WH Group Limited - Capital/Financing Update 2002

IMPORTANT

If you are in any doubt about this document, you should consult your stockbroker, bank manager, solicitor, professional accountant or other professional adviser.

A copy of this document, together with the related application form, has been registered by the Registrar of Companies in Hong Kong as required by Section 342C of the Companies Ordinance of Hong Kong. A copy of this document has also been filed with the Registrar of Companies in Bermuda as required by the Companies Act 1981 of Bermuda. The Registrar of Companies in Hong Kong, the Securities and Futures Commission in Hong Kong and the Registrar of Companies in Bermuda take no responsibility as to the contents of any of these documents.

The Stock Exchange of Hong Kong Limited and Hong Kong Securities Clearing Company Limited take no responsibility for the contents of this document, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this document.

This document is for information only and does not constitute an invitation or offer to acquire, purchase or subscribe for any securities of the Company.

Private Placing of up to HK$118,764,800 Warrants to subscribe for new shares of HK$0.01 each of Premium Land Limited, at an issue price of HK$0.05 per Warrant issued by

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PREMIUM LAND LIMITED （上海策略置地有限公司）[*]

(Incorporated in Bermuda with limited liability)

Placing Manager

KINGSTON SECURITIES LIMITED

This document is published for the purpose of obtaining the listing on the Stock Exchange of all the Warrants to be issued by Premium Land Limited and contains particulars given in compliance with the Listing Rules on The Stock Exchange of Hong Kong Limited for the purpose of giving information with regard to the Group and the Warrants.

Application has been made to The Stock Exchange of Hong Kong Limited for the listing of, and permission to deal in, the Warrants and the Shares falling to be issued upon the exercise of the Subscription Rights. Commencement of the listing of the Warrants and the dealings in the Warrants on The Stock Exchange of Hong Kong Limited are expected to be on 9 July 2002.

It should be noted that the Warrant Placing Agreement contains certain provisions under which the Placing Manager has the right to terminate its obligations under the Warrant Placing Agreement on the occurrence of certain events, including, inter alia: (a) any material breach of any of the representations, warranties and undertakings set out in Clause 7.01 of the Warrant Placing Agreement comes to the knowledge of the Placing Manager; or (b) there is any material and adverse change in the business or in the financial or trading position of the Group taken as a whole; or (c) there develops, occurs or comes into force any new law or regulation or any change in existing laws or regulations or the interpretation thereof or any local, regional, national or international event or change of a political, military, economic or other nature which, in each case, in the reasonable opinion of the Placing Manager, shall result in a material adverse change in political, economic or stock market conditions and otherwise materially and adversely affect the business or financial condition or prospects of the Group taken as a whole; or (d) the imposition of any moratorium on trading in securities generally on the Stock Exchange or the suspension of trading of the Shares on the Stock Exchange for more than ten consecutive trading days on the Stock Exchange, and which in each such case would reasonably be expected to have a material and adverse effect on the success of the issue of the Warrants. If the Placing Manager exercises such right, the Warrant Placing will not proceed.

Subject to the granting of listing of, and permission to deal in, the Warrants and the Shares falling to be issued upon exercise of the subscription rights attached to the Warrants on The Stock Exchange of Hong Kong Limited (the “Stock Exchange”) as well as compliance with the stock admission requirements of Hong Kong Securities Clearing Company Limited (“HKSCC”), the Warrants and the Shares falling to be issued upon exercise of the subscription rights attached to the Warrants will be accepted as eligible securities by HKSCC for deposit, clearance and settlement in the Central Clearing and Settlement System (“CCASS”) with effect from the commencement date of dealings in the Warrants on the Stock Exchange or such other date as determined by HKSCC. Settlement of transactions between participants of the Stock Exchange on any trading day is required to take place in CCASS on the second trading day thereafter. All activities under CCASS are subject to the General Rules of CCASS and CCASS Operational Procedures in effect from time to time.

* for identification purpose only

27 June 2002

CONTENTS

		Page
Attention. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		1
Preliminary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		2
Expected Timetable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		4
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		5
Summary of the Warrant Placing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		8
Directors, corporate information and
other parties involved in the Warrant Placing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		12
The	Warrant Placing
	1. General and reasons for the Warrant Placing . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	14
	2. Use of proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	14
	3. Conditions of the Warrant Placing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	14
	4. The Placing and underwriting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	15
	5. Terms of the Warrants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	15
	6. Listing and dealings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	16
	7. Permission of the Bermuda Monetary Authority . . . . . . . . . . . . . . . . . . . . . . . . . .	17
	8. Shareholding of the existing substantial Shareholders . . . . . . . . . . . . . . . . . . . . .	17
General information on the Group
	1. Description of the business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	18
	2. Share capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	18
	3. Directors and senior management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	19
	4. Market statistics on the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	20
Financial information on the Group. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		21
Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		65
APPENDICES
I.	Summary of the principal terms and conditions of the Warrants . . . . . . . . . . . . . .	66
II.	General information
	1 . Responsibility statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	75
	2. Disclosure of interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	75
	3. Substantial Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	77
	4. Working capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	77
	5. Material changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	77
	6. Material contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	77
	7. Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	78
	8. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	78
	9. Binding effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	79
	10. Documents delivered for registration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	79
	11. Documents available for inspection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	79

ATTENTION

THIS DOCUMENT IS SENT OR DELIVERED TO SHAREHOLDERS OF THE COMPANY FOR INFORMATION PURPOSES ONLY AND SHAREHOLDERS OF THE COMPANY SHOULD NOTE THAT THIS DOCUMENT DOES NOT CONSTITUTE AN OFFER OR INVITATION TO APPLY FOR OR TO TAKE UP ANY WARRANTS OR SHARES OF THE COMPANY.

– 1 –

PRELIMINARY

This document includes particulars given in compliance with the Companies Ordinance, the Companies Act and the Listing Rules for the purpose of giving information with regard to the Company and the Placing. The Directors collectively and individually accept full responsibility for the accuracy of the information contained in this document 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 in this document misleading.

The Bermuda Monetary Authority has given its consent for the issue of the Warrants and the New Shares. In giving such consent and in accepting this document for filing, the Bermuda Monetary Authority and the Registrar of Companies in Bermuda accept no responsibility for the financial soundness of the Company or any proposal or for the correctness of any of the statements made or opinion expressed herein.

This document is published in connection with the Placing, being a private placing of the Warrants, subject to the terms and conditions set out or referred to in this document.

Each potential subscriber or purchaser of the Warrants should determine the relevance of the information contained in this document and any purchase of the Warrants should be based on such information as each purchaser deems necessary. The Placing Manager does not undertake to review the financial condition or affairs of the Company during the term of the Warrants or to advise any investor or potential investor in the Warrants of any information which comes to its attention.

No action has been taken to permit the Placing or the distribution of this document in any jurisdiction other than Hong Kong and Bermuda. Accordingly, this document may not be used for the purpose of, and does not constitute, an offer or invitation in any jurisdiction or in any circumstances in which such offer or invitation is not authorised or to any person to whom it is unlawful to make such offer or invitation except under such circumstances that will result in compliance with any applicable laws and regulations.

No persons have been authorised to give any information or to make representation not contained in this document in connection with the Placing, and, if given or made, such information or representation must not be relied upon as having been authorised by any of the Company, the Placing Manager, their respective directors or any other persons involved in the Placing. Neither the delivery of this document nor any issue of any Warrants shall under any circumstances create any implication that there has been no change in the affairs of the Company since the date hereof. This document does not constitute, and may not be used for the purposes of, an offer or solicitations by anyone in any jurisdiction in which such offer or solicitation is not authorised or to any person to whom it is unlawful to make such offer or solicitation and no action is being taken to permit an offering of the Warrants or the distribution of this document in any jurisdiction where any such action is required. Distribution of this document and the offering, sale and delivery of the Warrants may be subject to restrictions in certain jurisdictions. Persons into whose possession this document comes are required by the Company to inform themselves of and to observe all restrictions in the relevant jurisdiction regarding the offering and delivery of the Warrants.

– 2 –

PRELIMINARY

Potential holders of the Warrants are recommended to consult their professional advisers if they are in any doubt as to the taxation implications of holding the Warrants or of exercising their rights thereunder. It is emphasised that none of the Company, the Directors or any other person involved in the Placing accepts responsibility for any tax effects on, or liabilities of, holders of the Warrants resulting from the subscription for, or the purchase, holding or disposal, of the Warrants and/or from the exercise of any subscription rights attaching to the Warrants.

EACH SUBSCRIBER OR PURCHASER OF THE WARRANTS MUST COMPLY WITH ALL APPLICABLE LAWS AND REGULATIONS IN FORCE IN EACH JURISDICTION IN WHICH IT SUBSCRIBES, PURCHASES, OFFERS OR SELLS THE WARRANTS OR POSSESSES OR DISTRIBUTES THIS DOCUMENT AND MUST OBTAIN ANY CONSENT, APPROVAL OR PERMISSION REQUIRED BY IT FOR THE SUBSCRIPTION, PURCHASE, OFFER OR SALE BY IT OR THE WARRANTS UNDER THE LAWS AND REGULATIONS IN FORCE IN ANY JURISDICTION TO WHICH IT IS SUBJECT OR IN WHICH IT MAKES SUCH SUBSCRIPTION, PURCHASE, OFFER OR SALE, AND NEITHER THE COMPANY NOR THE PLACING MANAGER NOR THE UNDERWRITERS SHALL HAVE ANY RESPONSIBILITY THEREFOR.

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EXPECTED TIMETABLE

2002

Latest time for the remittances of the subscription money

to the Placing Manager . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12:00 noon on Thursday, 4 July Latest time for exercising the termination right

under the Warrant Placing Agreement . . . . . . . . . . . . . . . . . . . . . . . 5:30 p.m. on Thursday, 4 July Warrant certificates to be posted on or before . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Friday, 5 July Dealings in the Warrants on the Stock Exchange to commence on or about . . . . . . Tuesday, 9 July

– 4 –

DEFINITIONS

The following definitions apply throughout this document unless the context requires otherwise:

“Board”	the board of Directors
“Business Day”	a day (excluding Saturdays) on which the Stock
	Exchange is open for dealings in Hong Kong and banks
	are open in Hong Kong for business
“CCASS”	the Central Clearing and Settlement System established
	and operated by HKSCC
“Companies Act”	the Companies Act 1981 of Bermuda
“Companies Ordinance”	Companies Ordinance (Chapter 32 of the Laws of Hong
	Kong)
“Company” or “Issuer”	Premium Land Limited a company incorporated in
	Bermuda with limited liability, the shares of which are
	listed on the Stock Exchange
“Completion”	completion of the Warrant Placing
“Directors”	the directors of the Company
“Exercise Moneys”	means, in relation to any Warrant or Warrants, the amount
	stated on the Warrant certificate issued in respect of
	such Warrant or Warrants as the amount in cash which
	the Warrantholder of such Warrant or Warrants is entitled
	to subscribe for Shares upon exercise of the Subscription
	Rights represented thereby;
“General Mandate”	a general and unconditional mandate to Directors to allot,
	issue and otherwise deal with new shares with an
	aggregate nominal amount not exceeding 20% of the
	aggregate nominal amount of the share capital of the
	Company
“Group”	the Company and its subsidiaries
“Hong Kong”	the Hong Kong Special Administrative Region of the
	PRC
“HKSCC”	Hong Kong Securities Clearing Company Limited
“Instrument”	a deed poll constituting the Warrants and to be executed
	by the Company to protect the rights and interests of
	the holders of the Warrants

– 5 –

DEFINITIONS

“Latest Practicable Date”	24 June 2002, being the latest practicable date prior to
	the printing of this document for ascertaining certain
	information contained in this document
“Listing Rules”	the Rules Governing the Listing of securities on the
	Stock Exchange
“New Shares”	new Share(s) which may fall to be issued upon the
	exercise of the subscription rights attaching to the
	Warrant(s)
“Mr. Chen”	陳龍(Chen Long), a PRC citizen and, a substantial
	shareholder of the Company
“Placing Manager ”	Kingston Securities Limited, a securities dealer
	registered under the Securities Ordinance (Chapter 333
	of the Laws of Hong Kong)
“Placees”	independent third parties not connected with or acting
	in concert with any directors, chief executive or
	substantial shareholders of the Company and/or any of
	their respective subsidiaries or an associate of any of
	them
“PRC”	the People’s Republic of China, which, for the purpose
	of this document, excludes Hong Kong, the Macau
	Special Administrative Region of the PRC and Taiwan
“Registrar”	Secretaries Limited
“Register”	the register of holders of Warrants maintained by the
	Registrar
“Shares”	shares of HK$0.01 each in the Company or other (if
	any) shares or stock in the share capital of the Company
	resulting from any sub-division, consolidation or re-
	classification of such shares
“Shareholders”	holders of the Shares
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“Subscription Date”	the date on which any of the Subscription Rights is duly
	exercised by the relevant Warrantholder pursuant to the
	terms of the Instrument
“Subscription Period”	the period of up to 12 months (or such earlier date as
	provided in the Instrument) from the date on which the
	Warrants first commence trading on the Stock Exchange,
	initially expected to be commencing from 9 July 2002
	and expiring on 8 July 2003 (both dates inclusive)

– 6 –

DEFINITIONS

“Subscription Price”
“Subscription Rights”
“Supplemental Agreement”
“Warrant(s)”
“Warrantholder(s)”
“Warrant Issue Price”
“Warrant Placing”
“Warrant Placing Agreement”
“HK$” and “HK cents”
“%”

an initial subscription price of HK$0.22 per New Share (subject to adjustment) at which holders of the Warrants may subscribe for the New shares

the rights attaching to the Warrants which may be exercised by the holders thereof in whole or in part but not in respect of a fraction of a Share during the Subscription Period to subscribe for Shares subject to and in accordance with the terms as provided in the Instrument
a supplemental agreement dated 12 June 2002 entered into between the Company and the Placing Manager to amend certain terms of the Warrant Placing Agreement
warrants to be issued by the Company which entitle holders thereof to subscribe up to HK$118,764,800 for Shares at the Subscription Price at any time between 9 July 2002 and 8 July 2003 (both days inclusive)
a person or persons who is or are for the time being registered in the Register as holder or joint holders of Warrants
HK$0.05 per unit of subscription rights attached to the Warrants to be issued pursuant to the Warrant Placing
the placing of the Warrants by Placing Manager and its agents on behalf of the Company to investors and securities dealers at the Warrant Issue Price on a fully underwritten basis
the conditional placing and underwriting agreement dated 8 May 2002 made between the Company and the Placing Manager in relation to the Warrant Placing and as amended by a supplemental agreement dated 12 June 2002
Hong Kong dollars and Hong Kong cents respectively, the lawful currency of Hong Kong

per cent

– 7 –

SUMMARY OF THE WARRANT PLACING

Issuer:

The issue:

Premium Land Limited.

The Warrants will be allotted and issued pursuant to the general mandate granted to the Directors to allot and issue Shares at the special general meeting of the Company held on 24 April 2002.

As at the date of the announcement of the Company dated 8 May 2002, the Shares falling to be issued upon the exercise of the Subscription Rights represent about 20.0% of the then existing issued shares capital of the Company.

The Shares falling to be issued upon the exercise of the Subscription Rights also represent 16.67% of the issued share capital of the Company as enlarged by the allotment and issue of 539,840,000 Shares to which the Warrants relate based on the initial subscription price of HK$0.22 per Share.

A supplemental agreement was entered into on 12 June 2002 between the Company and the Placing Manager in relation to certain amendments of the Warrant Placing Agreement. The amendments are summarised as follows: (i) The Subscription Price was adjusted from HK$0.36 to HK$0.22 (subject to further adjustment) and was negotiated on an arm’s length basis between the Company and the Placing Manager and on normal commercial terms and (ii) The expected completion date of the Warrant Placing will be extended to not later than 19 July 2002. Please refer to the section headed “The Warrant Placing” of this document for further detail.

Form:

Warrant Issue Price:

The Warrants are in registered form giving the holders the right to subscribe up to HK$118,764,800 in aggregate for Shares equivalent to the aggregate subscription price for a total of 539,840,000 Shares on the basis of an initial subscription price of HK$0.22 per Share (subject to adjustment) between 9 July 2002 and 8 July 2003 (both days inclusive). The Shares to which the Warrants relate currently represent approximately 20.0% of the existing issued share capital of the Company and approximately 16.67% of the issued share capital of the Company as enlarged by the allotment and issue of 539,840,000 Share to which the Warrants relate based on the initial subscription price of HK$0.22 per Share.

HK$0.05 per unit of subscription rights attached to the Warrants.

– 8 –

SUMMARY OF THE WARRANT PLACING

Board lot:

The board lot for trading in the Warrant is 40,000 units. Each board lot of the Warrants confer subscription rights, amounting to HK$8,800, to subscribe for, initially, 40,000 Shares.

Denominations: Warrants are represented by certificates in units of subscription rights of HK$0.22 each or integral multiples in respect thereof. Underwriting: The issue of the Warrants has been underwritten by the Placing Manager pursuant to the Warrant Placing Agreement, the terms of which are summarised in appendix I of this document. Exercise: The Warrants are exercisable only in amount of HK$0.22 or in integral multiples of HK$0.22. A Warrant may only be exercised by the delivery of a completed and signed subscription form together with the relevant Warrant certificate to the Registrar and together with a remittance for the aggregate Subscription Price for the Subscription Rights exercised. Subscription Price: Initially HK$0.22 per Share (subject to adjustment) in accordance with the provisions of the Instrument.

The Subscription Price (subject to further adjustment) represents:

a) (i) a discount of approximately 12.00% to the closing price of the HK$0.25 per Share as quoted on the Stock Exchange on 12 June 2002, being the last trading day prior to the date of the Supplemental Agreement; and (ii) a discount of approximately 16.67% to the average closing price of HK$0.264 per Share as quoted on the Stock Exchange of the last 10 trading days up to and including 12 June 2002. The aggregate of the Warrant Issue Price and the Subscription Price (subject to further adjustment) represents: (i) a premium of approximately 8.00% over the closing price of HK$0.25 per Share as quoted on the Stock Exchange on 12 June 2002; and (ii) a premium of approximately 2.27% over the average closing price of HK$0.264 per Share as quoted on the Stock Exchange for the last 10 trading days up to and including 12 June 2002.

– 9 –

SUMMARY OF THE WARRANT PLACING

b) (i) a discount of approximately 38.03% to the closing price of HK$0.355 per Share as quoted on the Stock Exchange on 7 May 2002, being the last trading day prior to the date of Warrant Placing Agreement; and (ii) a discount of approximately 29.51% to the average closing price of HK$0.3121 per Share as quoted on the Stock Exchange for the last 10 trading days up to and including 7 May 2002. The aggregate of the Warrant Issue Price and the Subscription Price represents: (i) a discount of approximately 23.94% to the closing price of HK$0.355 per Share as quoted on the Stock Exchange on 7 May 2002; and (ii) a discount of approximately 13.49% to the average closing price of HK$0.3121 per Share as quoted on the Stock Exchange for the last 10 trading days up to and including 7 May 2002.

Subscription Period: The Subscription Rights may be exercised at any time during the period for up to 12 months as provided in the Instrument commencing from the date on which the Warrants first commence trading on the Stock Exchange, initially expected to be commencing from 9 July 2002 and expiring on 8 July 2003 (both dates inclusive). Placees: Not less than three placees for each HK$1.0 million of the Placing who are independent of and not connected with the Company or any of the directors, chief executives, substantial shareholders of the Company or any of its subsidiaries or any of their respective associates, with a minimum of 100 placees Conditions of the Placing: The Placing is conditional on the satisfaction of the conditions set out in the paragraph headed “Conditions of the Warrant Placing” in the section headed “The Warrant Placing” in this document. Transfers of Warrants:

For the purpose of dealings on the Stock Exchange, a board lot of the Warrants will be warrants entitling the holder to subscribe an amount of HK$8,800 for, initially, 40,000 Shares. Warrants may only be transferred in the amount of HK$0.22 (or integral multiples thereof) of the subscription rights of the Warrants by delivery of a transfer form for registration to the Registrar in such form as may from time to time be in use and obtainable from the Registrar together with the Warrant certificate(s). Currently, Hong Kong stamp duty is chargeable on contract notes evidencing one sale or purchase of Warrants at a rate of HK$2.00 per HK$1,000 or part thereof (of which HK$1.00 per HK$1,000 is payable by the seller and HK$1.00 per HK$1,000 is payable by the purchaser) by reference to the value of the consideration or market value, whichever is the greater.

– 10 –

SUMMARY OF THE WARRANT PLACING

Listing and dealings:

Application has been made to the Listing Committee of the Stock Exchange for the listing of, and permission to deal in, the Warrants and the Shares which may fall to be issued upon the exercise of the Subscription Rights on the Stock Exchange. It is expected that dealings in the Warrants on the Stock Exchange will commence on or about 9 July 2002.

Subject to the granting of listing of, and permission to deal in, the Warrants and the Shares which may fall to be issued upon the exercise of the Subscription Rights on the Stock Exchange as well as compliance with the stock admission requirements of HKSCC, the Warrants and the Shares which may fall to be issued upon the exercise of the Subscription Rights will be accepted as eligible securities by HKSCC for deposit, clearance and settlement in CCASS with effect from the commencement date of dealings in the Warrants on the Stock Exchange or such other date as determined by HKSCC. Settlement of transactions between participants of the Stock Exchange on any trading day is required to take place in CCASS on the second trading day thereafter. All activities under CCASS are subject to the General Rules of CCASS and CCASS Operational Procedures in effect from time to time.

Governing law:

Registrar:

The laws of Hong Kong

Secretaries Limited

5th Floor, Wing On Centre, 111 Connaught Road Central, Hong Kong

Use of proceeds:

The gross proceeds of the Warrant Placing is about HK$26.99 million. The net proceeds of the Warrant Placing of about HK$26 million are intended to be used for the Company’s general working capital or reduction of the Group’s liabilities or other suitable projects when opportunity are identified and as the Directors think appropriate.

– 11 –

DIRECTORS, CORPORATE INFORMATION AND OTHER PARTIES INVOLVED IN THE WARRANT PLACING

Executive Directors:

Name	Address	Nationality
Dong Bo, Frederic	Flat A, 8th Floor, Tower 9	Hong Kong
	Phase II Pacific Palisade
	No. 1 Braemar Hill Road
	Hong Kong
Lau Man Tak	Flat C, 15th Floor	Hong Kong
	Block 34, Laguna City
	Lam Tin
	Kowloon
	HongKong
Independent non-executive Directors:
Kan Kwok Shu	Unit 1704, Tower B	Hong Kong
	Queen’s Garden
	8 Old Peak Road
	Hong Kong
Shum Ka Hei	Flat F, 24th Floor	Hong Kong
	Celeste Court
	12 Fung Fai Terrace
	Happy Valley
	Hong Kong
Authorised representatives:	Dong Bo, Frederic
	Lau Man Tak
Company secretary:	Lau Man TakHKSA
Auditors:	Deloitte Touche Tohmatsu
	Certified Public Accountants
	26th Floor, Wing On Centre
	111 Connaught Road Central
	Hong Kong
Registered office:	Clarendon House
	2 Church Street
	Hamilton HM 11
	Bermuda

– 12 –

DIRECTORS, CORPORATE INFORMATION AND OTHER PARTIES INVOLVED IN THE WARRANT PLACING

Head office and principal place of business:

Room 2804-05 Shui On Centre 6-8 Harbour Road Wanchai Hong Kong

Principal registrars and Butterfield Corporate Services Limited transfer office: Rosebank Centre 11 Beradiana Road Pembroke Hamilton Bermuda

Hong Kong registrars and transfer office:

Placing Manager:

Secretaries Limited 5th Floor, Wing On Centre 111 Connaught Road Central Hong Kong Kingston Securities Limited Suite 2801, 28th Floor One International Finance Centre 1 Harbour View Street Central Hong Kong

Legal advisers to the Company:

on Hong Kong law: Sidley Austin Brown & Wood 49th Floor Bank of China Tower 1 Garden Road Central Hong Kong

on Bermuda law: Conyers Dill & Pearman 2901 One Exchange Square 8 Connaught Place Central, Hong Kong

Principal bankers:

Dao Heng Bank Limited Head office Ground Floor The Center 99 Queen’s Road Central Hong Kong

Wing Hang Bank Limited Hong Kong Main Branch 161 Queen’s Road Central Hong Kong

– 13 –

THE WARRANT PLACING

1. GENERAL AND REASONS FOR THE WARRANT PLACING

It was announced by the Directors on 8 May 2002 that the Warrant Placing Agreement had been entered into in relation to the Warrant Placing (as amended by the Supplemental Agreement). The Directors consider that the Warrant Placing is an ideal opportunity to raise further capital for the Company. In particular, (i) it does not have an instant dilution effect on the shareholding of the existing shareholders; (ii) it raises funds immediately upon the completion of the Warrant Placing and if and when the Subscription Rights are exercised, further funds will be raised for additional general working capital of the Group and the financial conditions and shareholder base of the Company will accordingly be strengthened; and (iii) it provides investors with an alternative means to invest in the Company.

2. USE OF PROCEEDS

It is intended that the net proceeds of the Warrant Placing of approximately HK$26 million will be used for the Company’s general working capital or reduction of the Group’s liabilities or other suitable projects when opportunities are identified and as the Directors think appropriate.

3. CONDITIONS OF THE WARRANT PLACING

The Warrant Placing is subject to and conditional on the following conditions being fulfilled on or before 19 July 2002 (or such later date as may be agreed between the Company and the Placing Manager):

(1) the Listing Committee of the Stock Exchange granting approval for the listing of, and permission to deal in, all the Warrants and any Shares falling to be issued on the exercise of the subscription rights attaching to the Warrants either unconditionally or subject to conditions to which the Company accepts by no later than 4:00 p.m. on 19 July 2002 (Hong Kong time) (or such later time or date as the parties may agree);
(2) the delivery to and registration by the Registrar of Companies in Hong Kong of a copy of each of the document and the application form, each duly signed by any two of the Directors (or by their agents duly authorised in writing) and having annexed to it all documents required to be annexed thereto, in accordance with Section 348C of the Companies Ordinance on or before 27 June 2002 (Hong Kong time) (or such later time or date as the parties may agree); and
(3) the delivery to and filing with the Registrar of Companies in Bermuda of a copy of the document and the application form, each duly signed by any Director (for and on behalf of the other Directors) in accordance with the Companies Act on or before 27 June 2002 (Hong Kong time) (or such later time or date as the parties may agree).

– 14 –

THE WARRANT PLACING

new law or regulation or any change in existing laws or regulations or the interpretation thereof or any local, regional, national or international event or change of a political, military, economic or other nature which, in each case, in the reasonable opinion of the Placing Manager, shall result in a material adverse change in political, economic or stock market conditions and otherwise materially and adversely affect the business or financial condition or prospects of the Group taken as a whole; or (d) the imposition of any moratorium on trading in securities generally on the Stock Exchange or the suspension of trading of the Shares on the Stock Exchange for more than ten consecutive trading days on the Stock Exchange, and which in each such case would reasonably be expected to have a material and adverse effect on the success of the issue of the Warrants. If the Placing Manager exercises such right, the Warrant Placing will not proceed.

4. THE PLACING AND UNDERWRITING

The Placing Manager has, pursuant to the Warrant Placing Agreement, agreed, among other matters, to underwrite the Warrant Placing and to act as the placing agent for and on behalf of the Company to procure not less than 100 placees to subscribe for the Warrants at the Warrant Issue Price. Under the Warrant Placing Agreement, the Placing Manager has undertaken to subscribe for as principal at the Warrant Issue Price up to 539,840,000 Warrants for which it shall be unable to procure placees to subscribe in accordance with the Warrant Placing Agreement. In consideration of the Placing Manager performing its obligations under the Warrant Placing Agreement, the Company will pay the Placing Manager a commission of 1.0% on the aggregate Warrant Issue Price. Under the Warrant Placing Agreement, the Placing Manager has further undertaken to the Company to ensure that the placees will be third parties independent of and not connected with the Directors, chief executive or substantial shareholders of the Company or its subsidiaries or any of their respective associates.

The Company and the Placing Manager will ensure that the Placing will comply with the relevant provisions of the Listing Rules, including but not limited to appendix 6 and Chapter 15 of the Listing Rules.

5. TERMS OF THE WARRANTS

The Warrants will be issued in registered form by way of a deed poll to be executed by the Company and will rank pari passu in all respects with each other.

The Warrants will be constituted by the Instrument and will be issued by the Company in registered form exercisable in units of HK$0.22 each and will initially give the Warrantholders the right to subscribe at an initial subscription price of HK$0.22 per Share, subject to adjustment, for one new Share at any time within the Subscription Period. Any Subscription Rights which have not been exercised on or before the last day of the Subscription Period will lapse following such date and the Warrants will cease to be valid for all purposes.

The Shares falling to be issued upon the exercise of the Subscription Rights will rank pari passu in all respects with the Shares in issue on the date of allotment and issue of such Shares save for any right or entitlement to dividends or other rights or distributions the record date for which precedes the date of such allotment and issue.

– 15 –

THE WARRANT PLACING

The Subscription Rights of the Warrants will be transferable, in whole amounts or multiples of units of Subscription Rights of HK$0.22, by instrument of transfer in any usual or common form or in such other form which may be approved by the Directors. In the event a notice is given by the Company to its shareholders to convene a shareholders’ meeting for the purposes of considering, and if thought fit approving, a resolution to voluntarily wind up the Company, the Company shall forthwith give notice thereof to each Warrantholder and thereupon, every Warrantholder shall be entitled to exercise the Subscription Rights not later than two Business Days prior to the proposed shareholders’ meeting referred to above and the Company shall as soon as possible and in any event no later than the day immediately prior to the date of the proposed shareholders’ meeting allot such number of Shares to the Warrantholder which fall to be issued pursuant to the exercise of the Subscription Rights represented by such Warrant.

The Warrantholders will not be entitled as of right to participate in any distributions or further issue of securities by the Company prior to exercise of the Subscription Rights.

The Directors confirm that the Company will comply with Rule 15.06 of the Listing Rules in case of any alteration in the terms of the Warrants after issue and grant; such alteration to be approved by the Stock Exchange, except where the alterations take effect automatically under the terms of the Warrants.

The Warrant Issue Price was determined based on arm’s length negotiation between the Company and the Placing Manager. The Directors consider that the Warrant Issue Price is fair and reasonable.

A summary of the principal terms and conditions of the Warrants is set out in appendix I to this document.

6. LISTING AND DEALINGS

Application has been made to the Listing Committee of the Stock Exchange for the listing of and permission to deal in the Warrants to be issued as mentioned herein and any Shares which may fall to be issued upon exercise of the Subscription Rights attaching to the Warrants. No part of the share capital of the Company is listed or dealt in on any other stock exchange and the Company is not currently seeking to list the Shares or the Warrants on any other stock exchange.

The Warrants will be traded in board lots of 40,000 units carrying rights to subscribe for 40,000 Shares at the initial exercise price of HK$0.22. A brokerage fee of 1%, Stock Exchange trading fee of 0.005% and Securities and Futures Commission transaction levy of 0.007% of the Warrant Issue Price are payable by the placees in respect of the Warrants.

The issue of the Warrants will adhere to all relevant provisions of the Listing Rules.

Subject to the granting of listing of, and permission to deal in, the Warrants and the New Shares which may fall to be issued upon the exercise of the subscription rights attaching to the Warrants on the Stock Exchange as well as compliance with the stock admission requirements of HKSCC, the Warrants and the New Shares which may fall to be issued upon the exercise of the subscription rights attaching to the Warrants will be accepted as eligible securities by HKSCC for deposit, clearance and settlement in CCASS with effect from the commencement date of dealings in the Warrants on the Stock Exchange or such other date as determined by HKSCC. Settlement of transactions between participants of the Stock Exchange on any trading day is required to take place in CCASS on the second trading day thereafter. All activities under CCASS are subject to the General Rules of CCASS and CCASS Operational Procedures in effect from time to time.

– 16 –

THE WARRANT PLACING

All necessary arrangement will be made to enable the Warrants to be admitted into CCASS.

Dealings in the Warrants and New Shares in Hong Kong will be subject to Hong Kong stamp duty.

7. PERMISSION OF THE BERMUDA MONETARY AUTHORITY

Permission under the Exchange Control Act 1972 of Bermuda (and regulations made thereunder) has been received from the Bermuda Monetary Authority in respect of the issue of the Warrants and the Shares to be issued upon exercise of the Warrants to persons regarded as nonresidents of Bermuda for exchange control purposes subject to the requirement that the Shares are listed on the Stock Exchange. In granting such permission and in accepting this document and the application form for filing, neither the Bermuda Monetary Authority nor the Registrar of Companies of Bermuda accepts any responsibility for the financial soundness of the Group or for the correctness of any statements made or opinions expressed in this document of the application form.

8. SHAREHOLDING OF THE EXISTING SUBSTANTIAL SHAREHOLDERS

As at the Latest Practicable Date, Mr. Dong Bo, Federic, the chairman and executive director of the Company and Mr. Chen is beneficially interested in about 26.72% and 13.89% respectively of the issued share capital of the Company. Upon exercise in full of the Subscription Rights at the Subscription Price, 539,840,000 Shares will be allotted and issued and Mr. Dong Bo, Federic and Mr. Chen will be beneficially interested in about 22.27% and 11.57% respectively of the issued share capital of the Company as enlarged by such allotment and issue of the Shares. Apart from Mr. Dong Bo, Federic and Mr. Chen, there is no person known to the Directors who was, as at the Latest Practicable Date, directly or indirectly interested in 10% or more of the issued share capital of the Company.

– 17 –

GENERAL INFORMATION ON THE GROUP

1. DESCRIPTION OF THE BUSINESS

Review of operations

The Group is principally engaged in the business of property investment and development, securities trading and investment holding in Hong Kong and PRC. The Group also engages in trading of building materials and provision of renovation and decoration services to both commercial and residential properties.

Prospects

After the completion of the disposal of media business in July 2001, the principal assets of the Group continue to be properties and securities. The Group will continue to be engaged in property investment and development and securities trading and investment. The Board believes in the positive long-term prospects of the real estate property market throughout Asia and The PRC in particular.

The PRC joining the World Trade Organization and the commencement of Asia Pacific Economic Conference in the PRC will have a positive impact to the PRC is property market. The Group has full confidence in the PRC and will utilize its financial capabilities to exploit investment opportunities in properties in the PRC. Together with the experience of the controlling shareholder of the Group, the Directors believe that the Group is well positioned to benefit from the anticipated growth in the PRC property market.

The Group is planning to expand its business and to undertake property investment and/or development projects in the PRC in light of the future growth of the property market in the PRC. The Directors believe the demand for residential and commercial properties in the coastal regions of the PRC will increase in the future.

2. SHARE CAPITAL

As at the Latest Practicable Date, the share capital of the Company was as follows:

Authorised: 15,000,000,000 Shares Issued and fully paid: 2,699,365,970 Shares	HK$ 150,000,000

	HK$ 26,993,659.70

All of the existing issued Shares rank equally in all respects including all rights as to dividends, voting and interests in capital. 539,840,000 Warrants will be issued conferring rights in registered form to subscribe in aggregate up to HK$118,764,800 for new Shares. The Warrants will be transferrable and exercisable in units of Subscription Rights of HK$0.22 each and thus every Warrant will initially entitle the Warrantholder to subscribe in cash for one new Share at the initial subscription price of HK$0.22. The Shares falling to be issued upon the exercise of the Subscription Rights will upon allotment and issue rank equally in all respects with the existing Shares in issue on the date of allotment and issue of such Shares save for any right or entitlement to dividends or other rights or distributions the record date for which precedes such date of allotment and issue.

– 18 –

GENERAL INFORMATION ON THE GROUP

As at the Latest Practicable Date, there were outstanding options entitling the holders thereof to subscribe for 314,930,000 Shares in accordance with the Company’s share option schemes.

As at the Latest Practicable Date, no member of the Group has any share or loan capital under option or agreed conditionally or unconditionally to be put under option, nor have any conversion rights attached to the convertible bonds affecting shares in any company of the Group been issued or granted or agreed conditionally or unconditionally to be issued or granted by any of such companies.

On 4 January 2002, the Company entered into a subscription agreement under which Great Huge Investment Corp., the beneficial owner of which is Mr. Chen, an existing substantial shareholder of the Company will subscribe for a total of 74,980,000 new shares at HK$0.60 per shares. The subscription is subject to the granting of the approval for the listing of and permission to deal in new shares by the Listing Committee of the Stock Exchange. The Directors have confirmed that the aforesaid subscription was completed on 8 February 2002.

3. DIRECTORS AND SENIOR MANAGEMENT

Executive Directors

Mr. Dong Bo, Frederic, aged 35. Mr. Dong studied in Ireland. He has more than 10 years of extensive management experience in the PRC. Before joining the Group he was an executive director of China Development Corporation Limited, a listed company in Hong Kong. He is responsible for the overall management and directors of the Group.

Mr. Lau Man Tak, aged 32. Mr. Lau graduated from the Hong Kong Polytechnic University with a Bachelor’s Degree in Accountancy. Mr. Lau is an associate member of the Chartered Association of Certified Accountants and of the Hong Kong Society of Accountants and member of Hong Kong Securities Institute. He joined the Group in October 2001 and is responsible for the accounting and financial matters of the Group.

Independent non-executive Directors

Mr. Kan Kwok Sun, aged 43, held various senior positions in leading fund management companies such as Jardine Fleming Investment Management Limited, Euro Pacific Advisors and Thornton Management (Asia) Limited. Mr. Kan has over 15 years of investment experience in the Asia-Pacific region, in particular the Greater China Market. Mr. Kan graduated from the University of Calgary with a major in Finance. Mr. Kan was appointed as an independent non-executive Director on 29 October 2001.

Mr. Shum Ka Hei, aged 35, graduated from the Chinese University of Hong Kong in 1987 with a bachelor degree in social science. He was called to the bar of England and Wales in 1996 and is now a practising barrister in Hong Kong. Mr. Shum was appointed as an independent non-executive Director on 29 October 2001.

– 19 –

GENERAL INFORMATION ON THE GROUP

Senior Management

Mr. Hui Sze Yuen, aged 38, an associate Director and joined the Group in October 2001. Mr. Hui obtained his degree from the University of Winnipeg, Canada. He has many years of extensive experience in corporate finance and management of Hong Kong listed companies. He is responsible for the project development and corporate finance of the Group.

Mr. Peng Chengzhi, aged 40, a senior project manager joined the Group in October 2001. Mr. Peng graduated from University of Science & Technology in Beijing with a bachelor degree in engineering. Working in PRC for more than 10 years after graduation, he possesses a good understanding of and gets insight to the key and unique characteristics of the PRC’s environment for foreign investment. He is responsible for project development and management of the Group.

4. MARKET STATISTICS ON THE COMPANY

The Shares are only listed on the main board of the Stock Exchange. The board lot for trading the Shares on the Stock Exchange is 10,000 Shares.

Set out below are the market statistics of the Company:–

(a) The highest and lowest traded prices on the Stock Exchange of the Shares in 2000 and 2001 until Latest Practicable Date are set out below:

Year		High	Low
		HK$	HK$
2000		0.91	0.246
2001		0.36	0.122
2002	(up to the Latest Practicable Date)	0.39	0.195

(b) Closing price per Share as at the Latest Practicable Date . . . . . . . . . . . . . . .HK$0.204
(c) Market capitalisation . . . . . . . . . . . . . . . . . . . . . . . . . . . Approximately HK$551 million

Note: Based on the number of Shares in issue and the closing price per Share as at the Latest Practicable Date.

– 20 –

FINANCIAL INFORMATION ON THE GROUP

FINANCIAL INFORMATION OF THE GROUP

Financial statements

The following is a summary of the audited consolidated income statement of the Group for the three years ended 31 March 2001, the audited consolidated balance sheet of the Group and the balance sheet of the Company as at 31 March 2000 and 2001 and audited consolidated cash flow statement of the Group for the two years ended 31 March 2001 together with accompanying notes extracted from the annual reports of the Company for the two years ended 31 March 2000 and 2001.

Consolidated Income Statement

Notes Turnover Cost of sales Other revenue Administrative expenses Other operating expenses Profit from operations 3 Finance costs 5 Loss on disposal of subsidiaries 6 Unrealised holding loss on other investment reclassified after disposal of a former associate 7 Write-off of goodwill 8 Loss on deemed disposal of interest in an associate Share of results of associates (Loss) profit before taxation Taxation 9 (Loss) profit before minority interests Minority interests (Loss) profit for the year 10 (Loss) earnings per share 12 Basic (HK$) Diluted (HK$)	For the year ended 31 2001 2000 HK$’000 HK$’000 514,658 693,899 (338,668) (566,173) 175,990 127,726 12,588 14,103 (78,587) (51,875) (6,792) – 103,199 89,954 (85,469) (103,101) (864,078) (2,075) (42,166) – (46,855) – (1,797) – (35,215) 86,503 (972,381) 71,281 (4,096) (22,476) (976,477) 48,805 (48,820) (30,272) (1,025,297) 18,533 (3.276) 0.059 (3.281) 0.046	March 1999 HK$’000 350,901 (391,262) (40,361) 40,165 (68,780) (240,817) (309,793) (149,806) (220,723) – – – (189,866) (870,188) (250) (870,438) 193,499 (676,939) (0.432) (0.432)

– 21 –

FINANCIAL INFORMATION ON THE GROUP

Consolidated Balance Sheet

Notes Non-current assets Investment properties 13 Property, plant and equipment 14 Intangible asset 15 Interests in associates 17 Investments in securities 18 Properties under development 19 Current assets Inventories 20 Trade and other receivables 21 Investments in securities 18 Pledged bank deposits 22 Bank balances and cash Current liabilities Trade and other payables 23 Amounts due to associates Taxation payable Bank and other borrowings 24 Net current (liabilities) assets Non-current liabilities Amount due to ultimate holding company 25 Bank and other borrowings 24 Convertible debts 26 Minority interests Capital and reserves Share capital 27 Reserves 29 Shareholders’ funds	As at 31 March 2001 2000 HK$’000 HK$’000 84,510 2,038,890 103,204 72,794 68,075 – 19,466 1,763,867 2,000 6,437 – 1,303,696 277,255 5,185,684 5,960 6,098 26,370 84,723 22,518 17,609 – 56,225 52,299 190,957 107,147 355,612 25,807 56,670 – 968 – 28,489 101,263 163,431 127,070 249,558 (19,923) 106,054 257,332 5,291,738 28,684 – 6,883 883,176 – 295,451 35,567 1,178,627 10,432 1,665,642 211,333 2,447,469 625,894 625,894 (414,561) 1,821,575 211,333 2,447,469	As at 31 March 2001 2000 HK$’000 HK$’000 84,510 2,038,890 103,204 72,794 68,075 – 19,466 1,763,867 2,000 6,437 – 1,303,696 277,255 5,185,684 5,960 6,098 26,370 84,723 22,518 17,609 – 56,225 52,299 190,957 107,147 355,612 25,807 56,670 – 968 – 28,489 101,263 163,431 127,070 249,558 (19,923) 106,054 257,332 5,291,738 28,684 – 6,883 883,176 – 295,451 35,567 1,178,627 10,432 1,665,642 211,333 2,447,469 625,894 625,894 (414,561) 1,821,575 211,333 2,447,469
		5,185,684
		6,098 84,723 17,609 56,225 190,957
		355,612
		56,670 968 28,489 163,431
		249,558
		106,054
		5,291,738
		– 883,176 295,451
		1,178,627
		1,665,642
		2,447,469

		625,894 1,821,575
		2,447,469

– 22 –

FINANCIAL INFORMATION ON THE GROUP

Balance Sheet

Notes Non-current asset Interests in subsidiaries 16 Current assets Other receivables and prepayments Bank balances and cash Current liability Other payables Net current liabilities Non-current liability Convertible debts 26 Capital and reserves Share capital 27 Reserves 29 Shareholders’ funds	As at 31 March 2001 2000 HK$’000 HK$’000 190,149 1,444,025 1 97 245 954 246 1,051 1,042 2,994 (796) (1,943) 189,353 1,442,082 – 295,451 189,353 1,146,631 625,894 625,894 (436,541) 520,737 189,353 1,146,631

– 23 –

FINANCIAL INFORMATION ON THE GROUP

Consolidated Statement of Recognised Gains and Losses

Surplus arising on revaluation of investment properties The Group’s share of deficit arising on revaluation of investment properties Exchange (loss) gains arising on translation of financial statements of overseas operations Share of associates’ investment property revaluation reserve movements Share of associates’ other property revaluation reserve movements Share of associates’ exchange reserve movements Net gains not recognised in the consolidated income statement (Loss)profit for the year Total recognised gains and losses Goodwill on consolidation arising from acquisition of subsidiaries Capital reserve arising from increase in interests in/acquisition of associates Share of associates’ movements in capital reserve on consolidation	For the year ended 31 2001 2000 HK$’000 HK$’000 23,051 – – (8,400) (3,315) 2,439 2,596 – – 276,301 (5,734) (9,007) 16,598 261,333 (1,025,297) 18,533 (1,008,699) 279,866 (67,551) – 2,651 7,110 (1,569) (5,218) (1,075,168) 281,758	March 1999 HK$’000 – (11,159) 290 – – 10,957 88 (676,939) (676,851) – 91,076 21,279 (564,496)

– 24 –

FINANCIAL INFORMATION ON THE GROUP

Consolidated Cash Flow Statement

For the year ended 31 March 2001

Notes NET CASH OUTFLOW FROM OPERATING ACTIVITIES 30 RETURNS ON INVESTMENTS AND SERVICING OF FINANCE Interest paid Dividend paid to minority shareholders Bank facilities arrangement fees paid Interest received Dividends received from associates NET CASH OUTFLOW FROM RETURNS ON INVESTMENTS AND SERVICING OF FINANCE TAXATION Hong Kong Profits Tax paid Overseas tax paid Hong Kong Profits Tax refunded NET CASH OUTFLOW FROM TAXATION PAID INVESTING ACTIVITIES Proceeds from disposal of subsidiaries 31 Decrease in pledged bank deposits Purchase of subsidiaries (net of cash and cash equivalents acquired) 32 Advances to associates Purchase of property, plant and equipment Purchase of investment securities Investments in associates Proceeds from disposal of associates Proceeds from disposal of property, plant and equipment Purchase of investment properties NET CASH INFLOW FROM INVESTING ACTIVITIES NET CASH INFLOW BEFORE FINANCING ACTIVITIES	2001 HK$’000 (98,458) (109,030) (4,670) (1,619) 6,792 1,979 (106,548) – (377) 26 (351) 520,954 56,225 (115,057) (78,734) (14,303) (22,205) (537) – – – 346,343 140,986	2000 HK$’000 (24,102) (126,140) – (3,358) 9,790 4,219 (115,489) (963) (54) 123 (894) 326,286 57 – (71,623) (2,257) (2,415) (57,870) 58,603 178 (8,718) 242,241 101,756

– 25 –

FINANCIAL INFORMATION ON THE GROUP

Notes FINANCING ACTIVITIES 33 Redemption of convertible redeemable notes Repayment of bank borrowings New bank and other borrowings raised Contribution from minority shareholders Payment for shares repurchased Advance from associates Redemption of convertible guaranteed bonds New convertible redeemable notes raised NET CASH OUTFLOW FROM FINANCING ACTIVITIES DECREASE IN CASH AND CASH EQUIVALENTS EFFECT ON FOREIGN EXCHANGE RATE CHANGES CASH AND CASH EQUIVALENTS BROUGHT AT BEGINNING OF THE YEAR CASH AND CASH EQUIVALENTS CARRIED AT END OF THE YEAR ANALYSIS OF THE BALANCES OF CASH AND CASH EQUIVALENTS Bank balances and cash Bank overdrafts	2001 HK$’000 (297,674) (159,521) 181,216 18,149 – 135 – – (257,695) (116,709) (6,991) 175,999 52,299 52,299 – 52,299	2000 HK$’000 – (252,384) 246,025 10,479 – – (420,447) 294,165 (122,162) (20,406) – 196,405 175,999 190,957 (14,958) 175,999

– 26 –

FINANCIAL INFORMATION ON THE GROUP

Notes to the Financial Statements

1. GENERAL

The Company is incorporated in Bermuda as an exempted company with limited liability and its shares are listed on The Stock Exchange of Hong Kong Limited (the “Stock Exchange”). In the opinion of the directors, the Company’s ultimate holding company is China Strategic Holdings Limited (“China Strategic”), a public limited company incorporated in Hong Kong with its shares listed on the Stock Exchange.

The Company is an investment holding company. The principal activities of its principal subsidiaries and associates are set out in notes 43 and 17, respectively.

2. SIGNIFICANT ACCOUNTING POLICIES

The financial statements have been prepared under the historical cost convention, as modified for the revaluation of investment properties, investments in securities and in accordance with accounting principles generally accepted in Hong Kong. The principal accounting policies adopted are set out below:

Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Company and its subsidiaries made up to 31 March each year.

The results of subsidiaries and associates acquired or disposed of during the year are included in the consolidated income statement from the effective dates of acquisition or up to the effective dates of disposal, as appropriate.

All significant inter-company transactions and balances within the Group are eliminated on consolidation.

Goodwill/Capital reserve

Goodwill represents the excess of the purchase consideration over the fair value ascribed to the Group’s share of the separable net assets at the date of acquisition of the subsidiaries or associates and is eliminated against reserves immediately in the year of acquisition. Any impairment in value is charged to the income statement whenever the estimated recoverable amount is less than the carrying amount. Capital reserve, which represents the excess of the fair value ascribed to the Group’s share of the separable net assets at the date of acquisition of subsidiaries or associates over the purchase consideration, is credited to reserves.

On disposal of subsidiaries or associates, the attributable amount of goodwill or capital reserve previously eliminated against or credited to reserves and has not been charged or credited to the income statement is included in the determination of the profit or loss on disposal of the subsidiaries or associates.

Investments in subsidiaries

A subsidiary is an enterprise in which the Company, directly or indirectly, holds more than half of the issued share capital, or controls more than half of the voting power, or where the Company controls the composition of its board of directors or equivalent governing body.

Investments in subsidiaries are included in the Company’s balance sheet at cost, as reduced by any impairment losses recognised.

Associates

An associate is an enterprise over which the Group is in a position to exercise significant influence, including participation in financial and operating policy decisions.

The consolidated income statement includes the Group’s share of the post-acquisition results of its associates for the year. In the consolidated balance sheet, interests in associates are stated at the Group’s share of the net assets of the associates.

– 27 –

FINANCIAL INFORMATION ON THE GROUP

When the Group transacts with its associate, unrealised profits and losses are eliminated to the extent of the Group’s interest in the relevant associate, except where unrealised losses provide evidence of an impairment of the asset transferred.

In the Company’s balance sheet, investments in associate are stated at cost, as reduced by any impairment losses recognised.

Investments in securities

Investments in securities are recognised on a trade-date basis and are initially measured at cost. Investment securities, which are securities held for an identified long-term strategic purpose, are measured at subsequent reporting dates at cost, as reduced by any impairment loss that is other than temporary.

Other investments are measured at fair value, with unrealised gains and losses included in net profit or loss for the period.

Investment properties

Investment properties are completed properties which are held for their investment potential, any rental income being negotiated at arm’s length.

Investment properties are stated at open market values based on independent professional valuations at the balance sheet date. Any surplus or deficit arising on the revaluation of investment properties is credited or charged to the investment property revaluation reserve unless the balance of this reserve is insufficient to cover a deficit, in which case the excess of the revaluation deficit over the balance of the investment property revaluation reserve is charged to the income statement. Where a deficit has previously been charged to the income statement and a revaluation surplus subsequently arises, this surplus is credited to the income statement to the extent of the deficit previously charged.

On disposal of an investment property, the balance of the investment property revaluation reserve attributable to that property is transferred to the income statement.

No depreciation is provided on investment properties except where the unexpired term of the relevant lease is 20 years or less.

Property, plant and equipment

Property, plant and equipment held by group companies is stated at cost less depreciation or amortisation at the balance sheet date.

The cost of an asset comprises its purchase price and any directly attributable costs of bringing the asset to its present working condition and location for its intended use. Expenditure incurred after the asset has been put into operation, such as repairs and maintenance and overhaul costs, is normally charged to the income statement in the period in which it is incurred. In situations where it can be clearly demonstrated that the expenditure has resulted in an increase in the future economic benefits expected to be obtained from the use of the asset, the expenditure is capitalised as an additional cost of the asset.

The gain or loss arising from the disposal or retirement of an asset is determined as the difference between the sale proceeds and the carrying amount of the asset and is recognised in the income statement.

Where the recoverable amount of an asset has declined below its carrying amount, the carrying amount is reduced to reflect the decline in value. In determining the recoverable amount of assets, expected future cash flows are not discounted to their present values.

Depreciation and amortisation are provided to write off the cost of item of property, plant and equipment over their estimated useful lives, using the straight-line method, at the following rates per annum:

Land Over the term of the lease Buildings 2%–4% Leasehold improvements 10% to 15% or over the term of the lease, if shorter Others 10% to 30%

– 28 –

FINANCIAL INFORMATION ON THE GROUP

Intangible asset

Intangible asset is stated at cost less amortisation and provision, if necessary, for any impairment in value. The cost of the intangible asset is amortised over a period of twenty years on a straight line basis.

Properties under development

Properties under development are stated at cost or, in cases where a property has been reclassified from another class of assets, the carrying value of the property as stated in its original classification, less any impairment loss. Cost includes the acquisition cost, architect’s fee, interest and other direct costs attributable to the development of such properties.

Inventories

Inventories are stated at the lower of cost and net realisable value. Cost comprises direct materials and where applicable, direct labour costs and those overheads that have been incurred in bringing the inventories to their present location and condition. Cost is calculated using the first-in, first-out method. Net realisable value represents the estimated selling price in the ordinary course of business less the estimated cost to completion and costs necessary to make the sale and distribution.

Properties held for sale

Property held for sale is stated at the lower of cost or, in cases where a property has been reclassified from another class of assets, the carrying value of the property as stated in its original classification, and net realisable value. Cost includes the acquisition cost, architect’s fees and other direct costs attributable to such property. Net realisable value represents the estimated selling price in the ordinary course of business less the estimated costs necessary to make the sale.

Capitalisation of borrowing costs

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

All other borrowing costs are recognised as expenses in the period in which they are incurred.

Turnover

Turnover represents the gross proceeds received and receivable from third parties on sales of newspapers and magazines, sales of property interests, gross property rental income, gross proceeds on securities trading, advertising income and dividend income from investments during the year.

Recognition of income

Sales of properties are recognised when the significant risks and rewards of ownership have been transferred to the buyer, provided that the Group maintains neither managerial involvement to the degree usually associated with ownership, nor effective control over the properties sold.

Sales of investments in securities are recognised on a trade-date basis.

Rental income is recognised on a straight line basis over the term of the relevant lease.

Sales of newspaper and magazines are recognised when they are delivered and title has passed.

Advertising income is recognised on the relevant publication date.

Dividend income from investments is recognised when the shareholders’ rights to receive payment have been established.

Interest income is accrued on a time basis, by reference to the principal outstanding and at the interest rate applicable.

– 29 –

FINANCIAL INFORMATION ON THE GROUP

Taxation

The charge for taxation is based on the results for the year as adjusted for items which are nonassessable or disallowed. Timing differences arise from the recognition for tax purposes of certain items of income and expense in a different accounting period from that in which they are recognised in the financial statements. The tax effect of the resulting timing differences, computed under the liability method, is recognised as deferred taxation in the financial statements to the extent that it is probable that a liability or an asset will crystallise in the foreseeable future.

Operating leases

Rental income or expenses under operating leases are credited or charged, respectively, to the income statement on a straight line basis over the term of the relevant leases.

Foreign currencies

Transactions in currencies other than Hong Kong dollars are initially recorded at the rates of exchange ruling on the dates of the transactions. Monetary assets and liabilities denominated in such currencies are re-translated at the rates ruling on the balance sheet date. Profits and losses arising on exchange are dealt with in the income statement.

On consolidation, the financial statement of the Group’s overseas operations which are denominated in the currencies other than Hong Kong dollar are translated at the exchange rates ruling on the balance sheet date. Exchange differences arising, if any, are dealt with in reserves.

Cash equivalents

Cash equivalents represent short-term, highly liquid investments which are readily convertible into known amounts of cash and which were within three months of maturity when acquired, less advances from banks repayable within three months from the date of the advances.

3. PROFIT FROM OPERATIONS

Profit from operations has been arrived at after charging: Staff costs – directors’ remuneration – other staff costs – retirement benefits scheme contribution Auditors’ remuneration Depreciation and amortisation of property, plant and equipment Amortisation of intangible asset Loss on disposal of property, plant and equipment Net realised and unrealised holding losses on other investments Provision for impairment losses of unlisted investment securities Rentals paid for premises under operating leases and after crediting: Dividend income from listed other investments Interest income Net realised and unrealised holding gains on other investments Gross rental income from investment properties under operating leases, before deduction of provision for relevant bad and doubtful debts of HK$4,103,000 for the year ended 31 March 2000 (2001: nil) and outgoings of HK$3,523,000 for the year ended 31 March 2001 (2000: HK$1,390,000)	2001 HK$’000 9,896 46,912 1,525 58,333 2,377 10,260 685 5,736 5,418 1,014 4,417 542 6,792 – 72,487	2000 HK$’000 9,678 11,700 – 21,378 1,883 7,843 – 611 – – 2,548 337 9,790 45,915 92,913	1999 HK$’000 11,262 12,347 –
			23,609
			1,761 11,671 – 1,329 47,593 2,173 2,662 552 29,812 – 111,006

– 30 –

FINANCIAL INFORMATION ON THE GROUP

4. INFORMATION REGARDING DIRECTORS’ AND EMPLOYEES’ EMOLUMENTS

Particulars of the emoluments of the directors and the five highest paid individuals for the year are as follows:

(a) Directors’ emoluments Directors’ fees: Executive Independent non-executive Non-executive Other emoluments (salaries and other benefits) for executive directors Total emoluments	2001 HK$’000 – – 91 91 9,805 9,896	2000 HK$’000 132 36 – 168 9,510 9,678	1999 HK$’000 77 48 –
			125 11,137
			11,262

Not included in the directors’ emoluments above was rent-free accommodation provided to a Company’s director of a property owned by the Group with money value determined with reference to its rateable value amounting to approximately HK$2,635,000 up to the date of his resignation in February 2001. The respective rateable value for the year ended 31 March 2000 was approximately HK$3,144,000.

The emoluments of the directors, including the above accommodation benefit, were within the following bands:

	2001	2000	1999
	Number of	Number of	Number of
	directors	directors	directors
Nil – HK$1,000,000	14	7	6
HK$1,000,001 – HK$1,500,000	1	2	2
HK$1,500,001 – HK$2,000,000	1	1	1
HK$6,000,001 – HK$6,500,000	1	–	–
HK$7,500,001 – HK$8,000,000	–	1	1

(b) Employees’ emoluments

Of the five individuals with the highest emoluments in the Group, four (2000: four) were directors of the Company whose emoluments are included in the disclosure set out in (a) above. The emoluments of the remaining one (2000: one) individual were as follows:

	2001	2000	1999
	HK$’000	HK$’000	HK$’000
Salaries and other benefits	1,173	939	944

– 31 –

FINANCIAL INFORMATION ON THE GROUP

5. FINANCE COSTS

Interest on: Bank borrowings wholly repayable within five years Bank borrowings not wholly repayable within five years Convertible guaranteed bonds (including provision for premium payable on redemption) Convertible redeemable notes (including provision for premium payable on redemption) Other borrowings wholly repayable within five years _Less:_Amount capitalised to properties under development Amortisation of issue costs of convertible guaranteed bonds Amortisation of issue costs of convertible redeemable notes Bank facilities arrangement fees	2001 HK$’000 51,108 20,874 – 30,580 6,468 109,030 (27,403) 81,627 – 2,223 1,619 85,469	2000 HK$’000 81,269 874 31,855 3,569 4,531 122,098 (25,875) 96,223 3,196 324 3,358 103,101	1999 HK$’000 124,279 1,010 36,509 – 590
			162,388 (24,209
			138,179 3,835 – 7,792
			149,806

6. LOSS ON DISPOSAL OF SUBSIDIARIES

The loss on disposal of subsidiaries principally arose from the disposal of an approximate 63.68% interest in Asean Resources Holdings Limited (“Asean”) in January 2001 at a consideration of approximately HK$573 million. Asean is a public limited company incorporated in Bermuda with its shares listed on the Stock Exchange. Details of the disposal were set out in the circular dated 2 January 2001 issued by the Company (the “1/01 Circular”).

7. UNREALISED HOLDING LOSS ON OTHER INVESTMENT RECLASSIFIED AFTER DISPOSAL OF A FORMER ASSOCIATE

At 31 March 2000, the Group had an associate (the “Former Associate”) with its shares listed on the Stock Exchange. The majority of the Group’s interest in the Former Associate was held by Asean. Following the disposal of Asean described in note 6, the Group only held an approximate 1.7888% interest in the Former Associate. Since the Group can no longer exercise significant influence over the Former Associate, the investment in the Former Associate was reclassified as other investment and carried at fair value in accordance with the Group’s accounting policy. An unrealized holding loss of approximately HK$42,166,000 represents the difference between the carrying value of 1.7888% interest in the Former Associate at the date of disposal of Asean and the fair value of the shares of the Former Associate as at 31 March 2001.

8. WRITE-OFF OF GOODWILL

Impairment loss of goodwill on: – acquisition of certain subsidiaries – other investment_(note)_	2001 HK$’000 13,056 33,799 46,855	2000 HK$’000 – – –	1999 HK$’000 – –
			–

Note: The amount represents the goodwill previously write off against reserves on acquisitioq of the Former Associate. Impairment loss on goodwill arises at the time the investment in the Former Associate reclassified as other investment. Details are set out in note 7.

– 32 –

FINANCIAL INFORMATION ON THE GROUP

9. TAXATION

The charge comprises: Hong Kong Profits Tax Current year Underprovision in prior years Overseas taxation Current year Underprovision in prior years Share of taxation attributable to associates Taxation charge for the year	2001 HK$’000 – – – 30 347 377 3,719 4,096	2000 HK$’000 280 761 1,041 54 – 54 21,381 22,476	1999 HK$’000 1,119 (6,248) (5,129) 171 – (66) 5,274 250

Hong Kong Profits Tax is calculated at the rate of 16% on the estimated assessable profit for the year derived from Hong Kong.

Overseas taxation is calculated at the rates prevailing in the respective jurisdictions.

Details of the unrecognised deferred taxation for the year are set out in note 34.

10. (LOSS) PROFIT FOR THE YEAR

Of the Group’s loss for the year of HK$1,025,297,000 (2000: a profit of HK$18,533,000), a loss of HK$957,278,000 (2000: a profit of HK$5,908,000) has been dealt with in the financial statements of the Company.

11. DISCONTINUED OPERATIONS

In July 2001, the Group disposed of its entire interest in Actiwater Resources Limited (“Actiwater”), a wholly owned subsidiary of the Group to Expert Solution Limited (“Expert Solution”). The consolidated turnover and loss for the period of Actiwater and its subsidiaries for the period from 8 September 2000 (date of incorporation) to 31 March 2001, which have been included in the consolidated income statement, were HK$24,560,000 and HK$37,382,000, respectively.

Actiwater is an investment holding company. The principal activities of its subsidiaries are publishing of newspaper and magazines and provision of networking and information services.

Details of the disposal were set out in note 41(b).

– 33 –

FINANCIAL INFORMATION ON THE GROUP

12. (LOSS) EARNINGS PER SHARE

The calculation of the basic and diluted (loss) earnings per share for the year is based on the following

data:

(Loss) earnings for the purposes of basic (loss) earnings per share Effect of dilutive potential ordinary shares: – adjustment to the share of results of Asean based on dilution of its earnings per share – adjustment to the share of results of the Former Associate based on dilution of its (loss) earnings per share (Loss) earnings for the purposes of diluted (loss) earnings per share Weighted average number of ordinary shares for the purposes of basic (loss) earnings per share Effect of dilutive potential ordinary shares in respect of share options Weighted average number of ordinary shares for the purposes of diluted (loss) earnings per share	2001 HK$’000 (1,025,297) (1,230) (158) (1,026,685) 2001 Number of shares 312,947,194 – 312,947,194	2000 HK$’000 18,533 (3,604) (618) 14,311 2000 Number of shares 312,947,194 397,812 313,345,006	1999 HK$’000 (676,939) (206) (36) 677,181 1999 Number of shares 1,565,434,013 – 1,565,434,013

The weighted average number of ordinary shares for the purpose of basic and diluted (loss) earnings per share for 2001 and 2000 has been adjusted for the effect of share consolidation approved on 2 April 2001, details of which are set out in note 41(a).

For the year ended 31 March 2001, the computation of diluted loss per share did not assume the conversion of the Company’s convertible redeemable notes and share options which were surrendered in February 2001 as the Group incurred a loss for the year.

For the year ended 31 March 2000, the computation of diluted earnings per share did not assume the conversion of the Group’s convertible guaranteed bonds which were fully redeemed in February 2000 and the Company’s outstanding convertible redeemable notes since their exercise would result in an increase in earnings per share from continuing ordinary operations. Also, the computation of diluted earnings per share did not assume the conversion of the Company’s share options which lapsed in October 1999 as the exercise price was higher than the average fair value per share.

13. INVESTMENT PROPERTIES

	THE GROUP
	HK$’000
At 1 April 2000	2,038,890
Transfer from property, plant and equipment	57,149
Disposal of subsidiaries	(2,034,580)
Surplus arising on revaluation	23,051
At 31 March 2001	84,510

– 34 –

FINANCIAL INFORMATION ON THE GROUP

The carrying amount of investment properties held by the Group at 31 March 2001 as shown above comprises:

Land in Hong Kong Long lease Medium-term lease Land situated elsewhere in the People’s Republic of China under long-term land use rights	2001 HK$’000 83,550 960 – 84,510	2000 HK$’000 2,030,330 760 7,800
		2,038,890

All investment properties were revalued as at 31 March 2001 on an open market value basis by RHL Appraisal Ltd., an independent firm of professional property valuers. The surplus arising on the revaluation of approximately HK$23,051,000 has been credited to the investment property revaluation reserve (note 29).

– 35 –

FINANCIAL INFORMATION ON THE GROUP

14. PROPERTY, PLANT AND EQUIPMENT

THE GROUP COST At 1 April 2000 Acquisition of subsidiaries Additions Transfer to investment properties Disposals Disposal of subsidiaries Exchange realignment At 31 March 2001 DEPRECIATION AND AMORTISATION At 1 April 2000 Provided for the year Eliminated on disposals Transfer to investment properties Disposal of subsidiaries At 31 March 2001 NET BOOK VALUES At 31 March 2001 At 31 March 2000	Leasehold land and Leasehold buildings improvements HK$’000 HK$’000 52,265 10,146 517 2,600 – 1,045 (52,265) (9,049) – (1,097) – – – (162) 517 3,483 4,284 3,509 691 1,061 – (292) (4,972) (4,015) – – 3 263 514 3,220 47,981 6,637	Plant and machinery HK$’000 – 91,898 1,774 – – – – 93,672 – 2,334 – – – 2,334 91,338 –	Motor vehicles and yachts HK$’000 16,105 883 32,103 – – (48,272) – 819 13,841 1,478 – – (15,294) 25 794 2,264	Furniture and fixtures HK$’000 31,774 2,889 11,484 (9,412) (8,281) (19,647) (125) 8,682 15,862 4,696 (3,350) (4,590) (11,274) 1,344 7,338 15,912	Total HK$’000 110,290 98,787 46,406 (70,726 (9,378 (67,919 (287
					107,173
					37,496 10,260 (3,642 (13,577 (26,568
					3,969
					103,204

					72,794

The land and buildings held at 31 March 2001 are situated in Hong Kong and held under a medium-term lease. The land and buildings held at 31 March 2000 were situated in Hong Kong and held under long leases.

The Company did not have any property, plant and equipment at 31 March 2001 or at 31 March 2000.

15. INTANGIBLE ASSET

COST Acquisition of a subsidiary and balance at 31 March 2001 AMORTISATION Amortisation for the year and balance at 31 March 2001 NET BOOK VALUE	HK$’000 68,760 685
	68,075

The intangible asset represents the rights to publish newspaper under the trademark and tradename of “Sing Pao”.

– 36 –

FINANCIAL INFORMATION ON THE GROUP

16. INTERESTS IN SUBSIDIARIES

Unlisted shares, at cost Amount due from a subsidiary, less impairment loss	THE COMPANY 2001 2000 HK$’000 HK$’000 – – 190,149 1,444,025 190,149 1,444,025	THE COMPANY 2001 2000 HK$’000 HK$’000 – – 190,149 1,444,025 190,149 1,444,025
		1,444,025

The Company’s cost of investments in the unlisted shares of its directly held subsidiaries is in aggregate less than HK$1,000. The amount due from a subsidiary is unsecured and non-interest bearing and will not be repayable within one year of the balance sheet date. Accordingly, such amount has been classified as a noncurrent asset.

Particulars of the principal subsidiaries of the Company at 31 March 2001 are set out in note 43.

17. INTERESTS IN ASSOCIATES

Share of net assets Amounts due from associates	THE GROUP 2001 2000 HK$’000 HK$’000 9,869 1,283,111 9,597 480,756 19,466 1,763,867	THE GROUP 2001 2000 HK$’000 HK$’000 9,869 1,283,111 9,597 480,756 19,466 1,763,867
		1,763,867

The amounts due from associates are unsecured and non-interest bearing. In the opinion of the directors, the amounts due from associates will not be repayable within one year of the balance sheet date. Accordingly, such amounts have been classified as non-current assets.

Details of the associates at 31 March 2001 are as follows:

			Proportion of	Effective
			nominal value	proportion
	Place of		of issued	of issued
	incorporation/	Paid up	capital held	capital held
Name of associate	operations	share capital	by subsidiaries	by the Group	Principal activity
			%	%
Asia Standard Development	Hong Kong	HK$2	50	50	Investment holding
Company Limited
Era Winner Limited	Hong Kong	HK$2	50	50	Property holding

– 37 –

FINANCIAL INFORMATION ON THE GROUP

18. INVESTMENTS IN SECURITIES

Equity securities Listed – Hong Kong – Overseas Unlisted Market value of listed securities Carrying amount analysed for reporting purposes as: Current Non-current	THE GROUP Investment securities Other investments 2001 2000 2001 2000 HK$’000 HK$’000 HK$’000 HK$’000 – – 20,100 12,184 – – 2,418 3,787 – – 22,518 15,971 2,000 6,437 – 1,638 2,000 6,437 22,518 17,609 – – 22,518 15,971 – – 22,518 17,609 2,000 6,437 – – 2,000 6,437 22,518 17,609	THE GROUP Investment securities Other investments 2001 2000 2001 2000 HK$’000 HK$’000 HK$’000 HK$’000 – – 20,100 12,184 – – 2,418 3,787 – – 22,518 15,971 2,000 6,437 – 1,638 2,000 6,437 22,518 17,609 – – 22,518 15,971 – – 22,518 17,609 2,000 6,437 – – 2,000 6,437 22,518 17,609
		15,971 1,638
		17,609

		15,971

		17,609 –
		17,609

19. PROPERTIES UNDER DEVELOPMENT COST OR VALUATION At beginning of the year Additions Transfer to properties held for sale Disposal of subsidiaries At end of the year Comprising: At cost At valuation – 1995	THE GROUP 2001 2000 HK$’000 HK$’000 1,303,696 1,138,984 44,224 294,499 (630,210) – (717,710) (129,787 – 1,303,696 – 973,696 – 330,000 – 1,303,696	THE GROUP 2001 2000 HK$’000 HK$’000 1,303,696 1,138,984 44,224 294,499 (630,210) – (717,710) (129,787 – 1,303,696 – 973,696 – 330,000 – 1,303,696
		1,303,696

		973,696 330,000
		1,303,696

The carrying value of properties under development at the balance sheet date shown above	The carrying value of properties under development at the balance sheet date shown above	comprises:
	2001	2000
	HK$’000	HK$’000
Land in Hong Kong
Long lease	–	827,641
Medium-term lease	–	476,055
	–	1,303,696

As at 31 March 2000, included in properties under development was interest capitalised of approximately HK$86,149,000.

– 38 –

FINANCIAL INFORMATION ON THE GROUP

20. INVENTORIES

Properties held for sale Printing materials Books	2001 HK$’000 4,800 998 162 5,960	2000 HK$’000 6,098 – –
		6,098

Properties held for sale held by the Group at 31 March 2001 were carried at net realisable value while those held at 31 March 2000 were carried at cost. Printing materials and books held by the Group were carried at cost.

21. TRADE AND OTHER RECEIVABLES

The Group allows its trade customers with a credit period normally ranging from 30 days to 60 days (2000: up to 15 days). Included in trade and other receivables are trade receivables of HK$11,589,000 (2000: HK$11,432,000) and their aged analyses are as follows:

Trade receivables 0 to 30 days 31 to 90 days More than 90 days	THE GROUP 2001 2000 HK$’000 HK$’000 9,852 3,301 1,644 3,252 93 4,879 11,589 11,432	THE GROUP 2001 2000 HK$’000 HK$’000 9,852 3,301 1,644 3,252 93 4,879 11,589 11,432
		11,432

22. PLEDGED BANK DEPOSITS

At 31 March 2000, the bank deposits had been pledged to a bank for banking facilities granted to the Group. During the year, the pledged bank deposits have been released upon refinance of the banking facilities.

23. TRADE AND OTHER PAYABLES

Included in trade and other payables are trade payables of HK$12,861,000 and are aged under 30 days at 31 March 2001. Included in the balance at 31 March 2000 were retention money payables of HK$5,831,000 payable according to the terms of construction contracts.

– 39 –

FINANCIAL INFORMATION ON THE GROUP

24. BANK AND OTHER BORROWINGS

The bank and other borrowings comprise:
Bank borrowings
Other borrowings
Analysed as
– secured
– unsecured
The bank and other borrowings
are repayable as follows:
Within one year or on demand
More than one year, but not exceeding two years
More than two years, but not exceeding five years
More than five years
_Less:_Amount due within one year
shown under current liabilities
Amount due after one year

THE GROUP
2001
2000
HK$’000
HK$’000
108,146
978,198
–
68,409
108,146
1,046,607
58,146
1,046,607
50,000
–
108,146
1,046,607
101,263
163,431
6,883
463,737
–
190,591
–
228,848
108,146
1,046,607
(101,263)
(163,431)
6,883
883,176

25. AMOUNT DUE TO ULTIMATE HOLDING COMPANY

The amount is unsecured, non-interest bearing and has no fixed repayment terms. The ultimate holding company has confirmed that the amount is not repayable within twelve months of the balance sheet date. Accordingly, it is shown in the balance sheet as a non-current liability.

26. CONVERTIBLE DEBTS

HK$300,000,000 6% convertible redeemable notes _Less:_Unamortised issue costs _Add:_Accrued premium payable on redemption Amount due after one year	2001 HK$’000 – – – –	2000 HK$’000 300,000 (5,511) 962 295,451

In February 2001, the Group issued two convertible redeemable notes of HK$150,000,000 each due on 8 February 2003 (the “Convertible Notes”). The principal terms of the Convertible Notes were as follows:

(a) The outstanding principal amount of the Convertible Notes might be converted at the option of the holders of the Convertible Notes (“Noteholders”) in whole or in part (being HK$5,000,000 in principal amount or an integral multiple thereof) into shares of HK$0.40 each in the Company at an initial conversion price of HK$0.40 per share, subject to adjustment. Such option was exercisable at any time during the period from 8 August 2001 to 7 February 2003, both dates inclusive.
(b) The Group might redeem all or some of the Convertible Notes (being HK$5,000,000 in principal amount or an integral multiple thereof) on or at any time during the period from 8 February 2000 to 7 August 2001 at the Note Accrued Amount as defined below.

– 40 –

FINANCIAL INFORMATION ON THE GROUP

“Note Accrued Amount” meant such amount as would cause the Convertible Notes to provide a yield of 10% per annum to the Noteholders, from 8 February 2000 to the date of redemption calculated on a daily basis.

(c) Unless previously redeemed, purchased and cancelled or converted, the Convertible Notes would be redeemed on 8 February 2003 at 106.633% of their principal amount together with accrued interest.
(d) Interest was payable semi-annually in arrears in February and August in each year.

In January 2001, the Convertible Notes were fully redeemed by the Group.

27. SHARE CAPITAL

Number of ordinary shares Ordinary shares of HK$0.40 each Authorised: 3,000,000,000 Issued and fully paid: At 1 April 1999, 1 April 2000 and 31 March 2001 1,564,735,970	Value HK$’000 1,200,000

	625,894

There were no movements in the share capital in both years.

28. SHARE OPTION SCHEMES

Pursuant to the share option scheme of the Company adopted on 8 September 1998 (the “1998 Scheme”), the board of directors of the Company may at its discretion offer to any executive and/or employee, including executive directors, of the Company and/or its subsidiaries options to subscribe for shares in the Company in accordance with the terms of the 1998 Scheme. A total of 133,005,000 share options were granted during the year ended 31 March 2000. These share options entitled the holders thereof to subscribe for shares of HK$0.40 each in the Company at an subscription price of HK$0.5136 per share (subject to adjustment) during the exercisable period from 10 March 2000 to 9 March 2003 No options were exercised during the current year and these options were surrendered for cancellation in February 2001 upon the resignation of the relevant executives or employees. The 1998 Scheme was cancelled on 9 April 2001.

On 9 April 2001, the Company adopted a new share option scheme (the “2001 Scheme”), under which the board of directors of the Company may at its discretion offer to any executive and/or employee, including executive directors, of the Company and/or its subsidiaries options to subscribe for shares in the Company in accordance with the terms of the 2001 Scheme. No option shall be granted under the 2001 Scheme which would result in the aggregate number of shares issued or issuable or which may be issuable under the 2001 Scheme or any other schemes of similar nature to exceed 10% of the issued share capital of the Company at the time of granting of the option. No such options were granted up to the date of this report.

– 41 –

FINANCIAL INFORMATION ON THE GROUP

29. RESERVES

Share premium account HK$’000 THE GROUP At 1 April 1999 50,395 The Group’s share of deficit arising on revaluation of investment properties – Reserve arising from increase in interests in associates – Share of associates’ reserve movements – Eliminated on disposal of interests in subsidiaries and associates – Exchange differences arising on translation of financial statements of overseas operations – Profit for the year – At 1 April 2000 50,395 Surplus arising on revaluation of investment properties – Share of associates’ reserve movements – Goodwill arising on acquisition of subsidiaries – Capital reserve arising on acquisition of an associate – Write-off of goodwill charged to income statement – Release of reserve upon disposal of other property – Transfer from interest in an associate to other investment – Eliminated on disposal of interests in subsidiaries – Exchange differences arising on translation of financial statements of overseas operations – Loss for the year – At 31 March 2001 50,395 THE COMPANY At 1 April 1999 50,395 Profit for the year – At 1 April 2000 50,395 Loss for the year – At 31 March 2001 50,395	Capital redemption reserve HK$’000 13,878 – – – – – – 13,878 – – – – – – – – – – 13,878 13,878 – 13,878 – 13,878	Investment property revaluation reserve HK$’000 474,623 (8,400 ) – – 32,106 – – 498,329 23,051 2,596 – – – – – (498,979 ) – – 24,997 – – – – –	Other Capital property reserve revaluation (goodwill) on reserve consolidation HK$’000 HK$’000 52,614 358,206 – – – 7,110 276,301 (5,218 ) – 1,025 – – – – 328,915 361,123 – – – (1,569 ) – (67,551 ) – 2,651 – 13,056 (26,968 ) – – 33,799 (301,947 ) (394,111 ) – – – – – (52,602 ) – – – – – – – – – –	Special reserve HK$’000 78,176 – – – – – – 78,176 – – – – – – – – – – 78,176 – – – – –	Contributed surplus HK$’000 – – – – – – – – – – – – – – – – – – – 222,794 – 222,794 – 222,794	Accumulated Exchange profits reserve (losses) HK$’000 HK$’000 1,789 477,855 – – – – (9,007 ) – (850 ) – 2,439 – – 18,533 (5,629 ) 496,388 – – (5,734 ) – – – – – – – – – – – 14,182 – (3,315 ) – – (1,025,297 ) (496 ) (528,909 ) – 227,762 – 5,908 – 233,670 – (957,278 ) – (723,608 )	Total HK$’000 1,507,536 (8,400 ) 7,110 262,076 32,281 2,439 18,533 1,821,575 23,051 (4,707 ) (67,551 ) 2,651 13,056 (26,968 ) 33,799 (1,180,855 ) (3,315 ) (1,025,297 ) (414,561 ) 514,829 5,908 520,737 (957,278 ) (436,541 )

– 42 –

FINANCIAL INFORMATION ON THE GROUP

The accumulated losses of the Group include a profit of HK$5,421,000 (2000: loss of HK$14,839,000) retained by associates of the Group.

The special reserve of the Group represents the difference between the nominal amount of the share capital issued by the Company in exchange for the nominal amount of share capital of its subsidiaries acquired at the date of a previous group reorganisation.

The contributed surplus represents the difference between the consolidated shareholders’ funds of the subsidiaries at the date on which they were acquired by the Company, and the nominal value of the Company’s shares issued for the acquisition at the time of the group reorganisation.

Under the Companies Act 1981 of Bermuda (as amended), the contributed surplus account of the Company is available for distribution. However, the Company cannot declare or pay a dividend, or make a distribution out of contributed surplus if:

(a) the Company is, or would after the payment be, unable to pay its liabilities as they become due; or
(b) the realisable value of the Company’s assets would thereby be less than the aggregate of its liabilities and its issued share capital and share premium account.

In the opinion of the directors, as at 31 March 2000, the Company’s reserves available for distribution consisted of contributed surplus of approximately HK$222,794,000 and accumulated profits of approximately HK$233,670,000. The Company did not have any distributable reserves as at 31 March 2001.

30. RECONCILIATION OF (LOSS) PROFIT BEFORE TAXATION TO NET CASH OUTFLOW FROM OPERATING ACTIVITIES

(Loss) profit before taxation Share of results of associates Loss on deemed disposal of interest in an associate Interest income Interest expenses Amortisation of issue costs of the Convertible Bonds Amortisation of issue costs of the Convertible Notes Amortisation of intangible asset Bank facilities arrangement fees Depreciation and amortisation of property, plant and equipment Write-off of goodwill Unrealised holding loss on other investment reclassified after disposal of a former associate (Gain) loss on disposal of interests in associates Loss on disposal of interests in subsidiaries Loss on disposal of property, plant and equipment Provision for bad and doubtful debts Provision for premium payable on redemption of the Convertible Bonds Provision for premium payable on redemption of the Convertible Notes Increase in properties under development (Increase) decrease in properties held for sale Decrease in inventories (Increase) decrease in trade and other receivables Decrease in investments in securities Increase (decrease) in trade and other payables Net cash outflow from operating activities	2001 HK$’000 (972,381) 35,215 1,797 (6,792) 81,627 – 2,223 685 1,619 10,260 46,855 42,166 (20) 864,078 5,736 – – – (39,602) (187,809) 1,207 (6,546) 11,253 9,971 (98,458)	2000 HK$’000 71,281 (86,503) – (9,790) 96,223 3,196 324 – 3,358 7,843 – – 2,705 2,075 611 4,103 10,009 962 (268,624) 106,670 – 23,439 10,319 (2,303) (24,102)

– 43 –

FINANCIAL INFORMATION ON THE GROUP

31. DISPOSAL OF SUBSIDIARIES

Net assets disposed of: Investment properties Property, plant and equipment Properties under development Interests in associates Properties held for sale Investments in securities Trade and other receivables Bank balances and cash Bank overdrafts Trade and other payables Taxation payable Amounts due to associates Bank borrowings Minority interests Attributable (capital reserve) goodwill Attributable exchange reserve Attributable investment property revaluation reserve Attributable other property revaluation reserve Loss on disposal of subsidiaries Satisfied by: Cash	2001 HK$’000 2,034,580 41,351 717,710 1,726,237 450,862 15,765 388,256 60,163 (6,936) (68,159) (28,515) (46) (995,198) (1,716,956) 2,619,114 (394,111) 14,182 (498,979) (301,947) 1,438,259 (864,078) 574,181 574,181	2000 HK$’000 167,750 – 129,787 – – – – – – (858 – – – (526
		296,153 1,025 (923 32,106 –
		328,361 (2,075
		326,286

		326,286

Analysis of the net inflow of cash and cash equivalents in respect of the disposal of subsidiaries:

Cash consideration received Bank balances and cash disposed of Bank overdrafts disposed of Net inflow of cash and cash equivalents in respect of the disposal of subsidiaries	2001 HK$’000 574,181 (60,163) 6,936 520,954	2000 HK$’000 326,286 – –
		326,286

The subsidiaries disposed of during the year contributed HK$31,147,000 to the Group’s net operating cash flows, paid HK$70,844,000 in respect of the net returns on investment and servicing of finance, paid HK$351,000 in respect of taxation, utilized HK$156,628,000 for investing activities and raised HK$158,974,000 in respect of financing activities.

The subsidiaries disposed of during the year contributed HK$484,783,000 (2000: HK$373,045,000) to the Group’s turnover and HK$158,917,000 (2000: HK$69,208,000) to the Group’s profit from operations.

– 44 –

FINANCIAL INFORMATION ON THE GROUP

32. PURCHASE OF SUBSIDIARIES

Net assets acquired: Property, plant and equipment Intangible asset Investments in securities Inventories Trade and other receivables Bank balances and cash Trade and other payables Bank loans Bank overdrafts Amount due to ultimate holding company Minority interests Goodwill arising on acquisition of subsidiaries Satisfied by: Cash	2001 HK$’000 98,787 68,760 366 1,069 14,238 61,043 (23,159) (50,000) (11,866) (28,684) (33,871) 96,683 67,551 164,234 164,234	2000 HK$’000 – – – – – – – – – – –
		– –
		–

		–

Analysis of the net outflow of cash and cash equivalents in respect of the purchase of subsidiaries:

Cash consideration paid Bank balances and cash acquired Bank overdrafts acquired Net outflow of cash and cash equivalents in respect of the purchase of subsidiaries	2001 HK$’000 (164,234) 61,043 (11,866) (115,057)	2000 HK$’000 – – –

		–

The subsidiaries acquired during the year contributed HK$60,859,000 to the Group’s net operating cash outflows, paid HK$856,000 in respect of the net returns on investments and servicing of finance, utilised HK$111,009,000 for investing activities and raised HK$199,099,000 in respect of financing activities.

The subsidiaries acquired during the year contributed HK$24,560,000 to the Group’s turnover and HK$45,336,000 to the Group’s loss from operations.

– 45 –

FINANCIAL INFORMATION ON THE GROUP

33. ANALYSIS OF CHANGES IN FINANCING DURING THE YEAR

At 1 April 1999 New borrowings raised Disposal of subsidiaries_(note 31) Repayments Amortisation of issue costs Accrued premium payable on redemption Contribution from minority shareholders Profit for the year shared by minority shareholders Reserve shared by minority shareholders for the year: Investment property revaluation reserve Other property revaluation reserve Exchange reserve Net capital reserve on consolidation At 1 April 2000 New borrowings raised Disposal of subsidiaries(note 31) Repayments Amortisation of issue cost Acquisition of subsidiaries(note 32)_ Disposal of an associate Contribution from minority shareholders Dividend paid to minority shareholders Profit for the year shared by minority shareholders Reserve shared by minority shareholders for the year: Other property revaluation reserve Exchange reserve Net capital reserve on consolidation At 31 March 2001	Bank and other borrowings HK$’000 1,038,008 246,025 – (252,384) – – – – – – – – 1,031,649 181,216 (995,198) (159,521) – 50,000 – – – – – – – 108,146	Convertible guaranteed bonds HK$’000 407,242 – – (420,447) 3,196 10,009 – – – – – – – – – – – – – – – – – – – –	Convertible redeemable notes HK$’000 – 294,165 – – 324 962 – – – – – – 295,451 – – (297,674) 2,223 – – – – – – – – –	Amounts due to associates HK$’000 968 – – – – – – – – – – 968 135 (46) – – – (1,057) – – – – – – –	Minority interests HK$’000 1,469,194 – (526) – – 10,479 30,272 (4,768) 157,566 (3,026) 6,451 1,665,642 – (1,716,956) – – 33,871 – 18,149 (4,670) 48,820 (26,267) (7,262) (895) 10,432

– 46 –

FINANCIAL INFORMATION ON THE GROUP

34. UNRECOGNISED DEFERRED TAXATION

The components of the unrecognised deferred taxation assets (liability) at the balance sheet date are as follows:

Tax effect of timing differences attributable to: Tax losses Excess of tax allowances over depreciation	THE 2001 HK$’000 57,538 (10,930) 46,608	GROUP 2000 HK$’000 33,722 (975) 32,747	THE COMPANY 2001 2000 HK$’000 HK$’000 20,979 17,410 – – 20,979 17,410	THE COMPANY 2001 2000 HK$’000 HK$’000 20,979 17,410 – – 20,979 17,410
				17,410

The deferred tax asset has not been recognised in the financial statements as it is not certain that the benefits will be realised in the foreseeable future.

The components of the deferred taxation credit (charge) not recognised for the year are as follows:

Tax effect of timing differences attributable to: Tax losses incurred (utilised) (Excess) shortfall of tax allowances over depreciation Disposal of subsidiaries	THE GROUP 2001 2000 HK$’000 HK$’000 39,495 (17,968 (10,160) 869 (15,474) – 13,861 (17,099	THE GROUP 2001 2000 HK$’000 HK$’000 39,495 (17,968 (10,160) 869 (15,474) – 13,861 (17,099
		(17,099

Deferred taxation has not been provided for the accumulated surplus arising on the revaluation of investment properties as profits arising on future disposal of these assets would not be subject to taxation. Accordingly, the surplus arising on revaluation does not constitute a timing difference for tax purposes.

35. OPERATING LEASE COMMITMENTS

At the balance sheet date, the Group was committed to make payments in the next twelve months under a non-cancellable operating lease in respect of premises as follows:

Operating lease which expires: Within one year In the second to fifth year inclusive	THE GROUP 2001 2000 HK$’000 HK$’000 – 1,911 8,820 – 8,820 1,911	THE GROUP 2001 2000 HK$’000 HK$’000 – 1,911 8,820 – 8,820 1,911
		1,911

The Company had no significant commitments in respect of premises payable in the next twelve months under non-cancellable operating leases at 31 March 2001 and at 31 March 2000.

– 47 –

FINANCIAL INFORMATION ON THE GROUP

36. CONTINGENT LIABILITIES

Guarantees given to banks and/or a securities broker in respect of banking and credit facilities utilised by: – subsidiaries – associates	THE 2001 HK$’000 – – –	GROUP 2000 HK$’000 – 594,994 594,994	THE COMPANY 2001 2000 HK$’000 HK$’000 58,146 121,057 – – 58,146 121,057	THE COMPANY 2001 2000 HK$’000 HK$’000 58,146 121,057 – – 58,146 121,057
				121,057

37. CAPITAL COMMITMENTS

Capital expenditure in respect of an acquisition of a subsidiary contracted for but not provided in the financial statements Capital expenditure in respect of purchase of property, plant and equipment contracted for but not provided in the financial statements Capital expenditure in respect of purchase of properties under development contracted for but not provided in the financial statements Commitment to contribute a loan to an associate	THE GROUP 2001 2000 HK$’000 HK$’000 – 50,162 16,201 – – 156,685 – 3,472 16,201 210,319	THE GROUP 2001 2000 HK$’000 HK$’000 – 50,162 16,201 – – 156,685 – 3,472 16,201 210,319
		210,319

The Company had no significant capital commitments at 31 March 2001 and at 31 March 2000.

38. PLEDGE OF ASSETS

At 31 March 2001, investment property of HK$80,000,000 has been pledged to a bank to secure banking facilities granted to the Group. At 31 March 2000, investment properties of HK$2,013,940,000, leasehold land and buildings of HK$47,981,000 and certain shares in a subsidiary and an associate held by subsidiaries had been pledged to banks to secure banking facilities granted to the Group.

In addition to the above, at 31 March 2000, properties under development of HK$808,603,000, bank deposits of HK$56,225,000 and other investments of HK$543,000 together with certain shares in a subsidiary have been pledged to banks and a securities broker for banking and credit facilities granted to the Group. The Group’s obligations under such securities were released upon the Group’s disposal of interest in Asean during the year.

39. RETIREMENT BENEFITS SCHEME

With effective from 1 December 2000, the Group has joined a Mandatory Provident Fund scheme (“MPF Scheme”). The MPF scheme is registered with the Mandatory Provident Fund Scheme Authority under the Mandatory Provident Fund Scheme Ordinance. The assets of the MPF scheme are held separately from those of the Group in funds under the control of an independent trustee. Under the rules of the MPF Scheme, the employer and its employees are each required to make contributions to the scheme at rates specified in the rules. The only obligation of the Group with respect to the MPF Scheme is to make the required contributions under the scheme. No forfeited contributions are available to reduce the contributions payable in future years.

The retirement benefit scheme contributions arising from the MPF Scheme charged to the income statement represent contributions payable to the scheme by the Group at rates specified in the rules of the MPF Scheme.

– 48 –

FINANCIAL INFORMATION ON THE GROUP

A subsidiary of the Group in the Mainland China (the “PRC”) is a participant in a state-managed retirement plan in the PRC pursuant to which the subsidiary pays a fixed percentage of its qualifying staff’s wages as contribution to the plan. During the year, contributions payable by the subsidiary pursuant to this arrangement were approximately HK$23,000 (2000: nil). There were no forfeited contributions available to reduce the subsidiary’s future contributions during the year.

40. CONNECTED TRANSACTIONS AND RELATED PARTY DISCLOSURES

The significant transactions with the connected persons/related parties during the year are as follows:

(a) On 17 November 2000, a conditional agreement was entered into by the Company and Mr. Chan Boon Ho, Peter (“Mr. Chan”), the former chairman of the Group and the former controlling shareholder of the Group and United Goal Development Limited (“United Goal”), a company which is beneficially owned by Mr. Chan and Chow Tai Fook Enterprises Limited equally. Pursuant to the Agreement, the Group agreed to sell to Mr. Chan and United Goal 77,190,000 shares and 742,087,729 shares in Asean respectively for a total consideration of approximately HK$573,494,000 (the “Disposal”).

The Disposal constituted a connected transaction of the Company as Mr. Chan was the chairman and the controlling shareholder of the Group at the time of entering the Agreement. The Disposal was completed on 19 January 2001. Details of the Disposal are set out in the 1/01 Circular.

(b) On 17 November 2000, the Group entered into a conditional agreement with Good Trend Enterprises Limited, a wholly owned subsidiary of China Strategic, Capital Deal Investments Limited, a wholly owned subsidiary of Star East Holdings Limited (“Star East”) (collectively known as the “Vendors”). Pursuant to the agreement, the Vendors have agreed to sell to the Group 2 shares of China Youth Net.Com Limited (“China Youth”), 1 share of Komatic International Limited and 100 shares of Optima Media Holding Limited for a total consideration of HK$110,000,000 (the “Acquisition”).

The Acquisition constituted a connected transaction of the Company as China Strategic would become the controlling shareholder at the time of the completion of the Acquisition. The Acquisition was completed on 19 January 2001. Details of the Acquisition are set out in the 1/01 Circular.

(c) The Group entered into a conditional leasing agreement on 17 November 2000 with Mr. Chan in connection with the leasing of the house erected on No. 4 Henderson Road, Hong Kong for a period of 3 years commencing from the date of completion of the Disposal as mentioned in note (a) with an option exercisable by Mr. Chan to renew for a further term of 3 years (the “Lease”). The rental received from Mr. Chan amounted to approximately HK$774,000 for the year ended 31 March 2001.

The Lease constituted a connected transaction and commenced from 19 January 2001. Details of the Lease are set out in the 1/01 Circular.

(d) At 31 March 2001, the unsecured bank borrowing of HK$50,000,000 was guaranteed by China Strategic and Star East in proportion to their equity interest in the Company.
(e) During the year, the Group paid rental expenses and management and air-conditioning charges of HK$2,118,000 (2000: HK$3,038,000) in respect of office premises under a non-cancellable operating lease to a former associate which was disposed of during the year. The rental was paid in accordance with the terms of the relevant tenancy agreement.

41. POST BALANCE SHEET EVENTS

The following events occurred subsequent to the balance sheet date:

(a) Pursuant to special resolutions passed by the shareholders in a special general meeting held on 2 April 2001, the Company carried out the following capital reorganisation proposal:
adjusting the nominal value of the shares of the Company by reducing the nominal value of all the issued shares from HK$0.40 each to HK$0.01 each by the cancellation of HK$0.39 paid up share capital on each issued share;
subdividing every unissued share of HK$0.40 into 40 unissued shares of HK$0.01 each;

– 49 –

FINANCIAL INFORMATION ON THE GROUP

consolidating every five issued and unissued shares of HK$0.01 each into one consolidated share of HK$0.05; and
cancelling an amount of HK$48 million from the share premium account of the Company and crediting the amount so cancelled to the contributed surplus account of the Company.

Details of the above capital reorganisation proposal were set out in the circular dated 10 March 2001.

(b) On 18 May 2001, the Company entered into a conditional sale and purchase agreement with Expert Solution, a company which is owned as to 65% by China Strategic and as to 35% by Star East, in connection to the disposal of the Group’s entire interest of Actiwater to Expert Solution for a consideration of HK$110,000,000. The transaction was completed on 9 July 2001.

42. SEGMENTAL INFORMATION

The Group’s turnover and contribution to (loss) profit before taxation analysis by principal activity were as follows:

Property development and investment Property rental Publishing of newspaper and magazines and advertising income Securities trading and investments Software development Other revenue Administrative expenses Other operating expenses Profit from operations Finance costs Loss on disposal of subsidiaries Unrealised holding loss on other investment reclassified after disposal of a former associate Write-off of goodwill Loss on deemed disposal of interest in an associate Share of results of associates (Loss) profit before taxation	Turnover 2001 2000 HK$’000 HK$’000 412,513 527,820 72,487 92,913 24,560 – 5,098 73,166 – – 514,658 693,899	Contribution to (loss) profit before taxation 2001 2000 HK$’000 HK$’000 140,755 (5,946) 67,587 87,420 (12,890) – (6,889) 46,252 (12,573) – 175,990 127,726 12,588 14,103 (78,587) (51,875) (6,792) – 103,199 89,954 (85,469) (103,101) (864,078) (2,075) (42,166) – (46,855) – (1,797) – (35,215) 86,503 (972,381) 71,281

No segmental information by geographical location is presented as over 90% of the Group’s turnover and contribution to operating results for the year were derived from Hong Kong.

– 50 –

FINANCIAL INFORMATION ON THE GROUP

43. PARTICULARS OF PRINCIPAL SUBSIDIARIES

Details of the Company’s principal subsidiaries at 31 March 2001 are as follows:

			Proportion of
			nominal value	Effective
			of issued	proportion
		Paid up	capital held	of issued
	Place of	share capital/	by the	capital
	incorporation/	registered	Company#/	held by	Principal
Name of subsidiary	operations	capital	subsidiaries	the Group	activities
			%	%
Actiwater Resources	British Virgin	US$1	100 #	100	Investment holding
Limited	Islands	ordinary
	(“B.V.I.”)/	share
	Hong Kong
All Grand Limited	Hong Kong	HK$2	100	100	Property
		ordinary			investment
		shares
Central Lot Limited	B.V.I./	US$1	100	100	Investment holding
	Hong Kong	ordinary
		share
Charter Nominees	Hong Kong	HK$2	100	100	Investment holding
Limited		ordinary			and provision of
		shares			nominee services
China Youth Net.Com	Hong Kong	HK$2	100	100	Investment holding
Limited (formerly		ordinary
known as China		shares
Aircraft Leasing
(Holdings) Limited)
Education Online	B.V.I./	US$1	100	100	Investment holding
Company Limited	Hong Kong	ordinary
		share
Fairtop Limited	B.V.I./	US$1	100	100	Investment holding
	Hong Kong	ordinary
		share
Flow Success Company	Hong Kong	HK$2	100	100	Property holding
Limited		ordinary
		shares
Glad & Nice Limited	Hong Kong	HK$2	100	100	Property holding
		ordinary
		shares
Greenham Development	Hong Kong	HK$2	100	100	Property holding
Limited		ordinary
		shares
Honalary Company	B.V.I./	US$1	100	100	Investment holding
Limited	Hong Kong	ordinary
		share
Huey Tai Holdings	Hong Kong	HK$2	100#	100	Investment holding
Limited		ordinary
		shares

– 51 –

FINANCIAL INFORMATION ON THE GROUP

			Proportion of
			nominal value	Effective
			of issued	proportion
		Paid up	capital held	of issued
	Place of	share capital/	by the	capital
	incorporation/	registered	Company#/	held by	Principal
Name of subsidiary	operations	capital	subsidiaries	the Group	activities
			%	%
Jettie Limited	B.V.I./	US$1	100	100	Investment holding
	Hong Kong	ordinary
		share
Komatic International	B.V.I./	US$1	100	100	Investment holding
Limited	Hong Kong	ordinary
		share
Optima Media Holding	B.V.I./	US$100	100	100	Holding of
Limited	Hong Kong	ordinary			intangible asset
		shares			and investment
					holding
OZ New Media Inc.	Canada	CAD$11,591,580	78.8%	70.9%	Sale and
		common stock			development
		CAD$6,192,814	–	–	internet
		redeemable			delivered,
		preferred shares			curriculum -
		(note)			specific,
					multimedia
					educational
					software
					applications
Sing Pao Newspaper	Hong Kong	HK$2	100	100	Holding of fixed
Assets Limited		ordinary			assets
(formerly known as		shares
Legend Source
Limited)
Sing Pao Newspaper	Hong Kong	HK$2	100	100	Newspaper
Company Limited		ordinary			publication
(formerly known as		shares
Specstar Investment
Limited)
Sing Pao Newspaper	Hong Kong	HK$2	100	100	Provision of
Distribution Limited		ordinary			management
(formerly known as		shares			service
Sharp Keen Limited)
Sing Pao Newspaper	Hong Kong	HK$2	100	100	Provision of
Management Limited		ordinary			management
(formerly known as		shares			service
Union Vantage
Limited)
South Gater Limited	Hong Kong	HK$2	100	100	Property holding
		ordinary
		shares
Terimin Company	Hong Kong	HK$2	100	100	Property holding
Limited		ordinary
		shares

– 52 –

FINANCIAL INFORMATION ON THE GROUP

			Proportion of
			nominal value	Effective
			of issued	proportion
		Paid up	capital held	of issued
	Place of	share capital/	by the	capital
	incorporation/	registered	Company#/	held by	Principal
Name of subsidiary	operations	capital	subsidiaries	the Group	activities
			%	%
United Gain Limited	B.V.I./	US$1	100	100	Investment holding
	Hong Kong	ordinary
		share
Wah Fung Book Store	Hong Kong	HK$796,000	100	100	Investment holding
Limited		ordinary
		shares
Weth Development	Hong Kong	HK$2	100	100	Investment holding
Limited		ordinary
		shares
Wide Angle Press	Hong Kong	HK$918,400	100	100	Magazines and
Limited		ordinary			books
		shares			publication
中青在線網絡信息技術	PRC	RMB5,000,000	60	60	Provision of
有限公司		registered			networking and
		capital			information
					services

Note: The redeemable preferred shares have no voting rights and the holders are entitled to have:

(a) the right in priority to a preferential cash dividend as determined by the board of directors out of money properly applicable to the payment of dividends;
(b) the right on redemption to repayment of the amount paid up and all accrued but unpaid dividend; and
(c) the right in priority to any other class of shares to repayment of the redemption amount per share together with any accrued but unpaid dividend in the case of winding up.

The above table includes the subsidiaries of the Company which, in the opinion of the directors, principally affected the results of the year or formed a substantial portion of the net assets of the Group. To give details of other subsidiaries would, in the opinion of the directors, result in particulars of excessive length.

– 53 –

FINANCIAL INFORMATION ON THE GROUP

INTERIM RESULTS

The following unaudited consolidated income statement of the Group for the six-month period ended 30 September 2000 and 2001 together with the relevant notes are extracted from the interim reports of the Company for the six-month period ended 30 September 2001.

Condensed Consolidated Income Statement

Notes
Turnover
3
Cost of sales
Other revenue
Administrative expenses
Unrealised holding losses on investment
securities
Other operating expenses
(Loss) profit from operations
Finance costs
Loss on disposal of subsidiaries
Share of results of associates
(Loss) profit before taxation
Taxation
5
(Loss) profit before minority interests
Minority interests
(Loss) profit for the period
(Loss) earnings per share
6
Basic
Diluted

Six months ended
30 September
2001
2000
(unaudited)
(unaudited)
HK$’000
HK$’000
40,920
375,575
(51,205)
(234,434)
(10,285)
141,141
2,544
27,887
(40,070)
(34,418)
(13,305)
–
–
(4,687)
(61,116)
129,923
(3,770)
(47,444)
(4,942)
–
(5,952)
(2,908)
(75,780)
79,571
–
(3,342)
(75,780)
76,229
9,588
(46,784)
(66,192)
29,445
(20.40)cents
9.41 cents
N/A
9.03 cents

– 54 –

FINANCIAL INFORMATION ON THE GROUP

CONDENSED CONSOLIDATED STATEMENT OF RECOGNISED GAINS AND LOSSES

Exchanges losses arising on translation of
financial statements of overseas operations
Share of an associate’s exchange reserve movements
Losses not recognised in the condensed consolidated
income statement
(Loss) profit for the period
Total recognised gains and losses
Capital reserve on consolidation arising from
increase in interest in a former associate
Goodwill arising from acquisition of interest
in a subsidiary
Share of a former associate’s movements
in capital reserve on consolidation

Six months ended
30 September
2001
2000
(unaudited)
(unaudited)
HK$’000
HK$’000
–
(897)
–
(12,830)
–
(13,727)
(66,192)
29,445
(66,192)
15,718
–
2,652
–
(54,336)
–
(2,274)
(66,192)
(38,240)

– 55 –

FINANCIAL INFORMATION ON THE GROUP

CONDENSED CONSOLIDATED BALANCE SHEET

30 September
2001
(unaudited)
Notes
HK$’000
Non-current assets
Investment properties
8
84,510
Property, plant and equipment
8
4,966
Intangible asset
8
–
Interests in associates
13,442
Investments in securities
9
27,550
130,468
Current assets
Inventories
4,800
Trade and other receivables
10
2,488
Investments in securities
33,039
Bank balances and cash
119,822
160,149
Current liabilities
Trade and other payables
11
3,342
Amount due to a controlling shareholder
12
1,953
Loans from related parties
13
18,239
Bank and other borrowings
7,162
30,696
Net current assets (liabilities)
129,453
Total assets less current liabilities
259,921
Non-current liabilities
Amount due to former ultimate
holding company
14
–
Bank borrowings
47,847
47,847
Minority interests
287
Net assets
211,787
Capital and reserves
Share capital
15
18,747
Reserves
16
193,040
Shareholders’ funds
211,787

31 March
2001
(unaudited)
HK$’000
84,510
103,204
68,075
19,466
2,000
277,255
5,960
26,370
22,518
52,299
107,147
25,807
–
–
101,263
127,070
(19,923)
257,332
28,684
6,883
35,567
10,432
211,333
625,894
(414,561)
211,333

– 56 –

FINANCIAL INFORMATION ON THE GROUP

CONDENSED CONSOLIDATED CASH FLOW STATEMENT

NET CASH OUTFLOW FROM OPERATING
ACTIVITIES
NET CASH OUTFLOW FROM RETURNS ON
INVESTMENTS AND SERVICING OF FINANCE
TAXATION PAID
NET CASH INFLOW (OUTFLOW) FROM
INVESTING ACTIVITIES
NET CASH OUTFLOW BEFORE FINANCING
ACTIVITIES
NET CASH INFLOW FROM FINANCING ACTIVITIES
INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS AT BEGINNING
OF THE PERIOD
EFFECT OF FOREIGN EXCHANGE RATE CHANGES
CASH AND CASH EQUIVALENTS AT END OF
THE PERIOD

Six months ended
30 September
2001
2000
HK$’000
HK$’000
(78,183)
(30,501)
(2,430)
(57,270)
–
(260)
65,945
(40,836)
(14,668)
(128,867)
82,191
79,181
67,523
(49,686)
52,299
175,999
–
(920)
119,822
125,393

– 57 –

FINANCIAL INFORMATION ON THE GROUP

NOTES TO THE CONDENSED FINANCIAL STATEMENTS

1. BASIS OF PREPARATION

The condensed financial statements have been prepared in accordance with Statement of Standard Accounting Practice (“SSAP”) 25 “Interim financial reporting” issued by the Hong Kong Society of Accountants, and with the applicable disclosure requirements of appendix 16 to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Stock Exchange”).

2. PRINCIPAL ACCOUNTING POLICIES

The condensed financial statements have been prepared under the historical cost convention as modified for the revaluation of investment properties and certain investments in securities.

The accounting policies adopted are consistent with those followed in the preparation of the Group’s financial statements for the year ended 31 March 2001, except that in the current period, the Group has adopted for the first time, a number of new and revised SSAPs which has resulted in the adoption of SSAP 30 “Business Combinations” and the Group has elected not to restate goodwill (negative goodwill) previously eliminated against (credited to) reserves. Accordingly, goodwill arising on acquisitions prior to 1 April 2001 is held in reserves and will be charged to the income statement at the time of disposal of the relevant subsidiary or associate, or at such time as the goodwill is determined to be impaired. Negative goodwill arising on acquisitions prior to 1 April 2001 will be credited to income at the time of disposal of the relevant subsidiary or associate.

Any goodwill arising on acquisitions after 1 April 2001 will be capitalised and amortised over its estimated useful life. Any negative goodwill arising on acquisitions after 1 April 2001 will be presented as a deduction from assets and will be released to income based on an analysis of the circumstances from which the balance resulted.

Apart from SSAP 30, the other new and revised SSAPs adopted during the period do not have significant impact to the Group.

3. SEGMENT INFORMATION

Business nature Publishing of newspaper and magazine and advertising income Property development Property rental Securities trading and investment Software development Other income Central administrative expenses (Loss) profit from operations Geographical region Hong Kong North America Other income Central administrative expenses (Loss) profit from operations	Turnover Six months ended 30 September 2001 2000 HK$’000 HK$’000 37,940 – – 321,629 1,920 49,198 1,051 4,748 9 – 40,920 375,575 Turnover Six months ended 30 September 2001 2000 HK$’000 HK$’000 40,911 375,575 9 – 40,920 375,575	Segment results Six months ended 30 September 2001 2000 HK$’000 HK$’000 (12,983) – – 95,860 1,920 48,395 (12,254) (3,114) (13,837) (11,446) (37,154) 129,695 2,544 27,887 (26,506) (27,659) (61,116) 129,923 Segment results Six months ended 30 September 2001 2000 HK$’000 HK$’000 (23,317) 141,141 (13,837) (11,446) (37,154) 129,695 2,544 27,887 (26,506) (27,659) (61,116) 129,923

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FINANCIAL INFORMATION ON THE GROUP

4. COST OF SALES

The amount for the period from 1 April 2000 to 30 September 2000 included the Group’s share of surplus of approximately HK$27,322,000 released from other property revaluation reserve upon the pre-sale of properties under development held for sale.

5. (LOSS) PROFIT FROM OPERATIONS

The (loss) profit from operations has been arrived at after charging (crediting):

	Six months ended	Six months ended
	30 September
	2001	2000
	HK$’000	HK$’000
Amortisation of intangible asset	859	–
Depreciation and amortisation of property, plant and equipment	4,829	4,095
Interest income	(1,340)	(4,879)

6. TAXATION

The charge comprises: Overseas taxation: Current period Underprovision in prior periods Share of taxation attributable to associates	Six months ended 30 September 2001 2000 HK$’000 HK$’000 – 30 – 230 – 260 – 3,082 – 3,342	Six months ended 30 September 2001 2000 HK$’000 HK$’000 – 30 – 230 – 260 – 3,082 – 3,342
		260 3,082
		3,342

No provision for taxation has been made in the financial statements as the companies comprising the Group incurred tax losses for the period. Overseas taxation for the prior period was calculated at the rates prevailing in the respective jurisdictions.

7. (LOSS) EARNINGS PER SHARE

The calculation of the basic and diluted (loss) earnings per share for the period, is based on the following data:

(Loss) earnings for the purpose of basic (loss) earnings per share Effect of dilutive potential ordinary shares: – adjustment to the share of results of a former indirectly owned subsidiary of the Company, with its shares listed on the Stock Exchange, based on dilution of its earnings per share – adjustment to the share of results of a former associate, with its shares listed on the Stock Exchange, based on dilution of its (loss) earnings per share (Loss) earnings for the purpose of diluted (loss) earnings per share	Six months ended 30 September 2001 2000 HK$’000 HK$’000 (66,192) 29,445 – (1,066 – (122 (66,192) 28,257	Six months ended 30 September 2001 2000 HK$’000 HK$’000 (66,192) 29,445 – (1,066 – (122 (66,192) 28,257
		28,257

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FINANCIAL INFORMATION ON THE GROUP

Weighted average number of ordinary shares for the purposes of basic and diluted (loss) earnings per share	Six months ended 30 September 2001 2000 Number of Number of shares shares 324,466,320 312,947,194

For the six months ended 30 September 2000, the computation of diluted earning per share does not assume the exercise of the Company’s outstanding share options as the exercise price was higher than the average fair value per share. The computation also does not assume the conversion of the Company’s outstanding convertible redeemable notes since their exercise would result in an increase in earnings per share from continuing ordinary operations.

The weighted average number of the shares for the purpose of basic and diluted (loss) earnings per share for the six months ended 30 September 2000 has been adjusted for the effect of the consolidation of the Company’s shares as set out in note 15.

8. MOVEMENTS IN INVESTMENT PROPERTIES AND PROPERTY, PLANT AND EQUIPMENT AND INTANGIBLE ASSET

The directors consider that the values of the Group’s investment properties as at 30 September 2001 would not differ materially from the professional valuation made as at 31 March 2001 and, accordingly, no revaluation surplus or deficit has been recognised in the current period.

During the six months ended 30 September 2001, the Group disposed of certain subsidiaries which had property, plant and equipment and an intangible asset with an aggregate carrying value of approximately HK$96,000,000 and HK$67,216,000 respectively.

9. INVESTMENTS IN SECURITIES

Included in investment in securities is an unlisted convertible bond with principal amount of HK$25,550,000 issued by Newslink Holding Limited (“Newslink”), an investment holding company incorporated in the British Virgin Islands, according to a subscription agreement entered into between the Group and Newslink on 23 August 2001.

10. TRADE AND OTHER RECEIVABLES

The Group did not have any trade receivables as at 30 September 2001.

The Group allowed its trade customers with a credit period normally ranging from 30 days to 60 days. As at 31 March 2001, included in trade and other receivables were trade receivables of HK$11,589,000 and their aged analyses were as follows:

Trade receivables 0 to 30 days 31 to 90 days More than 90 days	HK$’000 9,852 1,644 93
	11,589

11. TRADE AND OTHER PAYABLES

The Group did not have any trade payables as at 30 September 2001. As at 31 March 2001, included in trade and other payables were trade payables of HK$12,861,000 and were aged under 30 days.

12. AMOUNT DUE TO A SHAREHOLDER

The amount represents expenses paid on behalf of the Group by Capital Strategic Investment Limited which is unsecured, non-interest bearing and fully settled subsequent to the balance sheet date.

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FINANCIAL INFORMATION ON THE GROUP

13. LOANS FROM RELATED PARTIES

The amount represents a loan from a director of a subsidiary of the Company and a loan from a company in which that director has a beneficial interest. The amounts are unsecured, bear interest at commercial rates and repayable within one year.

14. AMOUNT DUE TO FORMER ULTIMATE HOLDING COMPANY

The amount represented an amount due to China Strategic Holdings Limited which was unsecured, non-interest bearing and was assigned to a subsidiary of China Strategic Holdings Limited upon disposal of the subsidiaries.

15. SHARE CAPITAL

Notes AUTHORISED Ordinary shares at HK$0.40 each at 1 April 2000 and 31 March 2001 Addition due to subdivision of shares into 40 ordinary shares of HK$0.01 each (a) Ordinary of shares at HK$0.01 each Consolidation of ordinary shares (a) Ordinary shares at HK$0.05 each at 30 September 2001 ISSUED AND FULLY PAID Balance at 1 April 2000 and 31 March 2001 at HK$0.40 each Adjustment of nominal value and consolidation of ordinary shares (a) Issue of shares on private placement (b) Balance at 30 September 2001 at HK$0.05 each	Number of shares 3,000,000,000 117,000,000,000 120,000,000,000 (96,000,000,000) 24,000,000,000 1,564,735,970 (1,251,788,776) 312,947,194 62,000,000 374,947,194	Amounts HK$’000 1,200,000 – 1,200,000 – 1,200,000 625,894 (610,247) 15,647 3,100 18,747

During the period, the following changes in the share capital of the Company took place:

(a) Pursuant to special resolutions passed by the shareholders in a special general meeting held on April 2001. The Company carried out the following capital reorganisation proposal:
subdividing every unissued share of HK$0.40 into 40 unissued shares of HK$0.01 each;
adjusting the nominal value of the shares of the Company by reducing the nominal value of all the issued shares from HK$0.40 each to HK$0.01 each by the cancellation of HK$0.39 paid up share capital on each issued share;
consolidating every five issued and unissued shares of HK$0.01 each into one consolidated share of HK$0.05; and
cancelling an amount of HK$48,000,000 from the share premium account of the Company and crediting this amount together with the nominal issued shares of HK$610,247,000 so cancelled to the contributed surplus account of the Company (note 16).
(b) On 27 July 2001 a placing agreement was entered into between the Company and certain independent institutional investors to subscribe for 62,000,000 shares of HK$0.05 each in the Company at a price of HK$1.10 per share, representing a premium of 0.9% to the closing market price of the Company’s shares on 27 July 2001. The proceeds will be used for future expansion in properties investment and development and in securities trading and investment.

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FINANCIAL INFORMATION ON THE GROUP

16. RESERVES

At 1 April 2000 Surplus arising on revaluation of investment properties Share of associates’ reserve movements Goodwill arising on acquisition of subsidiaries Capital reserve arising on acquisition of an associate Write-off of goodwill charged to income statement Release of reserve upon disposal of other property Transfer from interest in an associate to other investment Eliminated on disposal of interests in subsidiaries Exchange differences arising on translation of financial statements of overseas operations Loss for the year At 31 March 2001 Cancellation of shares (note 15) Cancellation of share premium_(note 15)_ Issue of shares Share issue expenses Eliminated on disposal of interest in subsidiaries Loss for the period At 30 September 2001	Share premium account HK$’000 50,395 – – – – – – – – – – 50,395 – (48,000 ) 65,100 (682 ) – – 66,813	Capital redemption reserve HK$’000 13,878 – – – – – – – – – – 13,878 – – – – – – 13,878	Investment property revaluation reserve HK$’000 498,329 23,051 2,596 – – – – – (498,979 ) – – 24,997 – – – – – – 24,997	Other Capital property reserve revaluation (goodwill) on reserve consolidation HK$’000 HK$’000 328,915 361,123 – – – (1,569 ) – (67,551 ) – 2,651 – 13,056 (26,968 ) – – 33,799 (301,947 ) (394,111 ) – – – – – (52,602 ) – – – – – – – – – (1,445 ) – – – (54,047 )	Special reserve HK$’000 78,176 – – – – – – – – – – 78,176 – – – – – – 78,176	Contributed surplus HK$’000 – – – – – – – – – – – – 610,247 48,000 – – – – 658,247	Accumulated Exchange profits reserve (losses) HK$’000 HK$’000 (5,629 ) 496,388 – – (5,734 ) – – – – – – – – – – – 14,182 – (3,315 ) – – (1,025,297 ) (496 ) (528,909 ) – – – – – – – – 573 – – (66,192 ) 77 (595,101 )	Total HK$’000 1,821,575 23,051 (4,707 ) (67,551 ) 2,651 13,056 (26,968 ) 33,799 (1,180,855 ) (3,315 ) (1,025,297 ) (414,561 ) 610,247 – 65,100 (682 ) (872 ) (66,192 ) 193,040

The contributed surplus of the Group represents the cancellation of an amount of HK$48,000,000 from the share premium account of the Company and the credit of an amount of HK$610,247,000 so cancelled as detailed in note 15(a)).

17. DISPOSAL OF SUBSIDIARIES

The subsidiaries disposed of during the period contributed HK$37,940,000 to the Group’s turnover and HK$28,753,000 to the Group’s loss from operations.

The subsidiaries disposed of during the period contributed HK$31,427,000 to the Group’s net operating cash outflow and raised HK$25,193,000 in respect of financing activities.

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FINANCIAL INFORMATION ON THE GROUP

18. CAPITAL COMMITMENTS

30 September 2001 HK$’000 Capital expenditure in respect of purchase of property, plant and equipment contracted for but not provided in the condensed financial statements – –	31 March 2001 HK$’000 16,201
	16,201

19. POST BALANCE SHEET EVENTS

The following events occurred subsequent to the balance sheet date:

(a) In October 2001, the Group paid a deposit of HK$10 million to an independent third party as a partial consideration to acquire a 13.5% interest in Auto System Limited. Auto System Limited is a company incorporated in British Virgin Islands and engaged in the trading of indoor automation system.
(b) In November 2001, the Group entered into a sale and purchase agreement with an independent third party to acquire 30% interest in Dionysus Investments Limited at a consideration of HK$30 million. Dionysus Investment Limited is incorporated in British Virgin Islands and is engaged in property development.
(c) In October 2001, a loan facility of HK$105 million was granted to the Group by former subsidiary of the Company for a period of twelve month from the date of drawdown.

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FINANCIAL INFORMATION ON THE GROUP

PRO FORMA STATEMENT OF UNAUDITED ADJUSTED CONSOLIDATED NET TANGIBLE ASSETS

On the basis of the audited consolidated net assets of the Group as at 31 March 2001 and taking into account the unaudited results for the six months ended 30 September 2001, the increased in issued share capital of the Company since 30 September 2001, and the Warrants will be issued and exercised in full, the pro forma unaudited adjusted consolidated net tangible assets of the Group would be as follows:

HK$’000 Audited consolidated net tangible assets as at 31 March 2001 143,258 Add (Less): Unaudited consolidated net loss attributable to the shareholders of the Company for the six months ended 30 September 2001 (66,192) Unaudited adjusted net tangible assets of the Group per interim report 77,066 Net proceeds from the placing of 62,000,000 Shares on 27 July 2001 66,500 Net proceeds from the placing of 74,980,000 Shares on 8 January 2002 44,000 Net proceeds from the subscription of 89,946,000 Shares on 10 April 2002 71,000 Unaudited adjusted net tangible assets of the Group immediately prior to the Warrant Placing 258,566 Pro forma unaudited adjusted net tangible assets value per Share immediately prior to the Warrant Placing (based on 2,699,365,970 Shares in issue as at the Latest Practicable Date) Add:_Estimated initial net proceeds from the Warrant Placing 26,000 Unaudited adjusted net tangible assets of the Group immediately following the Warrant Placing 284,566 Pro forma unaudited adjusted net tangible assets value per Share immediately following the Warrant Placing (based on 2,699,365,970 Shares in issue as at the Latest Practicable Date) _Add: Estimated net proceeds on the full exercise of the subscription rights attaching to the Warrants 118,764 Unaudited adjusted net tangible assets of the Group immediately following the Warrant Placing 403,330 Pro forma unaudited adjusted consolidated net tangible assets value per Share immediately following the full exercise of the subscription right attaching to the Warrants (based on a total of 2,699,365,970 Shares in issue as at the Latest Practicable Date and enlarged by 539,840,000 Shares to be issued under the Warrants at the initial subscription price of HK$0.22 per Share)	0.096

	0.106

	0.125

– 64 –

INDEBTEDNESS

INDEBTEDNESS AS AT 30 APRIL 2002

At the close of business on 30 April 2002, being the latest practicable date for the purpose of making this indebtedness statement prior to the printing of this document, the Group had outstanding bank borrowings of approximately HK$59.8 million of which approximately HK$51.2 million were secured by an investment property owned by a subsidiary of the Company with a market value of HK$80 million at 30 April 2002 and approximately HK$8.6 million were secured by bank deposits owned by the Group, directors of a subsidiary and an independent third party.

As at 30 April 2002, the Group also had outstanding unsecured borrowings from an independent third party and a director of a subsidiary of HK$105 million and HK$1 million respectively.

Foreign currency amounts have been translated into Hong Kong dollars at the approximate exchange rates prevailing at the close of business on 30 April 2002.

Save as aforesaid and apart from intra-group liabilities, the Group did not have outstanding at the close of business on 30 April 2002 any loan capital issued and outstanding or agreed to be issued, bank overdrafts, loans or other similar indebtedness, liabilities under acceptances or acceptable credits, debentures, mortgages, charges, obligations under hire purchases or finance leases, guarantees or other material contingent liabilities.

The Directors have confirmed that, apart from the above, there has been no material change in the indebtedness or contingent liabilities of the Group since 30 April 2002.

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SUMMARY OF THE PRINCIPAL TERMS AND CONDITIONS OF THE WARRANTS

APPENDIX I

The Warrants will be issued subject to and with the benefit of an instrument by way of deed poll (“Instrument”) to be executed by the Company and issued in registered form and will form one class and rank pari passu in all respects with each other.

The Warrants will confer rights to subscribe up to HK$118,764,800 in aggregate for Shares, equivalent to the aggregate subscription price for a total of 539,840,000 Shares, on the basis of an initial subscription price of HK$0.22 per Share (subject to adjustment).

The Warrants will represent direct obligations of the Company to holders of Warrants (“Warrantholders”) as described in the Instrument. The following is a summary of the major provisions of the Instrument and of the principal terms and conditions of the Warrants set out on the Warrant certificates. Warrantholders will be entitled to the benefit of, be bound by, and be deemed to have notice of all such terms and conditions and of the provisions of the Instrument, copies of which will be available at the principal place of business for the time being of the Company in Hong Kong.

1. EXERCISE OF SUBSCRIPTION RIGHTS

(A) Subject to the provisions hereof and in compliance with all exchange control, fiscal and other applicable laws and regulations, the Warrantholder shall have the right, which may be exercised in whole or in part, but not in respect of a fraction of a Share, at any time during the Subscription Period, to subscribe in cash the whole or part, in units or multiples of HK$0.22 of the Exercise Moneys for fully-paid Shares at the Subscription Price. After the last day of the Subscription Period, any Subscription Rights which have not been exercised will lapse and Warrant certificates will cease to be valid for any purpose whatsoever.
(B) In order to exercise in whole or in part the Subscription Rights represented by this Warrant certificate, the Warrantholder must complete and sign the Subscription Form (which shall be irrevocable) and deliver the same and this Warrant certificate to the Registrar, together with a remittance for the Exercise Moneys (or, in the case of a partial exercise, the relevant portion of the Exercise Moneys), being the amount of the Subscription Price for the Shares in respect of which the Warrantholder is exercising his Subscription Rights. In each case compliance must also be made with any exchange control, fiscal or other applicable laws or regulations for the time being.
(C) The number of Shares to be allotted on exercise of the Subscription Rights shall be calculated by dividing the amount specified in the relevant Subscription Form and duly remitted as aforesaid by the Subscription Price applicable on the Subscription Date. No fraction of a Share will be allotted but any balance representing fractions of the Exercise Moneys paid on exercise of the Subscription Rights represented by this Warrant certificate will be paid by the Company to the Warrantholder and such balance shall be rounded down to the nearest one cent provided always that for the purpose of determining whether any (and if so what) fraction of a Share arises:
(a) if the Subscription Rights represented by this Warrant certificate and any one or more other Warrant certificates are exercised on the same Subscription Date by the same Warrantholder then the Subscription Rights represented by such Warrant certificates shall be aggregated; and

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SUMMARY OF THE PRINCIPAL TERMS AND CONDITIONS OF THE WARRANTS

APPENDIX I

(b) regard shall be paid, where applicable, to the provisions of Clause 6(C) of the Instrument.
(D) The Company has undertaken in the Instrument that any Shares falling to be issued upon the exercise of any of the Subscription Rights represented by this Warrant certificate will be:
(a) issued and allotted not later than 28 business days (or, if applicable, such other period as prescribed by the Stock Exchange) after the relevant Subscription Date (taking into account any adjustment which may have been made pursuant to Clause 4 of the Instrument); and
(b) will rank pari passu with the fully paid Shares in issue on the relevant Subscription Date and accordingly shall entitle the holders to participate in all dividends or other distributions paid or made on or after the relevant Subscription Date other than any dividend or other distribution previously declared or recommended or resolved to be paid or made if the record date therefor shall be on or before the relevant Subscription Date and notice of the amount and record date for which shall have been given to the Stock Exchange prior to the relevant Subscription Date.
(E) As soon as practicable after the relevant allotment and issue of Shares under this Condition (and, in any event, not later than 28 business days (or, if applicable, such other period as prescribed by the Stock Exchange) after the relevant Subscription Date), there will be issued free of charge to the Warrantholder(s) to whom such allotment has been made upon his exercise of any Subscription Rights:
(a) a certificate (or certificates) for the relevant Shares in the name(s) of such Warrantholder(s);
(b) (if applicable) a balancing Warrant certificate in registered form in the name(s) of such Warrantholder(s) in respect of any Subscription Rights represented by this Warrant certificate remaining unexercised;
(c) (if applicable) a cheque representing fractions of the Exercise Moneys in respect of the Warrantholder’s fractional entitlement to Shares as mentioned in paragraph (C) of this Condition; and
(d) (if applicable) the certificate mentioned in Clause 6(A)(4) of the Instrument.

The certificate(s) for Shares arising on the exercise of Subscription Rights, the balancing Warrant certificate (if any), the cheque in respect of the Exercise Moneys in respect of the Warrantholder’s fractional entitlement to Shares (if any) and the certificate mentioned in Clause 6(A)(4) of the Instrument (if any) will be sent by post at the risk of such Warrantholder(s) to the address of such Warrantholder(s) (or in the case of a joint holding to that one of them whose name stands first in the Register). If the Company agrees, such certificates and cheques may, by prior arrangement, be retained by the Registrar to await collection by the relevant Warrantholder(s).

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SUMMARY OF THE PRINCIPAL TERMS AND CONDITIONS OF THE WARRANTS

APPENDIX I

2. ADJUSTMENTS OF SUBSCRIPTION PRICE

The Instrument contains detailed provisions relating to the adjustment of the Subscription Price. The following is a summary of, and is subject to, the provisions of Clause 4 of the Instrument:

(A) The Subscription Price shall (except as mentioned in paragraphs (B), (C) and (D) of this Condition) be adjusted as provided in the Instrument in each of the following cases (but shall however not be adjusted below the nominal value of Shares until the Subscription Right Reserve (as defined in the Instrument) is maintained pursuant to Clause 6 thereof):
(a) an alteration of the nominal amount of the Shares by reason of any consolidation or subdivision or reclassification;
(b) an issue (other than in lieu of a cash dividend) by the Company of Shares credited as fully paid by way of capitalisation of profits or reserves (including any share premium account or contributed surplus account);
(c) a capital distribution (as defined in the Instrument) being made by the Company, whether on a reduction of capital or otherwise, except pursuant to a purchase by the Company of Shares, to holders of Shares (in their capacity as such);
(d) a grant by the Company to the holders of Shares (in their capacity as such) of rights to acquire for cash assets of the Company or any of the Subsidiaries;
(e) an offer of new Shares for subscription by way of rights or a grant of options or warrants to subscribe for new Shares at a price which is less than 90% of the market price (calculation as provided in the Instrument) being made by the Company to holders of Shares (in their capacity as such);
(f) an issue wholly for cash being made by the Company or any other company of securities convertible into or exchangeable for or carrying rights of subscription for new Shares, if in any case the total Effective Consideration per new Share (as defined in the Instrument) is less than 90% of the market price (calculation as provided in the Instrument), or the conversion, exchange or subscription rights of any such issue are altered so that the said total Effective Consideration is less than 90% of the market price;
(g) an issue being made by the Company wholly for cash of Shares (other than pursuant to a Share Option Scheme, as defined in the Instrument) at a price less than 90% of the market price (calculation as provided in the Instrument); and
(h) a repurchase by the Company of Shares or securities convertible into Shares or any rights to subscribe for Shares in circumstances where the Directors consider that it may be appropriate to make an adjustment to the Subscription Price.

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SUMMARY OF THE PRINCIPAL TERMS AND CONDITIONS OF THE WARRANTS

APPENDIX I

(B) Except as mentioned in paragraph (C) of this Condition, no such adjustment as is referred to in paragraph (A) of this Condition shall be made in respect of:
(a) an issue of fully-paid Shares upon the exercise of any conversion rights attaching to securities convertible into Shares or upon the exercise of any rights (including the Subscription Rights) to acquire Shares;
(b) an issue by the Company of Shares or other securities of the Company or any Subsidiary of securities wholly or partly convertible into, or carrying rights to acquire Shares, in any such case in consideration or part consideration for the acquisition of any other securities, assets or business;
(c) an issue of fully-paid Shares by way of capitalisation of all or part of the Subscription Right Reserve (as defined in the Instrument) (or other profits or reserves) to be established in certain circumstances subject and pursuant to the terms and conditions contained in the Instrument (or any similar reserves which has been or may be established pursuant to the terms of issue of any other securities wholly or partly convertible into or carrying rights to acquire Shares);
(d) an issue of Shares in lieu of a cash dividend where an amount not less than the nominal amount of the Shares so issued is capitalised and the market value (calculation as provided in the Instrument) of such Shares in aggregate is not more than 110% of the amount of dividend which holders of Shares could elect to or would otherwise receive in cash; or
(e) an issue by the Company of Shares or by the Company or any Subsidiary of securities convertible into, or exchangeable for, or carrying rights of subscription for, Shares pursuant to a Share Option Scheme.
(C) Notwithstanding the provisions referred to in paragraphs (A) and (B) of this Condition, in any circumstances where the Directors consider that an adjustment to the Subscription Price provided for under the said provisions should not be made or should be calculated on a different basis or that an adjustment to the Subscription Price should be made notwithstanding that no such adjustment is required under the said provisions or that an adjustment should take effect on a different date or with a different time from that provided for under the said provisions, the Company may appoint either the Auditors or an approved merchant bank to consider whether for any reason whatever, the adjustment to be made (or the absence of adjustment) would or might not fairly and appropriately reflect the relative interests of the persons affected thereby and, if the Auditors or such an approved merchant bank shall consider this to be the case, the adjustment shall be modified or nullified or an adjustment made instead of no adjustment in such manner (including, without limitation, making an adjustment calculated on a different basis) and/or the adjustment shall take effect from such other date and/or time as shall be certified by the Auditors or such approved merchant bank (as the case may be) to be in its opinion, appropriate.
(D) Any adjustment to the Subscription Price shall be made to the nearest one cent (HK$0.005 being rounded up). No adjustment shall be made to the Subscription Price in any case in which the amount by which the same would be reduced would be less than one cent and any adjustment which would otherwise then be required shall not

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SUMMARY OF THE PRINCIPAL TERMS AND CONDITIONS OF THE WARRANTS

APPENDIX I

be carried forward. No adjustment shall be made (except on a consolidation of Shares into shares of a larger nominal amount each or upon a repurchase of Shares) which would increase the Subscription Price.

(E) Every adjustment to the Subscription Price will be certified to be fair and appropriate by the Auditors or an approved merchant bank and notice of each adjustment (giving the relevant particulars) will be given to the Warrantholders. In giving any certificate or making any adjustment hereunder, the Auditors or such approved merchant bank shall be deemed to be acting as experts and not as arbitrators and, in the absence of manifest errors, their decision shall be conclusive and binding on the Company and the Warrantholders and all persons claiming through or under them respectively. Any such certificates of the Auditors or the approved merchant bank will be available for inspection at the principal place of business of the Company for the time being in Hong Kong, where copies may be obtained.

3. REGISTERED WARRANTS

The Warrants are issued in registered form. The Company shall be entitled to treat the registered holder of any Warrant as the absolute owner thereof and accordingly shall not, except as ordered by a court of competent jurisdiction or required by law, be bound to recognise any equitable or other claim to, or interest in such Warrant on the part of any other person, whether or not it shall have express or other notice thereof.

4. TRANSFER, TRANSMISSION AND REGISTER

(A) The Warrants shall be in registered form and shall be transferable by instrument of transfer in any usual or common form or in any other form which may be approved by the Directors. For this purpose, the Company shall maintain a register of Warrantholders (“ Register ”) in the territory where the Stock Exchange for the time being is situate (or such other place as the Directors consider appropriate, having regard to the applicable rules governing the listing of Warrants). Transfers of Warrants must be executed by both the transferor and the transferee. Where the transferor or the transferee is HKSCC Nominees Limited or its successor thereto (or such other company as may be approved by the board of Directors for this purpose), the transfers may be executed under the hand of the authorised person(s) or by machine imprinted signature(s) on its behalf as the case may be. The provisions of the bye-laws of the Company relating to the registration and transfer of Shares shall, mutatis mutandis, apply to the registration and transfer of the Warrants. The Instrument contains provisions relating to the transfer, transmission and registration of the Warrants.
(B) Persons who hold the Warrants and have not registered the Warrants in their own names and wish to exercise the Warrants should note that they may incur additional costs and expenses in connection with any expedited re-registration of the Warrants prior to the transfer or exercise of the Warrants, in particular during the period commencing 10 business days prior to and including the last day of the Subscription Period.

Since the Warrants will be admitted to CCASS, so far as applicable laws or regulations of relevant regulatory authorities, the terms of the Instrument and circumstances permit, the Company may determine the last dealing day of the Warrants to be a date at least three (3) dealing days before the last day of the Subscription Period.

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SUMMARY OF THE PRINCIPAL TERMS AND CONDITIONS OF THE WARRANTS

APPENDIX I

5. CLOSURE OF REGISTER

The registration of transfers may be suspended and the Register may be closed at such times and for such periods as the Directors may from time to time direct, provided that the same shall not be closed for a period in aggregate more than 30 days in any one year. Any transfer or exercise of the Subscription Rights attached to the Warrants made while the Register is so closed shall, as between the Company and the person claiming under the relevant transfer of Warrants or, as the case may be, as between the Company and the Warrantholders who have so exercised their respective Subscription Rights attached to their Warrants (but not otherwise), be considered to be made immediately after the reopening of the Register.

6. PURCHASE AND CANCELLATION

The Company or any of the Subsidiaries may at any time purchase Warrants:

(A) in the open market or by tender (available to all Warrantholders alike) at any price; or
(B) by private treaty at a price, exclusive of expenses, not exceeding 110% of the closing price of the Warrants for one or more board lots of Warrants on the last day on which the Warrants were traded on the Stock Exchange prior to the date of purchase thereof, but not otherwise.

All Warrants purchased as aforesaid shall be cancelled forthwith and may not be reissued or re-sold.

7. MEETINGS OF WARRANTHOLDERS AND MODIFICATION OF RIGHTS

(A) The Instrument contains provisions for convening meetings of Warrantholders to consider any matter affecting the interests of Warrantholders, including the modification by a Special Resolution of the provisions of the Instrument and/or these Conditions. A Special Resolution duly passed at any such meeting shall be binding on the Warrantholders, whether present or not.
(B) All or any of the rights for the time being attached to the Warrants (including any of the provisions of the Instrument) may from time to time (whether or not the Company is being wound up) be altered or abrogated (including but without prejudice to that generality by waiving compliance with, or by waiving or authorising any past or proposed breach of, any of the provisions of these Conditions and/or the Instrument) and the sanction of a Special Resolution shall be necessary and sufficient to effect such alteration or abrogation.
(C) At any meeting of Warrantholders, two or more persons (or their proxies) holding in aggregate not less than 10% of all outstanding Warrants, shall (except for the purpose of passing a Special Resolution) form a quorum. The requisite quorum at a meeting of Warrantholders for the passing of a Special Resolution shall be two or more persons (or their proxies) holding in aggregate not less than one-third of all outstanding Warrants.

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SUMMARY OF THE PRINCIPAL TERMS AND CONDITIONS OF THE WARRANTS

APPENDIX I

(D) Where a Warrantholder is a recognised clearing house (within the meaning of the Securities and Futures (Clearing Houses) Ordinance (Chapter 420 of the Laws of Hong Kong)) or its nominee(s), it may authorise such person(s) as it thinks fit to act as its representative(s) or proxy (or proxies) at any Warrantholders’ meeting provided that, if more than one person is so authorised, the authorisation or proxy form must specify the number of Warrants in respect of which each such person is so authorised. The person(s) so authorised shall be entitled to exercise the same powers on behalf of the recognised clearing house as that recognised clearing house or its nominee(s) could exercise as if such person were an individual Warrantholder.

8. REPLACEMENT OF WARRANT CERTIFICATES

(A) If a Warrant certificate is mutilated, defaced, lost or destroyed, it may, at the discretion of the Company, be replaced at the principal office of the Registrar on payment of such costs as may be incurred in connection therewith and on such terms as to evidence, indemnity and/or security as the Company may require and on payment of such fee not exceeding HK$2.50 (or such higher fee as may from time to time be permitted under the rules prescribed by the Stock Exchange) as the Company may determine. Mutilated or defaced Warrant certificates must be surrendered before replacements will be issued.
(B) In the case of lost Warrant certificates, Section 71A subsections (2), (3), (4), (6), (7) and (8) of the Companies Ordinance (Chapter 32 of the Laws of Hong Kong) shall apply as if “shares” referred to therein included Warrants.

9. PROTECTION OF SUBSCRIPTION RIGHTS

The Instrument contains certain undertakings by and restrictions on the Company designed to protect the Subscription Rights.

10. CALL

If at any time the aggregate amount of Warrants outstanding is equal to or less than 10% of the total amount of Subscription Rights attached to the Warrants issued under the Instrument, then the Company may, on giving not less than three (3) months’ notice to the Warrantholders, require the Warrantholders either to exercise their Subscription Rights represented thereby or allow the Warrants held by them to lapse. On expiry of such notice, all unexercised Warrants will be automatically cancelled without any compensation being payable to the Warrantholders.

11. FURTHER ISSUES

The Company shall be at liberty to issue further warrants or other securities convertible into, exchangeable for or carrying rights to subscribe for Shares in such manner and on such terms as it sees fit.

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SUMMARY OF THE PRINCIPAL TERMS AND CONDITIONS OF THE WARRANTS

APPENDIX I

12. UNDERTAKINGS BY THE COMPANY

In addition to the undertakings given by it in relation to the grant and exercise of the Subscription Rights and the protection thereof, the Company has undertaken in the Instrument that:

(A) it shall send to each Warrantholder, at the same time as the same are sent to the holders of Shares, its audited accounts and all other notices, reports and communications despatched by it to the holders of Shares generally;
(B) it shall pay all stamp and capital duties, registration fees or similar charges, if any, in respect of the execution of the Instrument, the creation and issue of the Warrants in registered form, the exercise of the Subscription Rights and the issue of Shares upon exercise of the Subscription Rights;
(C) it shall keep available for issue sufficient Ordinary Capital to satisfy in full all rights of subscription for and conversion into Shares for the time being outstanding; and
(D) it shall use its best endeavours to procure that:
(a) at all times during the Subscription Period, the Warrants may be dealt in on the Stock Exchange (save that this obligation will lapse in the event that the listing of the Warrants on the Stock Exchange is withdrawn following an offer for all or any of the Warrants); and
(b) all Shares allotted upon exercise of the Subscription Rights may, upon allotment or as soon as reasonably practicable thereafter, be dealt in on the Stock Exchange (save that this obligation will lapse in the event that the listing of the Shares on the Stock Exchange is withdrawn following an offer for all or any of the Shares where a like offer is extended to holders of the Warrants).

13. NOTICES

The Instrument contains provisions relating to notices to be given to Warrantholders and the following provisions shall apply to such notices:

(A) every Warrantholder shall register with the Company an address either in Hong Kong or elsewhere to which notices to be given to such Warrantholder are to be sent and if any Warrantholder shall fail to do so, notice may be given to such Warrantholder by sending the same in any of the manners hereinafter mentioned to his last known place of business or residence or, if there be none, by posting the same for three (3) business days at the principal place of business of the Company in Hong Kong;
(B) a notice may be given by paid advertisement of the same in both a leading Englishlanguage newspaper circulated in Hong Kong and a leading Chinese-language newspaper circulated in Hong Kong or by delivery, prepaid letter (airmail in the case of an overseas address), cable or telex message; and

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SUMMARY OF THE PRINCIPAL TERMS AND CONDITIONS OF THE WARRANTS

APPENDIX I

(C) all notices with respect to Warrants standing in the names of joint holders shall be given to the person first named in the Register and notice so given shall be sufficient notice to all the joint holders of such Warrants.

14. WINDING-UP OF THE COMPANY

The Instrument contains provisions to the effect that:–

(A) in the event a notice is given by the Company to its shareholders to convene a shareholders’ meeting for the purposes of considering, and if thought fit approving, a resolution to voluntarily wind-up the Company, the Company shall forthwith give notice thereof to each Warrantholder and thereupon, every Warrantholder shall be entitled by irrevocable surrender of his Warrant certificate(s) to the Company (such surrender to occur not later than two (2) business days prior to the proposed shareholders’ meeting referred to above) with the Subscription Form(s) duly completed, together with payment of the Exercise Moneys (or the relative portion thereof), to exercise the Subscription Rights represented by such Warrant certificate(s) and the Company shall as soon as possible and in any event no later than the day immediately prior to the date of the proposed shareholders’ meeting allot such number of Shares to the Warrantholder which fall to be issued pursuant to the exercise of the Subscription Rights represented by such Warrant certificate(s) to the extent specified in the Subscription Form(s). The Company shall give notice to the Warrantholders of the passing of such resolution within seven (7) days after the passing thereof; and
(B) if an effective resolution is passed during the Subscription Period for the voluntary winding-up of the Company for the purpose of reconstruction or amalgamation pursuant to a scheme of arrangement to which the Warrantholders, or some persons designated by them for such purpose by Special Resolution, shall be a party, or in conjunction with which a proposal is made to the Warrantholders and is approved by Special Resolution, the terms of such scheme of arrangement or (as the case may be) proposal shall be binding on all the Warrantholders.

Subject to the foregoing, if the Company is wound up, all Subscription Rights which have not been exercised at the date of the passing of such resolution shall lapse and Warrant certificates shall cease to be valid for any purpose.

15. OVERSEAS WARRANTHOLDERS

The Instrument contains provisions giving certain discretion to the Directors in the case of any Warrantholder who has a registered address in any territory other than Hong Kong where, in the opinion of the Directors, the issue of Shares upon exercise of any of the Subscription Rights represented by any Warrants held by such Warrantholder may be unlawful or impracticable.

16. GOVERNING LAW

The Instrument and the Warrants are governed by and shall be construed in accordance with the laws of Hong Kong.

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GENERAL INFORMATION

APPENDIX II

1. RESPONSIBILITY STATEMENT

This document includes particulars given in compliance with the Rules Governing the Listing of Securities on the Stock Exchange 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 document and confirm, having made all reasonable enquiries that to the best of their knowledge and belief there are no other facts the omission of which would make any statement herein misleading.

2. DISCLOSURE OF INTERESTS

(a) As at the Latest Practicable Date, the interests of Directors in the securities of the Company or any of its associated corporations within the meaning of the SDI Ordinance which are required to be notified to the Stock Exchange and pursuant to Section 28 of the SDI Ordinance (including interests which they are deemed or taken to have under Section 31 of or Part I of the Schedule to the SDI Ordinance) or which are required, pursuant to Section 29 of the SDI Ordinance to be entered in the register referred to therein or which are required to be notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Companies were as follows:–
(i) Interests in the Company’s securities

			Number of	Approximately
			ordinary	Percentage
Name		Nature of interest	shares held	(%)
Dong	Bo, Federic	Personal interest	721,270,350	26.72

Save as disclosed herein, as at the Latest Practicable Date, none of the Directors or their respective associates has any interests in the equity or debt securities of the Company or any of its associated corporations within the meaning of the SDI Ordinance which are required to be notified to the Stock Exchange and the Company pursuant to section 28 of the SDI Ordinance (including interests which they are deemed or taken to have under section 31 of or Part I of the Schedule to the SDI Ordinance) or which are required, pursuant to section 29 of the SDI Ordinance to be entered in the register referred to therein or which are required to be notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Companies.

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GENERAL INFORMATION

APPENDIX II

Directors’ rights to acquire shares

Pursuant to the Company’s share option scheme, the Company has granted options on the Company’s ordinary shares in favour of certain directors, the details of which are as follows:

	Number of
	share options
	granted up to the
	Latest Practicable Date
Dong Bo, Federic	16,788,000
Lau Man Tak	26,990,000

The above share options granted during the year and outstanding as at the Latest Practicable Date entitle the holders to subscribe for shares of the Company at any time during the period from 3 May 2002 to 2 November 2003, at an exercise price of HK$0.298.

Save as disclosed above, at no time during the year was the Company or any of its subsidiaries a party to any arrangement to enable the Directors, their respective spouse, or children under 18 years of age to acquire benefits by means of the acquisition of shares in or debentures of the Company or any other body corporate.

Further details of the Company’s share option scheme are set out in note 28 to the financial statements.

(b) As at the Latest Practicable Date, the Placing Manager has no interest in any shares or other securities of the Company or any of its subsidiaries or the right (whether legally enforceable or not) to subscribe for or nominate persons to subscribe for such shares or securities.
(c) There are no existing or proposed service contracts between the Company or any of its subsidiaries and any of the Directors which do not expire or are not determinable within one year without payment of compensation (other than statutory compensation).
(d) As at the Latest Practicable Date, none of the Directors or the Placing Manager has any direct or indirect interest in any assets which have been since 31 March 2001 the date to which the latest audited consolidated financial statements of the Group were made up acquired or disposed of by or leased to or proposed to be acquired or disposed of by or leased to the Company or any of its subsidiaries.
(e) Save as disclosed in this document there is no contract or arrangement subsisting as at the date hereof in which any Director is materially interested and which is significant in relation to the business of the Company or any of its subsidiaries.
(f) Sidley Austin Brown & Wood is the legal advisers in relation to the Warrant Placing.

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GENERAL INFORMATION

APPENDIX II

3. SUBSTANTIAL SHAREHOLDERS

(a) As a the Latest Practicable Date the register kept by the Company under Section 16(l) of the SDI Ordinance records that United Jumbo Limited and Great Huge Investment Corp. held approximately 26.72% and 13.89% of the total issued share capital of the Company.
(b) So far as the Directors are aware, as at the Latest Practicable Date, the following shareholder and its associates will be interested in more than 10% of the total issued share capital of the Company:

			Approximate
			percentage of
Name	Note	Number of Shares	share capital
United Jumbo Limited	1	721,270,350	26.72
Great Huge Investment Corp.	2	374,900,000	13.89

Note 1: United Jumbo Limited is beneficially wholly-owned by Mr. Dong Bo, Frederic, the chairman and executive director of the Company.
Note 2: Great Huge Investments Corp. is beneficially wholly-owned by Mr. Chen.
(c) Save as disclosed in this document, as at the Latest Practicable Date, so far as the Directors were aware, there were no persons who, directly or indirectly, held or were interested in Shares, or options in respect of such Shares, representing 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 member of the Group.

4. WORKING CAPITAL

The Directors are of the opinion that, taking into account available banking facilities and the net proceeds of the Warrant Placing and in the absence of unforeseen circumstances, the Group will have sufficient working capital for its present requirements.

5. MATERIAL CHANGES

The Directors are not aware of any material adverse change in the financial or trading position of the Group since 31 March 2001 the date to which the latest published audited accounts of the Company have been made up.

6. MATERIAL CONTRACTS

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

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GENERAL INFORMATION

APPENDIX II

The following contracts, not being contracts in the ordinary course of business, have been entered into by Premium Land Limited and/or its subsidiaries since the beginning of the two years preceding the date of this document up to the Latest Practicable Date and which are or may be material:

the conditional agreement dated 17 November 2000 between, among other parties, Actiwater Resources Limited, Premium Land Limited (formerly known as Huey Tai International Limited at the time of entering the agreement), Good Trend Enterprises Limited, Capital Deal Investments Limited and China Strategic Holdings Limited in relation to the acquisition of the issued share capital of China Youth Net.Com Limited, the capital of Komatic International Limited, and the capital of Optima Media Holding Limited.
the conditional agreement dated 17 November 2000 between, Premium Land Limited (formerly known as Huey Tai International Limited at the time of entering the agreement), Mr. Chan Boon Ho, Peter, United Goal Development Limited, and Chow Tai Fook Enterprises Limited in relation to sale and purchase of share capital of Asean Resources Holdings Limited.
the conditional agreement dated 4 January 2002 between Super Target Limited and the vendors in relation to the acquisition of 51% interests in Shanghai Hualong Construction Stock Co., Ltd.

Save as disclosed above, neither Premium Land Limited nor any of its subsidiaries has entered into any material contract, not being contracts entered into in the ordinary course of business carried on by Premium Land Limited and its subsidiaries, since the beginning of the two years preceding the date of this document up to the Latest Practicable Date and which are or may be material.

7. LITIGATION

Neither the Company nor any of its subsidiaries are engaged in any litigation or claim of material importance and, so far as the Directors are aware, no litigation or claim of material importance is pending or threatened against the Company or any of its subsidiaries.

8. MISCELLANEOUS

(a) The expenses in connection with the Warrants Placing and the application for listing, including underwriting commissions, documentation fee, registrations, printing, translation, legal and accountancy charges, Warrant certificates, registrars and advertising payable by the Company, are estimated to amount to approximately HK$1.0 million.
(b) No commissions, discounts, brokerages or other special terms have been granted or agreed to be granted by any member of the Company to any Directors or proposed Directors, promoters in connection with the issue or sale of any capital by any such member of the Company.

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GENERAL INFORMATION

APPENDIX II

9. BINDING EFFECT

This document shall have the effect, if an application is made in pursuance hereof, of rendering all persons concerned bound by all of the provisions (other than the penal provisions) of Sections 44A and 44B of the Companies Ordinance so far as practicable.

10. DOCUMENTS DELIVERED FOR REGISTRATION

A copy of this document, having attached thereto a copy of the application form has been registered by the Registrar of Companies in Hong Kong as required by Section 342C of the Companies Ordinance and a copy of the document has been filed with the Registrar of Companies in Bermuda pursuant to the Companies Act.

11. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents are available for inspection at the offices of Sidley Austin Brown & Wood, 49th Floor, Bank of China Tower, 1 Garden Road, Central, Hong Kong during normal business hours up to and including 11 July 2002:

(a) the memorandum of association and bye-laws of the Company;
(b) the material contracts referred to in the section headed “Material contracts” in this appendix;
(c) the draft Instrument;
(d) the annual report of the Company for two financial years ended 31 December 2001; and
(e) the unaudited interim results of the Group for the six months ended 30 September 2001.

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AI assistant

WH Group Limited — Capital/Financing Update 2002

49096_rns_2002-06-26_18adba3b-86e1-4667-bf64-c75a620bba96.pdf

IMPORTANT

PREMIUM LAND LIMITED （上海策略置地有限公司）[*]

Placing Manager

KINGSTON SECURITIES LIMITED

EXPECTED TIMETABLE

DEFINITIONS

DEFINITIONS

DEFINITIONS

SUMMARY OF THE WARRANT PLACING

Executive Directors:

Head office and principal place of business:

Legal advisers to the Company:

Principal bankers:

1. GENERAL AND REASONS FOR THE WARRANT PLACING

2. USE OF PROCEEDS

3. CONDITIONS OF THE WARRANT PLACING

4. THE PLACING AND UNDERWRITING

5. TERMS OF THE WARRANTS

THE WARRANT PLACING

6. LISTING AND DEALINGS

7. PERMISSION OF THE BERMUDA MONETARY AUTHORITY

8. SHAREHOLDING OF THE EXISTING SUBSTANTIAL SHAREHOLDERS

1. DESCRIPTION OF THE BUSINESS

Review of operations

Prospects

2. SHARE CAPITAL

3. DIRECTORS AND SENIOR MANAGEMENT

Executive Directors

Independent non-executive Directors

Senior Management

4. MARKET STATISTICS ON THE COMPANY

FINANCIAL INFORMATION OF THE GROUP

Financial statements

Consolidated Income Statement

Consolidated Balance Sheet

Balance Sheet

Consolidated Statement of Recognised Gains and Losses

Consolidated Cash Flow Statement

Notes to the Financial Statements

1. GENERAL

2. SIGNIFICANT ACCOUNTING POLICIES

Basis of consolidation

Goodwill/Capital reserve

Investments in subsidiaries

Associates

Investments in securities

Investment properties

Property, plant and equipment

Intangible asset

Properties under development

Inventories

Properties held for sale

Capitalisation of borrowing costs

Turnover

Recognition of income

Taxation

Operating leases

Foreign currencies

Cash equivalents

3. PROFIT FROM OPERATIONS

4. INFORMATION REGARDING DIRECTORS’ AND EMPLOYEES’ EMOLUMENTS

(b) Employees’ emoluments

5. FINANCE COSTS

6. LOSS ON DISPOSAL OF SUBSIDIARIES

7. UNREALISED HOLDING LOSS ON OTHER INVESTMENT RECLASSIFIED AFTER DISPOSAL OF A FORMER ASSOCIATE

8. WRITE-OFF OF GOODWILL

9. TAXATION

10. (LOSS) PROFIT FOR THE YEAR

11. DISCONTINUED OPERATIONS

12. (LOSS) EARNINGS PER SHARE

13. INVESTMENT PROPERTIES

14. PROPERTY, PLANT AND EQUIPMENT

15. INTANGIBLE ASSET

16. INTERESTS IN SUBSIDIARIES

17. INTERESTS IN ASSOCIATES

18. INVESTMENTS IN SECURITIES

20. INVENTORIES

WH Group Limited Capital/Financing Update 2002