,825,124
— 119,394,720	14,833,765 53,000,000		9,510,889 —	4,501,290 —	28,845,944 172,394,720
119,394,720 Investment properties HK$ — 21,810,930 21,810,930 — 20,694,720 20,694,720	67,833,765 9,510,889 Other properties Furniture, fixtures, office and computer equipment HK$ HK$ 5,219,254 2,743,069 — — 5,219,254 2,743,069			4,501,290 Motor vehicles HK$ 3,771,204 — 3,771,204	201,240,664
						Total HK$ 11,733,527 21,810,930
						33,544,457
		5,219,041 —	2,890,152 —	3,771,204 —		11,880,397 20,694,720
		5,219,041	2,890,152	3,771,204		32,575,117

— 62 —

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

The net book value of investment properties and other properties is analysed as follows:

Investment properties

Held in Hong Kong Leases of over 50 years Leases of between 10 to 50 years Held outside Hong Kong Leases of between 10 to 50 years Other properties Held in Hong Kong Leases of over 50 years Held outside Hong Kong Freehold Leases of over 50 years Leases of between 10 to 50 years	Group 2003 2002 HK$ HK$ 43,900,000 44,200,000 27,000,000 27,000,000 30,810,930 48,194,720 101,710,930 119,394,720 Group 2003 2002 HK$ HK$ 42,882,071 43,961,483 272,000 278,400 1,473,693 1,510,434 963,545 997,244 45,591,309 46,747,561	Company 2003 2002 HK$ HK$ — — — — 21,810,930 20,694,720 21,810,930 20,694,720 Company 2003 2002 HK$ HK$ 2,974,908 3,012,454 — — — — 861,610 889,741 3,836,518 3,902,195	Company 2003 2002 HK$ HK$ — — — — 21,810,930 20,694,720 21,810,930 20,694,720 Company 2003 2002 HK$ HK$ 2,974,908 3,012,454 — — — — 861,610 889,741 3,836,518 3,902,195

			3,902,195

The investment properties were revalued on an open market value basis at 31 December 2003 by independent professional valuers, namely Chesterton Petty Limited in Hong Kong and Fujian Huaxing Certified Public Accountants Ltd. in Mainland China.

Other properties stated at valuation were valued by an independent professional valuer, Chesterton Petty Limited, on an open market value basis at 31 December 1992.

The carrying amount of other properties of the Group would have been HK$29,072,559 (2002: HK$29,724,317) had they been stated at cost less accumulated depreciation and impairment losses.

The title deeds in respect of certain investment properties in Hong Kong with a net book value of HK$33.4 million (2002: HK$34.2 million) held by a subsidiary are placed in the custody of the Office of the Commissioner of Insurance in Hong Kong.

— 63 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

14. SUBSIDIARIES

Unlisted shares, at cost Amounts due from subsidiaries Amounts due to subsidiaries Less: Impairment losses	Company 2003 2002 HK$ HK$ 60,655,034 60,655,026 327,603,697 350,987,546 (3,203) (2,441)	Company 2003 2002 HK$ HK$ 60,655,034 60,655,026 327,603,697 350,987,546 (3,203) (2,441)
	388,255,528 (161,389,174)	411,640,131 (175,952,782)
	226,866,354	235,687,349

The following is a list of the Company’s principal subsidiaries at 31 December 2003:

			Nominal value of
	Place of		issued ordinary	Group’s
	incorporation/		share capital/	equity
Name	operations	Principal activities	registered capital	interest
Directly held:
Dorfine Development Limited	Hong Kong	Property investment	HK$2	100%
Fujian Minxin Investment	The People’s	Investment	HK$3,000,000(4)	100%
Consultants Co., Ltd. (1)&(2)	Republic of	consulting
	China
Min Xin (China) Investment	British Virgin	Investment holding	US$1	100%
Limited	Islands
Minxin Ferdinand Investments	Hong Kong	Investment holding	HK$5,000,000	51%
Limited
Min Xin Infrastructure Limited	British Virgin	Investment holding	US$1	100%
	Islands
Min Xin Insurance Company	Hong Kong	Writing of	HK$55,000,000	100%
Limited		general insurance
		business
Ranger Insurance Brokers Limited	Hong Kong	Insurance brokerage	HK$100,000	100%
Take Chance Company Limited	Hong Kong	Property investment	HK$2	100%
Thousand Limited	British Virgin	Investment holding	US$1	100%
	Islands
Welljet Development Limited	Hong Kong	Property investment	HK$2	100%

— 64 —

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

			Nominal value of
	Place of		issued ordinary	Group’s
	incorporation/		share capital/	equity
Name	operations	Principal activities	registered capital	interest
Indirectly held:
Crown Land International Limited	Hong Kong	Investment holding	HK$10,000	100%
Jinan Pacific Real Estate	The People’s	Property	RMB13,881,160(4)	51%
Development Co., Ltd. (1)&(3)	Republic of	development
	China	and sales
Min Xin Properties Limited	Hong Kong	Investment holding	HK$5,000,000	100%
Shining Gold Limited	British Virgin	Investment holding	US$1	100%
	Islands
Wide Exposure Developments	British Virgin	Investment holding	US$1	100%
Limited	Islands

(1) Companies not audited by PricewaterhouseCoopers. The Group’s profit before taxation attributable to these companies amounted to HK$11,869,259 (2002: HK$8,847,525).
(2) Wholly foreign-owned enterprise in Mainland China
(3) Equity joint venture enterprise in Mainland China.
(4) Registered and paid up capital

15. JOINTLY CONTROLLED ENTITIES

Share of net assets Loans to jointly controlled entities (note (a)) Amounts due from jointly controlled entities (note (a)) Less: Impairment losses (note (b)) Unlisted investments, at cost	Group 2003 2002 HK$ HK$ 496,093,152 450,102,609 - - - - - - - - - - - - - - - - - - - - - - - - 110,256,527 94,679,498 51,130,299 51,130,299	Group 2003 2002 HK$ HK$ 496,093,152 450,102,609 - - - - - - - - - - - - - - - - - - - - - - - - 110,256,527 94,679,498 51,130,299 51,130,299
	161,386,826 (145,053,156)	145,809,797 (145,809,797)
	16,333,670 - - - - - - - - - - - - ----------------------------------------------- 512,426,822 210,805,040	— - - - - - - - - - - - - ----------------------------------------------- 450,102,609
		210,805,000

— 65 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

Unlisted investments, at cost Loans to jointly controlled entities (note (a)) Amounts due from jointly controlled entities (note (a)) Less: Impairment losses (note (b))	Company 2003 2002 HK$ HK$ 210,805,000 210,805,000 93,922,857 94,679,498 51,130,299 51,130,299 355,858,156 356,614,797 (150,058,156) (150,814,797) 205,800,000 205,800,000

(a) Loans and other amounts were advanced to the jointly controlled entities as part of the Group’s and the Company’s investments in these jointly controlled entities and are unsecured and have no fixed repayment terms. During the year, the Group advanced a loan of HK$16,333,670 to a newly acquired jointly controlled entity, Min Faith Investments Limited, which is unsecured and interest free. Except for this newly granted loan, the remaining balances bear interest at 12% per annum (2002: 12%).
(b) As a result of the accumulated losses arising from certain joint ventures, impairment losses were recognised by the Group and the Company against the investments and the loans and amounts due from these jointly controlled entities in prior years. Interest income on these loans is accounted for on a cash basis and no interest income was received during the year (2002: HK$70,282).
(c) The Group and the Company also have bank deposits placed with jointly controlled financial institutions in the normal course of business which are included in cash and bank balances (note 21(a)).

— 66 —

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

The following is a list of the principal jointly controlled entities at 31 December 2003:

	Place of		Group’s
	incorporation/		equity
Name	operations	Principal activities	interest
Xiamen International Bank(1),	The People’s	Banking and investment	36.75%
and its subsidiaries:	Republic of China	holding
Fast Rise Investments Limited	Hong Kong	Property investment	36.75%
Luso International Banking Limited	Macau	Banking	36.75%
Setwide Investments Limited	Hong Kong	Property investment	36.75%
Silver Win Development Limited	Hong Kong	Property investment	36.75%
Wealth Rise Development Limited	Hong Kong	Property investment	36.75%
Xiamen International Investment Limited	Hong Kong	Investment holding	36.75%
XIB Properties Limited	Liberia	Property investment	36.75%
Min Faith Investments Limited(2),	Hong Kong	Investment holding	40%
and its subsidiaries:
Fuzhou Charm Faith Autosystem Co., Ltd.(2)	The People’s	Manufacturing and	40%
	Republic of China	distribution of digital
		instruments
Min Faith Instruments Limited(2)	Hong Kong	Investment holding	20.4%
Tianjin Charm Faith Instruments Co., Ltd.(2)	The People’s	Manufacturing and	20.4%
	Republic of China	distribution of digital
		instruments
Westly Limited(1), and its subsidiary:	Hong Kong	Investment holding	50%
Asian Eagle Limited	Hong Kong	Property development and	50%
		sales

(1) Jointly controlled entities directly held by the Company.
(2) Companies not audited by PricewaterhouseCoopers. The Group’s attributable share of profit before taxation with respect to these newly acquired companies amounted to HK$3,045,129.

— 67 —

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

Xiamen International Bank (“XIB”) is a major jointly controlled entity directly held by the Company. The Group holds a 36.75% interest in ownership and, jointly with a substantial shareholder of the Company, a 47.62% interest in voting power of the board of directors of XIB. The financial information of XIB extracted from its statutory accounts prepared in accordance with generally accepted accounting principles in The People’s Republic of China are as follows:

(a) Consolidated profit and loss account

Profit before taxation Taxation Profit after taxation Minority interests Net profit Consolidated balance sheet Cash and short term funds Investments Loans and advances and other assets, less provisions Fixed assets Share capital Reserves Shareholders’ equity Deposits and other liabilities	2003 HK$’000 143,669 (27,369) 116,300 — 116,300 2003 HK$’000 1,102,504 2,007,875 8,656,150 212,270 11,978,799	2002 HK$’000 122,946 (8,584) 114,362 556 114,918 2002 HK$’000 744,385 1,532,544 7,214,029 218,742 9,709,700 800,000 393,235 1,193,235 8,516,465 9,709,700
	800,000 509,535 1,309,535 10,669,264	800,000 393,235
		1,193,235 8,516,465
	11,978,799

(b) Consolidated balance sheet

Net interest income, charge for bad and doubtful debts and depreciation charge of XIB during the year amounted to HK$247,936,000 (2002: HK$187,736,000), HK$56,938,000 (2002: HK$41,323,000) and HK$20,804,000 (2002: HK$18,714,000) respectively.

— 68 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

16. ASSOCIATES

Share of net assets
Loans to associates
Amount due from an associate
Less: Impairment losses
Unlisted investments, at cost
Unlisted investments, at cost

Group
2003
2002
HK$
HK$
29,735,144
25,986,856
- - - - - - - - - - - -
- - - - - - - - - - - -
70,664,162
84,871,020
106,113
106,087
70,770,275
84,977,107
—
(9,215,537)
70,770,275
75,761,570
- - - - - - - - - - - -
-----------------------------------------------
- - - - - - - - - - - -
-----------------------------------------------
100,505,419
101,748,426
16,355,633
6,285,803
Company
2003
2002
HK$
HK$
10,069,838
—

The loans to and amount due from associates are unsecured, interest free and have no fixed repayment terms except for an amount of RMB1,520,000 (2002: RMB1,520,000) which bears interest at normal commercial rates and is repayable in two years from the drawdown date. At 31 December 2002, a RMB10 million interest bearing loan has been granted to an associate, on normal commercial terms, for the purpose of financing a property project. The loan was secured by a piece of land in Mainland China and was fully repaid during the year. Interest income received and receivable from the associate during the year amounted to HK$385,145 (2002: HK$220,969).

— 69 —

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

The following is a list of the principal associates at 31 December 2003:

	Place of incorporation/		Group’s equity
Name	operations	Principal activities	interest
Changchun Changxin International Real	The People’s	Property development and	20%
Estate Development Co., Ltd.(1)	Republic of China	sales
(note 31(a))
Fujian Hua Yuan City Construction	The People’s	Sewage and waste	25%
Environment Protection Co., Ltd.(1)	Republic of China	treatment services
Promise Good Limited(1), and its	British Virgin Islands	Investment holding	40%
subsidiaries:
Nickwell Investments Limited(1)	British Virgin Islands	Investment holding	40%
Raytek Investments Limited(1)	British Virgin Islands	Investment holding	40%
Wise Link Investments Limited(1)	British Virgin Islands	Investment holding	40%
Ningbo Nickwell Highway	The People’s	Infrastructure	26%(2)
Development Company Limited(1)	Republic of China
Ningbo Rayter Highway Development	The People’s	Infrastructure	26%(2)
Company Limited(1)	Republic of China
Ningbo Wise Link Highway	The People’s	Infrastructure	26%(2)
Development Company Limited(1)	Republic of China
Vigorous Developments Limited(1),	British Virgin Islands	Investment holding	30%
and its subsidiary:
Maanshan Huan Tung Highway	The People’s	Infrastructure	21%(3)
Development Limited(1)	Republic of China

(1) Companies not audited by PricewaterhouseCoopers. The Group’s attributable share of net loss before taxation with respect to these companies amounted to HK$7,952,681 (2002: a profit of HK$5,779,639).
(2) The profit sharing arrangement commenced from August 1998 and the Group’s share of the associates’ profit is 32% for the first five years, 20% for the next five years and 26% for the remaining years.
(3) The profit sharing arrangement commenced from January 2000 and the Group’s share of the associate’s profit is 24% for the first five years, 18% for the next five years and 21% for the remaining years.

17. OTHER ASSET

Advance to an unrelated company Less: Impairment loss	Group and Company 2003 2002 HK$ HK$ 64,500,000 64,500,000 (6,450,000) (6,450,000) 58,050,000 58,050,000

— 70 —

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

The advance is secured by certain units of a building in Fuzhou, Mainland China. Interest of 14% and management fee of 4% per annum is payable by the borrower on the advance.

In 2001, the Company took legal action against the borrower for settlement of the advance which was not repaid as originally scheduled. On 26 January 2001, a court order was granted to confirm the Company’s right to foreclose on secured units of the building held as collateral. The Company is currently taking steps to arrange for the disposal of the properties collateral by public auction and the directors, based on a valuation report obtained, consider that an impairment loss of HK$6,450,000 against the advance is adequate and appropriate. The Group and the Company have ceased accruing interest and management fee on the advance since 2001.

18. PROPERTIES HELD FOR SALE

Properties under development, at cost Completed properties, at cost	Group 2003 2002 HK$ HK$ — 7,588,000 32,960,761 16,097,878 32,960,761 23,685,878	Group 2003 2002 HK$ HK$ — 7,588,000 32,960,761 16,097,878 32,960,761 23,685,878
		23,685,878

19. INSURANCE DEBTORS

The credit period for the majority of insurance debtors normally ranges from 90 to 120 days. The credit terms of insurance debtors, including whether guarantees from third parties are required, are determined by senior management.

At 31 December 2003, the ageing analysis of the insurance debtors by invoice date was as follows:

Within 30 days 31 - 60 days 61 - 90 days Over 90 days	Group 2003 HK$ 3,359,470 3,468,581 2,970,985 3,978,278 13,777,314	2002 HK$ 3,793,371 7,783,371 4,053,969 2,829,400
		18,460,111

— 71 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

20. TRADING SECURITIES

		Group		Company
	2003	2002	2003	2002
	HK$	HK$	HK$	HK$
Equity securities, listed in Hong Kong
at market value	5,665,096	14,028,704	3,115,096	9,525,768

21. CASH AND BANK BALANCES

Included in cash and bank balances are:

(a) deposits with jointly controlled financial institutions totalling HK$216,143,594 (2002: HK$133,182,917) by the Group and HK$204,849,872 (2002: HK$121,964,951) by the Company. The deposits carry interest at normal commercial rates and have generated interest income of HK$2,065,685 (2002: HK$2,360,211) to the Group for the year.
(b) deposits of RMB143,046,050 (equivalent to HK$134,713,618) placed with certain banks (including jointly controlled financial institutions as disclosed in note (a) above) in Mainland China (2002: RMB117,342,495, equivalent to HK$110,480,893).

In accordance with the requirement from The Commissioner of Insurance in Hong Kong, a subsidiary maintains at all times a portion of its funds, being not less than HK$16 million (2002: HK$16 million), in fixed deposits. The subsidiary also maintains a bank deposit of HK$5,237,030 (2002: HK$5,700,971) for fulfilling certain requirements under the Macau Insurance Ordinance.

22. INSURANCE LIABILITIES

At 31 December 2003, the ageing analysis of the insurance liabilities by invoice date was as follows:

Within 30 days 31 - 60 days 61 - 90 days Over 90 days	Group 2003 HK$ 796,351 1,771,455 1,218,123 1,819,702 5,605,631	2002 HK$ 2,303,248 2,212,207 1,444,832 1,724,551
		7,684,838

— 72 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

23. DEFERRED TAXATION

Deferred taxation is calculated in full on temporary differences under the liability method using a principal taxation rate of 17.5% (2002: 16%) for Hong Kong taxation and 33% (2002: 33%) for Mainland China taxation. Deferred income tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when the deferred income taxes relate to the same fiscal authority.

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

At the beginning of the year Deferred taxation charged to profit and loss account Deferred taxation charged/(credited) to other properties revaluation reserve Exchange differences At the end of the year	2003 HK$ 3,803,715 480,823 262,507 423 4,547,468	2002 HK$ (Note 1) 3,415,586 547,526 (159,397) — 3,803,715

Deferred income tax assets are recognised for tax losses carried forward to the extent that realisation of the related tax benefit through future taxable profits is probable. At 31 December 2003, the Group has estimated unrecognised tax losses of HK$80,440,770 (2002: HK$78,446,291) to carry forward against future taxable income. These tax losses have no expiry date.

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

Deferred tax liabilities

At 1 January Charged/(credited) to profit and loss account Charged to equity Exchange differences At 31 December	Accelerated tax depreciation 2003 2002 HK$ HK$ 917,161 881,715 85,053 35,446 — — — — 1,002,214 917,161	Revaluation of properties 2003 2002 HK$ HK$ 2,800,086 3,042,262 (88,285) (82,779) 262,507 (159,397) — — 2,974,308 2,800,086	Accrued income 2003 2002 HK$ HK$ 1,291,546 643,014 1,217,946 648,532 — — 1,636 — 2,511,128 1,291,546	Total 2003 2002 HK$ HK$ 5,008,793 4,566,991 1,214,714 601,199 262,507 (159,397) 1,636 — 6,487,650 5,008,793

— 73 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

Deferred tax assets

At 1 January Charged/(credited) to profit and loss account Exchange differences At 31 December	Tax losses 2003 2002 HK$ HK$ (929,865) (907,703) (71,437) (22,162) — — (1,001,302) (929,865)	Unearned income 2003 2002 HK$ HK$ (275,213) (243,702) (662,454) (31,511) (1,213) — (938,880) (275,213)	Total 2003 2002 HK$ HK$ (1,205,078) (1,151,405 (733,891) (53,673 (1,213) — (1,940,182) (1,205,078	Total 2003 2002 HK$ HK$ (1,205,078) (1,151,405 (733,891) (53,673 (1,213) — (1,940,182) (1,205,078
				(1,205,078

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when the deferred income taxes relate to the same fiscal authority. The following amount, determined after appropriate offsetting, is shown in the consolidated balance sheet:

Deferred tax liabilities The amount shown in the balance sheet includes the following: Deferred tax liabilities to be settled after more than 12 months	2003 HK$ 4,547,468 2,886,023	2002 HK$ 3,803,715 2,717,307

24. SHARE CAPITAL

						Authorised
						Ordinary shares of HK$1	each
						No. of shares	HK$
At	31	December	2003	and	2002	800,000,000 800,000,000
						Issued and fully paid
						Ordinary shares of HK$1	each
						No. of shares	HK$
At	31	December	2003	and	2002	459,428,656 459,428,656

— 74 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

25. RESERVES

Group

Share premium HK$ 384,620,414 —	Capital redemption reserve HK$ 47,086,000 —	Statutory reserve HK$ 31,033,936 —	General reserve HK$ 52,862,258 —	Investment revaluation reserve HK$ 10,939,158 (1,640,874)	Other properties revaluation reserve HK$ 23,184,866 (3,709,579)	Exchange translation reserve HK$ 405,123 —	Capital reserve Retained profit/ (accumulated loss) HK$ HK$ 132,973,835 34,063,805 — (8,564,564)	Capital reserve Retained profit/ (accumulated loss) HK$ HK$ 132,973,835 34,063,805 — (8,564,564)	Total HK$ 717,169,395 (13,915,017
384,620,414 — — — — — — —	47,086,000 — — — — — — —	31,033,936 — — — — — — 3,137,737	52,862,258 — — — — — — (8,489,835)	9,298,284 — 562,366 (84,355) — — — —	19,475,287 — — (262,507) — — — —	405,123 132,973,835 — — — — — — — 1,459,692 (18,420) — — — — —		25,499,241 — — — — — 56,786,807 5,352,098	703,254,378 — 562,366 (346,862 1,459,692 (18,420 56,786,807 —
384,620,414	47,086,000	34,171,673	44,372,423	9,776,295	19,212,780	386,703	134,433,527	87,638,146	761,697,961
								18,377,146 69,261,000
								87,638,146

— 75 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

Group

Share premium HK$ 384,620,414 —	Capital redemption reserve HK$ 47,086,000 —	Statutory reserve HK$ 29,177,827 —	General reserve Investment revaluation reserve HK$ HK$ 86,758,875 8,499,386 — (1,280,912)	General reserve Investment revaluation reserve HK$ HK$ 86,758,875 8,499,386 — (1,280,912)	Other properties revaluation reserve Exchange translation reserve HK$ HK$ 24,181,101 1,261,267 (3,868,976) —	Other properties revaluation reserve Exchange translation reserve HK$ HK$ 24,181,101 1,261,267 (3,868,976) —	Capital reserve Retained profit/ (accumulated loss) HK$ HK$ 93,835,473 (5,879,126) — (1,627,831)	Capital reserve Retained profit/ (accumulated loss) HK$ HK$ 93,835,473 (5,879,126) — (1,627,831)	Total HK$ 669,541,217 (6,777,719)
384,620,414 — — — — — — — — —	47,086,000 — — — — — — — — —	29,177,827 — — — — — — — — 1,856,109	86,758,875 — — — — 7,974,616 — — (52,984,223) 11,112,990	7,218,474 — 2,399,743 (359,962) — 40,029 — — — —	20,312,125 (996,235) — 159,397 — — — — — —	1,261,267 93,835,473 — — — — — — (875,930) (5,871,245) — (7,974,616) 19,786 — — — — 52,984,223 — —		(7,506,957) — — — — — — 45,975,297 — (12,969,099)	662,763,498 (996,235) 2,399,743 (200,565) (6,747,175) 40,029 19,786 45,975,297 — —
384,620,414	47,086,000	31,033,936	52,862,258	9,298,284	19,475,287	405,123	132,973,835	25,499,241 — 25,499,241 25,499,241	703,254,378

— 76 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

Group

						Other			Retained
		Capital			Investment	properties	Exchange		profit/
	Share	redemption	Statutory	General	revaluation	revaluation	translation	Capital	(accumulated
	premium	reserve	reserve	reserve	reserve	reserve	reserve	reserve	loss)	Total
	HK$	HK$	HK$	HK$	HK$	HK$	HK$	HK$	HK$	HK$
Company and subsidiaries	384,620,414	47,086,000	2,660	449,571	—	19,212,780	640,708	(3,819,491)	14,917,030	463,109,672
Jointly controlled entities	—	—	33,508,619	43,922,852	9,776,295	—	—	141,184,223	56,896,123	285,288,112
Associates	—	—	660,394	—	—	—	(254,005)	(2,931,205)	15,824,993	13,300,177
At 31 December 2003	384,620,414	47,086,000	34,171,673	44,372,423	9,776,295	19,212,780	386,703	134,433,527	87,638,146	761,697,961
Company and subsidiaries	384,620,414	47,086,000	—	249,280	—	19,475,287	637,763	(3,819,491)	(3,916,878)	444,332,375
Jointly controlled entities	—	—	30,463,007	52,612,978	9,298,284	—	—	141,184,223	5,739,116	239,297,608
Associates	—	—	570,929	—	—	—	(232,640)	(4,390,897)	23,677,003	19,624,395
At 31 December 2002	384,620,414	47,086,000	31,033,936	52,862,258	9,298,284	19,475,287	405,123	132,973,835	25,499,241	703,254,378

The statutory reserve is set aside from retained earnings in accordance with the relevant statutory requirements. The general reserve is transferred from retained earnings and is available for general use. The capital reserve represents goodwill and negative goodwill arising from consolidation of subsidiaries and associates acquired prior to 1 January 2001 and capitalisation of reserves by a jointly controlled entity. At 31 December 2003, capital reserve included goodwill of HK$6,826,441 (2002: HK$8,286,133) and negative goodwill of HK$75,745 (2002: HK$75,745).

— 77 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

Company

Share premium HK$ At 1 January 2003 384,620,414 Profit for the year — At 31 December 2003 384,620,414 Representing: 2003 final dividend proposed Others Retained profit at 31 December 2003 At 1 January 2002 384,620,414 Profit for the year — At 31 December 2002 384,620,414 Representing: 2002 final dividend proposed Others Accumulated loss at 31 December 2002	Capital redemption reserve Retained profit/ (accumulated loss) HK$ HK$ 47,086,000 (4,161,914) — 23,399,424 47,086,000 19,237,510 18,377,146 860,364 19,237,510	Capital redemption reserve Retained profit/ (accumulated loss) HK$ HK$ 47,086,000 (4,161,914) — 23,399,424 47,086,000 19,237,510 18,377,146 860,364 19,237,510	Total HK$ 427,544,500 23,399,424
			450,943,924
		18,377,146 860,364
		19,237,510
	47,086,000 —	(36,812,110) 32,650,196	394,894,304 32,650,196
384,620,414	47,086,000	(4,161,914)	427,544,500
		— (4,161,914)
		(4,161,914)

26. CONTINGENT LIABILITIES


	2003	2002	2003	2002
	HK$	HK$	HK$	HK$
Guarantees	13,800,340	9,454,335	—	—

A subsidiary has issued guarantees for bank mortgage loan facilities obtained by certain buyers for acquiring properties in Mainland China from the subsidiary. These guarantees will be released upon the receipt of title deeds of the related mortgaged properties by the banks which normally takes less than one year from the date of guarantee.

— 78 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

27. CAPITAL COMMITMENTS

Authorised but not contracted for Contracted but not provided for The Group’s share of capital commitments of the jointly controlled entities not included above is as follows: Contracted but not provided for	Group 2003 2002 HK$ HK$ — 2,750,000 284,760 573,850 284,760 3,323,850 1,421,817 3,487,532	Company 2003 2002 HK$ HK$ — 2,750,000 156,133 156,095 156,133 2,906,095	Company 2003 2002 HK$ HK$ — 2,750,000 156,133 156,095 156,133 2,906,095
			2,906,095

28. LEASE COMMITMENTS

(a) As lessee

At 31 December 2003, the Group and the Company had future aggregate minimum lease payments payable under non-cancellable operating leases as follows:

				Company
	2003	2002	2003		2002
	HK$	HK$	HK$		HK$
Land and buildings
Within one year	270,920	226,920	1,090,320	196,000
In the second to fifth year inclusive	184,000	—	184,000		—
	454,920	226,920	1,274,320	196,000

— 79 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

(b) As lessor

At 31 December 2003, the Group had future aggregate minimum lease payments receivable under noncancellable operating leases as follows:

Land and buildings Within one year In the second to fifth year inclusive	Group 2003 HK$ 4,416,262 5,506,104 9,922,366	2002 HK$ 2,155,800 187,148
		2,342,948

The lease terms for business and residential properties leased out by the Group range from one to six years, with fixed rentals throughout the lease periods.

— 80 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

29. RECONCILIATION OF PROFIT BEFORE TAXATION TO NET CASH INFLOW GENERATED FROM OPERATIONS

Profit before taxation Share of profits of jointly controlled entities Share of losses/(profits) of associates Deficit on revaluation of investment properties Write back of impairment losses for loans to and amounts due from jointly controlled entities and associates Depreciation Gain on winding up of subsidiaries Loss on sale of fixed assets (Gain)/loss on disposal of investment properties Goodwill written off Dividend income from listed investments Interest income from debt securities Interest income Operating profit/(loss) before working capital changes Decrease in amounts due from jointly controlled entities (Increase)/decrease in amounts due from associates (Increase)/decrease in properties held for sale Decrease in deferred acquisition costs Decrease/(increase) in insurance debtors Decrease/(increase) in claims recoverable from reinsurers Decrease in other debtors and prepayments Decrease in trading securities (Decrease)/increase in unearned premiums Decrease in unexpired risks (Decrease)/increase in gross outstanding insurance claims Decrease in insurance liabilities Increase/(decrease) in other creditors and accruals Exchange difference Net cash inflow generated from operations	2003 HK$ 74,938,581 (57,985,181) 8,051,584 1,883,790 (9,974,236) 2,525,369 — 34,170 (11,797,570) 1,459,692 (566,663) (111,433) (4,890,891)	2002 HK$ 60,750,443 (44,725,535) (5,434,146) 5,859,573 (11,111,608) 2,488,199 (6,747,175) 76,284 26,949 — (358,764) — (7,039,576) (6,215,356) 126,898 287 22,237,239 5,430 (1,932,653) (2,943,421) 27,783,944 385,411 119,085 (843,000) 4,014,056 (885,686) (40,210,321) 7,275 1,649,188
	3,567,212 — (26) (9,274,883) 1,220,711 4,682,797 1,268,507 9,787,006 8,363,608 (4,653,442) (47,000) (7,131,700) (2,079,207) 14,086,708 10,426	(6,215,356 126,898 287 22,237,239 5,430 (1,932,653 (2,943,421 27,783,944 385,411 119,085 (843,000 4,014,056 (885,686 (40,210,321 7,275
	19,800,717

— 81 —

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

30. RELATED PARTY TRANSACTIONS

In addition to those disclosed elsewhere in the accounts, significant related party transactions which were carried out in the normal course of the Group’s business are as follows:

(a) Gross insurance premium less commission paid totalling HK$4,686,479 (2002: HK$5,263,834) was generated from jointly controlled entities for the year. Those insurance policies underwritten by the Group were contracted at prices and terms not less favourable than those contracted with other third party customers of the Group.
(b) An amount of HK$1,880,000 (2002: HK$1,880,000) was paid to Vigour Fine Company Limited, a substantial shareholder of the Company, for the provision of certain management services which include the provision of directors to the board of directors of the Company pursuant to a management agreement.
(c) During the year, the Group together with a subsidiary of one of its substantial shareholders entered into an agreement with a third party to dispose of a building in which certain floors were held by the Group as investment properties. The Group paid a fee of HK$400,000 to a jointly controlled entity for advice and agency services received in the negotiation of this transaction and a gain of approximately HK$11.8 million (note 2) was recognised by the Group on the disposal.

31. POST BALANCE SHEET DATE EVENTS

(a) In December 2003, the Group entered into an agreement (“the Agreement”) with a third party (“the Transferee”) to transfer its equity and debt interest in an associated company, Changchun Changxin International Real Estate Develpoment Co., Ltd. (“the Associate”) (note 16) at a cash consideration of RMB22.15 million (equivalent to approximately HK$20.9 million). The transferee would also reimburse any taxes or levies paid or payable by the Group in Mainland China other than stamp duty arising from this transaction. The transaction was completed in March 2004 upon the full settlement of the cash consideration by the Transferee.

At 31 December 2003, the net carrying value of the Group’s investment in the Associate (including the balances due from the Associate) is approximately HK$14.8 million after the write back of the provisions previously made against the balances due from this Associate of approximately HK$9.2 million (note 4). A gain on disposal of the Associate of approximately HK$6.1 million will be recorded by the Group in 2004.

(b) In April 2004, the Group entered into a sale and purchase agreement with a third party (“the Buyer”) to dispose of one of the Group’s investment properties (“the Property”) at a cash consideration of HK$52 million. The carrying value of the property is HK$37.5 million at 31 December 2003 based on an independent professional valuation.

The transaction is to be completed on or before 30 June 2004. As at the date of this report, the Group has received a cash deposit of HK$5.2 million from the Buyer.

32. APPROVAL OF ACCOUNTS

The accounts were approved by the board of directors on 23 April 2004.

— 82 —

APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION

1. LETTER FROM THE REPORTING ACCOUNTANTS

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

1 September 2004

PricewaterhouseCoopers 33/F, Cheung Kong Center 2 Queen's Road Central Hong Kong Telephone +852 2289 8888 Facsimile +852 2810 9888 www.pwchk.com

The Directors

Min Xin Holdings Limited

17/F, Fairmont House

8 Cotton Tree Drive

Central Hong Kong

Dear Sirs,

We report on the unaudited pro forma financial information of Min Xin Holdings Limited (the “Company”) and its subsidiaries (hereinafter collectively referred to as the “Group”) set out on pages 85 to 92 under the headings of unaudited pro forma consolidated balance sheet, unaudited pro forma consolidated profit and loss account and unaudited pro forma consolidated cash flow statement (hereinafter collectively referred to as the “unaudited pro forma financial information”) in Appendix II of the Company’s circular (the “Circular”) dated 1 September 2004 in connection with the very substantial acquisition and connected transaction for the proposed acquisition of 108,000,000 Domestic Shares of Huaneng Power International, Inc. pursuant to The Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Listing Rules”). 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 proposed acquisition might have affected the relevant financial information of the Group as at 31 December 2003.

Responsibilities

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 Listing Rules.

It is our responsibility to form an opinion, as required by paragraph 4.29 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.

— 83 —

UNAUDITED PRO FORMA FINANCIAL INFORMATION

APPENDIX II

Basis of opinion

We conducted our work with reference to the Statements of Investment Circular Reporting Standards and Bulletin 1998/8 “Reporting on pro forma financial information pursuant to the Listing Rules” issued by the Auditing Practices Board in the United Kingdom, where applicable. Our work, which involved no independent examination of any of the underlying financial information, consisted primarily of comparing the unadjusted financial information with the source documents, considering the evidence supporting the adjustments and discussing the unaudited pro forma financial information with the directors of the Company.

Our work does not constitute an audit or review in accordance with Statements of Auditing Standards issued by the Hong Kong Society of Accountants, and accordingly, we do not express any such assurance on the unaudited pro forma financial information.

The unaudited pro forma financial information has been prepared on the basis set out on pages 85 to 92 for illustrative purpose only and, because of its nature, it may not be indicative of the financial position and results of the Group at any future dates or for any future periods.

Opinion

In our opinion:

a) the unaudited pro forma financial information has been properly compiled by the directors of the Company on the basis stated;
b) such basis is consistent with the accounting policies of the Group; and
c) the adjustments are appropriate for the purpose of the unaudited pro forma financial information as disclosed pursuant to paragraph 4.29 of the Listing Rules.

Yours faithfully,

PricewaterhouseCoopers

Certified Public Accountants

Hong Kong

— 84 —

APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION

2. UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET OF THE GROUP

The unaudited pro forma consolidated balance sheet of the Group as presented below has been prepared based on the published audited consolidated balance sheet of the Group as at 31 December 2003, and adjusted, where appropriate, to illustrate the effect of the Acquisition.

Pursuant to the Agreement, the purchase consideration of the Asset is equal to RMB358,560,000 (equivalent to approximately HK$338,936,000) and subject to the NAV Appreciation adjustment as set forth in the Letter from the Board on page 6 of the Circular. The Group intends to finance the costs of the Acquisition by a bank loan of HK$120,000,000 with the remaining balance from internal cash resources. As at the Latest Practicable Date, the Group has not obtained any bank borrowings for the Acquisition.

For the purpose of presenting the unaudited pro forma consolidated balance sheet of the Group as at 31 December 2003, it has been assumed that the Acquisition took place on 31 December 2003 and the NAV Appreciation, if any, which is largely subject to the prospective financial results of Huaneng for the year ending 31 December 2004 and thereafter, where applicable, has not been taken into account in the adjustments.

The unaudited pro forma consolidated balance sheet has been prepared for illustrative purposes only and, because of its nature and the fact that the NAV Appreciation, if any, has not been taken into account in the adjustments, may not give a true picture of the financial position of the Group as at 31 December 2003 or at any future dates.

NON-CURRENT ASSETS Fixed assets Jointly controlled entities Associates Held-to-maturity debt securities, unlisted Non-trading investments Other asset	As at 31 December 2003 Audited Adjustments Pro forma HK$ HK$ Note HK$ 152,023,204 152,023,204 512,426,822 512,426,822 100,505,419 100,505,419 9,009,318 9,009,318 — 340,686,000 (1) 340,686,000 58,050,000 58,050,000 832,014,763 1,172,700,763 --------------- ---------------	As at 31 December 2003 Audited Adjustments Pro forma HK$ HK$ Note HK$ 152,023,204 152,023,204 512,426,822 512,426,822 100,505,419 100,505,419 9,009,318 9,009,318 — 340,686,000 (1) 340,686,000 58,050,000 58,050,000 832,014,763 1,172,700,763 --------------- ---------------
		1,172,700,763 ---------------

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APPENDIX II

UNAUDITED PRO FORMA FINANCIAL INFORMATION

CURRENT ASSETS Properties held for sale Deferred acquisition costs Insurance debtors Claims recoverable from reinsurers Other debtors and prepayments Trading securities, listed Cash and bank balances CURRENT LIABILITIES Unearned premiums Unexpired risks Gross outstanding insurance claims Insurance liabilities Other creditors and accruals Current portion of a bank loan Taxation NET CURRENT ASSETS TOTAL ASSETS LESS CURRENT LIABILITIES NON-CURRENT LIABILITIES Non-current portion of a bank loan Deferred tax liabilities MINORITY INTERESTS NET ASSETS	As at 31 December 2003 Audited Adjustments Pro forma HK$ HK$ Note HK$ 32,960,761 32,960,761 7,824,360 7,824,360 13,777,314 13,777,314 17,511,179 17,511,179 3,762,450 3,762,450 5,665,096 5,665,096 478,469,483 (220,686,000) (2) 257,783,483	As at 31 December 2003 Audited Adjustments Pro forma HK$ HK$ Note HK$ 32,960,761 32,960,761 7,824,360 7,824,360 13,777,314 13,777,314 17,511,179 17,511,179 3,762,450 3,762,450 5,665,096 5,665,096 478,469,483 (220,686,000) (2) 257,783,483
	559,970,643 --------------- 22,096,166 948,000 68,806,753 5,605,631 50,496,335 — 24,000,000 (2) 4,854,747 152,807,632 --------------- ----------------------------------------------------------- 407,163,011 --------------- ----------------------------------------------------------- 1,239,177,774 --------------- — 96,000,000 (2) 4,547,468	339,284,643 --------------- 22,096,166 948,000 68,806,753 5,605,631 50,496,335 24,000,000 4,854,747
		176,807,632 --------------- ----------------------------------------------------------- 162,477,011 --------------- ----------------------------------------------------------- 1,335,177,774 --------------- 96,000,000 4,547,468
	4,547,468 --------------- 13,503,689 --------------- ----------------------------------------------------------- 1,221,126,617	100,547,468 --------------- 13,503,689 --------------- ----------------------------------------------------------- 1,221,126,617

— 86 —

APPENDIX II

UNAUDITED PRO FORMA FINANCIAL INFORMATION

SHARE CAPITAL OTHER RESERVES RETAINED PROFITS Proposed final dividend Others SHAREHOLDERS’ FUNDS	As at 31 December 2003 Audited Adjustments Pro forma HK$ HK$ Note HK$ 459,428,656 459,428,656 674,059,815 674,059,815 18,377,146 18,377,146 69,261,000 69,261,000 1,221,126,617 1,221,126,617	As at 31 December 2003 Audited Adjustments Pro forma HK$ HK$ Note HK$ 459,428,656 459,428,656 674,059,815 674,059,815 18,377,146 18,377,146 69,261,000 69,261,000 1,221,126,617 1,221,126,617
		1,221,126,617

Notes:

(1) The adjustment reflects the increase in non-trading investments by the cost of the Acquisition, which comprises RMB358,560,000 (equivalent to HK$338,936,000 translated at an exchange rate of HK$1 = RMB1.0579) and the estimated professional fees and charges directly related to the Acquisition of approximately HK$1,750,000. The cost of the Acquisition has not taken into account the NAV Appreciation, if any as aforementioned, and other insignificant transaction costs.
(2) The adjustments reflect the increase in bank loans and the decrease in cash and bank balances resulting from the proposed settlement arrangement of the Acquisition costs as set forth in note (1) above as if the settlement had taken place on 31 December 2003. The Group intends to finance such amount by a 5-year term loan of HK$120,000,000 with the remaining balance of HK$220,686,000 from the Group’s internal cash resources. As at the Latest Practicable Date, the Group has not obtained any bank borrowings or committed facility lines for the Acquisition but an indicative proposal for a HK$120,000,000 term loan facility has been received by the Company from a bank. The granting of the facility is further subject to the bank’s approval procedures.

According to the indicative proposal, HK$24,000,000 of the loan facility is repayable within 12 months from the effective date of the loan agreement. Therefore, such amount has been classified as current liabilities and the remaining balance of HK$96,000,000 has been classified as non-current liabilities in the unaudited pro forma consolidated balance sheet.

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UNAUDITED PRO FORMA FINANCIAL INFORMATION

APPENDIX II

3. UNAUDITED PRO FORMA CONSOLIDATED PROFIT AND LOSS ACCOUNT OF THE GROUP

The unaudited pro forma consolidated profit and loss account of the Group as presented below has been prepared based on the published audited consolidated profit and loss account of the Group for the year ended 31 December 2003, and adjusted, where appropriate, to illustrate the effect of the Acquisition as if the Acquisition had taken place as at 1 January 2003.

The unaudited pro forma consolidated profit and loss account has been prepared for illustrative purposes only and, because of its nature, may not give a true picture of the results of the Group for the year ended 31 December 2003 or any future periods.

TURNOVER TOTAL REVENUES COST OF PROPERTIES SOLD NET COMMISSIONS, CLAIMS AND OTHER EXPENSES INCURRED ON INSURANCE BUSINESS STAFF COSTS DEPRECIATION OTHER PROVISIONS AND LOSSES OTHER OPERATING EXPENSES TOTAL OPERATING EXPENSES OPERATING PROFIT FINANCE COSTS SHARE OF RESULTS OF — JOINTLY CONTROLLED ENTITIES — ASSOCIATES	For the year ended 31 December 2003 Audited Adjustments Pro forma HK$ HK$ Note HK$ 116,544,198 (1,856,215) (1)(a) 114,687,983 127,280,343 15,498,923 (1)(a) & (b) 142,779,266 --------------- --------------- (39,285,079) (39,285,079) (30,837,638) (30,837,638) (22,445,664) (22,445,664) (2,525,369) (2,525,369) 6,630,754 6,630,754 (13,812,363) (13,812,363) (102,275,359) (102,275,359) --------------- ----------------------------------------------------------- --------------- ----------------------------------------------------------- 25,004,984 40,503,907 --------------- --------------- — (4,000,446) (2) (4,000,446) --------------- --------------- 57,985,181 57,985,181 (8,051,584) (8,051,584) 49,933,597 49,933,597 --------------- ----------------------------------------------------------- --------------- -----------------------------------------------------------	For the year ended 31 December 2003 Audited Adjustments Pro forma HK$ HK$ Note HK$ 116,544,198 (1,856,215) (1)(a) 114,687,983 127,280,343 15,498,923 (1)(a) & (b) 142,779,266 --------------- --------------- (39,285,079) (39,285,079) (30,837,638) (30,837,638) (22,445,664) (22,445,664) (2,525,369) (2,525,369) 6,630,754 6,630,754 (13,812,363) (13,812,363) (102,275,359) (102,275,359) --------------- ----------------------------------------------------------- --------------- ----------------------------------------------------------- 25,004,984 40,503,907 --------------- --------------- — (4,000,446) (2) (4,000,446) --------------- --------------- 57,985,181 57,985,181 (8,051,584) (8,051,584) 49,933,597 49,933,597 --------------- ----------------------------------------------------------- --------------- -----------------------------------------------------------
	127,280,343 15,498,923 (1)(a) & (b) --------------- (39,285,079) (30,837,638) (22,445,664) (2,525,369) 6,630,754 (13,812,363) (102,275,359) --------------- ----------------------------------------------------------- 25,004,984 --------------- — (4,000,446) (2) --------------- 57,985,181 (8,051,584)	142,779,266 --------------- (39,285,079 (30,837,638 (22,445,664 (2,525,369 6,630,754 (13,812,363
		(102,275,359 --------------- ----------------------------------------------------------- 40,503,907 --------------- (4,000,446 --------------- 57,985,181 (8,051,584
	49,933,597 --------------- -----------------------------------------------------------

— 88 —

APPENDIX II

UNAUDITED PRO FORMA FINANCIAL INFORMATION

PROFIT BEFORE TAXATION TAXATION PROFIT AFTER TAXATION MINORITY INTERESTS PROFIT ATTRIBUTABLE TO SHAREHOLDERS DIVIDEND BASIC EARNINGS PER SHARE	For the year ended 31 December 2003 Audited Adjustments Pro forma HK$ HK$ Note HK$ 74,938,581 86,437,058 (14,398,235) (14,398,235) 60,540,346 72,038,823 (3,753,539) (3,753,539) 56,786,807 68,285,284 18,377,146 18,377,146 HK CENTS HK CENTS HK CENTS 12.36 2.50 (3) 14.86	For the year ended 31 December 2003 Audited Adjustments Pro forma HK$ HK$ Note HK$ 74,938,581 86,437,058 (14,398,235) (14,398,235) 60,540,346 72,038,823 (3,753,539) (3,753,539) 56,786,807 68,285,284 18,377,146 18,377,146 HK CENTS HK CENTS HK CENTS 12.36 2.50 (3) 14.86
	60,540,346 (3,753,539)	72,038,823 (3,753,539
	56,786,807 18,377,146 HK CENTS HK CENTS 12.36 2.50 (3)

Notes:

(1) The adjustments reflect:
(a) the decrease in bank interest income of HK$1,856,215 attributable to the reduction in cash and bank balances of HK$220,686,000 for the settlement of the Acquisition costs as if the payment had occurred as at 1 January 2003. The decrease in interest income is estimated based on the average interest rate of 0.84% per annum earned by the Company on its bank balances denominated in Hong Kong dollars and United States dollars for the year ended 31 December 2003; and
(b) the increase in dividend income of RMB18,360,000 (equivalent to HK$17,355,138 translated at an exchange rate of HK$1 = RMB1.0579) as a result of a dividend declared by Huaneng of RMB0.17 per Huaneng Share (adjusted for subsequent corporate events, details of which are set out in the announcement of Huaneng dated 16 March 2004) during the year ended 31 December 2003 as if the Asset had been held by the Group since 1 January 2003.
(2) The adjustment reflects the interest expenses for the year ended 31 December 2003 attributable to the Group’s intended bank loan of HK$120,000,000 for the Acquisition as if the loan had been drawn down on 1 January 2003. As at the Latest Practicable Date, the Group has not obtained any bank borrowings or committed facility lines for the Acquisition and the adjustment is estimated based on the interest rate as indicated in the indicative proposal for a HK$120,000,000 term loan facility received by the Company from a bank. The interest rate is based upon a spread over the Hong Kong Interbank Offered Rate.
(3) The adjustment reflects the increase in the Company’s basic earnings per Share based on the pro forma adjusted profit attributable to shareholders of HK$68,285,284 and the weighted average number of 459,428,656 Shares in issue during the year ended 31 December 2003. The Company has no dilutive potential ordinary Shares in issue and therefore no diluted earnings per Share is presented.

— 89 —

APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION

4. UNAUDITED PRO FORMA CONSOLIDATED CASH FLOW STATEMENT OF THE GROUP

The unaudited pro forma consolidated cash flow statement of the Group as presented below has been prepared based on the published audited consolidated cash flow statement of the Group for the year ended 31 December 2003, and adjusted, where appropriate, to illustrate the effect of the Acquisition as if the Acquisition had taken place as at 1 January 2003.

The unaudited pro forma consolidated cash flow statement has been prepared for illustrative purposes only and, because of its nature, may not give a true picture of the cash flows of the Group for the year ended 31 December 2003 or any future periods.

NET CASH INFLOW GENERATED FROM OPERATIONS Interest received Interest paid Tax paid NET CASH INFLOW FROM OPERATING ACTIVITIES INVESTING ACTIVITIES Purchase of fixed assets Equity investment in a jointly controlled entity Equity investment in an associate Loans advanced to a jointly controlled entity Loans repaid by an associate Purchase of held-to-maturity debt securities Purchase of non-trading investments Withdrawal of insurance regulatory related deposits Dividends received from listed investments Dividends received from unlisted investments Interest income from debt securities Sale of investment properties	For the year ended 31 December 2003 Audited Adjustments Pro forma HK$ HK$ Note HK$ 19,800,717 19,800,717 4,863,374 (1,856,215) (1) 3,007,159 — (4,000,446) (2) (4,000,446) (2,572,349) (2,572,349) 22,091,742 16,235,081 ------------- -------------- (674,685) (674,685) (40) (40) (10,069,838) (10,069,838) (15,577,029) (15,577,029) 14,208,916 14,208,916 (9,012,500) (9,012,500) — (340,686,000) (3) (340,686,000) 463,941 463,941 566,663 566,663 — 17,355,138 (4) 17,355,138 111,433 111,433 27,597,570 27,597,570	For the year ended 31 December 2003 Audited Adjustments Pro forma HK$ HK$ Note HK$ 19,800,717 19,800,717 4,863,374 (1,856,215) (1) 3,007,159 — (4,000,446) (2) (4,000,446) (2,572,349) (2,572,349) 22,091,742 16,235,081 ------------- -------------- (674,685) (674,685) (40) (40) (10,069,838) (10,069,838) (15,577,029) (15,577,029) 14,208,916 14,208,916 (9,012,500) (9,012,500) — (340,686,000) (3) (340,686,000) 463,941 463,941 566,663 566,663 — 17,355,138 (4) 17,355,138 111,433 111,433 27,597,570 27,597,570
	22,091,742 ------------- (674,685) (40) (10,069,838) (15,577,029) 14,208,916 (9,012,500) — (340,686,000) (3) 463,941 566,663 — 17,355,138 (4) 111,433 27,597,570	16,235,081 -------------- (674,685 (40 (10,069,838 (15,577,029 14,208,916 (9,012,500 (340,686,000 463,941 566,663 17,355,138 111,433 27,597,570

— 90 —

APPENDIX II

UNAUDITED PRO FORMA FINANCIAL INFORMATION

NET CASH INFLOW/(OUTFLOW) FROM INVESTING ACTIVITIES NET CASH INFLOW/(OUTFLOW) BEFORE FINANCING FINANCING Bank loan obtained Dividends paid to minority interests Advances to minority interests NET CASH (OUTFLOW)/INFLOW FROM FINANCING INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS AT 1 JANUARY CASH AND CASH EQUIVALENTS AT 31 DECEMBER ANALYSIS OF THE BALANCES OF CASH AND CASH EQUIVALENTS Cash and bank balances Less: Deposits placed pursuant to insurance regulatory requirements	For the year ended 31 December 2003 Audited Adjustments Pro forma HK$ HK$ Note HK$ 7,614,431 (315,716,431) -------------- ------------------------------------------------------ --------------- --------------------------------------------------------- 29,706,173 (299,481,350) -------------- -------------- — 120,000,000 (5) 120,000,000 (1,732,435) (1,732,435) (728,871) (728,871) (2,461,306) 117,538,694 -------------- ------------------------------------------------------ -------------- -------------------------------------------------------- 27,244,867 (181,942,656) 429,987,586 429,987,586 457,232,453 248,044,930 478,469,483 (209,187,523) (6) 269,281,960 (21,237,030) (21,237,030) 457,232,453 248,044,930	For the year ended 31 December 2003 Audited Adjustments Pro forma HK$ HK$ Note HK$ 7,614,431 (315,716,431) -------------- ------------------------------------------------------ --------------- --------------------------------------------------------- 29,706,173 (299,481,350) -------------- -------------- — 120,000,000 (5) 120,000,000 (1,732,435) (1,732,435) (728,871) (728,871) (2,461,306) 117,538,694 -------------- ------------------------------------------------------ -------------- -------------------------------------------------------- 27,244,867 (181,942,656) 429,987,586 429,987,586 457,232,453 248,044,930 478,469,483 (209,187,523) (6) 269,281,960 (21,237,030) (21,237,030) 457,232,453 248,044,930
	(2,461,306) -------------- ------------------------------------------------------ 27,244,867 429,987,586	117,538,694 -------------- -------------------------------------------------------- (181,942,656 429,987,586
	457,232,453
	478,469,483 (209,187,523) (6) (21,237,030)	269,281,960 (21,237,030
	457,232,453

— 91 —

APPENDIX II

UNAUDITED PRO FORMA FINANCIAL INFORMATION

Notes:

(1) The adjustment reflects the decrease in cash inflow of HK$1,856,215 as a result of the decrease in bank interest income as detailed in note 1(a) to the unaudited pro forma consolidated profit and loss account.
(2) The adjustment reflects the cash outflow of HK$4,000,446 in relation to the bank loan interest as detailed in note 2 to the unaudited pro forma consolidated profit and loss account.
(3) The adjustment reflects the cash outflow of HK$340,686,000 arising from the acquisition of the Asset as detailed in note 1 to the unaudited pro forma consolidated balance sheet.
(4) The adjustment reflects the cash inflow of HK$17,355,138 arising from the dividend received from the Asset as detailed in note 1(b) to the unaudited pro forma consolidated profit and loss account.
(5) The adjustment reflects the cash inflow of HK$120,000,000 arising from the proposed bank loan to be obtained as detailed in note 2 to the unaudited pro forma consolidated balance sheet.
(6) The adjustment reflects the net decrease in cash and cash equivalents at the end of the pro forma period after taking into account the aforementioned pro forma cash flow adjustments.

— 92 —

GENERAL INFORMATION

APPENDIX III

1. RESPONSIBILITY STATEMENT

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

2. SHARE CAPITAL

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

Authorised: 800,000,000 Shares of HK$1.00 each Issued and fully paid: 459,428,656 Shares of HK$1.00 each	HK$ 800,000,000
	HK$ 459,428,656

The Shares in issue are listed on the Stock Exchange. 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 or any other securities of the Company to be listed or dealt in on any other stock exchanges.

3. DISCLOSURE OF INTERESTS

(i) Directors’ interest and short positions in the securities of the Company and its associated corporations

As at the Latest Practicable Date, the interests and short positions of each Director and the chief executive of the Company in the Shares, underlying shares and debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) which (a) were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which they were taken or deemed to have under such provisions of the SFO); or (b) were required, pursuant to Section 352 of the

— 93 —

APPENDIX III

GENERAL INFORMATION

SFO to be entered in the register referred to therein; or (c) were required pursuant to the Model Code for Securities Transactions by Directors of Listed Companies (the “Model Code”), to be notified to the Company and the Stock Exchange, were as follows:

			Approximate
			shareholding
Name of Director	Number	of Shares	percentage
	Long position	Short position
Mr. Ip Kai Ming	666,000	Nil	0.14%

Save as disclosed in this circular, as at the Latest Practicable Date, none of the Directors or the chief executive of the Company were interested, or were deemed to be interested in the long and short positions in the Shares, underlying shares and debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) which (a) were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which they were taken or deemed to have under such provisions of the SFO); or (b) were required, pursuant to section 352 of the SFO, to be entered in the register referred to therein; or (c) were required, pursuant to the Model Code, to be notified to the Company and the Stock Exchange.

(ii) Persons who have interests or short positions which are discloseable under Divisions 2 and 3 of Part XV of the SFO

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

		Approximate
		shareholding
Name	Number of Shares	percentage
Samba Limited	144,885,000	31.54%
Papilio Inc. (Note 1)	169,125,000	36.81%
Vigour Fine Company Limited (Note 1)	192,764,600	41.96%
FITIC (Note 2)	192,764,600	41.96%

Notes:

Papilio Inc. and Vigour Fine Company Limited, which were both substantial shareholders of Samba Limited were deemed to be interested in Samba Limited’s interest of 144,885,000 Shares.

— 94 —

APPENDIX III

GENERAL INFORMATION

FITIC was deemed to be interested in Vigour Fine Company Limited’s interest of 192,764,600 Shares by virtue of its controlling interests in Vigour Fine Company Limited.

Name	Name of subsidiary Nature of interest Percentage of interest in subsidiary Jinan Pacific Real Estate Development Co., Ltd. corporate 49%

Save as disclosed in this circular, as at the Latest Practicable Date, so far is known to any Director or chief executive of the Company, no other person had an interest or short position in the Shares and underlying shares of the Company which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO, or, who was, directly or indirectly, interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any other member of the Group.

(iii) Material interests

None of the Directors or the chief executive of the Company or expert named in paragraph 8 below has any direct or indirect interest in any assets which have been acquired or disposed of by or leased to any member of the Group, or are proposed to be acquired or disposed of by or leased to any member of the Group since 31 December 2003, being the date to which the latest published audited financial statements of the Company were made up.

None of the Directors or the chief executive of the Company or expert named in paragraph 8 below is materially interested in any contract or arrangement entered into by the Company subsisting at the date of this circular which is significant in relation to the business of the Group.

4. COMPETING INTERESTS

As at the Latest Practicable Date, none of the Directors or the chief executive of the Company and their respective associates had any interest in a business which competes or may compete with the business of the Group.

— 95 —

GENERAL INFORMATION

APPENDIX III

5. SERVICE CONTRACT

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

6. MATERIAL CONTRACTS

The following contracts (not being contracts entered into in the ordinary course of business) have been entered into by the members of the Group within two years preceding the date of this circular and which are or may be material. At the time of execution, none of the transactions as contemplated under the following contracts were notifiable transactions under the Listing Rules.

(a) an agreement dated 14 January 2003 entered into between Thousand Limited, a wholly owned subsidiary of the Company, and other parties pursuant to which Thousand Limited acquired 40% interest in Min Faith Investments Limited at a cash consideration of approximately HK$16.33 million;
(b) an agreement dated 15 January 2003 entered into between the Company and other parties pursuant to which the Company subscribed for 25% of the registered capital of Fujian Hua Yuan City Construction Environment Protection Co., Ltd. for RMB10.67 million;
(c) an agreement dated 16 October 2003 entered into between Sharp Star Limited (“Sharp Star”), a wholly owned subsidiary of the Company, and other parties pursuant to which Sharp Star disposed of certain floors of a building in Macau at a cash consideration of HK$28 million;
(d) an agreement dated 30 December 2003 entered into between Min Xin Properties Limited (“MXPL”), a wholly owned subsidiary of the Group, and a third party pursuant to which MXPL transferred its equity and debt interest in Changchun Changxin International Real Estate Development Co., Ltd. at a cash consideration of RMB22.15 million (equivalent to approximately HK$20.9 million); and
(e) an agreement dated 15 April 2004 entered into between Take Chance Company Limited (“Take Chance”), a wholly owned subsidiary of the Company, and a third party pursuant to which Take Chance disposed of its investment properties at a cash consideration of HK$52 million.

7. LITIGATION

So far as the Directors are aware, as at the Latest Practicable Date, neither the Company nor any of its subsidiaries was engaged in any litigation or arbitration of material importance and no litigation or claim of material importance was pending or threatened against the Company or any of its subsidiaries.

— 96 —

GENERAL INFORMATION

APPENDIX III

8. QUALIFICATION

The following are the qualification of the experts who have given opinion or advice contained in this circular:

Name

Qualifications

Goldbond Capital

a licensed corporation under the transitional arrangement within the meaning of the SFO to carry out Types 1 and 6 regulated activities under the SFO

PricewaterhouseCoopers

Certified Public Accountants

As at the Latest Practicable Date, neither Goldbond Capital nor PricewaterhouseCoopers was beneficially interested in the share capital of any member of the Group or had any right, whether legally enforceable or not, to subscribe for or to nominate persons to subscribe for securities in any member of the Group and have any interest, either directly or indirectly, in any assets which have been, since the date to which the latest published audited financial statements of the Company were made up, acquired or disposed of by or leased to or are proposed to be acquired or disposed of by or leased to any member of the Group.

9. CONSENT

Goldbond Capital and PricewaterhouseCoopers have given and have not withdrawn their respective written consents to the issue of this circular with inclusion of their letters, reports and/or summary of their opinions (as the case may be) and references to their names in the form and context in which they respectively appear herein.

10. GENERAL

a) The secretary of the Company is Ms. Connie Yee Moy Chan, who is an associate member of both The Institute of Chartered Secretaries and Administrators and The Hong Kong Institute of Company Secretaries.
b) The qualified accountant of the Company is Mr. Chan Kwong Yu, who is a Fellow of The Association of Chartered Certified Accountants of the United Kingdom and a member of the Hong Kong Society of Accountants.
c) The registered office of the Company is at 17th Floor, Fairmont House, 8 Cotton Tree Drive, Central, Hong Kong.
d) The share registrar of the Company is Standard Registrars Limited at Ground Floor, Bank of East Asia Harbour View Centre, 56 Gloucester Road, Wanchai, Hong Kong.
e) The English text of this circular shall prevail over the Chinese text.

— 97 —

GENERAL INFORMATION

APPENDIX III

11. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents are available for inspection during normal business hours at the registered office of the Company at 17th Floor, Fairmont House, 8 Cotton Tree Drive, Central, Hong Kong from 1 September 2004 to 16 September 2004 (both days inclusive):

(a) the memorandum and articles of association of the Company;
(b) the annual report of the Company for each of the three years ended 31 December 2003;
(c) the Agreement;
(d) the letter from the Independent Board Committee to the Independent Shareholders, the text of which is set out on page 21 of this circular;
(e) the letter of advice from Goldbond Capital to the Independent Board Committee, the text of which is set out on pages 22 to 34 of this circular;
(f) the letter issued by PricewaterhouseCoopers in connection with the unaudited pro forma consolidated balance sheet, unaudited pro forma consolidated profit and loss account and unaudited pro forma consolidated cash flow statement of the Group as set out in Appendix II;
(g) the contracts referred to in the section headed “Material contracts” in paragraph 6 of this appendix; and
(h) the written consents referred to in the section headed “Consent” in paragraph 9 of this appendix.

— 98 —

NOTICE OF EXTRAORDINARY GENERAL MEETING

==> picture [74 x 43] intentionally omitted <==

MIN XIN HOLDINGS LIMITED

(incorporated in Hong Kong with limited liability)

(Stock Code: 222)

NOTICE IS HEREBY GIVEN that an extraordinary general meeting (the “EGM”) of Min Xin Holdings Limited (the “Company”) will be held at Taishan Room, Level 5, Island Shangri-La, Pacific Place, Supreme Court Road, Central, Hong Kong on Friday, 17 September 2004 at 3:00 p.m. for the purpose of considering and, if thought fit, passing the following resolution as an ordinary resolution:

ORDINARY RESOLUTION

“THAT the Agreement (as defined in the circular of the Company dated 1 September 2004 despatched to the shareholders of the Company), a copy of which is tabled at the EGM and marked “A” and initialed by the chairman of the EGM for identification purpose, and the transaction contemplated under or incidental to the Agreement be and is hereby approved and the directors of the Company be and are hereby authorized to take all steps necessary or expedient in their opinion to implement and/or give effect to the terms of the Agreement.”

By Order of the Board Ding Shi Da Chairman

Hong Kong, 1 September 2004

Registered office:

17th Floor, Fairmont House

8 Cotton Tree Drive Central Hong Kong

Notes:

A form of proxy for use at the EGM is enclosed.

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NOTICE OF EXTRAORDINARY GENERAL MEETING

Any member entitled to attend and vote at the EGM shall be entitled to appoint another person as his proxy to attend and vote in his stead. A member who is the holder of two or more shares may appoint one or two proxies to represent him and vote on his behalf at the EGM. A proxy need not be a member of the Company.
The instrument appointing a proxy must be signed by a member or his attorney duly authorised in writing or, in the case of a corporation or institution, either under the common seal or under the hand of an officer or attorney duly authorised in writing.
To be valid, the instrument appointing a proxy and, if such proxy form is signed by a person under a power of attorney or other authority on behalf of the appointer, a notarially certified copy of that power of attorney or other authority, must be deposited at the Company’s registered office, 17th Floor, Fairmont House, 8 Cotton Tree Drive, Central, Hong Kong not less than 48 hours before the time appointed for the holding of the EGM or any adjourned meeting thereof.
The register of members of the Company will be closed from Thursday, 16 September 2004 to Friday, 17 September 2004, both days inclusive, during which period no share transfers will be registered. All transfer documents accompanied by the relevant share certificates must be lodged with the Company’s share registrar, Standard Registrars Limited, at Ground Floor, Bank of East Asia Harbour View Centre, 56 Gloucester Road, Wanchai, Hong Kong not later than 4:00 p.m. on 15 September 2004. Only shareholders whose names appear on the register of members of the Company on 15 September 2004 are entitled to attend and vote at the EGM.
In the case of joint holders, any one of such holders may attend and vote at the EGM either personally or by proxy in respect of the shares as if he was solely entitled thereto, but if more than one of such joint holders be present at the EGM, the holder whose name stands first in the register of members shall alone be entitled to vote in respect thereof. Several executors or administrators of a deceased member in whose name any share stands shall for such purpose be deemed joint holders thereof.
The voting on the resolution will be conducted by way of a poll.
On a poll, every member present in person or by proxy shall have one vote for every share held by him.

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AI assistant

Wanjia Group Holdings Limited — Proxy Solicitation & Information Statement 2004

49194_rns_2004-09-01_d03cea43-4576-45bb-9c02-0ba8e3df78fa.pdf

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

MIN XIN HOLDINGS LIMITED

VERY SUBSTANTIAL ACQUISITION AND CONNECTED TRANSACTION

Goldbond Capital (Asia) Limited

TABLE OF CONTENTS

DEFINITIONS

DEFINITIONS

MIN XIN HOLDINGS LIMITED

Board of Directors

VERY SUBSTANTIAL ACQUISITION AND CONNECTED TRANSACTION

INTRODUCTION

THE AGREEMENT

Date

Parties

Subject matter of the Acquisition

Terms of the Agreement

LETTER FROM THE BOARD

LETTER FROM THE BOARD

Consideration

Acquisition cost of each share in the Asset

LETTER FROM THE BOARD

Conditions precedent

Warranty

INFORMATION ON THE GROUP

LETTER FROM THE BOARD

INFORMATION ON THE VENDOR

INFORMATION ON THE ASSET

INFORMATION ON THE HUANENG GROUP

LETTER FROM THE BOARD

Based on International Financial Reporting Standards:

LETTER FROM THE BOARD

REASONS FOR THE ACQUISITION

LETTER FROM THE BOARD

FINANCIAL EFFECTS OF THE ACQUISITION

RISKS IN RELATION TO THE ASSET

FINANCIAL AND TRADING PROSPECTS OF THE GROUP

MANAGEMENT DISCUSSION AND ANALYSIS

For the year ended 31 December 2003

Results

Business review

Banking business

Insurance business

Toll road investments

Property investments

LETTER FROM THE BOARD

Financial position

Employees and remuneration policy

For the year ended 31 December 2002

Results

Business review

Banking business

Insurance business

Toll road investments

Property investments

Financial position

For the year ended 31 December 2001

Results

Business review

Banking business

Insurance business

Toll road investments

Financial position

LETTER FROM THE BOARD

GENERAL

THE INDEPENDENT BOARD COMMITTEE

THE EGM

LETTER FROM THE BOARD

POLL PROCEDURE

LETTER FROM THE BOARD

RECOMMENDATION

FURTHER INFORMATION

MIN XIN HOLDINGS LIMITED

VERY SUBSTANTIAL ACQUISITION AND CONNECTED TRANSACTION

LETTER FROM GOLDBOND CAPITAL

VERY SUBSTANTIAL ACQUISITION AND CONNECTED TRANSACTION

INTRODUCTION

LETTER FROM GOLDBOND CAPITAL

Wanjia Group Holdings Limited Proxy Solicitation & Information Statement 2004