ZO Future Group — Annual Report 2009

Jul 24, 2009

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, 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 announcement.

GRANDTOP INTERNATIONAL HOLDINGS LIMITED 泓鋒國際控股有限公司 *

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 2309)

ANNOUNCEMENT OF RESULTS FOR THE YEAR ENDED 31 MARCH 2009

The Board of Directors (“the Board”) of Grandtop International Holdings Limited (the “Company”) announces the audited consolidated results of the Company and its subsidiaries (the “Group”) for the year ended 31 March 2009, together with comparative figures for the previous year, as follows:

CONSOLIDATED INCOME STATEMENT

For the year ended 31 March 2009

Notes Turnover 4 Cost of sales Gross profit Other revenue and net gains 5 Impairment loss on property, plant and equipment Impairment loss on available-for-sale financial assets 11 Impairment loss on trade receivables Selling expenses Administrative expenses Share-based payments Finance costs 6 Loss before taxation 7 Income tax 8 Loss for the year attributable to equity holders of the Company Dividend 9 Loss per share 10 — Basic and diluted (HK cents)	2009 HK$’000 10,660 (6,513) 4,147 986 — (73,945) (1,333) (2,000) (19,072) — (538) (91,755) 78 (91,677) — (10.96)	2008 HK$’000 20,595 (17,574) 3,021 404 (1,919) (110,923) (1,745) (790) (29,563) (10,200) — (151,715) (418) (152,133) — (22.47)

• for identification purpose only

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CONSOLIDATED BALANCE SHEET At 31 March 2009

Notes ASSETS AND LIABILITIES Non-current assets Property, plant and equipment Investment property Available-for-sale financial assets 11 Current assets Prepaid land lease expenses Trade receivables 12 Deposits, prepayments and other receivables 12 Cash and cash equivalents Current liabilities Accruals and other payables Taxation payable Amounts due to directors Net current liabilities Total assets less current liabilities Non-current liabilities Amounts due to directors Deferred tax liabilities Convertible notes NET (LIABILITIES)/ASSETS CAPITAL AND RESERVES Share capital Reserves TOTAL EQUITY	2009 HK$’000 2,992 1,060 60,419 64,471 — — 1,190 2,968 4,158 5,880 20,337 5,378 31,595 (27,437) 37,034 97,982 167 4,108 102,257 (65,223) 9,852 (75,075) (65,223)	2008 HK$’000 2,780 1,250 134,364 138,394 289 1,099 544 7,055 8,987 5,588 20,415 10,583 36,586 (27,599) 110,795 97,982 167 — 98,149 12,646 7,603 5,043 12,646

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Notes:

1. Statement of compliance and basis of preparation

These financial statements have been prepared in accordance with all applicable Hong Kong Financial Reporting Standards (“HKFRSs”), accounting principles generally accepted in Hong Kong and the disclosure requirements of the Hong Kong Companies Ordinance. These financial statements also comply with the applicable disclosure provisions of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Listing Rules”).

These financial statements have been prepared under the historical cost convention, as modified by the revaluation of investment property, available-for-sale financial assets and derivative component of convertible notes which are carried at fair value.

The financial statements have been prepared on a going concern basis notwithstanding the fact that the Group reported consolidated net current liabilities of HK$27,437,000 (2008: net current liabilities of HK$27,599,000) and consolidated net liabilities of HK$65,223,000 (2008: net assets of HK$12,646,000) as at 31 March 2009 and loss for the year then ended of HK$91,677,000 (2008: loss of HK$152,133,000). This condition may indicate the existence of material uncertainty which may cast significant doubts on the Group’s ability to continue as a going concern and therefore that it may be unable to realise its assets and discharge its liabilities in the normal course of business.

Notwithstanding the above, the directors of the Company have considered the following situations and are satisfied that it is appropriate to prepare the Group’s consolidated financial statements on a going concern basis:

• (i) The Company raised working capital with net proceeds of HK$58,000,000 in aggregate by way of placing of its new shares of the Company after the balance sheet date; and

• (ii) Included in the non-current liabilities of the Group as at 31 March 2009 is an amount due to a director who is also an ultimate shareholder of the Company with aggregrate carrying amount of HK$95,068,000, which is unsecured, interest free and has no fixed repayment term. The Director and ultimate shareholder of the Company undertakes not to demand for the Group to repay this amount due until the Company and the Group are financially capable to do so. This interest free advance is not repayable within twelve months from the balance sheet date and is considered in substance as a quasi-equity loan to finance the Group’s long term investments.

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2. Adoption of new and revised Standards

In the current year, the Group has adopted all of the new and revised HKFRSs, which collective term includes all applicable individual HKFRSs, Hong Kong Accounting Standards (“HKASs”) and Interpretations issued by the Hong Kong Institute of Certified Public Accountants that are relevant to its operations and effective for the current accounting period of the Group and the Company. The adoption of these new and revised HKFRSs did not result in substantial changes to the Group’s accounting policies.

The adoption of HK(IFRIC) — Int 12 “Service concession arrangements”, HK(IFRIC) — Int 14 “HKAS 19 — The limit on a defined benefit asset, minimum funding requirements and their interaction” and HKAS 39 & HKFRS 7 Amendments “Reclassification of financial assets” has no impact on the financial statements.

At the date of authorisation of the financial statements, the following HKFRSs were in issue but not yet effective:

		Effective date
HKAS 1 (Revised)	Presentation of financial statements	(i)
HKAS 23 (Revised)	Borrowing costs	(i)
HKAS 32 & HKAS 1	Puttable financial instruments and obligations arising	(i)
(Amendments)	on liquidation
HKFRS 1 & HKAS 27	Cost of an investment in a subsidiary, jointly controlled	(i)
(Amendments)	entity or associate
HKFRS 8	Operating segments	(i)
HK(IFRIC) — Int 15	Agreements for the construction of real estates	(i)
HKFRS 2 (Amendments)	Vesting conditions and cancellations	(i)
HKFRS 7 (Amendments)	Improving disclosures about financial instruments	(i)
HKAS 27 (Revised)	Consolidated and separate financial statements	(ii)
HKAS 39 (Amendments)	Eligible hedged items	(ii)
HKFRS 1 (Revised)	First-time adoption of HKFRSs	(ii)
HKFRS 3 (Revised)	Business combinations	(ii)
HK(IFRIC) — Int 17	Distributions of non-cash assets to owners	(ii)
HK(IFRIC) — Int 13	Customer loyalty programmes	(iii)
HK(IFRIC) — Int 16	Hedges of a net investment in a foreign operation	(iv)

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Effective date

HK (IFRIC) — Int 9 & HKAS	Embedded derivatives	(v)
39 (Amendments)
HK(IFRIC) — Int 18	Transfers of assets from customers	(vi)
2008 Improvements to	— HKAS 1, HKAS 16, HKAS 19, HKAS 20, HKAS
HKFRSs that may result	23, HKAS 27, HKAS 28, HKAS 29, HKAS 31,
in accounting changes for	HKAS 36, HKAS 38, HKAS 39, HKAS 40 &
presentation, recognition or	HKAS 41	(i)
measurement	— HKFRS 5	(ii)
2009 Improvements to	— HKAS 39 (80)	(i)
HKFRSs that may result	— HKAS 38, HKFRS 2, HK(IFRIC) — Int 9,
in accounting changes for	HK(IFRIC) – Int 16	(ii)
presentation, recognition or	— HKAS 1, HKAS 7, HKAS 17, HKAS 36,
measurement	HKAS 39, HKFRS 5 & HKFRS 8	(vii)

Effective date:

• (i) Annual periods beginning on or after 1 January 2009

• (ii) Annual periods beginning on or after 1 July 2009

• (iii) Annual periods beginning on or after 1 July 2008

• (iv) Annual periods beginning on or after 1 October 2008

• (v) Annual periods ending on or after 30 June 2009

• (vi) Transfers of assets from customers received on or after 1 July 2009

• (vii) Annual periods beginning on or after 1 January 2010

The Group is in the process of making an assessment of what the impact of these new or revised standards or interpretations is expected to be in the period of initial application.

3. Segment Information

Segment information is presented by way of two segment formats: (i) on a primary segment reporting basis, by business segment; and (ii) on a secondary segment reporting basis, by geographical segment.

The Group’s operating businesses are structured and managed separately according to the nature of their operations and the products they provide. Each of the Group’s business segments represents a strategic business unit that offers products which are subject to risks and returns that are different from those of the other business segments. The business segments of the Group are businesses of apparel sourcing, apparel trading, entertainment and investment holding.

In determining the Group’s geographical segments, revenues are attributed to the segments based on the location of the customers, and assets are attributed to the segments based on the location of the assets.

Intersegment sales and transfers are transacted with reference to the selling prices used for sales made to third parties at the then prevailing market prices.

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(a) Business segments

The following tables present revenue, results and certain asset, liability and expenditure information for the Group’s business segments for the years ended 31 March 2009 and 2008.

	Apparel	sourcing	Apparel	trading	Entertainment	Entertainment	Investment	holding	Consolidated	Consolidated
	2009	2008	2009	2008	2009	2008	2009	2008	2009	2008
	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000
Segment revenue
Sales to external
customers	1,113	809	1,225	19,786	8,322	—	—	—	10,660	20,595
Segment results	1,113	809	(309)	2,212	3,343	—	—	—	4,147	3,021
Other revenue and
net gains	—	—	—	—	47	—	936	236	983	236
Unallocated other
revenue and net
gains									3	168
									986	404
Unallocated
expenses									(22,405)	(44,217)
Impairment loss
on available-for-
sale financial
asset							(73,945)	(110,923)	(73,945)	(110,923)
Finance costs									(538)	—
									(74,483)	(110,923)
Loss before
taxation									(91,755)	(151,715)
Income tax	—	—	—	(418)	—	—	78	—	78	(418)
Loss for the year
attributable to
equity holders
of the Company									(91,677)	(152,133)

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Apparel trading Entertainment Investment holding 2009 2008 2009 2008 2009 2008 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 Assets Segment assets — 1,099 — — 66,049 144,220 Unallocated assets Total assets Liabilities Segment liabilities — — 1,420 — 111,695 114,215 Unallocated liabilities Total liabilities Capital expenditure — 16 — — 648 1,258 Depreciation and amortisation — 688 — — 615 740 Unallocated depreciation and amortisation Impairment loss of property, plant and equipment — 1,813 — — — 106 Other non-cash expenses 1,333 1,745 — — 73,263 110,710 Unallocated other non-cash expenses	Consolidated 2009 2008 HK$’000 HK$’000 66,049 145,319 2,580 2,062 68,629 147,381 113,115 114,215 20,737 20,520 133,852 134,735 648 1,274 615 1,428 110 57 725 1,485 — 1,919 74,596 112,455 — 10,200 74,596 122,655	Consolidated 2009 2008 HK$’000 HK$’000 66,049 145,319 2,580 2,062 68,629 147,381 113,115 114,215 20,737 20,520 133,852 134,735 648 1,274 615 1,428 110 57 725 1,485 — 1,919 74,596 112,455 — 10,200 74,596 122,655
		147,381
		114,215 20,520
		134,735
		1,274
		1,428
		57
		1,485
		1,919
		112,455 10,200
		122,655

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(b) Geographical segments

Hong Kong Macau United Kingdom (“U.K.”) Hong Kong Macau U.K.	Segment revenue 2009 2008 HK$’000 HK$’000 8,322 — — 15,103 2,338 5,492 10,660 20,595	Segment capital expenditure 2009 2008 HK$’000 HK$’000 648 1,274 — — — — 648 1,274 Segment assets 2009 2008 HK$’000 HK$’000 7,135 10,555 1,076 1,363 60,418 135,463 68,629 147,381

4. Turnover

Turnover, which is also revenue, represents the sales value of goods supplied and services provided to customers and is analysed as follows:

Service income from entertainment business Apparel sourcing Apparel trading Other revenue and net gains Rental income Sundry income Bank interest income Fair value gain on convertible notes Fair value (loss)/gain on investment property	2009 HK$’000 8,322 1,113 1,225 10,660 2009 HK$’000 64 237 3 872 (190) 986	2008 HK$’000 — 809 19,786 20,595 2008 HK$’000 23 75 93 — 213 404

5. Other revenue and net gains

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6. Finance costs

Imputed interest expense on convertible notes 7. Loss before taxation Loss before taxation is arrived at after charging: Cost of inventories sold Cost of services rendered Charge for impairment loss on inventories (including in “cost of sales” in the income statement) Depreciation of property, plant and equipment Write-off of property, plant and equipment Release of prepaid land lease expenses Auditors’ remuneration: — current year provision — prior year underprovision Share-based payments to consultants Minimum lease payments under operating lease in respect of premises Net foreign exchange losses Employee benefit expenses (including directors’ remuneration): Salaries and allowances Pension fund contributions Share-based payments and crediting: Rental income from investment property (net of direct operating expenses)			2009 HK$’000 538 2009 HK$’000 1,534 4,979 — 436 — 289 750 375 1,125 — 1,281 — 7,756 140 — 7,896 (57)		2008 HK$’000 — 2008 HK$’000 16,647 — 927 1,054 115 431 600 — 600 2,828 2,063 67
			7,756 140 —		11,664 286 7,372
					19,322 (20)

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8. Income tax

Taxation (credit)/charge in the consolidated income statement represents:

Current tax — U.K. — Provision for the year Profits tax — Hong Kong — Overprovision for prior year	2009 HK$’000 — (78) (78)	2008 HK$’000 418
		—
		418

No provision for Hong Kong profits tax has been made as the Group had no assessable profits arising from Hong Kong during the year (2008: HK$Nil). Taxation for overseas subsidiaries is similarly charged at the appropriate current rates of taxation ruling in the relevant jurisdictions.

During the year ended 31 March 2006, the Hong Kong Inland Revenue Department (“IRD”) issued certain estimated assessments for tax liabilities of Sun Tai Hing Garment Making Company Limited (“Sun Tai Hing”), a wholly owned subsidiary of the Company, for an aggregate amount of approximately HK$19,918,000 on the non-taxable claims of non-Hong Kong sourced income for the years of assessment of 1998/1999, 1999/2000, 2000/2001, 2001/2002, 2002/2003 and 2003/2004 (the “Estimated Assessments”). Sun Tai Hing formally lodged objections with the IRD against the Estimated Assessments and a final settlement has not yet been reached. Full provision on the tax liabilities of the Estimated Assessment was made and included in taxation payable of the Group as at the balance sheet date, and the directors of Sun Tai Hing and the Company considered that the existing provision is adequate.

9. Dividend

No dividend was paid or proposed for the year ended 31 March 2009 (2008: HK$Nil), nor has any dividend been proposed since the balance sheet date.

10. Loss per share

The calculation of basic loss per share is based on the loss for the year attributable to the equity holders of the Company, and the weighted average number of ordinary shares in issue during the year.

The calculation of diluted loss per share is based on the loss for the year attributable to the equity holders of the Company. The weighted average number of ordinary shares used in the calculation is the number of ordinary shares in issue during the year, as used in the basic loss per share calculation, and the weighted average number of ordinary shares assumed to have been issued at no consideration on the deemed exercise or conversion of all potential dilutive ordinary shares into ordinary shares.

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

Loss: Loss attributable to the equity holders of the Company, used in the basic and diluted loss per share calculations Add:_Imputed interest on convertible notes _Less:_Fair value gain on the derivative component of convertible notes _Shares: Weighted average number of ordinary shares for basic loss per share calculation Effect of dilution on weighted average number of ordinary shares in respect of share options Effect of dilution on weighted average number of ordinary shares in respect of conversion of convertible notes Weighted average number of ordinary shares adjusted for the effect of dilution	2009 HK$’000 (91,677) 538 (872) (92,011) Number of 2009 ’000 836,164 — 43,288 879,452	2008 HK$’000 (152,133) — — (152,133) shares 2008 ’000 677,020 7,177 — 684,197

• Diluted loss per share amounts for the current and prior years are the same as the respective basic loss per share amounts because the basic loss per share amounts for the both years are reduced when taking respective convertible notes and share options (were applicable) into account, and therefore the conversion of convertible notes and share options have an anti-dilutive effect on the basic loss per share amounts for the current and prior years.

11. Available-for-sale financial assets

Equitysecurities listed in U.K. At cost of acquisition _Less:_impairment losses At fair value	2009 HK$’000 245,287 (184,868) 60,419	2008 HK$’000 245,287 (110,923) 134,364

The Company acquired 24,375,975 ordinary shares of 10 pence each or approximately 29.9% of the issued capital of Birmingham City Plc. (“BCP”) at a cash consideration of £14,950,029 (equivalent to approximately HK$237,225,000 at the acquisition date) from independent vendors during the year ended 31 March 2008. BCP was incorporated in the U.K. with limited liability and its shares are listed on the Alternative Investment Market of the London Stock Exchange (the “AIM”). BCP’s principal place of business is in the

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U.K. and is principally engaged in investment holding. BCP has one subsidiary, Birmingham City Football Club Plc. registered in the U.K. and it is principally engaged in operation of a football league club in the U.K. As the Company failed to appoint any representative to the board of directors of BCP and had no power to exercise any significant influence or joint control over the financial and operating policy decisions of BCP after the acquisition of equity interest in BCP, the directors of the Company consider that the Company’s investment in BCP is not an investment in an associate but should be designated as availablefor-sale equity securities. Taking into account the transaction costs of HK$8,062,000 that are directly attributable to the Company’s acquisition of the equity interest in BCP, the initial cost of the Company’s investment in BCP as at the acquisition date amounted to approximately HK$245,287,000.

For the purpose of assessing the impairment of the Company’s investment in BCP, market price of BCP’s shares listed on the AIM is taken into account. The directors of the Company considered that there is a significant decline in the fair value of the securities, i.e. BCP’s market share price quoted on the AIM, below its cost, which is an evidence of impairment. Therefore, an impairment loss on available-for-sale financial assets of HK$73,945,000 (2008: HK$110,923,000) was directly recognised in profit or loss for the year ended 31 March 2009 based on the BCP’s market share price quoted on the AIM at the spot transaction rate as at 31 March 2009. Such impairment losses recognised in profit or loss are not reversed through profit or loss, any subsequent increase in the fair value of such available-for-sale financial assets is recognised directly in equity.

12. Trade receivables, deposits, prepayments and other receivables

Trade receivables _Less:_Allowance for doubtful debts Deposits, prepayments and other receivables	2009 HK$’000 4,687 (4,687) — 1,190 1,190	2008 HK$’000 4,453 (3,354) 1,099 544 1,643

(i) The average credit period to the Group’s trade receivables is 60 days (2008: 60 days).

• (ii) The ageing analysis of gross trade receivables, based on invoice date, is as follows:

Within 30 days 31 to 60 days Over 60 days	2009 HK$’000 — — 4,687 4,687	2008 HK$’000 335 1,730 2,388
		4,453

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MANAGEMENT DISCUSSION AND ANALYSIS

Results

For the year ended 31 March 2009, the Group recorded a consolidated turnover of approximately HK$10.7 million, representing a decrease of 48.1% compared to the turnover of approximately HK$20.6 million in the last financial year. Such decrease was mainly due to the decrease of the sales of apparel trading business. However, the Group has entered into new business segment which is entertainment business during the year.

The Group’s turnover for the year under review was derived from Hong Kong and the United Kingdom markets and accounted for 78.1% and 21.9% respectively. In the last financial year, the Group’s turnover was derived from Macau and the United Kingdom markets and accounted for 73.3% and 26.7% respectively.

During the financial year, the gross profit margin of the Group was 38.9% while it was 14.7% in the last financial year. The significant increase in the gross profit margin was mainly due to high gross profit margin in entertainment business in Hong Kong and sportswear & apparel trading business in the United Kingdom.

The loss of the Group for the year ended 31 March 2009 was decreased by 39.7% to approximately HK$91.7 million from the loss for the year of approximately HK$152.1 million in the last financial year. Such loss of the Group was mainly due to a very significant impairment loss on the investment in Birmingham City Plc..

Business Review and Prospects

The Company engages in investment holding. The principal activities of the subsidiaries are businesses of entertainment, apparel sourcing, sportswear & apparel trading and investment holding. During the year under review, the Group entered into entertainment business because of diversification of business and high profit margin in this business. For the existing sportswear & apparel trading business in the United Kingdom, the Group decided to minimise this business because the high competitive market in United Kingdom.

Although the Group is facing the global financial turmoil and poor market conditions, the Group will continue to explore and identify investment opportunities to add into the Group’s investments in order to enhance the shareholders’ value by its organic growth.

Dividend

No dividend was paid or proposed for the year ended 31 March 2009 (2008: HK$Nil), nor has any dividend been proposed since the balance sheet date.

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Liquidity and Financial Resources

As at 31 March 2009, the cash and bank balances of the Group were approximately HK$3,000,000, representing a decrease of 57.7% compared to the cash and bank balances of approximately HK$7,100,000 as at the last financial year end. The current ratio of the Group as at 31 March 2009 was 13.2% (31 March 2008: 24.6%).

Capital Raising

The Company entered into subscription agreement dated 7 May 2008 (the “Subscription Agreement”) and supplemental agreement dated 4 June 2008 (the “Supplemental Agreement”) with Pacific Capital Investment Management Limited (“Pacific Capital”) to issue convertible notes (the “Convertible Notes”) by the Company for an aggregate principal amount of up to HK$200,000,000 which was approved as an ordinary resolution passed at the extraordinary general meeting of the Company on 7 July 2008. During the year, the Convertible Notes in the principal amount of HK$20,000,000 were issued. On 11 August 2008, 23 September 2008, 20 November 2008, 18 February 2009, 13 March 2009, 6 April 2009 and 30 April 2009, conversion rights attaching to the Convertible Notes in the principal amounts of HK$6,000,000, HK$2,500,000, HK$1,500,000, HK$2,500,000, HK$2,500,000, HK$2,500,000 and HK$2,500,000 were exercised respectively, resulting in the allotment and issue of 49,586,000 shares, 50,000,000 shares, 30,000,000 shares, 47,169,000 shares, 48,076,000 shares, 45,454,000 shares and 45,454,000 shares respectively.

The Company entered into termination agreement on 5 June 2009 with Pacific Capital to cancel and terminate the Subscription Agreement and the Supplemental Agreement in respect of the Convertible Notes under mutual agreement. The Company and Pacific Capital agreed to release and discharge each other from all obligations under Subscription Agreement and the Supplemental Agreement. Further details were set out in the Company’s announcement dated 7 June 2009.

On 7 June 2009, Great Luck Management Limited and Mr. Yeung Ka Sing, Carson (the “Vendors”), the Company and the placing agent entered into the top-up placing and subscription agreement pursuant to which, the Vendors agreed to place, through the placing agent, an aggregate of 150,000,000 existing shares. The gross proceeds from the top-up subscription are HK$60,000,000. The net proceeds of approximately HK$58,000,000 from the top-up subscription are intended to be used as general working capital of the Group, for expansion of the Group’s business and/or possible investments in the future when opportunities arise. The details of the top-up placing and subscription agreement were set out in the Company’s announcement dated 8 June 2009.

Foreign Exchange Exposure

The Group is exposed to currency risk primarily through its investment in quoted equity securities in Birmingham City Plc. with a carrying value of approximately HK$60.4 million (31 March 2008: HK$134.4 million) as at 31 March 2009 that are denominated in Pound Sterling (“£”), which was acquired during the year of 2008.

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Pledge of Group’s Asset

As at 31 March 2009 and 31 March 2008, the property of Sun Tai Hing Garment Making Company Limited (“Sun Tai Hing”), a subsidiary of the Company, was charged by the plaintiff for the claim in a writ on 11 September 2007. Save as the above, the Group did not have assets charged nor pledged to secure any outstanding borrowing.

Human Resource

The Group employs approximately 50 employees and their remuneration packages are generally structured by reference to market terms and individual merit. Salaries are normally review on an annual basis based on performance appraisals and other relevant factors.

Commitment

As at 31 March 2009 and 2008, the Company and the Group did not have any capital commitment.

Contingent Liabilities

A writ was filed against the Group entities in respect of a claim for reimbursement of expenses paid on behalf of the Group amounting to approximately HK$3,000,000 on 26 July 2006. The Company was not aware of such alleged payments and had instructed lawyers to deal with the matter. Based on the written legal opinion from the legal counsel, the board of directors is of the opinion that the claim is not justifiable and without merit.

A writ was filed by Siu Ban & Sons Limited (“Siu Ban”) against Sun Tai Hing, a subsidiary of the Company, on 11 September 2007 in respect of a claim for the return of the property of Sun Tai Hing located in Hong Kong (the “Property”) and damages for costs and loss of interest Siu Ban claimed that Sun Tai Hing did not pay the purchase consideration for the acquisition of the Property in May 2002. The Property was also charged by the plaintiff for this claim. The board of directors is of the opinion that the claim is not justifiable and without merit.

Significant Post Balance Sheet Non-Adjusting Events

The Company entered into termination agreement on 5 June 2009 with Pacific Capital to cancel and terminate the Subscription Agreement and the Supplemental Agreement in respect of the Convertible Notes under mutual agreement. The Company and Pacific Capital agreed to release and discharge each other from all obligations under Subscription Agreement and the Supplemental Agreement. Further details were set out in the Company’s announcement dated 7 June 2009.

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On 7 June 2009, Great Luck Management Limited and Mr. Yeung Ka Sing, Carson (“Vendors”), the Company and the placing agent entered into the top-up placing and subscription agreement pursuant to which, the Vendors agreed to place, through the placing agent, an aggregate of 150,000,000 existing shares. The gross proceeds from the top-up subscription are HK$60,000,000. The net proceeds of approximately HK$58,000,000 from the top-up subscription are intended to be used as general working capital of the Group, for expansion of the Group’s business and/or possible investments in the future when opportunities arise. The details of the top-up placing and subscription agreement were set out in the Company’s announcement dated 8 June 2009.

Purchase, Sale or Redemption of Securities of the Company

During the relevant periods neither the Company, nor any of its subsidiaries has purchased, redeemed or sold any of the Company’s listed securities.

Corporate Governance

The Board believes that good corporate governance is crucial to improve the efficiency and performance of the Group and to safeguard the interests of the shareholders. The Company has applied the principles of the Code on Corporate Governance Practices (the “Code”) as set out in Appendix 14 of the Listing Rule and complied with all the applicable code provisions of the Code, except the following:

Code provision A.4.1 stipulates that non-executive directors should be appointed for a specific term, subject to re-election. The Company deviates from the above code provision as one of non-executive Directors (“NEDs”) and all independent non-executive Directors (“INEDs”) are not appointed for specific terms. According to the provisions of the Company’s Articles of Association, however, the NEDs and INEDs are subject to retirement and re-election. The reason for the deviation is that the Company believes that the Directors ought to be committed to representing the long term interest of the Company’s shareholders.

Code provision A.4.2 stipulates that all directors should be subject to retirement by rotation at least once every three years. Pursuant to the Company’s Articles of Association, the chairman shall not be subject to retirement by rotation or be taken into account in determining the number of directors to retire in each year. In order to ensure the smooth running and continuous adhering to the strategic view of the Company, the Company believes that the position of chairman is more practical to be maintained and not to be subject to retirement by rotation.

Code provision E1.2 stipulates that the chairman of the board (the “Chairman”) should attend the annual general meeting (the “AGM”). The Chairman was unable to attend the AGM on 28 August 2008 due to his business trip but he has designated the Executive Director of the Company to answer questions raised at the AGM.

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Model Code for Securities

The Company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers as set out in Appendix 10 of the Listing Rules (the “Model Code”). Having made specific enquiry to all the Directors of the Company, all the Directors of the Company confirmed that they have complied with the required standard of dealings and the code of conduct regarding the Model Code adopted by the Company.

Audit Committee

The Company has an Audit Committee which was established on 22 October 2002 in accordance with the requirements of the Code of Best Practices set out in Appendix 14 of the Listing Rules, for the purpose of reviewing and providing supervision over the Group’s financial reporting process and internal controls.

The Audit Committee comprises three independent non-executive directors of the Company up to the date of this announcement. The Audit Committee of the Company reviewed and commented on the Company’s annual results for the year ended 31 March 2009.

Remuneration Committee

The Remuneration Committee was established for the purpose of making recommendations to the Board on the Company’s policy and structure for all remuneration of directors and senior management. The written terms of reference which describe the authority and duties of the Remuneration Committee which in line with the Code were prepared and adopted. The Remuneration Committee, comprises three independent non-executive directors, namely Mr. Chang Kin Man, Mr. Yau Yan Ming, Raymond and Mr. Zhou Han Ping.

Publication of Further Information on the Stock Exchange’s Website

The Company’s annual report will be dispatched to the shareholders of the Company and will be available for viewing on the website of Hong Kong Exchanges and Clearing Limited at www.hkexnews. hk under “Latest Listed Company Information” and on the website of the Company at www.irasia.com/ listco/hk/grandtop/index.htm in due course.

By Order of the Board

Grandtop International Holdings Limited

Hui Ho Luek, Vico

Executive Director and Chief Executive Officer

Hong Kong, 24 July 2009

As at the date of this announcement, the Board comprises of executive directors, namely Mr. Yeung Ka Sing, Carson, Mr. Hui Ho Luek, Vico, Mr. Steven McManaman, Mr. Fan Zhi Yi, Mr. Lee Yiu Tung, Mr. Ip Wing Lun and Ms. Wong Po Ling, Pauline; non-executive directors, namely Mr. Christian Lali Karembeu and Mr. Chan Wai Keung and independent non-executive directors, namely Mr. Chang Kin Man, Mr. Yau Yan Ming, Raymond and Mr. Zhou Han Ping.

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