Weiye Holdings Limited — Proxy Solicitation & Information Statement 2008

Dec 18, 2008

IMPORTANT THIS CIRCULAR REQUIRES YOUR IMMEDIATE ATTENTION

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

If you are in doubt as to any aspect of this circular, you should consult your stockbroker or other registered dealer in securities, bank manager, solicitor, professional accountant or other professional adviser.

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

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UNITED POWER INVESTMENT LIMITED

(Incorporated in Bermuda with limited liability)

(Stock Code: 674)

SUBSCRIPTION OF NEW SHARES IN SUBSIDIARIES DISCLOSEABLE AND CONNECTED TRANSACTION

INDEPENDENT FINANCIAL ADVISER TO THE INDEPENDENT BOARD COMMITTEE AND THE SHAREHOLDERS

AMPLE CAPITAL LIMITED

19th December, 2008

CONTENTS

	Page
Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	ii
Letter from the Board. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Independent Board Committee. . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
Letter from Ample Capital. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8
Appendix — General information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	16

— i —

DEFINITIONS

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

“Ample Capital” Ample Capital Limited, a licensed corporation to carry out type 4 (advising on securities), type 6 (advising on corporate finance) and type 9 (asset management) regulated activities under the SFO, being the independent financial adviser to the Independent Board Committee and the Shareholders in relation to the Tak Full Subscription

“Board”	board of Directors
“Company”	United Power Investment Limited, a company incorporated
	in Bermuda with limited liability and the shares of which are
	listed on the Stock Exchange
“Directors”	directors of the Company
“Group”	the Company and its subsidiaries
“Hong Kong”	the Hong Kong Special Administrative Region of the PRC
“Independent Board	an independent committee of the Board comprising Messrs.
Committee”	Chan Lai Mei, Lee Wai Loun and Lee Yuk Sang, Angus,
	formed for the purpose of advising the Shareholders regarding
	the Tak Full Subscription
“Latest Practicable Date”	16th December, 2008, being the practicable date prior to
	printing of this circular for ascertaining certain information
	for inclusion in this circular
“Listing Rules”	the Rules Governing the Listing of Securities on the Stock
	Exchange
“Madam Ma”	Madam Ma Shuk Kam, the non-executive Chairperson of the
	Company
“Mr. Yeung”	Mr. Yeung Chi Hang, an executive Director and the Chief
	Executive Officer of the Company
“Ms. Yeung”	Ms. Yeung Kit Yu, Kitty

— ii —

DEFINITIONS

“PRC”	People’s Republic of China
“SFO”	Securities and Futures Ordinance (Chapter 571 of the Laws of
	Hong Kong)
“Shareholder(s)”	holder(s) of Share(s)
“Share(s)”	share(s) of HK$0.05 each in the share capital of the Company
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“Tak Full”	Tak Full Group Limited, a company incorporated in Samoa
	with limited liability
“Tak Full Subscription”	the subscription of the TF Well Allied Shares by Tak Full for
	HK$4.6 million in cash
“TF Well Allied Shares”	3.96 shares of US$1 each of Well Allied subscribed by Tak
	Full
“WC Well Allied Shares”	21.873 shares of US$1 each of Well Allied subscribed by Welly
	Champ
“Well Allied”	Well Allied Investments Limited, a company incorporated
	in the British Virgin Islands with limited liability and a non-
	wholly owned subsidiary of the Company
“Welly Champ”	Welly Champ International Limited, a company incorporated
	in the British Virgin Islands with limited liability and a non-
	wholly owned subsidiary of the Company
“Welly Champ Shares”	42.88 shares of US$1 each of Welly Champ subscribed by the
	Company
“World Possession”	World Possession Assets Limited, a company incorporated in
	the British Virgin Islands with limited liability
“HK$” and “cent(s)”	Hong Kong dollar(s) and cent(s) respectively

— iii —

LETTER FROM THE BOARD

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UNITED POWER INVESTMENT LIMITED

(Incorporated in Bermuda with limited liability)

(Stock Code: 674)

Directors: Principal Office: Ma Shuk Kam (Non-executive Chairperson) 2810-11, 28th Floor Yeung Chi Hang (Chief Executive Officer) Shun Tak Centre Liu Yu Mo West Tower Au Edmond Wah 200 Connaught Road Centre Chan Lai Mei Hong Kong Lee Wai Loun Lee Yuk Sang, Angus *

• Independent non-executive Directors

19th December, 2008

To the Shareholders

Dear Sir or Madam,

SUBSCRIPTION OF NEW SHARES IN SUBSIDIARIES DISCLOSEABLE AND CONNECTED TRANSACTION

INTRODUCTION

It was announced on 28th November, 2008 that on 21st November, 2008, (i) the Company subscribed for the Welly Champ Shares at a total cash consideration of HK$25.4 million, which was used by Welly Champ for the subscription of the WC Well Allied Shares at the same amount; and (ii) Tak Full subscribed for the TF Well Allied Shares at a total cash consideration of HK$4.6 million.

Each of the subscription of the Welly Champ Shares by the Company and the subscription of the WC Well Allied Shares by Welly Champ constituted a discloseable transaction of the Company under the Listing Rules. The Tak Full Subscription constituted a connected transaction of the Company under the Listing Rules which requires the approval of the independent shareholders of the Company pursuant to Rule 14A.48 of the Listing Rules. The Stock Exchange has granted a waiver of the requirement of holding a general meeting and accepted the written independent shareholders’ approval of World Possession and Mr. Yeung pursuant to Rule 14A.43 of the Listing Rules.

— 1 —

LETTER FROM THE BOARD

An independent board committee comprising Messrs. Chan Lai Mei, Lee Wai Loun and Lee Yuk Sang, Angus (all being independent non-executive Directors) has been formed to advise the Shareholders in respect of the Tak Full Subscription. The Company has appointed Ample Capital as the independent financial adviser to advise the Independent Board Committee and the Shareholders in this respect.

The purpose of this circular is to give you further details of the subscriptions and set out the recommendation of the Independent Board Committee and the advice of Ample Capital in respect of the Tak Full Subscription.

SUBSCRIPTION FOR SHARES OF WELLY CHAMP ON 21ST NOVEMBER, 2008

Parties:

Subscriber: the Company

Issuer: Welly Champ, a subsidiary of the Company

Assets acquired:

42.88 shares of US$1 each of Welly Champ.

Before the subscription, the Company held 126.12 shares of US$1 each of Welly Champ, representing about 75.92% of its issued share capital. After the subscription, the Company holds a total of 169 shares of US$1 each of Welly Champ, representing about 80.86% of its enlarged issued share capital. The other shareholders of Welly Champ are Long Sincere International Limited and Rise Jumbo Limited (who are owned by Wong Wei and Li Bin, directors of Welly Champ respectively), each holding 12.04% of the issued share capital of Welly Champ before the Subscription. Since they have decided not to subscribe for any of the Welly Champ Shares, their shareholdings in Welly Champ have been diluted to 9.57% each.

The net asset value of Welly Champ was HK$39,182,134 as at 31st March, 2008.

Consideration:

HK$25.4 million in cash

Ranking of the Welly Champ Shares:

The Welly Champ Shares rank pari passu with the existing issued shares of Welly Champ.

— 2 —

LETTER FROM THE BOARD

Payment terms:

The subscription price was paid on 21st November, 2008.

Funding:

The subscription price was funded from internal resources of the Company.

SUBSCRIPTION FOR SHARES OF WELL ALLIED ON 21ST NOVEMBER, 2008

Parties:

Subscribers: Welly Champ and Tak Full

Issuer: Well Allied, a subsidiary of the Company

Assets acquired:

Welly Champ subscribed for 21.873 shares of US$1 each of Well Allied for HK$25.4 million in cash.

Tak Full subscribed for 3.96 shares of US$1 each of Well Allied for HK$4.6 million in cash.

Welly Champ and Tak Full are shareholders of Well Allied holding 63.36% and 36.64% of the issued share capital of Well Allied respectively before the subscription. After the subscription, Welly Champ and Tak Full hold 66.81% and 33.19% of the enlarged issued share capital of Well Allied respectively.

Tak Full is owned as to 38.89%, 18.4%, 18.3%, 18.3%, 4.44% and 1.67% by Fashion Investments Limited (who is not owned by a connected person of the Company within the meaning of the Listing Rules), Messrs. Lee Tien-Yung, Li Deh-Sheng, Philip Lu Yueh-Wei, Hao Hsin-Ming and Cheung Kwok Chung respectively. Messrs. Lee Tien-Yung and Philip Lu Yueh-Wei are directors of Well Allied.

Well Allied had a negative net asset value of HK$9,477,501 as at 31st March, 2008.

Ranking of the WC Well Allied Shares and the TF Well Allied Shares:

The WC Well Allied Shares and the TF Well Allied Shares rank pari passu with the existing issued shares of Well Allied.

— 3 —

LETTER FROM THE BOARD

Payment terms:

The subscription prices of the WC Well Allied Shares and the TF Well Allied Shares were paid on 21st November, 2008.

Funding:

The subscription price of the WC Well Allied Shares was funded from the subscription of the Welly Champ Shares paid by the Company.

INFORMATION ON WELLY CHAMP AND WELL ALLIED

Welly Champ is a company incorporated in the British Virgin Islands on 9th January, 2006. It is principally engaged in investment holding and is the holding company of Well Allied. According to the unaudited management accounts of Welly Champ for the period from the date of incorporation to 31st March, 2007 and the year ended 31st March, 2008, its losses both before and after taxation were HK$7,437 and HK$11,209 respectively. There was no extraordinary item during these periods.

Well Allied is a company incorporated in the British Virgin Islands on 2nd February, 2006. It is principally engaged in collection of fees for licensing of karaoke music products in the PRC. According to the unaudited management accounts of Well Allied for the period from the date of incorporation to 31st March, 2007 and the year ended 31st March, 2008, its losses both before and after taxation were HK$2,108,082 and HK$46,570,198 respectively. There was no extraordinary item during these periods.

REASONS FOR THE TRANSACTION

The subscription was effected to enable Well Allied to raise additional working capital to acquire rights to license copyrights to karaoke music products to karaoke operators in the PRC.

The subscription prices were arrived at after arm’s length negotiations and with reference to the total shareholders’ funds contributed to Welly Champ and Well Allied respectively.

The directors of the Company consider that the terms of the subscription are fair and reasonable and in the interests of the shareholders as a whole.

— 4 —

LETTER FROM THE BOARD

CONNECTION BETWEEN THE PARTIES

Welly Champ and Well Allied are subsidiaries of the Company who are not connected persons pursuant to Note 1 to Rule 14A.11(5) of the Listing Rules. Tak Full is a substantial shareholder of Well Allied. Save as disclosed above, the minority shareholders of Welly Champ and Well Allied and their respective ultimate beneficial owners are third parties independent of the Company and connected persons of the Company.

INFORMATION FOR SHAREHOLDERS

The Group is principally engaged in hotel and restaurant operations, property investment, provision of wedding services, entertainment business and collection of fees for licensing of karaoke music products in the PRC.

Tak Full is principally engaged in investment holding.

For the Company, each of the subscription of the Welly Champ Shares by the Company and the subscription of the WC Well Allied Shares by Welly Champ constituted a discloseable transaction of the Company under the Listing Rules. The Tak Full Subscription constituted a connected transaction under the Listing Rules which requires the approval of the independent shareholders of the Company. The Group does not have any transaction with Welly Champ, Well Allied or Tak Full which is required to be aggregated with the subscription under Rules 14.22 or 14A.25 of the Listing Rules. The Stock Exchange has granted a waiver of the requirement of the independent shareholders’ approval to the Tak Full Subscription be given by a majority vote at a general meeting of the shareholders of the Company and accepted a written independent shareholders’ approval pursuant to Rule 14A.43 of the Listing Rules as (i) no shareholder of the Company has a material interest in the Tak Full Subscription and is required to abstain from voting if the Company were to convene a general meeting for the approval thereof; and (ii) the Company has obtained a written independent shareholders’ approval dated 24th November, 2008 of World Possession and Mr. Yeung (who are closely allied shareholders and together hold 2,144,660,478 Shares, representing about 63.11% of the issued share capital of the Company giving the right to attend and vote at the general meeting of the Company to approve the Tak Full Subscription). World Possession, which holds 1,423,550,686 Shares (representing about 41.89% of the issued share capital of the Company), is owned by Madam Ma (the mother of Mr. Yeung), Ms. Yeung (the sister of Mr. Yeung) and Mr. Yeung in equal shares. Mr. Yeung also personally holds 721,109,792 Shares (representing about 21.22% of the issued share capital of the Company).

FINANCIAL EFFECT ON THE GROUP

Save that the current assets of the Group have been increased by HK$4.6 million, the subscription does not have any material impact on the earning, assets or liabilities of the Group.

— 5 —

LETTER FROM THE BOARD

MATERIAL CHANGE

The business of the Group has been adversely affected by the current global financial crisis as the economic environments in Hong Kong and the PRC worsen. The hotel operations, provision of wedding services, property investment and restaurant operations of the Group have slowed down as a result of growing pessimism in consumer sentiment. However, the impact on the Group’s financial and trading positions is not expected to be significant for the remaining term of the current financial year. Save as aforesaid and as disclosed in the interim report of the Company for the six months ended 30th September, 2008, the Directors are not aware of any material adverse change in the financial or trading position of the Group since 31st March, 2008, being the date to which its latest published audited financial statements were made up.

GENERAL INFORMATION

Your attention is drawn to letters from the Independent Board Committee and Ample Capital respectively as contained in this circular and the additional information set out in the appendix to this circular.

Yours faithfully, Liu Yu Mo Executive Director

— 6 —

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

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UNITED POWER INVESTMENT LIMITED

(Incorporated in Bermuda with limited liability)

(Stock Code: 674)

19th December, 2008

To the Shareholders

Dear Sir or Madam,

SUBSCRIPTION OF NEW SHARES IN WELL ALLIED INVESTMENTS LIMITED BY TAK FULL GROUP LIMITED CONNECTED TRANSACTION

We refer to the documents dated 19th December, 2008 issued by the Company (the “Circular”), of which this letter forms part. Terms defined in the Circular shall bear the same meanings when used herein unless the context requires otherwise.

We have been appointed to constitute the Independent Board Committee to consider the Tak Full Subscription and Ample Capital has been appointed as the financial adviser to advise us in this respect.

Your attention is drawn to the letter from the Board and the letter from Ample Capital containing its advice to us as set out in the Circular respectively.

Taking into account the advice from Ample Capital, we consider that the terms of the Tak Full Subscription are fair and reasonable so far as the Shareholders are concerned and the Tak Full Subscription is in the interests of the Company and the Shareholders as a whole.

Yours faithfully,

Chan Lai Mei Lee Wai Loun Lee Yuk Sang, Angus

Independent Board Committee

— 7 —

LETTER FROM AMPLE CAPITAL

The following is the text of the letter of advice from Ample Capital to the Independent Board Committee and the Shareholders for inclusion in this circular.

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19th December, 2008

To the Independent Board Committee and the Shareholders of United Power Investment Limited

Dear Sirs and Madams,

SUBSCRIPTION OF NEW SHARES IN WELL ALLIED INVESTMENTS LIMITED BY TAK FULL GROUP LIMITED CONNECTED TRANSACTION

INTRODUCTION

Ample Capital Limited has been appointed by the Company to act as the independent financial adviser to advise the Independent Board Committee and the Shareholders, pursuant to the requirements of the Listing Rules, in relation to the Tak Full Subscription, details of which are set out in the circular issued by the Company (the “Circular”) to the Shareholders dated 19th December, 2008.

This letter sets out our advice in respect of the Tak Full Subscription for inclusion in the Circular. Unless otherwise defined or the context otherwise requires, all terms defined in the Circular shall have the same meaning when used in this letter.

On 21st November, 2008, (i) the Company subscribed for the Welly Champ Shares at a total cash consideration of HK$25.4 million, which was used by Welly Champ for the subscription of the WC Well Allied Shares at the same amount; and (ii) Tak Full subscribed for the TF Well Allied Shares at a total cash consideration of HK$4.6 million.

Each of the subscription of the Welly Champ Shares by the Company and the subscription of the WC Well Allied Shares by Welly Champ constituted a discloseable transaction of the Company under the Listing Rules. The Tak Full Subscription constituted a connected transaction of the Company under the Listing Rules which requires the approval of the independent shareholders of the Company pursuant to Rule 14A.48 of the Listing Rules. The Group does not have any transaction with Welly Champ, Well Allied or Tak Full which is required to be aggregated with the subscription under Rules 14.22 or 14A.25 of the Listing Rules.

— 8 —

LETTER FROM AMPLE CAPITAL

The Company has applied for and the Stock Exchange has granted a waiver of the requirement of holding a general meeting to approve the Tak Full Subscription and accepted the written independent shareholders’ approval of World Possession and Mr. Yeung pursuant to Rule 14A.43 of the Listing Rules as (i) no Shareholder has a material interest in the Tak Full Subscription and is required to abstain from voting if the Company were to convene a general meeting for the approval thereof; and (ii) the Company has obtained a written independent Shareholders’ approval dated 24th November, 2008 of World Possession and Mr. Yeung (who are closely allied Shareholders and together hold 2,144,660,478 Shares, representing about 63.11% of the issued share capital of the Company giving the right to attend and vote at the general meeting of the Company to approve the Tak Full Subscription).

The Independent Board Committee comprising three independent non-executive Directors, namely Madam Chan Lai Mei, Messrs. Lee Wai Loun and Lee Yuk Sang, Angus has been established to advise the Shareholders in respect of the Tak Full Subscription.

BASIS OF ADVICE

In formulating our opinions and recommendations, we have relied on the information supplied to us by the Company and the opinions expressed by, and the representations of, the Directors and the management of the Company, including those set out in the Circular. We have assumed that all the information and representations so supplied by the Directors and/or the management of the Company and all information, opinions and representations referred to or contained in the Circular, for which the Directors and the Company are solely and wholly responsible, were true, accurate, complete and not misleading at the time they were supplied, expressed or made, and remained so up to the date of the Circular. No representation or warranty, expressed or implied, is made by us on the accuracy, truth or completeness of such information, opinions and/or representations. We have no reason to doubt the truth, accuracy and completeness of the information and presentation provided to us by the Directors.

We consider that we have been provided with sufficient information on which to form a reasonable basis for our opinion. We have no reason to suspect that any relevant information has been withheld, nor are we aware of any fact or circumstance which would render the information provided and representations made to us untrue, inaccurate or misleading. We consider that we have performed all the necessary steps to enable us to reach an informed view and to justify our reliance on the information provided so as to provide a reasonable basis for our opinion. The Directors have confirmed that, to the best of their knowledge and belief, there are no other facts the omission of which would make any statement in the Circular misleading.

— 9 —

LETTER FROM AMPLE CAPITAL

While we have taken reasonable steps to satisfy the requirements under the Listing Rules, we have not carried out any independent verification of the information, opinions or representations given or made by or on behalf of the Company, nor have we conducted an independent investigation into the business affairs or assets and liabilities of the Group or any of the other parties involved in the Tak Full Subscription.

In the event of inconsistency, the English text of this letter shall prevail over the Chinese translation of this letter.

PRINCIPAL FACTORS AND REASONS CONSIDERED

In arriving at our opinion regarding the Tak Full Subscription, we have taken into consideration the following principal factors and reasons:

A. Background Information

1. General Information

Prior to the subscription by Welly Champ and the Tak Full Susbcription on 21st November, 2008 (together the “Subscription”), Well Allied was owned as to 63.36% and 36.64% by Welly Champ (which is a non-wholly owned subsidiary of the Company) and Tak Full respectively. After the Subscription, Welly Champ and Tak Full hold 66.81% and 33.19% respectively of the enlarged issued share capital of Well Allied as the new shares were not subscribed on a pro rata basis according to each of Welly Champ and Tak Full’s shareholding in Well Allied before the Subscription.

Tak Full is a substantial shareholder of a subsidiary of the Company and hence, a connected person within the meaning of the Listing Rules. The issue of new shares by Well Allied which is a subsidiary of the Company to a connected person on a non pro rata basis is a connected transaction not falling within the exemption under Rule 14A.31(3) of the Listing Rules and requires the approval of the independent Shareholders.

2. Business Information

The Group is principally engaged in hotel and restaurant operations, property investment, provision of wedding services, entertainment business and collection of fees for licensing of karaoke music products in the PRC (the “Licence Fee Collection Business”).

— 10 —

LETTER FROM AMPLE CAPITAL

We notice that the Group commenced its Licence Fee Collection Business in mid 2006 when 中音傳播（深圳）有限公司 (China Music Video Broadcast (Shenzhen) Company Limited) (“China Music”), a wholly owned subsidiary of Well Allied, entered into three co-operation agreements (the “Co-operation Agreements”) with 中國音像集體管理協會 (China Music Video Collective Management Association) and/or 北京天語同聲信息技術有限公司 (Song Labs Co., Ltd.) relating to the business of licensing of copyright to karaoke music products to karaoke operators in the PRC. Since then, the Group has entered into a number of agreements and supplemental agreements with various parties to realise the benefits of the Co-operation Agreements.

Amongst such agreements, it is noted that on 14th July, 2006, Well Allied and PLD International Co., Ltd. (“PLD”) entered into a co-operation agreement (the “PLD Agreement”). Pursuant to the PLD Agreement, Well Allied and PLD agreed to a series of arrangements, including the appointment of China Music as PLD’s exclusive agent in the PRC under various contracts entered into between PLD and various owners of copyrights to audio-visual works for vocal accompaniment (the “Licensors”) responsible for sourcing licensees and collection of fees. Under the contracts with the Licensors, PLD acquired the exclusive rights to, inter alia, grant licence to karaoke operators the right to replicate and play such audio-visual works for providing vocal accompaniment to customers (the “Licence Rights”). The PLD Agreement would expire on 30th April, 2009. Further details of the PLD Agreement were set out in the announcement of the Company dated 20th July, 2006.

Tak Full is principally engaged in investment holding.

3. Financial Information

Based on information provided by the Company, we have summarised below for ease of reference information on (i) the financial results of the Licence Fee Collection Business for the two years ended 31st March, 2008, six months ended 30th September 2007 and six months ended 30th September, 2008; and (ii) the structure of shareholders’ fund of Well Allied:

(i) Financial Information of Licence Fee Collection Business

	Year	Ended	Six Months	Ended
	31.03.07	31.03.08	30.09.2007	30.09.2008
	HK$	HK$	HK$	HK$
Turnover	65,966	3,948,346	1,068,143	1,127,244
Segment Results (Loss)	(6,151,895)	(55,982,898)*	(29,127,096)**	(26,259,337)***

Source: Annual Report 2008 and interim results announcement of 8th December, 2008 of the Company

* Amortisation of deferred expenditure of HK$45.27 million had been included. ** Amortisation of deferred expenditure of HK$22.57 million had been included. *** Amortisation of deferred expenditure of HK$22.63 million had been included.

— 11 —

LETTER FROM AMPLE CAPITAL

From the above table, it could be seen that the turnover of the Licence Fee Collection Business for the year ended 31st March, 2008 was approximately HK$3.95 million, representing approximately 59.8 times that for the turnover for 2007. We understand that the Group only commenced such business in 2006 and the turnover of approximately HK$0.066 million for the year ended 31st March, 2007 did not reflect a full year’s operation. Turning to the interim results, we notice that the turnover of approximately HK$1.13 million for the six months ended 30th September, 2008 was only slightly more than the turnover of approximately HK$1.07 million for the same period in 2007. Nevertheless, we could still see a growing trend though improving gradually.

The Licence Fee Collection Business has not been profitable since commencement of operation and the losses were mainly due to the amortisation of deferred expenditure. With the implementation of the Group’s plan to deal with the Licensors directly upon the expiry of the PLD Agreement and the tightened protection of intellectual property ownership in the PRC as discussed in section B under the heading “Reasons For The Subscription” of this letter, we expect this would have a positive impact on the Licence Fee Collection Business and eventually improving the contribution to the Group from such business.

(ii) Structure of Shareholders’ Fund of Well Allied

Contributed By: Welly Champ Tak Full Total	As at 31.03.08 HK$’000 % 98,462 63.36 56,938 36.64 155,400 100	Under the Subscription HK$’000 % 25,400 84.67 4,600 15.33 30,000 100	After the Subscription HK$’000 % 123,862 66.81 61,538 33.19 185,400 100	After the Subscription HK$’000 % 123,862 66.81 61,538 33.19 185,400 100
				100

For illustrative purpose, Tak Full would have to contribute an additional amount of HK$6.392 million to make up to HK$10.992 million should Tak Full be subscribing for new shares in Well Allied on a pro rata basis in maintaining its shareholding of 36.64% after the Tak Full Subscription.

— 12 —

LETTER FROM AMPLE CAPITAL

B. Reasons For The Subscription

It is stated in the letter from the Board contained in the Circular that the Subscription was effected to enable Well Allied to raise additional working capital to acquire rights to license copyrights to karaoke music products to karaoke operators in the PRC.

Based on discussions with management of the Company, we are given to understand that upon expiry of the PLD Agreement in April 2009, the Group intends to acquire the exclusive Licence Rights directly from the Licensors to enable China Music to continue to fulfill its obligations under the Co-operation Agreements and to receive its share of the licence fee. As an industrial practice, the Group has to commence negotiations with the Licensors a couple of months prior to the expiry in April 2009 and make advance payment of a portion of the licence fees to the Licensors upon execution of the contracts to acquire the Licence Rights by the Group. In order to have sufficient funding for such acquisitions, Well Allied has to raise additional capital now.

According to preliminary estimation by the management of the Company, it is believed that a sum of approximately HK$30 million would be required by Well Allied for the abovementioned acquisition of Licence Rights and working capital purpose. During the negotiations with Tak Full on the terms of the Subscription, Tak Full expressed its intention to contribute a sum of HK$4.6 million only. After taking into consideration of the progressively improving turnover of the Licence Fee Collection Business and the funding requirement of Well Allied, the Directors believed that the additional contribution of HK$6.392 million by the Group in excess of that required to maintain its shareholding of 63.36% prior to the Subscription is in the interests of the Company and the Shareholders as a whole.

We note that in recent years, apart from the promulgation of 中華人民共和國著作權 法 (the Copyright Law of the PRC), the PRC Government has tightened the protection of intellectual property ownership in the karaoke industry with the establishment of a series of framework of regulations and laws to regulate the collective management of copyrights, the administration of entertainment venues and the producing specifications of karaoke programmes. Ever since the release of 國家版權局2006年1號公告 (National Copyright Administration of the PRC Notice No. (1) of 2006) by 國家版權局(National Copyright Administration of the PRC) announcing the commencement of collection of karaoke copyright fees from 1st January, 2007, 中國音像著作權集體管理協會 (China Audio-Video Copyright Association) has announced the standard tariffs 2008 for copyright fees payable by karaoke operators. In light of such developments by relevant regulatory bodies in the PRC, we believe that the Licence Fee Collection Business would make promising progress in its contribution to the Group’s revenue in the coming future. Hence, even Tak Full made capital contribution to Well Allied less than that required to maintain its shareholding of 36.64% prior to the Subscription, resulting in the Group contributing an additional amount of HK$6.392 million, we concur with the Directors that it is in the interests of the Company and the Shareholders as a whole.

— 13 —

LETTER FROM AMPLE CAPITAL

C. Subscription Price and Payment Term

It is stated in the letter from the Board contained in the Circular that the subscription price was arrived at after arm’s length negotiations and with reference to the total shareholders’ funds contributed to Well Allied.

Details of the changes in the shareholders’ fund structure of Well Allied were set out in subsection A3 under the heading “Financial Information” of this letter.

The contribution by Welly Champ and Tak Full of HK$25.4 million and HK$4.6 million respectively resulted in the issue of 21.873 shares and 3.96 shares to Welly champ and Tak Full respectively. For illustrative purpose, the subscription price per share for the WC Well Allied Shares and TF Well Allied Shares was approximately HK$1.1613 million and HK$1.1616 million respectively. The small difference was due to the series of rounding exercise in computing the number of new shares to be issued given an additional contribution of HK$30 million. If ignoring such computational difference, we consider that the WC Well Allied Shares and TF Well Allied Shares were subscribed on more or less the same unit price.

In addition, we notice that both Welly Champ and Tak Full have to pay the subscription monies in cash on 21st November, 2008.

In view of the above, we conclude that Tak Full was on no more favourable terms than the Group under the Subscription. The Tak Full Subscription is on normal commercial terms and is fair and reasonable.

D. Financial Effects

It is stated in the letter from the Board contained in the circular that save that the current assets of the Group have been increased by the HK$4.6 million, the subscription does not have any material impact on the earnings, assets or liabilities of the Group.

While we concur with the Directors that the Tak Full Subscription has increased the current assets of the Group by HK$4.6 million, it should be noted that the increase in shareholders’ fund in Well Allied contributed by Tak Full would also be reflected by a corresponding increase in the minority interests in the consolidated balance sheet of the Group.

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LETTER FROM AMPLE CAPITAL

ADVICE

To summarise, in arriving at our advice, we have taken into consideration all the reasons and factors discussed above, in particular the following:

• The funding requirement of Well Allied of approximately HK$30 million to renew the Licence Rights with the Licensors.

• Tak Full would only contribute HK$4.6 million.

• The positive impact of the recent development of intellectual property protection regulations in the PRC on the Licence Fee Collection Business of the Group.

• Tak Full is on no more favourable terms than the Group under the Subscription.

Given the subscription for new shares in a subsidiary to raise additional working capital is an activity wholly necessary for the License Fee Collection Business of the Group, we are of the opinion that the Tak Full Subscription is in the ordinary and usual course of business of the Company.

Having considered the above principal factors and reasons, we are of the opinion that the terms of the Tak Full Subscription are on normal commercial terms, fair and reasonable so far as the Shareholders are concerned and in the interests of the Company and its Shareholders as a whole. Accordingly, should a general meeting of the Shareholders be held for the purpose of considering and, if thought fit, approving the Tak Full Subscription, we would advise the Shareholders, and also the Independent Board Committee to recommend to the Shareholders, to vote in favour of the ordinary resolution to approve the Tak Full Subscription.

Yours faithfully, For and on behalf of

Ample Capital Limited Fiona M.Y. Lau

Senior Vice President

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GENERAL INFORMATION

APPENDIX

RESPONSIBILITY STATEMENT

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

DISCLOSURE OF INTERESTS

Interests of Directors

As at the Latest Practicable Date, the interests of the Directors in the share capital of the Company which were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests which they were taken or deemed to have under such provisions of the SFO), or were required, pursuant to section 352 of the SFO, to be entered in the register referred to therein, or were required, pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers in the Listing Rules, to be notified to the Company and the Stock Exchange were as follows:

			Percentage of
	Number of		shareholding
Name	Shares	Nature of interest
Ma Shuk Kam	1,445,550,686	(Note 1)	42.54
Yeung Chi Hang	2,144,660,478	(Note 2)	63.11
Liu Yu Mo	1,048,000	Personal	0.03
Au Edmond Wah	1,000,000	Personal_(Note 3)_	0.03

Notes:

1. 1,423,550,686 Shares are owned by World Possession, which is beneficially owned by Madam Ma, Mr. Yeung and Ms. Yeung in equal shares, and 22,000,000 Shares are owned by Madam Ma personally.

2. 1,423,550,686 Shares are owned by World Possession, which is beneficially owned by Madam Ma, Mr. Yeung and Ms. Yeung in equal shares, and 721,109,792 Shares are owned by Mr. Yeung personally.

3. This relates to the options granted to Mr. Au Edmond Wah to subscribe for 1,000,000 Shares at the exercise price of HK$0.2254 per Share from 13th December 2005 to 30th August 2012.

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GENERAL INFORMATION

APPENDIX

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

Interests of other persons in the share capital of the Company

As at the Latest Practicable Date, so far as is known to the Directors, the following persons (other than a Director or chief executive of the Company) had an interest 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:

	Number of		Percentage of
Name	shares	Nature of interest	Shareholding
World Possession	1,423,550,686	Beneficial owner	41.89

Save as disclosed above, as at the Latest Practicable Date, according to the register of interests required to be kept by the Company under section 336 of the SFO, there was no person who had any interest or short position in the shares or underlying shares of the Company which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO.

Madam Ma and Mr. Yeung are directors of World Possession.

Interests in other members of the Group

As at the Latest Practicable Date, so far as is known to the Directors, the following persons (other than a Director or chief executive of the Company) were, directly or indirectly, interested in 10% or more of the nominal value of the share capital carrying rights to vote in all circumstances at general meetings of the following subsidiaries of the Company:

• (a) Mr. Poon Tak Yip was interested in (i) 25% of the issued share capital of Reli-a-bo Entertainment Limited (“Reli-a-bo”) and (ii) 20% of the issued share capital of Wellprecise Limited through Nation Group Limited;

• (b) Mr. Wong Chor Ming was interested in 10% of the issued share capital of Reli-a-bo;

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GENERAL INFORMATION

APPENDIX

• (c) each of Long Sincere International Limited and Rise Jumbo Limited was interested in 9.57% of the issued share capital of Welly Champ;

• (d) Tak Full was interested in 33.19% of the issued share capital of Well Allied;

• (e) Impeccable Group Limited was interested in 49% of the issued share capital of Le Caveau Limited;

• (f) Smooth Luck Investments Limited was interested in 40% of the issued share capital of Genius Star International Limited;

• (g) Mr. Ng Lok Shing Ronald was interested in 49% of the issued share capital of Baron Productions and Artiste Management Company Limited and Solid Sound Productions Limited;

• (h) Media Business Services Limited was interested in 49% of the issued share capital of Wise Reach Investments Limited;

• (i) Mr. Chan Siu Kei and Ms. Wong Oi Kwan Jenny Natalie were interested in 30% and 10% of the issued share capital of Chance Music Limited respectively; and

• (j) 北京金英馬影視文化有限責任公司 (English transliteration: Beijing Jiangyingma Movie and Television Culture Company Limited) was interested in 40% of the issued share capital of 北京金英馬國際文化交流有限公司 (English transliteration: Beijing Jiangyingma International Culture Exchange Company Limited).

Interests of expert in the Group

Ample Capital does not have any shareholding in any company in the Group or the right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any company in the Group.

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GENERAL INFORMATION

APPENDIX

Interests in assets, contracts or arrangements

Since 31st March, 2008, the date of the latest published audited financial statements of the Group, none of the Directors or Ample Capital has any direct or indirect interest in any assets acquired or disposed of by or leased to or proposed to be acquired or disposed of by or leased to any member of the Group except the following tenancy agreements entered into between associates of Madam Ma and/or Mr. Yeung as landlords and Golden Island Catering Group Company Limited (a wholly owned subsidiary of the Company) as tenant:

(a) Tenancy agreement dated 30th November, 2006 relating to No. 135, Waterloo Road, Kowloon, Hong Kong

Landlord	Term	Monthly rent
West Global Investments	1st December, 2008 to 30th	HK$180,000 (exclusive of
Limited (an associate	November, 2010 (with	rates, management fees
of Madam Ma and Mr.	an option to renew for a	and government rent
Yeung)	further term of 1 year at	which are payable to
	the then prevailing market	independent third parties)
	rent)

• (b) Tenancy agreement dated 1st January, 2008 relating to Workshop Space B on the 2nd Floor, Fung Wah Factorial Building, Nos. 646, 648 and 648A Castle Peak Road, Kowloon, Hong Kong

Landlord	Term	Monthly rent
Source Expand	1st January, 2008 to 31st	HK$19,000 (exclusive of
Development Limited (an	December, 2009	rates, management fees
associate of Madam Ma		and government rent
and Mr. Yeung)		which are payable to
		independent third parties)

• (c) Tenancy agreement dated 26th June, 2008 relating to Unit 2811 on the 28th Floor of West Tower, Shun Tak Centre, Nos. 168-200 Connaught Road Central, Hong Kong

Landlord	Term	Monthly rent
High Brand Limited (an	1st July, 2008 to 30th June,	HK$114,975 (exclusive of
associate of Madam Ma)	2010	rates, management fees
		and government rent
		which are payable to
		independent third parties)

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GENERAL INFORMATION

APPENDIX

Save as disclosed above, none of the Directors is materially interested in any contract or arrangement subsisting at the date of this circular which is significant in relation to the business of the Group taken as a whole.

Service contracts

There is no existing or proposed service contract between any member of the Group and any Director or proposed Director (excluding contracts expiring or determinable by the Group within one year without payment of compensation (other than statutory compensations)).

Competing business

None of the Directors has any interest in any business which competes or is likely to complete, either directly or indirectly, with the Group’s business.

LITIGATION

Neither the Company nor any of its subsidiaries is engaged in any litigation or arbitration of material importance and no litigation or claim of material importance is known to the Directors to be pending or threatened against the Company or any of its subsidiaries.

CONSENT

Ample Capital has given and has not withdrawn its written consent to the issue of this circular with copy of its letter and the references to its name included herein in the form and context in which they are respectively included.

QUALIFICATION OF EXPERT

The qualifications of the expert who has given opinions in this circular are as follows:

Name Qualification

Ample Capital a licensed corporation to carry out type 4 (advising on securities), type 6 (advising on corporate finance) and type 9 (asset management) regulated activities under the SFO

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GENERAL INFORMATION

APPENDIX

GENERAL

• (a) The secretary of the Company is Ms. Cheung Mei Ha, Jennifer. She is a solicitor practising in Hong Kong.

• (b) The qualified accountant of the Company is Mr. Liu Yu Mo. He is a certified practising accountant (Aust.) and a fellow member of the Hong Kong Institute of Certified Public Accountants.

• (c) The registered office of the Company is at Clarendon House, Church Street, Hamilton HM11, Bermuda. The Hong Kong share registrar of the Company is Tricor Secretaries Limited at 26th Floor, Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong

DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be available for inspection at the offices of Jennifer Cheung & Co. at Unit A, 19th Floor, Two Chinachem Plaza, 68 Connaught Road Central, Hong Kong during normal business hours up to and including 2nd January, 2009:

• (a) the applications for the Welly Champ Shares, the WC Well Allied Shares and the TF Well Allied Shares respectively; and

• (b) the written consent referred to in the paragraph headed “Consent” in this appendix.

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