THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt as to any aspect of this document or as to the action to be taken, you should consult your licensed securities dealer or registered institution in securities, bank manager, solicitor, professional accountant or other professional adviser. If you have sold or transferred all your shares in Hop Hing Holdings Limited, you should at once hand this document and the accompanying forms of proxy to the purchaser or the transferee or to the bank, licensed securities dealer or other agent through whom the sale or transfer was effected for transmission to the purchaser or the transferee. The Stock Exchange of Hong Kong Limited and Hong Kong Securities Clearing Company Limited take no responsibility for the contents R11.20 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. R17.02(4)

HOP HING HOLDINGS LIMITED A1a(1) (incorporated in Bermuda with limited liability) (Stock Code: 47)

REORGANISATION PROPOSAL FOR HOP HING HOLDINGS LIMITED TO BECOME A WHOLLY-OWNED SUBSIDIARY OF HOP HING GROUP HOLDINGS LIMITED (A COMPANY INCORPORATED IN THE CAYMAN ISLANDS WITH LIMITED LIABILITY, THE SHARES OF WHICH ARE PROPOSED TO BE LISTED ON THE MAIN BOARD OF THE STOCK EXCHANGE OF HONG KONG LIMITED BY WAY OF INTRODUCTION) PURSUANT TO A SCHEME OF ARRANGEMENT (UNDER SECTION 99 OF THE COMPANIES ACT 1981 OF BERMUDA (AS AMENDED))

Sponsor and financial adviser

A letter from the Board is set out on pages 27 to 30 of this document. The Explanatory Statement is set out on pages 31 to 52 of this document. The actions to be taken by the Shareholders and the Warrantholders is set out on page 52 of this document. Notices convening the Court Meeting, the SGM and the Warrantholders’ Meeting to be held on Monday, 7 April 2008 at 11:00 a.m., 11:30 a.m. (or as soon as the Court Meeting has been concluded or adjourned) and 12:00 noon (or immediately following the SGM) respectively at Units E & F, 2nd Floor, Hop Hing Building, 9 Ping Tong Street East, Tong Yan San Tsuen, Yuen Long, New Territories, Hong Kong are set out on pages 270 to 278 of this document. Subject to the granting of listing of, and permission to deal in, the shares of Hop Hing Group Holdings Limited on the Main Board and compliance with the stock admission requirements of HKSCC, those shares will be accepted as eligible securities by HKSCC for deposit, clearance and settlement in CCASS with effect from the commencement date of dealings in such shares or such other date as determined by HKSCC. All activities under CCASS are subject to the General Rules of CCASS and CCASS Operational Procedures in effect from time to time. Whether or not you are able to attend the Court Meeting, the SGM and the Warrantholders’ Meeting or any of them, you are strongly urged to complete and sign the enclosed forms of proxy in accordance with the respective instructions printed thereon, and to lodge them with the branch share registrar of the Company, Computershare Hong Kong Investor Services Limited, at 46/F., Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong as soon as possible, but in any event, not later than the times and dates specified therein respectively. The form of proxy in respect of the Court Meeting may also be handed to the Chairman of the Court Meeting at the Court Meeting if it is not so lodged. Completion and return of the forms of proxy will not preclude you from attending and voting in person at the Court Meeting, the SGM and the Warrantholders’ Meeting or any respective adjournment thereof should you so wish. 14 March 2008 CONTENTS

Page

Definitions ...... 1

Expected timetable ...... 10

Summary of the Proposals ...... 13

Risk factors ...... 14

Responsibility statement ...... 22

Directors and Senior Executives of the Company and Newco ...... 23

Corporate information of the Company and Newco ...... 25

Parties involved in the Proposals ...... 26

Letter from the Board ...... 27

Explanatory statement...... 31

Waivers from Compliance with the Listing Rules and the Takeovers Code ...... 53

Appendix I – Information on the Group...... 55

Appendix II – Information on Newco ...... 75

Appendix III – Financial information of the Group ...... 81

Appendix IV – Property valuation ...... 152

Appendix V – Summary of the rules of Newco Share Option Scheme ...... 184

Appendix VI – Summary of the constitution of Newco and Cayman Islands company law ...... 197

Appendix VII – Summary of the differences of certain provisions of the Bermuda and Cayman Islands company law ...... 228

Appendix VIII – Explanatory statement on Repurchase Mandate ...... 236

Appendix IX – Additional information ...... 238

Scheme of Arrangement ...... 265

Notice of the Court Meeting ...... 270

Notice of the SGM ...... 272

Notice of the Warrantholders’ Meeting ...... 275

– i – DEFINITIONS

In this document, the following words and expressions shall have the following meanings, unless the context otherwise requires:

“Announcement” the announcement dated 31 January 2007 issued by the Company in relation to the Proposals

“Announcement Date” 31 January 2007, the date on which the Announcement was published

“Approved Merchant Bank” means a reputable merchant bank or other financial institution selected by the board of directors of Newco or a duly authorised committee thereof

“Articles” the articles of association of Newco, as amended from time to time

“Auditors” means the auditors for the time being of Newco

“Authorisations” all necessary authorisations, registrations, filings, rulings, consents, permissions and approvals in connection with the Redomicile Proposal

“Board” the board of Directors

“Business Day” a day that is not a Saturday, Sunday or public holiday in Hong Kong

“Capital Distribution” shall (without prejudice to the generality of that phrase) include distributions in cash or in specie. Any dividend charged or provided for in the accounts for any financial period shall (whenever paid and however described) be deemed to be a Capital Distribution, provided that any such dividend shall not be automatically so deemed if:

(a) it is paid out of the net consolidated profits (less consolidated losses) attributable to the holders of Newco Shares for all financial periods after the year ended 31 December 2007 as shown in the audited consolidated profit and loss account of Newco and its Subsidiaries for each such financial period; or

– 1 – DEFINITIONS

(b) to the extent that (a) above does not apply, the rate of that dividend, together with all other dividends on the class of capital in question charged or provided for in the accounts for the financial period in question, does not exceed the aggregate rate of dividend on such class of capital charged or provided for in the accounts for the last preceding financial period. In computing such rates, such adjustments may be made as are in the opinion of the Auditors appropriate to the circumstances and shall be made in the event that the lengths of such periods differ materially

“CCASS” the Central Clearing and Settlement System established and operated by HKSCC

“CIMB-GK” CIMB-GK Securities (HK) Limited, a licensed corporation under the SFO to carry on Types 1 (dealing in securities), 4 (advising on securities) and 6 (advising on corporate finance) regulated activities under the SFO

“China” or “PRC” the People’s Republic of China, which, for the purpose of this document, excludes Hong Kong, Macau and Taiwan

“Companies Act” the Companies Act 1981 of Bermuda (as amended)

“Companies Law” the Companies Law (2007 Revision) of the Cayman Islands as amended from time to time

“Company” Hop Hing Holdings Limited, an exempted company incorporated in Bermuda with limited liability whose Shares are listed on the Main Board

“Corporate Guarantee” the guarantees given by the Company in relation to banking facilities granted by banks to Subsidiaries and a joint venture company of the Group undertaking the Oil Business

“Court” the Supreme Court of Bermuda

“Court Meeting” meeting of the Shareholders convened in accordance with the direction of the Court

– 2 – DEFINITIONS

“Directors” the directors of the Company

“Effective Date” the date upon which the Scheme, if approved and sanctioned by the Court, becomes effective in accordance with its terms, which is also the day on which an office copy of the order of the Court sanctioning the Scheme under Section 99 of the Companies Act shall have been delivered to the Registrar of Companies for registration

“Evergreen” Evergreen Oils and Fats Limited, a company incorporated in Cayman Islands and is principally engaged in the business of warehousing, marketing and selling edible oils, fats and shortening in Hong Kong and Macau, which is owned as to 50% by the Company and 50% by an independent third party.

“Explanatory Statement” the explanatory statement relating to the Redomicile Proposal, the text of which is set out on pages 31 to 52 of this document

“Executive” the Executive Director of the Corporate Finance Division of the SFC and any delegate of the Executive Director

“Exercise Monies” means, in relation to any Newco Warrant(s), the amount stated on the face of the Newco Warrant Certificate(s) issued in respect of such Newco Warrant(s) as the amount in cash for which the Newco Warrantholders of such Newco Warrant(s) is entitled to subscribe for Newco Shares upon the exercise of the Subscription Rights represented thereby

“Fellow Subsidiaries” the subsidiaries proposed to be established by Newco to operate certain new businesses

“Group” or “Newco Group” the Company and its subsidiaries before implementation of the Scheme or Newco and its subsidiaries upon implementation of the Scheme (as the case may be)

“HK$” Hong Kong dollars, the lawful currency of Hong Kong

“HHO” Hop Hing Oil (1985) Limited

“Hong Kong ” the Hong Kong Special Administration Region of the PRC

“HKSCC” the Hong Kong Securities and Clearing Company Limited

– 3 – DEFINITIONS

“Hop Hing Oil” Hop Hing Oil Investment Limited, a company incorporated in Hong Kong with limited liability and an indirectly wholly-owned subsidiary of the Company

“Hung’s” Hung’s (1985) Limited

“Latest Practicable Date” 10 March 2008, being the latest practicable date prior to the issue of this document for ascertaining certain information contained herein

“Listing Committee” the Listing Committee of the Stock Exchange

“Listing Rules” the Rules Governing the Listing of Securities on the Stock Exchange, as amended from time to time

“Macau” the Macau Special Administrative Region of the PRC

“Main Board” the stock market operated by the Stock Exchange prior to the establishment of the Growth Enterprise Market (excluding the options market) and which stock market continues to be operated by the Stock Exchange in parallel with the Growth Enterprise Market. For the avoidance of doubt, the Main Board excludes the Growth Enterprise Market

“Manufacturing Subsidiary” Top Charter Holdings Limited, a wholly-owned subsidiary of the Company, a party under the Supply Agreement

“Newco” Hop Hing Group Holdings Limited, an exempted company incorporated in the Cayman Islands with limited liability, a wholly-owned subsidiary of the Company, which will become the new holding company of the Group on the Effective Date, and the shares of which will be listed on the Main Board by way of introduction

“Newco Board” the board of directors of Newco

“Newco Share(s)” ordinary share(s) of HK$0.10 each in the share capital of Newco

“Newco Share Option Scheme” the share option scheme of Newco proposed to be adopted by Newco

– 4 – DEFINITIONS

“Newco Shareholder(s)” the holder(s) of the Newco Share(s)

“Newco Warrant(s)” the warrant(s) proposed to be issued by Newco which entitle the holders thereof to subscribe for Newco Share(s) at a subscription price of HK$0.25, subject to adjustment

“Newco Warrantholder(s)” Holder(s) of Newco Warrant(s)

“Newco Warrant Certificate(s)” means the certificate(s) (in registered form) issued in respect of the Newco Warrants as from time to time modified in accordance with the provisions set out in the Newco Warrant Instrument

“Newco Warrant Instrument” the instrument constituting the Newco Warrant(s)

“Old Share Option Scheme” the share option scheme of the Company which was adopted by the shareholders of the Company at the special general meeting of the Company convened and held on 30 June 2000. Such scheme was terminated on 25 June 2004 pursuant to an ordinary resolution passed by the shareholders of the Company at the special general meeting of the Company convened and held on 25 June 2004, on the basis that any options granted under such scheme prior to the passing of the above shareholders’ resolution shall not, in any way, be affected or prejudiced and all such option shall continue to be valid and exercisable in accordance with the provisions of the same scheme

“Oil Business” the Group’s existing edible oil business

“Operational Guarantee” the guarantee given by the Company in favour of Evergreen for the due performance of the Manufacturing Subsidiary under the Supply Agreement and the undertaking given by the Company to indemnify Evergreen on a full indemnity basis in respect of all costs, expenses and damage by reason of or in consequence of any failure of the Manufacturing Subsidiary to carry out any of its obligations under the Supply Agreement

“Overseas Shareholder(s)” Shareholder(s) whose address(es), as shown on the register of members of the Company at the Record Time, is (are) in any territory other than Hong Kong

– 5 – DEFINITIONS

“Panyu Hop Hing” Panyu Hop Hing Oils & Fats Co. Ltd, a company registered as a wholly-foreign-owned enterprise under PRC law and an indirectly wholly-owned subsidiary of the Company

“Panyu Kwong Hing” Panyu Kwong Hing Packaging Ltd., a company registered as a wholly-foreign-owned enterprise under PRC law and an indirectly wholly-owned subsidiary of the Company

“Proposals” the Redomicile Proposal and the Warrant Proposal

“Record Time” currently expected to be 4:30 p.m. (Hong Kong time) on the Business Day immediately preceding the Effective Date

“Redomicile Proposal” the proposal for the change of the domicile of the holding company of the Group from Bermuda to the Cayman Islands pursuant to the Proposals

“Registrar” Computershare Hong Kong Investor Services Limited at 46th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong, being the Company’s Hong Kong branch registrar and transfer office

“Registrar of Companies” the Registrar of Companies in Bermuda

“Relevant Authorities” appropriate governments and/or governmental bodies, regulatory bodies, courts or institutions

“Repurchase Mandate” the general unconditional mandate given to the Directors to repurchase fully paid Newco Shares

“RMB” Renminbi, the lawful currency of the PRC

“Scheme” the proposed scheme of arrangement under Section 99 of the Companies Act

“Scheme Share(s)” issued Share(s) which are subject to the Scheme

“Scheme Shareholder(s)” holder(s) of the Scheme Share(s) as at the Record Time

“SFC” the Securities and Futures Commission of Hong Kong

– 6 – DEFINITIONS

“SFC Waiver” a waiver by the Executive Director of the Corporate Finance Division of the SFC or any delegate of the Executive Director of full compliance with Rule 2.10 of the Takeovers Code as a result of implementing the Redomicile Proposal

“SFO” the Securities and Futures Ordinance, Chapter 571 of the Laws of Hong Kong, as amended from time to time

“SGM” the special general meeting of the Company proposed to be convened and held for the purpose of considering and approving the Scheme (and the necessary resolutions to implement the Scheme) and the Warrant Proposal

“Share(s)” ordinary share(s) with a par value of HK$0.10 each in the A1a(23)(1) share capital of the Company

“Share Option Scheme” the share option scheme of the Company adopted on 25 June 2004

“Shareholder(s)” the holder(s) of the Share(s)

“special resolution” a resolution to be passed by not less than three-fourths of the votes cast by the shareholders of the Company as, being entitled so to do, vote in person or, where proxies are allowed, by proxy, at the SGM

“sq.m.” square meter

“Stock Exchange” The Stock Exchange of Hong Kong Limited

“Subscription Price” means the sum payable in respect of each Newco Shares to which the registered holder of each Newco Warrant will be entitled upon exercise of the Subscription Rights represented thereby, being HK$0.25 in cash per Newco Share or such adjusted price as may for the time being be applicable in accordance with the terms of the Newco Warrant Instrument

– 7 – DEFINITIONS

“Subscription Rights” means the rights of the Newco Warrantholders as represented by the Newco Warrants to subscribe for Newco Shares up to HK$20,401,692.5 in aggregate pursuant to the Newco Warrants (including, but without limitation, additional Newco Shares issued by way of capitalization of the Subscription Right Reserve pursuant to Clause 6); and in relation to each Newco Warrant, means the rights of the relevant Newco Warrantholders to subscribe for Newco Shares for the relative Exercise Monies (or a relevant portion thereof) pursuant to such Newco Warrant, upon and subject to the Conditions

“Subscription Right Reserve” means any reserve established and maintained pursuant to Clause 6.1 (headed “Subscription Right Reserve”) of the Newco Warrant Instrument

“Subsidiaries” means a company which is for the time being and from time to time a subsidiary (within the meaning of Section 2 of the Companies Ordinance (Chapter 32 of the laws of Hong Kong (as amended from time to time)) or Section 86(1) of the Companies Act) of Newco, whether incorporated in Hong Kong, Bermuda or elsewhere

“Supply Agreement” the agreement dated 20 February 2002 entered into between the Manufacturing Subsidiary, the Company (as guarantor) and Evergreen relating to the supply of edible oil products by the Manufacturing Subsidiary to Evergreen; which will continue until termination of the joint venture agreement relating to Evergreen

“Takeovers Code” the Code on Takeovers and Mergers, as amended from time to time

“Total Effective Considerations” the “Total Effective Consideration” receivable for the securities issued shall be deemed to be the consideration receivable by the Company for any such securities plus the additional minimum consideration (if any) to be received by the Company and/or Newco (if not the Company) upon (and assuming) the conversion or exchange thereof or the exercise of such subscription rights

– 8 – DEFINITIONS

“UK” the United Kingdom

“US$” or “US dollars” or “USD” United States dollars, the lawful currency for the time being of the United States of America

“US”, “USA” or “United States” the United States of America

“Warrant(s)” the warrant(s) issued by the Company on 15 September 2005 which entitle the holder to subscribe for one Share for every one warrant they hold at the subscription price of HK$0.25 at any time during the period between 15 September 2005 and 30 April 2009

“Warrantholders” holders of the Warrants

“Warrantholders’ Meeting” the meeting of the Warrantholders proposed to be convened and held to consider and approve the Warrant Proposal

“Warrant Proposal” the proposal under which the existing Warrants will be cancelled and in consideration thereof, the Warrantholders will receive one Newco Warrant for every one Warrant held at the Record Time and become Newco Warrantholders thereafter

“Zhejiang Hop Hing” Zhejiang Hop Hing Oils & Fats Company, Limited, a company registered as equity joint ventures under PRC law and owned as to 61% by the Company

“%” per cent.

– 9 – EXPECTED TIMETABLE

2008 (Hong Kong time unless otherwise indicated)

Latest time for lodging forms of transfer of Shares and the Warrants to qualify for entitlement to vote at the Court Meeting, the SGM and the Warrantholders’ Meeting...... 4:00 p.m. on Tuesday, 1 April

Closure of register of members of the Company for the purpose of determining the Shareholders who are entitled to attend and vote at the Court Meeting and the SGM. Closure of register of Warrantholders for the purpose of determining the Warrantholders who are entitled to attend and vote at the Warrantholders’ Meeting...... from Wednesday, 2 April to Monday, 7 April (both dates inclusive)

Latest time for lodging forms of proxy in respect of (Note 1): Court Meeting ...... 11:00 a.m. on Saturday, 5 April SGM ...... 11:30 a.m. on Saturday, 5 April Warrantholders’ Meeting ...... 12:00 noon on Saturday, 5 April

Court Meeting ...... 11:00 a.m. on Monday, 7 April

SGM (Note 2) ...... 11:30 a.m. on Monday, 7 April

Warrantholders’ Meeting (Note 3) ...... 12:00 noon on Monday, 7 April

Announcement of the results of the Court Meeting, the SGM and the Warrantholders’ Meeting ...... after 4:30 p.m. on Monday, 7 April

Hearing of petition to sanction the Scheme ...... Friday, 18 April (Bermuda time)

Last day for dealings in the Shares and the Warrants on the Stock Exchange ...... Monday, 21 April

Dealings in the Shares and the Warrants on the Stock Exchange ceased ...... 4:00 p.m. on Monday, 21 April

Announcement of the result of hearing of petition to sanction the Scheme and the Effective Date to be published on or about...... after 4:30 p.m. on Monday, 21 April

– 10 – EXPECTED TIMETABLE

2008

Latest time for lodging forms of transfer of the Shares and the Warrants in order to be entitled to Newco Shares and Newco Warrants ...... 4:00 p.m. on Thursday, 24 April

Record Time ...... 4:30 p.m. on Thursday, 24 April

Closure of register of member of the Company and register of Warrantholders to determine who is entitled to Newco Shares and Newco Warrants respectively ...... Friday, 25 April

Registration of the order of the Court to sanction the Scheme with the Registrar of Companies ...... Friday, 25 April (Bermuda and Hong Kong time)

Effective Date (Note 4) ...... Friday, 25 April (Bermuda and Hong Kong time)

Withdrawal of the listing of the Shares (in board lots of 2,000 Shares) and the Warrants (in board lots of 20,000 Warrants) on the Main Board ...... 4:00 p.m. on Monday, 28 April

Despatch of the new certificates for Newco Shares and Newco Warrants ...... Monday, 28 April

Dealings in Newco Shares and Newco Warrants on the Stock Exchange commence ...... 9:30 a.m. on Tuesday, 29 April

Matching service for odd lots trading of Newco Shares and Newco Warrants commences ...... 9:30 a.m. on Tuesday, 29 April

Last day of the matching services for odd lots A1a(22) trading of Newco Shares and Newco Warrants...... Thursday, 29 May

– 11 – EXPECTED TIMETABLE

Shareholders and Warrantholders should note that the above timetable, which is mainly dependent on the availability of the dates for the Court to hear the petition to sanction the Scheme, is subject to change. Further announcement(s) regarding the Redomicile Proposal and the Warrant Proposal will be made as and when appropriate.

Shareholders should note that the board lot size for trading of Newco Shares will be changed to 4,000 Newco Shares upon the Scheme becoming effective. New certificates for Newco Shares and for Newco Warrants will be issued to the Shareholders and the Warrantholders who are registered in the register of members of the Company and the register of Warrantholders, respectively, at the Record Time.

Notes:

1. The forms of proxy should be lodged with the Registrar, Computershare Hong Kong Investor Services Limited at 46th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong, as soon as possible and in any event not later than the relevant times and dates stated above or it may be handed to the Chairman of the Court Meeting at the Court Meeting. Completion and return of a form of proxy for the Court Meeting or the SGM or Warrantholders’ Meeting will not preclude a Scheme Shareholder or a Shareholder or a Warrantholder (as the case may be) from attending and voting in person at the relevant meeting if he or she so wishes. In such event, the returned form of proxy will be deemed to have been revoked.

2. The SGM will be held at the abovementioned specific time or so soon thereafter as the Court Meeting shall have been concluded or adjourned.

3. The Warrantholders’ Meeting will be held at the abovementioned specific time or so soon thereafter as the SGM shall have been concluded or adjourned.

4. The Scheme will become effective when it is sanctioned (with or without modification(s)) by the Court and an office copy of the order of the Court is delivered to the Registrar of Companies for registration. If the Scheme shall not have become effective by 30 September 2008 or such later date as the Court may direct, the Scheme will lapse. The Shareholders will be advised by an announcement of the exact date upon which the Scheme becomes effective.

The Board proposes that the change of domicile of the Company will be implemented by way of the Scheme, pursuant to which the structure of the Group will be reorganised such that Newco will become the new holding company of the Group and the Shareholders will receive one Newco Share for every Share held at the Record Time and become Newco Shareholders thereafter and the Warrantholders will receive one Newco Warrant for every one Warrant held at the Record Time and become Newco Warrantholders thereafter.

– 12 – SUMMARY OF THE PROPOSALS

As part of the corporate restructuring exercise, the Board proposes (a) a change of domicile of the holding company of the Group from Bermuda to the Cayman Islands by way of the Scheme, pursuant to which the structure of the Group will be reorganised such that Newco, an exempted company incorporated in the Cayman Islands with limited liability, will become the new holding company of the Group and the Shareholders will receive one Newco Share for every one Share held at the Record Time and become Newco Shareholders thereafter; and (b) for the existing Warrants to be cancelled and in consideration of which the Warrantholders will receive one Newco Warrant for every one Warrant held at the Record Time and become Newco Warrantholders thereafter. Accordingly, the Shareholders and the Warrantholders (upon exercise of the Warrants) will have the same proportionate interests in Newco as they currently hold in the Company, upon implementation of the Redomicile Proposal.

As a result of the Scheme, the Company and all existing subsidiaries of the Company will become direct and indirect subsidiaries of Newco respectively and Newco will become the ultimate holding company of the Newco Group. Upon completion of the Proposals, Newco Shares and Newco Warrants will be listed on the Main Board by way of introduction, whereas the listing status of the Company will be withdrawn.

Shareholders should note that the board lot size for trading of Newco Shares will be changed to 4,000 Newco Shares upon the Scheme becomes effective. New certificates for Newco Shares and for Newco Warrants will be issued to Newco Shareholders and Newco Warrantholders who are registered in the register of members of the Company and the register of Warrantholders respectively at the Record Time.

– 13 – RISK FACTORS

RISK RELATING TO THE BUSINESS OF THE NEWCO GROUP

Uncertainty of the diversification and expansion of business of the Newco Group

Upon completion of the Redomicile Proposal, Newco will be the new holding company of the Group and all the existing business of the Group will be assumed by the Newco Group. In addition, one of the reasons to implement the Redomicile Proposal is to facilitate future and further expansion of the business of the Newco Group.

Although the Directors do not presently have any concrete plan as regards the timing and nature of any acquisitions of assets or businesses, they believe that, with the Group’s experience and networking gained in the Oil Business, the possible nature of businesses to be acquired may relate to the food and beverage and retail industries. The Directors believe that diversifying the Group’s business to other related sectors will enhance the overall financial performance of the Newco Group and balance its overall business risks. It is uncertain whether future expansion and diversification of the business of the Newco Group will be carried out, and, if so, whether they will be successful or profitable.

Source of revenue in Hong Kong and the PRC

Our products are mainly sold to customers in Hong Kong and the PRC. Hence our business has been materially dependent on the demand for and domestic selling prices of edible oil products in Hong Kong and the PRC, the consumers’ taste, the level of consumption of edible oil products and the economic environment in Hong Kong and the PRC. In the event that there is any material change in any of these factors and that we are unable to respond promptly, we may not be able to compete with our competitors. Our results could therefore be adversely affected.

Performance of our customers and our sales and distribution network

A substantial portion of our products is sold to retail chains, distributors and sub-distributors, who in turn sell our products to their customers. The sales of our products could decline if the sales performance of these retail chains or distributors deteriorates. Furthermore, most of these distributors are not exclusive to us and therefore may sell products that compete with our products. There is a risk that our distributors may give higher priority to products of, or form alliances with, our competitors. In any of these events, our sales performance may decline and our financial results could be adversely affected.

Reliance on imported raw materials

A significant portion of the Group’s production is conducted in the PRC and we purchase our raw materials from the local markets which has been increasingly dependent on imported raw material sources of soyabean and palm oil. Any reduction in the level of PRC’s import of soyabean and palm oil, an increase in trade barriers to such import by the PRC government or any material change in the mandatory national quality standards on imported soyabean and palm oil imposed by the PRC government could cause an increase in the cost of our imported raw materials. Our business and profitability could be adversely affected if we are not able to transfer such increase in costs to other parties.

– 14 – RISK FACTORS

Joint venture in Hong Kong

The sale of our edible oil products with individual packaging of 150 kg or less in Hong Kong and Macau, which accounted for approximately 44%, 45% and 44% of the Group’s turnover for the three years ended 31 December 2006, is carried out by a joint venture company, in which we own 50% interest. The joint venture agreement governing the joint venture company is for a term of 15 years from July 1994 and thereafter shall continue for further periods of 15 years (each a “15-year Period”), unless and until terminated by any party to the joint venture agreement by giving not less than 12 months’ notice prior to the expiry of any one of the 15-year Period. The first 15-year Period will end on 30 June 2009. The Company is in the process of discussing with the joint venture partner to revise the terms of the joint venture agreement. If the progress and outcome of such discussion are such that the Company does not intend to continue with the joint venture agreement after 30 June 2009, it will have to give notice to the joint venture partner not later than 30 June 2008 according to the terms of the joint venture agreement. Similarly, there is no guarantee that the joint venture partner would want to continue with the joint venture agreement. Furthermore, there is no guarantee that the joint venture agreement would in future be continued after the expiry of any one of the 15-year Period. Should the joint venture agreement be terminated, the joint venture company will be liquidated and appropriate arrangements have to be in place to take up the sale of the edible oil products by our sales teams. Consequentially, our business operation and our financial results may be adversely affected.

Reliance on sufficient and suitable experienced personnel for the Newco Group’s operations

Upon completion of the Scheme, Newco will become the new holding company of the Group and all the existing business of the Group will be assumed by the Newco Group.

Despite the fact that the business and management of the Newco Group will not be changed by reason of the implementation of the Scheme, due to the Newco Group’s intention to expand its business operations, the Newco Group may require to recruit personnel with specific experience and a wide range of skills in order to implement its various expansion plans successfully.

There is no assurance that the Newco Group will be able to recruit sufficient and suitable personnel with the requisite experience to operate and manage the existing and future business of the Newco Group. The expansion plans and the business of the Newco Group may have to be curtailed if, for any reasons, the Newco Group is unable to recruit sufficient and suitable personnel.

Potential product liability claims

The Group has complied with the edible oil standards that are relevant and applicable to our edible oil products from time to time. We did not receive any material claim in the Track Record Period from our customers relating to any liability arising from or relating to the use of our edible oil products and the Group has maintained general product liability insurance in respect of potential liability arising from defective or sub-standard edible oil products. However, there can be no assurance that such product liability claim will not be brought against us or that we would not have to bear any such liability in the future, which could have an adverse impact on our business or reputation.

– 15 – RISK FACTORS

The Company has given the Operational Guarantee for the due performance of the Manufacturing Subsidiary under the Supply Agreement for supplying edible oil products to the joint venture company. In view of the contingent nature of the Operational Guarantee, it is not practicable to quantify the maximum amount of exposure that the Company may involve in thereunder. Should any claims under the Operational Guarantee materialize, the Company will have to bear the costs of compensation. Although the implementation of the Scheme can keep the contingent liabilities arising from the Operational Guarantee separate from the new businesses and assets to be acquired in future, materialization of such contingent liabilities may still adversely affect the consolidated financial results of the Newco Group, of which the Company will be a wholly owned subsidiary.

Increasingly stringent environmental protection regulations

We are subject to environmental protection regulations in Hong Kong and the PRC. We did not receive any material environmental claim in the past, and the Directors believe that our production facilities in Hong Kong and the PRC conform with the currently applicable environmental protection regulations in all material aspects. Nevertheless, there can be no assurance that the existing laws and regulations will not change in the future. In such event, we may need to incur additional costs to comply with the stringent laws and regulations, which could have an adverse impact on our financial position.

Changes in the existing Hong Kong and PRC food hygiene laws

Manufacturers in the Hong Kong and PRC food industry are subject to compliance with Hong Kong and the PRC food hygiene laws and regulations which include hygiene standards with respect to food and food additives, packaging and containers, information to be disclosed on packaging as well as hygiene requirements for food production and sites, facilities and equipment used for the transportation and sale of food. The Group has complied with such hygiene standards and requirements in the past. However, if the Newco Group fails to comply with such laws in the future it may result in fines, suspension of operations, loss of licenses or the Newco Group may even have to face civil or criminal proceedings in extreme cases. In the event that the government of Hong Kong and/or the PRC raise(s) the stringency of such laws, our production and distribution costs may increase, and we may be unable to pass these additional costs onto our customers.

Licences and permits to operate our business

In accordance with HK and the PRC laws and regulations, we are required to obtain and maintain various licenses and permits to operate our business. Failure to obtain or renew our licenses and permits could require us to temporarily or permanently suspend some or all of our production activities which could disrupt our operations and make us unable to meet our contractual obligations. This may adversely affect our business, financial condition and results of operations.

– 16 – RISK FACTORS

The shareholders of Panyu Hop Hing and Panyu Kwong Hing (the “Panyu Companies”) have delayed in contributing to the first installment of the respective registered capital of the Panyu Companies. The rules and regulations in relation to foreign investments in the PRC stipulate that if the contribution to the registered capital of a foreign enterprise is delayed, the foreign enterprise may face the legal consequence of having its approval certificate invalidated automatically and have its business licence cancelled by the relevant Administration of Industry and Commerce. On the other hand, according to the administrative penalty laws of the PRC, no administrative penalty would be imposed on illegal acts that remain unrevealed for two years, unless stipulated otherwise. This two-year period is calculated from the occurring date of the illegal act, if the illegal act is continuous or continuing, the period would be calculated from the day when the act terminates.

According to the Company’s PRC legal adviser’s reasonable due diligence and the confirmation of the Panyu Companies,

(a) the Panyu Companies had submitted applications for increasing their registered capitals to the relevant governmental authority, respectively before their respective first installment of capital contributions were made by their shareholders. The authority had not raised any objection against the validity of the approval certificate of either of the Panyu Companies. Furthermore, it has approved the increase of registered capital of the Panyu Companies and has reissued the approval certificates to the Panyu Companies;

(b) the relevant Administration of the Industry and Commerce has not made any decision to cancel the business licences of the Panyu Companies within two years after the shareholders of the Panyu Companies have paid their respective first installment of capital contribution; and

(c) the Panyu Companies have already passed the annual review by the Administration of Industry and Commerce of 2006.

Based on the aforesaid, the Company’s PRC legal adviser opines that the delayed capital contribution of the first installment by the shareholders of the Panyu Companies would not cause the automatic invalidation of the Panyu Companies’ current approval certificates or cancellation of the Panyu Companies’ current business licences, or affect the Panyu Companies’ legal establishment and continuing existence; no administrative penalty or other legal consequences would now be imposed on the Panyu Companies in relation to the delayed capital contribution. However, there can be no assurance that the relevant PRC authorities will not institute any legal proceedings against us in the future, in which case, the validity of the business licences and approval certificates of the Panyu Companies and thus the business operation and financial performance of the Group may be affected.

– 17 – RISK FACTORS

RISK RELATING TO THE INDUSTRY OF THE NEWCO GROUP

Seasonal nature of business

Our business is seasonal due to the impact of seasonal demand for consumption of food products and seasonal cycles for agricultural oil commodities. Our turnover and operating profit are generally lower during April to August of each year and higher in the fourth quarter of each year. Some of our costs are fixed and cannot be adjusted for seasonality. There can be no assurance that future seasonality in turnover, operating profit and working capital requirements would not have a material adverse impact on our business, financial condition and results of operations.

Strong competition in the industry

The industry in which we operate is characterized by price sensitivity and consumer’s preference which may include health awareness, customs and other cultural factors. There is low technical entry barrier in the edible oil industry and it is unlikely that there will be patent rights applicable to edible oil products or the production process involved. We compete with other edible oil producers in the PRC on the wholesale level. While our Directors believe that we are the only edible oil producer who processes edible oil refinery in Hong Kong and one of the established edible oil producers in the PRC, there can be no assurance that we will be able to continue to enjoy this competitive advantage in the future in light of the competitive market environment.

Changing operating conditions in the edible oil industry

Since the quota and the tariff imposed by the PRC government on importation of crude oil have been reduced pursuant to PRC’s accession into the WTO and it is generally anticipated by the PRC and foreign governments that an increasing number of foreign investment enterprises may be set up to explore the PRC market, which may further intensify the edible oil market competition. We may need to adjust our business strategies to cater for the anticipated changes in quota, tariff, policy, regulations, operating conditions in the edible oil industry as a whole. If we are unable to compete with our competitors or we are not able to adjust our business promptly in response to the regulatory changes, our business and profitability could be adversely affected.

Increasing price trend of agricultural raw materials in international markets

The sourcing costs of our principal raw materials including crude and refined edible oil have been increasing and remained at high levels. Such continuous price increase was mainly due to the increasing market tendency of using agricultural raw materials to produce bio-diesel and fuel ethanol which can be used as a gasoline blending additive. If the increasing price trend of agricultural raw materials continues, it may result in soaring production costs and adversely affect the Group’s profitability.

– 18 – RISK FACTORS

RISK RELATING TO CONDUCTING BUSINESS IN THE PRC

Economic and political policies of the PRC

A substantial portion of our assets are located in the PRC and a significant portion of our revenue is derived from our operation in the PRC. Accordingly, our results of operations and prospects are subject, to a significant degree, to economic, political and social policies and development in the PRC.

The PRC economy differs from the economies of most developed countries in many respects, including the extent of government involvement, growth rate, control of foreign exchange, allocation of resources and balance of payments position. It has traditionally been centrally planned, with a series of economic plans promulgated and implemented by the State. Over the past two decades, the PRC has been reforming her economic and political systems, moving toward a more market- oriented economy, resulting in significant economic and social development. Many of the reforms are unprecedented and are expected to be refined and improved, but political, economic and social factors may also lead to further adjustment. The refinement and adjustment measures, however, may not always have a positive effect on Newco’s businesses, operating results and financial condition.

While the PRC’s economy has experienced significant growth in the recent years, growth has been uneven across regions and various sectors of the economy. The State plays a significant role in China’s economic growth as well as in regulating industry development by imposing industrial policies. It exercises significant control over China’s economic growth through the allocation of resources, controlling payment of foreign currency-denominated obligations, setting monetary policy and providing preferential treatment to particular industries or companies.

There can be no assurance that the State will continue to pursue economic reforms. The economic policies or measures adopted by the PRC government may not always have a positive impact on Newco’s businesses. Changes in economic, political and social environment in the PRC and policies adopted by the State to regulate economy and the industry may have an adverse impact on Newco’s businesses, financial condition and results of operations.

Inherent uncertainties due to the legal system of the PRC

The PRC’s legal system is based on written statutes. Prior legal decisions and judgments have limited precedential value. The PRC is still in the process of developing a comprehensive statutory framework and its legal system is still considered to be underdeveloped in comparison with legal system in some western countries. However, it has made significant progress in the legal system of the PRC.

– 19 – RISK FACTORS

Despite significant development in the legal system, the enforcement of existing laws and regulations in the PRC may be uncertain or inconsistent, and the interpretation of these laws and regulations may change from time to time. Any such change could have an adverse impact on our business and thereby adversely affect our business operations.

Impact of changes in foreign exchange regulations A1a(31)

The revenue of our PRC operation is in RMB which is not freely convertible into other currencies. Under the existing foreign exchange regulations in China, with certain exceptions, we may undertake current account exchange transactions by complying with certain procedural requirements and such transactions are not subject to any approval by the State Administration of Foreign Exchange. The PRC government may, however, at its discretion, restrict access in the future to foreign currencies for current account transactions under certain circumstances. Any such change to the foreign exchange regulations may adversely affect our ability to pay dividends or satisfy other foreign exchange requirements.

Impact of fluctuations in the value of RMB

The value of the RMB against other foreign currencies is subject to changes in the PRC government’s policies and to international economic and political development. Effective from 21 July 2005, the RMB was no longer pegged solely to the US dollar. Instead, a managed floating exchange system has been introduced by the PRC government which allows the RMB to fluctuate within a regulated band based on market supply and demand and by reference to a basket of currencies. On 23 September 2005, the PRC government widened the daily trading band for RMB against non-US dollar currencies from 1.5% to 3% to improve the flexibility of the new foreign exchange system.

The exchange rate may become volatile, the RMB may be revalued further against the US dollar or other currencies or the RMB may be permitted to enter into a full or limited free float, which may result in an appreciation or depreciation in the value of the RMB against the US dollar or other currencies. Fluctuations in exchange rates may adversely affect the value, translated or converted into US dollars or Hong Kong dollars (which is pegged to the US dollar), of our net assets and revenue, a substantial portion of which is received in RMB.

A substantial portion of our business assets are located in China and a significant portion of our revenue is derived from the PRC in RMB. If the RMB fluctuates against the Hong Kong dollar, which we use as our reporting currency in our financial statements, these fluctuations may result in exchange losses or gains and increases or reductions in our debts after translation into Hong Kong dollars. Therefore, currency fluctuations may have a material adverse effect on our reported financial condition in the future.

– 20 – RISK FACTORS

RISK RELATING TO OUR SHARES

There has been no prior public market for Newco Shares

Before the Scheme, there was no public market for Newco shares. While we have applied to have Newco shares listed on the Stock Exchange, we cannot guarantee that an active, liquid public trading market for our shares will develop.

Volatility of share price

The price and trading volume of our shares may be volatile. The market price of our shares may fluctuate significantly and rapidly as a result of the following factors, amongst others, some of which are beyond our control:

1. variations of Newco Group’s results

2. announcement by us of significant acquisitions, strategic alliances or joint ventures

3. addition or departure of key personnel

4. fluctuations in stock market price and volume

5. involvement in litigation; and

6. general economic and stock market conditions.

No guarantee for dividend distribution

In general meetings, we may declare dividends in any currency to be paid to the members of Newco. There is no assurance that we will declare dividends of any amounts, at any rates or at all in the future. Future dividends, if any, will be at the discretion of the Board and will depend upon our future results of operations, capital requirements, general financial condition, legal and contractual restrictions and other factors the Board may deem relevant. The dividend distribution of the Group in the past may not be used as a reference or basis to determine the level of dividends that may be declared and paid by Newco in the future.

RISK RELATING TO ACTS OF GOD AND EPIDEMICS THAT ARE BEYOND OUR CONTROL

Natural disasters, epidemics and other acts of God which are beyond our control, may adversely affect the economy, infrastructure and livelihood of the people of Hong Kong and the PRC. These conditions may have a significant impact on the Newco Group which relies heavily on agricultural raw materials. The Newco Group will also be heavily affected by the prices of raw materials and end products and by the consumption patterns of the end-users. Our business, operating results and financial condition may be adversely affected in a material respect if such natural disasters occur.

In general, epidemics threaten people’s lives and may adversely affect their livelihoods. For example, the outbreak of Severe Acute Respiratory Syndrome in 2003 and the outbreak of avian flu in 2004 in Asia had an adverse impact on the economy of Hong Kong, the PRC and other parts of Asia. The occurrence of an epidemic is beyond our control and there can be no assurance that such outbreak will not happen again. Any epidemic occurring in areas in which we operate or even in areas in which we do not operate, may adversely affect our business, operating results and financial condition in a material respect.

– 21 – RESPONSIBILITY STATEMENT

The information in this document relating to the Group and the Newco Group has been supplied by the Directors.

This document includes particulars given in compliance with the Listing Rules for the A1a(2) purpose of giving information with regard to the Group and the Newco Group. The Directors R11.12 collectively and individually accept full responsibility for the accuracy of the information contained R17.02(2)(d) in this document and confirm, having made all reasonable enquiries, that to the best of their R19.08(1) knowledge and belief there are no other facts the omission of which would make any statement in this document misleading.

– 22 – DIRECTORS AND SENIOR EXECUTIVES OF THE COMPANY AND NEWCO

Name Address Nationality A1a(41) R8.12 Non-executive Directors Para.6, 3rd Sch., CO Mr. Hung Hak Hip, Peter Flat A, 5/F. British Twin Brook 43 Repulse Bay Road Hong Kong

Ms. Hung Chiu Yee 2/F., 6 Green Lane American Hong Kong

Mr. Lee Pak Wing B4, 6/F., San Francisco Tower Chinese 29-35 Ventris Road Happy Valley Hong Kong

Independent non-executive Directors

Dr. Wong Yu Hong, Philip 48 Horizon Drive Chinese Chung Hom Kok Hong Kong

Mr. Sze Tsai To, Robert 6th Floor British Catalina Mansion 100 MacDonnell Road Hong Kong

Mr. Cheung Wing Yui House B6 Chinese Springfield Gardens No. 5-9 Shouson Hill Road West Hong Kong

Mr. Seto Gin Chung, John 42C Estoril Court Chinese 55 Garden Road Central Hong Kong

Hon Shek Lai Him, Abraham, J.P. Flat C, 13/F. Chinese No.39 MacDonnell Road Hong Kong

– 23 – DIRECTORS AND SENIOR EXECUTIVES OF THE COMPANY AND NEWCO

Name Address Nationality

Executive Directors

Mr. Wong Kwok Ying Flat 307, Block B Chinese Peninsula Heights 63 Broadcast Drive Kowloon Tong Kowloon Hong Kong

Ms. Lam Fung Ming, Tammy Flat H, 27/F Chinese Block 1 Nerine Cove Hang Fu Street Tuen Mun New Territories Hong Kong

Senior executives

Mr. Lian Bai Xiang 18 Hop Hing Road Chinese Hengli, Nansha Guangzhou China

Mr. Wan Kam Shing Units E & F, 2/F., Chinese Hop Hing Building 9 Ping Tong Street East Tong Yan San Tsuen Yuen Long New Territories Hong Kong

Ms. Tai Bik Yin Units E & F, 2/F., British Hop Hing Building 9 Ping Tong Street East Tong Yan San Tsuen Yuen Long New Territories Hong Kong

– 24 – CORPORATE INFORMATION OF THE COMPANY AND NEWCO

Company secretary Wong Kwok Ying, CPA (practising) A1a(42) R8.17(2)

Qualified accountant Wong Kwok Ying, CPA (practising) A1a(42)

Authorised representatives Wong Kwok Ying A1a(3) Lam Fung Ming, Tammy

Registered office of Newco Clifton House, 75 Fort Street, A1a(43) P.O. Box 1350 GT, Grand Cayman, A1a(6) KY1-1108, A1a(29)(2) Cayman Islands

A1a(43) Head office and principal place Units E & F, 2/F., A1a(6) of business in Hong Kong Hop Hing Building 9 Ping Tong Street East A1a(29)(2) Tong Yan San Tsuen Yuen Long New Territories Hong Kong

Principal registrar and transfer agent of Appleby Trust (Cayman) Limited A1a(3) Newco in the Cayman Islands Clifton House, 75 Fort Street, A1a(43) P.O. Box 1350 GT, Grand Cayman, KY1-1108, Cayman Islands

Branch share registrar and transfer office Computershare Hong Kong Investor R8.16 of Newco in Hong Kong Services Limited 46/F., Hopewell Centre 183 Queen’s Road East Wanchai Hong Kong

Principal bankers The Hongkong and Shanghai Banking Corporation Limited A1a(3) Hongkong and Shanghai Bank Building 1 Queen’s Road Central Hong Kong

DBS Bank (Hong Kong) Limited 16/F., The Center 99 Queen’s Road Central Hong Kong

Bank of China Ltd. Guangzhou Panyu Sub-branch No. 338, Qinghe East Road, Shiqiao, Panyu, Guangzhou, PRC

– 25 – PARTIES INVOLVED IN THE PROPOSALS

Financial adviser to the Company and sponsor CIMB-GK Securities (HK) Limited A1a(3) and compliance adviser to Newco 25/F., Central Tower 28 Queen’s Road Central Hong Kong

Legal advisers on Hong Kong law Coudert Brothers, in association with Orrick, A1a(3) Herrington & Sutcliffe, LLP 39th Floor, Gloucester Tower The Landmark 15 Queen’s Road Central Hong Kong

Legal advisers on Bermuda and Appleby Cayman Islands law 8th Floor A1a(3) Bank of America Tower 12 Harcourt Road Central Hong Kong

Legal advisers on the PRC law Grandall Legal Group (Shenzhen) A1a(3) 24/F., Shenzhen Special Zone Press Tower 6008 Shennan Blud. Shenzhen PRC

Auditors Ernst & Young A1a(4) 18th Floor Para. 43 Two International Finance Centre 3rd Sch., CO 8 Finance Street, Central Hong Kong

Property valuer DTZ Debenham Tie Leung Limited 16th Floor 1063 King’s Road Quarry Bay Hong Kong

– 26 – LETTER FROM THE BOARD

HOP HING HOLDINGS LIMITED A1a(1) (incorporated in Bermuda with limited liability) (Stock Code: 47)

Board of Directors: Registered office: Hung Hak Hip, Peter* (Chairman) Canon’s Court Wong Yu Hong, Philip** 22 Victoria Street Sze Tsai To, Robert** Hamilton HM12 Cheung Wing Yui** Bermuda Seto Gin Chung, John** Shek Lai Him, Abraham** Principal place of business Hung Chiu Yee* in Hong Kong: Lee Pak Wing* Units E & F, 2/F., Wong Kwok Ying Hop Hing Building Lam Fung Ming, Tammy 9 Ping Tong Street East Tong Yan San Tsuen * Non-executive Director Yuen Long ** Independent non-executive Director New Territories Hong Kong 14 March 2008 To the Shareholders and the Warrantholders

Dear Sir or Madam, REORGANISATION PROPOSAL FOR HOP HING HOLDINGS LIMITED TO BECOME A WHOLLY-OWNED SUBSIDIARY OF HOP HING GROUP HOLDINGS LIMITED (A COMPANY INCORPORATED IN THE CAYMAN ISLANDS WITH LIMITED LIABILITY, THE SHARES OF WHICH ARE PROPOSED TO BE LISTED ON THE MAIN BOARD OF THE STOCK EXCHANGE OF HONG KONG LIMITED BY WAY OF INTRODUCTION) PURSUANT TO A SCHEME OF ARRANGEMENT (UNDER SECTION 99 OF THE COMPANIES ACT 1981 OF BERMUDA (AS AMENDED))

1. INTRODUCTION

On 31 January 2007, the Board announced that the Company intended to put forward to the Shareholders the proposed change of domicile of the holding company of the Group from Bermuda to the Cayman Islands by way of the Scheme.

– 27 – LETTER FROM THE BOARD

The purpose of this document is to provide the Shareholders with details of the Proposals and to seek the Shareholders’ approval thereof. If the Scheme shall not have become effective on or before 30 September 2008 or such later date as the Court may direct, the Scheme will lapse.

Further details and effects of the Proposals which comprises the Scheme are set out in the Explanatory Statement.

2. BACKGROUND TO THE PROPOSALS

Reference is made to the announcement of the Company dated 31 January 2007 in relation to the Proposals. As part of the corporate restructuring exercise, the Board proposes (a) a change of domicile of the holding company of the Group from Bermuda to the Cayman Islands by way of the Scheme, pursuant to which the structure of the Group will be reorganised such that Newco, an exempted company incorporated in the Cayman Islands with limited liability, will become the new A1a(15(1) holding company of the Newco Group and the Shareholders will receive one Newco Share for S.342(1), CO every Share held at the Record Time and become Newco Shareholders thereafter; and (b) for the existing Warrants to be cancelled and in consideration of which the Warrantholders will receive one Newco Warrant for every one Warrant held at the Record Time and become Newco Warrantholders thereafter. Accordingly, the Shareholders and the Warrantholders will have the same proportionate interests in Newco as they currently hold in the Company, upon implementation of the Redomicile Proposal.

3. REASONS FOR THE REDOMICILE PROPOSAL

The Group is principally engaged in the extraction, refining, blending, bottling, packaging R8.04 and distribution of edible oils and ancillary activities in Hong Kong and the PRC. Its shareholders’ Para. 1, funds based on unaudited accounts as at 30 June 2007 and audited accounts as at 31 December 3rd Sch, CO 2006 were approximately HK$407 million and HK$404 million respectively. The Group has always concentrated on its core business since the listing of the Shares in 1988. In the last five years, while the Oil Business in Hong Kong has been profitable, the Group has been adversely affected by losses incurred by its Oil Business in the PRC.

Given the prolonged unsatisfactory performance of the Group’s businesses, the Directors have decided to act more proactively to try to diversify the Group’s business to other related sectors such as food and beverage and retail business so as to balance and enhance the overall financial performance of the Group to create value for the Shareholders.

– 28 – LETTER FROM THE BOARD

The Directors consider that different business activities carry different risk profiles and may employ different management philosophies despite under the same top management. In operating the Group’s existing Oil Business, the Group has established a particular business model. Many of the business risks the Group is currently subject to are peculiar to the Oil Business. Should the right opportunities arise in future, Newco Group may invest in sectors which operate under different business models and are subject to different business risks. In diversifying Newco Group’s business, however, it is important that the new businesses may, where considered desirable, be insulated from and not be directly affected by the business risks and associated liabilities of the existing businesses, including the Corporate Guarantee and the Operational Guarantee. The amount of risks involved in the Operational Guarantee is not readily quantifiable. Similarly, it may be desirable not to expose the existing businesses of the Group to the business risks and associated liabilities of future businesses. Accordingly, it is in the best interests of the Group, the Shareholders and the Warrantholders to put any future business ventures or new assets under Newco and not under the Company.

Although the Scheme is designed to pave the way for possible future diversification of Newco Group’s businesses, the Directors do not presently have any concrete plan as regards the timing and nature of any acquisitions of assets or businesses. Save for Directors’ intention mentioned A1a(28)(7) above, no major change in the nature of the business of the Group is currently under discussion and negotiation by the Directors. In the event of any acquisition, it will be effected in accordance with the relevant provisions of the Listing Rules. The Directors would, however, emphasize that such acquisition or diversification of businesses may or may not happen upon the Scheme becoming effective.

Newco was incorporated in the Cayman Islands, being one of the jurisdictions specified under the Listing Rules as an acceptable place of incorporation for overseas issuers, provided certain additional requirements are fulfilled. The Directors consider the Cayman Islands as the appropriate place of incorporation of Newco for the following reasons:

(i) it has political stability, a common law legal system and is growing in importance as an international financial centre with an increasing number of companies with global presence incorporated there;

(ii) having Newco incorporated in the Cayman Islands is less expensive and quicker than having it incorporated in Bermuda (the only other practicable alternative). The incorporation of Newco, the transfer of Newco Shares and the issue of new shares in Newco do not require monetary or ministerial approvals under the Cayman Islands company law. Further, it is less expensive to maintain a company incorporated in the Cayman Islands than a Bermuda incorporated company;

– 29 – LETTER FROM THE BOARD

(iii) Newco can be operated with fewer domestic formalities (and therefore more cost effective) prior to its listing in Hong Kong if it is incorporated in the Cayman Islands rather than in Bermuda; and

(iv) the Companies Law of the Cayman Islands provides flexibility on the use of share premium by Newco.

4. RECOMMENDATIONS

Having taken into account (i) the background to the Proposals; and (ii) the detailed reasons for the implementation and the effects of the Proposals as set out in the Explanatory Statement, the Directors consider that the Proposals are in the interests of the Company and the Shareholders and Warrantholders as a whole. Accordingly, the Directors recommend the Shareholders and the Warrantholders to vote in favour of the relevant resolutions to be proposed at the Court Meeting and/or the SGM or the Warrantholders’ Meeting (as the case may be) to approve the Scheme, the Proposals, and the implementation thereof (as the case may be).

5. ACTIONS TO BE TAKEN

Your attention is drawn to the section headed “Actions to be taken” in the Explanatory Statement for the recommended actions to be taken by you as Shareholders and/or Warrantholders.

6. ADDITIONAL INFORMATION

Your attention is also drawn to the further details of the Proposals provided in the Explanatory Statement and other information set out in the appendices to this document.

Yours faithfully, For and by order of the Board of Hop Hing Holdings Limited

Hung Hak Hip, Peter Chairman

– 30 – EXPLANATORY STATEMENT

This explanatory statement constitutes the statement required under Section 99 of the Companies Act.

REDOMICILE PROPOSAL

1. INTRODUCTION

On 31 January 2007, the Board announced that the Company intended to put forward to the Shareholders the proposed change of domicile of the holding company of the Group from Bermuda to the Cayman Islands by way of the Scheme.

The purpose of this Explanatory Statement is to explain to the Shareholders, inter alia, the reasons for and the effect of the Proposals and the steps required to implement it. Your attention is drawn, in particular, to the “Letter from the Board” in this document and paragraph 18 in this Explanatory Statement in which the Board recommends you, as a Shareholder and/or Warrantholders, to vote in favour of the resolution to be proposed at the Court Meeting, the SGM and the Warrantholders’ Meeting respectively to approve the Scheme, the Proposals and the implementation thereof.

2. REASONS FOR THE PROPOSALS

Please refer to the reasons set out in the “Letter from the Board” in this document.

3. SUMMARY OF THE PROPOSALS

As part of the corporate restructuring exercise, the Board proposes (a) a change of domicile of the holding company of the Group from Bermuda to the Cayman Islands by way of the Scheme, pursuant to which the structure of the Group will be reorganised such that Newco, an exempted company incorporated in the Cayman Islands with limited liability, will become the new holding company of the Group and the Shareholders will receive one Newco Share for every one Share A1a(15)(1) held at the Record Time and become Newco Shareholders thereafter; and (b) for the existing A1a(23)(2) Warrants to be cancelled and in consideration of which the Warrantholders will receive one Newco R15.03(4) Warrant for every one Warrant held at the Record Time and become Newco Warrantholders thereafter. Accordingly, the Shareholders and the Warrantholders (upon exercise of the Warrants) will have the same proportionate interests in Newco as they currently hold in the Company, upon implementation of the Redomicile Proposal.

Pursuant to the Scheme, it is proposed that on the Effective Date:

(a) all the Scheme Shares will be cancelled and extinguished and the authorised and issued share capital of the Company will be reduced;

– 31 – EXPLANATORY STATEMENT

(b) new Shares will be allotted and issued, credited as fully paid, to Newco such that the Company will become a wholly-owned subsidiary of Newco; and

(c) in consideration of the cancellation and extinguishment of the Scheme Shares, the Scheme Shareholders will receive Newco Shares credited as fully paid, on the basis of one Newco Share for every one Scheme Share held as at the Record Time.

Upon the Scheme become effective, the Warrants shall be cancelled and, in consideration of such cancellation, the holders of Warrants whose names appear in the register of holders of Warrants at the Record Time shall, subject to and in accordance with the Warrant Proposal, receive for every Warrant then held one Newco Warrant carrying the right to subscribe for shares in the capital of Newco at a subscription price of HK$0.25 per share, subject to adjustment, at any time on or before 30 April 2009.

As a result of the implementation of the Scheme, all existing subsidiaries of the Company will become indirect subsidiaries of Newco and Newco will become the ultimate holding company of the Group. Upon completion of the Proposals, the Newco Shares and the Newco Warrants will be listed on the Main Board by way of introduction, whereas the listing of the Shares and the Warrants will be withdrawn.

4. CONDITIONS OF THE REDOMICILE PROPOSAL

The Redomicile Proposal will become effective and binding on all the Shareholders and the Warrantholders upon the following conditions being satisfied on or before 30 September 2008 or such other date as the Company and Newco may agree and the Court may direct:

(i) the Scheme being approved by a majority in number representing not less than three- fourths in value of the Shareholders present and voting in person or by proxy at the Court Meeting convened in accordance with the direction of the Court;

(ii) the passing by the Shareholders of a special resolution at the SGM to approve the Scheme (and the necessary arrangement(s) to implement the Scheme) and the Warrant Proposal;

(iii) the passing by the Warrantholders of a special resolution at the Warrantholders’ Meeting to approve, subject to the condition that the Scheme becomes effective, the Warrant Proposal (and the necessary arrangement(s) to implement the Warrant Proposal);

(iv) the Scheme, with or without modification, being sanctioned by the Court and an office copy of the order of the Court required under section 99 of the Companies Act being delivered to and registered by the Registrar of Companies;

– 32 – EXPLANATORY STATEMENT

(v) the Listing Committee granting the approval for the listing of, by way of introduction, and permission to deal in, the Newco Shares proposed to be issued pursuant to the Scheme, the Newco Warrants proposed to be issued pursuant to the Warrant Proposal and any Newco Shares which may fall to be issued pursuant to the exercise of the Newco Warrants and options to be granted under the Newco Share Option Scheme;

(vi) all Authorisations (if any) from the relevant authorities in the Cayman Islands for, inter alia, the issue of the Newco Shares pursuant to the Scheme, the issue of the Newco Warrants pursuant to the Warrant Proposal and the issue of the Newco Shares pursuant to the exercise of the Newco Warrants and options to be granted under the Newco Share Option Scheme having been obtained;

(vii) the granting by the Executive of the SFC Waiver; and

(viii) all other Authorisations which may be required under any existing contractual arrangements including loan and other finance documentation and/or pursuant to any regulatory requirements having been obtained.

As the implementation of the Scheme will render Newco being treated as a new listing applicant, Newco shall therefore be subject to, among other things, the relevant requirements set out in Rule 8.05 of the Listing Rules in respect of, amongst others, the track record. Since the Company incurred losses for the three financial years ended 31 December 2006, it is envisaged that Newco would not be able to strictly comply with the requirements set out in Rule 8.05 of the Listing Rules. Therefore, Newco has made an application to the Stock Exchange for, and the Stock Exchange has granted, a waiver from strict compliance with the requirements under Rule 8.05 of the Listing Rules.

As required by Rule 10.08 of the Listing Rules, a new issuer is restricted from further issuing securities within six months of its listing on the Stock Exchange. Although Newco is deemed to be a new listing applicant by reason of the Redomicile Proposal, the Newco Shareholders are in fact the Shareholders and there is no change in their shareholdings in Newco, save that Newco Shares will be listed on the Main Board and the listing status of the Company will be withdrawn.

As referred to in the Letter from the Board, given the prolonged unsatisfactory performance of the Group’s businesses, the Directors have decided to act more proactively to try to diversify the Group’s business to other related sectors so as to balance and enhance the overall financial performance of the Group to create value for the Shareholders. Should the right opportunities arise, the Newco Group may need to finance its investments by issuing new Newco Shares within six months following the listing of Newco Shares on the Main Board. In view of the principal reasons set out above, Newco has applied to the Stock Exchange for, and the Stock Exchange has granted, a waiver from strict compliance with Rule 10.08 of the Listing Rules. A consequential technical waiver from strict compliance with Rule 10.07(1)(a) of the Listing Rules has also been applied from and granted by the Stock Exchange.

– 33 – EXPLANATORY STATEMENT

As one of the effects of the Redomicile Proposal is that the Company will be privatised and at the same time the listing of the Shares on the Stock Exchange will be withdrawn, the Scheme, if implemented, is subject to Rule 2.10 of the Takeovers Code which imposes more onerous voting requirements than those imposed by the Companies Act. As such, the Company has obtained a waiver from the SFC from strict compliance with Rule 2.10 of the Takeovers Code on the basis that (a) there is no change in the percentage shareholding of any Shareholder in the holding company of the Group; (b) there is no acquisition or consolidation of control by any person or a group of persons; and (c) the economic interests in the Company of all the Shareholders and the Warrantholders will not be affected, as a result of the implementation of the Redomicile Proposal.

5. EFFECTS OF THE PROPOSALS R11.07

5.1 Financial position

The implementation of the Redomicile Proposal will not, of in itself, other than by way of payment of the associated expenses, affect the underlying assets, business, management or financial position of the Group. The consolidated assets and liabilities of Newco immediately upon implementation of the Redomicile Proposal are expected to be the same (save for the above mentioned payment of the associated expenses) as those of the Group immediately prior to the implementation of the Redomicile Proposal.

5.2 Business

The business and management of the Group will not be changed by reason only of the implementation of the Redomicile Proposal. Immediately following the implementation of the Redomicile Proposal, Newco will act as the holding company of the Group and the Group will continue to carry on its present principal business activities, being the extraction, refining, blending, blending, bottling, packaging and distribution of edible oils and the ancillary activities in Hong Kong and the PRC.

5.3 Ownership, voting control and management A1a(27A)

The controlling shareholders of the Company are currently interested in approximately 63% of the issued share capital of the Company and holding 54,505,755 Warrants. Upon implementation of the Redomicile Proposal, the Shareholders and Warrantholders will become Newco Shareholders and Newco Warrantholders and the number of Newco Shares and Newco Warrants they will receive will be identical to the number of the Shares and Warrants which they held in the Company. The Shareholders’ and the Warrantholders’ (upon exercise of the Warrants) proportionate interests in Newco will be the same as their existing proportionate interests (or in case of the Warrantholders, the proportionate interests upon exercise of the Warrants) in the Company.

The controlling shareholders of the Company will continue to be the controlling shareholders of Newco. The Company will become a wholly-owned subsidiary of Newco and the ownership of the Company’s subsidiaries will remain unchanged under the Company, save that Newco will become the ultimate holding company of such subsidiaries.

– 34 – EXPLANATORY STATEMENT

Apart from the connected transactions and continuing connected transactions disclosed in the paragraph headed “Connected transactions and continuing connected transactions” as set out in Appendices I and IX to this document, the Company had a service agreement (the “Service Agreement”) with Hung’s Management Services Limited (“HMS”), an associate of Mr. Hung Hak Hip, Peter, a non-executive Director, which was entered into on 2 January 2008, under which HMS will provide to the Company general management consultancy services (the “Services”) for and in connection with the business of the Company as may be required by the Company from time to time for one year commencing from 1 January 2008. The consideration for the Services is HK$660,000. The Services contemplated under the Service Agreement constitute de minimis transactions pursuant to Rule 14A.31(2) of the Listing Rules.

5.4 Directors and employees

Except for Ms. Lam Fung Ming, Tammy who has been in the employment of the Group since 1990 and was appointed as a Director in November 2004 and Mr. Seto Gin Chung, John and Mr. Shek Lai Him, Abraham who were appointed as independent non- executive Directors in April 2006 and January 2007 respectively, all of the current Directors have been with the Company during the last three years. All the current Directors are expected to act as directors of Newco and no substantial change to the senior management personnel of the Group is expected upon implementation of the Redomicile Proposal.

5.5 Convertibles and share option schemes A1a(18)(1)

As at the Latest Practicable Date, the Company has no share options outstanding under the Share Option Scheme and the Old Share Option Scheme.

Upon the Redomicile Proposal becoming effective, it is proposed that the Newco Share Option Scheme be adopted by Newco, with terms similar to the terms of the Share Option Scheme, which will comply with the requirements under Chapter 17 of the Listing Rules. The adoption of the Newco Share Option Scheme has been approved by the shareholder(s) of Newco on the condition upon the Scheme becoming effective.

Save for the Warrants, there are no outstanding options or convertible securities issued by the Company as at the date of this document.

5.6 Warrants A1a(19)(1) A1a(19)(2) As at the Latest Practicable Date, the Company had 81,606,770 Warrants outstanding, A1a(18)(1) which were held by approximately 360 Warrantholders. These Warrants had a market A1a(18)(2) capitalization of approximately HK$28.2 million as at the Latest Practicable Date and carry R15.03(1) the rights to subscribe for an aggregate of 81,606,770 Shares at an initial subscription price R15.03(2) of HK$0.25 per Share at any time during the period between 15 September 2005 and 30 R.8.18 April 2009. Assuming all the Warrants are exercised in full, an additional 81,606,770 Shares will be issued. Set out below is the interest of the Warrantholders as at the Latest Practicable Date.

– 35 – EXPLANATORY STATEMENT

Number of Warrant held on the Latest Practicable Warrantholders Notes Date %

Hung’s (i),(iii),(iv) 23,427,216 28.7 HHO (ii),(iii),(iv) 31,078,539 38.1

Directors: Hung Hak Hip, Peter (v) 1,645,133 2.0 Cheung Wing Yui 79,600 0.1 Hung Chiu Yee 154,564 0.2

Public: Hap Seng Consolidated Berhad (“HSCB”) (vi),(vii) 4,267,055 5.2 Sallisaw (2003) Limited 569,628 0.7 Benedetto Ltd. 492,800 0.6 Other public Warrantholders 19,892,235 24.4

Total public Warrantholders 25,221,718 30.9

Total 81,606,770 100.0

Notes:

(i) Hung’s is the registered holder of the warrants disclosed above.

(ii) HHO is the registered holder of the warrants disclosed above.

(iii) GZ Trust Corporation (“GZTC”) is the registered holder of the units of certain unit trusts, of which Hung’s and HHO are trustees. By virtue of the SFO, GZTC is deemed to be interested in the warrants held by Hung’s and HHO.

(iv) Mr. Hung Cheung Pui is the founder of two discretionary trusts, of which GZTC is the trustee. By virtue of the SFO, Mr. Hung Cheung Pui is deemed to be interested in the disclosed interest of GZTC mentioned above.

(v) By virtue of the SFO, Mr. Hung Hak Hip, Peter is deemed to be interested in the warrants held through his spouse and controlled corporation and the warrants which were beneficially owned by a discretionary trust whose discretionary beneficiaries include certain associates of Mr. Hung Hak Hip, Peter.

(vi) HSCB is held as to 57.18% by Gek Poh (Holdings) Sdn. Bdh (“GPHSB”). By virtue of the SFO, GPHSB is deemed to be interested in the disclosed interest of HSCB mentioned above.

(vii) Datuk Seri Panglima Lau Cho Kun (“DSPL”) holds 56% interest in GPHSB. By virtue of the SFO, DSPL is deemed to be interested in the disclosed interest of GPHSB mentioned above.

– 36 – EXPLANATORY STATEMENT

The Warrantholders’ Meeting is proposed to be convened and held to consider and approve the Warrant Proposal (and the necessary arrangement(s) to implement the Warrant Proposal) subject to the condition that the Scheme becomes effective. In consideration for the cancellation of the Warrants, Newco Warrants will be issued by Newco on the basis of one Newco Warrant for every one Warrant held. The Newco Warrants will entitle the holders thereof to subscribe in cash for fully paid Newco Shares at an initial subscription price of HK$0.25 per Newco Share (subject to adjustment). Save for the relevant differences in respect of the provision of the Articles, the terms and conditions of the Newco Warrants proposed to be issued by Newco will be the same as those of the Warrants, and will be in compliance with the relevant provisions of the Listing Rules. The following table sets out the summary of the terms of the Newco Warrants:

Maximum number of Newco Shares to be issued upon full exercise of the Newco A1a(18)(1) Warrants: R15.02(v)

81,606,770 Newco Shares

Exercise period: A1a(18)(2) R15.02(2) from the date of issue of Newco Warrant Certificates up to and including 30 April 2009.

Amount payable on the exercise of the Newco Warrants: A1a(18)(3) R15.03(3) the Newco Warrants will carry rights to subscribe for Newco Shares at an aggregrate consideration of approximately HK$20 million.

Arrangements for transfer or transmission of the Newco Warrants: A1a(18)(4)

The Newco Warrant will be transferable in whole or in the integral multiples of HK$5,000 by instrument of transfer in any usual or common form or such other form as may be approved by the Directors. The Newco will maintain a register of the Newco Warrantholders accordingly. Where the transferor or the transferee is HKSCC Nominees Limited or its successors thereto, the transfer may be executed under the hand of authorised person(s) or by machine-imprinted signature(s) on its behalf. The provisions of the Newco’s Articles of Association for the time being in force relating to the registration, transfer and transmission of the Shares shall apply, mutatis mutandis to the registration, transfer and transmission of the Newco Warrants.

– 37 – EXPLANATORY STATEMENT

Persons should note that they may incur additional costs and expenses in connection with any expedited registration of the Newco Warrants prior to the transfer or exercise of the Newco Warrants, in particular during the period commencing 10 business days prior to and including the expiry date of the Newco Warrants.

Since the Newco Warrants will be admitted to CCASS, so far as applicable laws or regulations of the relevant regulatory authorities, terms of the Newco Warrant instrument and circumstances permit, the Company may determine the last trading day of the Newco Warrants to be a date at least 3 trading days before 30 April 2009.

Rights of Newco Warrant holders on winding-up: A1a(18)(5) R15.03(5) The Newco Warrant instrument will provide that if an effective resolution is R15.03(6) passed during the Exercise Period for the voluntary winding-up of the Company, then

(a) if such winding-up is for the purpose of reconstruction or amalgamation pursuant to a scheme of arrangement to which the Newco Warrantholders, or some persons designated by them for such purpose by a Special Resolution, shall be a party or in conjunction with which a proposal is made to the Newco Warrantholders and is approved by a Special Resolution, the terms of such scheme of arrangement or (as the case may be) proposal shall be binding on all the Newco Warrantholders; and

(b) in any other case, every Newco Warrantholder shall be entitled at any time within six weeks after the passing of such resolution for the voluntary winding-up of the Company by irrevocable surrender of his Newco Warrant certificate(s) to the Company with the subscription form (s) duly completed, together with payment of the exercise monies or the relative portion thereof, to elect to be treated as if he had immediately prior to the commencement of such winding-up exercised the subscription rights represented by such Newco Warrant to the extent specified in the subscription form(s) and had on such date been the holder of the Newco Shares to which he would have become entitled pursuant to such exercise and the Newco and the liquidator of the Newco shall give effect to such election accordingly. Newco shall give notice to the Newco Warrantholders of the passing of any such resolution within seven days after the passing thereof and such notice shall contain a reminder to Newco Warrantholders with respect to their rights under their paragraph (b).

Subject to the foregoing, if the Newco is wound up, all subscription rights which have not been exercised at the commencement of the winding-up will lapse and each Newco Warrant certificate will cease to be valid for any purpose.

– 38 – EXPLANATORY STATEMENT

Adjustments to subscription price:

The Newco Warrant Instrument will contain detailed provisions relating to the A1a(18)(6) adjustments of the Subscription Price. The following is a summary of, and is subject to, the adjustment provisions of the Newco Warrant Instrument:

(a) The subscription price shall (except as mentioned in sub-paragraphs (b) and (c) below) be adjusted as provided in the Newco Warrant Instrument in each of the following cases:

(i) an alteration of the nominal amount of each Share by reason of any consolidation, subdivision or re-classification;

(ii) an issue (other than in lieu of a cash dividend) by Newco of Newco Shares credited as fully-paid by way of capitalization of profits or reserves (including any share premium account or capital redemption reserve fund);

(iii) a Capital Distribution (as defined in the Newco Warrant Instrument) being made by the Company, whether on a reduction of capital or otherwise, to holders of Newco Shares in their capacity as such;

(iv) a grant by Newco to holders of Newco Shares (in their capacity as such) of rights to acquire for cash, assets of Newco or any of its Subsidiaries (as defined in the Newco Warrant Instrument);

(v) an offer or grant being made by Newco to holders of Newco Shares of new Newco Shares by way of rights, or of options or warrants to subscribe for new Newco Shares at a price which is less than 90% of the market price (calculated as provided in the Newco Warrant Instrument);

(vi) an issue wholly for cash being made by Newco or any of its Subsidiaries (as defined in the Newco Warrant Instrument) of securities convertible into or exchangeable for or carrying rights of subscription for new Newco Shares, if in any case the Total Effective Consideration (as defined in the Warrant Instrument) per Newco Share is less than 90% of the market price (calculated as provided in the Newco Warrant Instrument), or terms of any such issue are altered so that the said Total Effective Consideration is less than 90% of such market price;

– 39 – EXPLANATORY STATEMENT

(vii) an issue being made wholly for cash of Newco Shares other than pursuant to a Share option Scheme (as defined in the Newco Warrant Instrument) at a price less than 90% of the market price (calculated as provided in the Newco Warrant Instrument); and

(viii) the purchase of Newco Shares by Newco in circumstances where the Total Effective Consideration per Newco Share is more than 110% of the closing price of one Newco Share on the Stock Exchange (calculated as provided in the Newco Warrant Instrument) or where Newco considers that it may be appropriate to make an adjustment to the Subscription Price.

(b) Except as mentioned in sub-paragraph (c) below, no such adjustment as is referred to in sub-paragraph (a) above shall be made in respect of:

(i) an issue of fully-paid Newco Shares upon the exercise of any conversion rights attached to securities convertible in Newco Shares or upon the exercise

(ii) an issue of Newco Shares or other securities of Newco or any Subsidiary (as defined in the Newco Warrant Instrument) wholly or partly convertible into, or carrying rights to acquire, Newco Shares to directors or employees of Newco or any Subsidiaries pursuant to a Share Option Scheme;

(iii) an issue by Newco of Newco Shares or by Newco or any Subsidiary (as defined in the Newco Warrant Instrument) of securities wholly or partly convertible into or carrying rights to acquire Newco Shares, in any such case in consideration or part consideration for the acquisition of any other securities, assets or business;

(iv) an issue of fully-paid Newco Shares by way of capitalization of all or part of the Subscription Right Reserve (as defined in the Newco Warrant Instrument) to be established in certain circumstances pursuant to the terms and conditions contained in the Newco Warrant Instrument or any similar reserve which has been or may be established pursuant to the terms of any other securities wholly or partly convertible into or carrying rights to acquire Newco Shares; or

(Note: To the extent permitted by the law of the Cayman Islands, Newco will maintain the Subscription Right Reserve subject to the terms and conditions contained in the Newco Warrant Instrument.)

– 40 – EXPLANATORY STATEMENT

(v) an issue of Newco Shares in lieu of a cash dividend where an amount not less than the nominal amount of the Newco Shares so issued is capitalized and the market value (calculated as provided in the Newco Warrant Instrument) of such Newco Shares is not more than 110% of the amount of dividend which holders of Newco Shares could elect to or would otherwise receive in cash.

(c) Notwithstanding the provisions referred to in sub-paragraphs (a) and (b) above, in any circumstances where the Newco Board considers 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 than adjustment should take effect on a different date or at a different time from that provided for under the said provisions, the Newco Board may appoint an Approved Merchant Bank (as defined in the Newco Warrant Instrument) 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 such Approved Merchant Bank considers 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 is certified by such Approved Merchant Bank to be in its opinion appropriate.

(d) Any adjustment to the Subscription Price will 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 it would be reduced would be less than one cent and any adjustment which would otherwise then be required will not be carried forward. No adjustment which would increase the Subscription Price may be made (except on a consolidation of Newco Shares or pursuant to sub-paragraph (c) above.)

– 41 – EXPLANATORY STATEMENT

(e) Every adjustment to the Subscription Price will be certified by the Auditors (as defined in the Newco Warrant Instrument) or an Approved Merchant Bank to be fair and appropriate and notice of each adjustment (giving the relevant particulars) shall be given to the Newco Warrantholders. Any such certificate of the Auditors and/or Approved Merchant Bank will be available for inspection by the Newco Warrantholders at the principal place of business for the time being of Newco in Hong Kong, where copies may be obtained.

Purchase and Cancellation: R15.03(8)

Newco or any of its Subsidiaries may at any time purchase the Newco Warrants:

(a) in the open market or by tender (available to all Newco 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 Newco Warrants on the Stock Exchange on the date immediately prior to the date of purchase thereof,

but not otherwise. All Newco Warrants purchased as aforesaid shall be cancelled forthwith and may not be re-issued or re-sold.

Governing Law: A1a(18)(7)

the Newco Warrants will be governed by and are to be construed in accordance A1a(18)(8) with the laws of Hong Kong

5.7 Dividends

It is intended that dividends on the Newco Shares will, as for the Shares, be paid in Hong Kong dollars. Similar to the case at present in relation to the Shares in respect of withholding tax under the current legislation of Bermuda, dividends on the Newco Shares will likewise be free of any withholding tax under the current legislation of the Cayman Islands.

– 42 – EXPLANATORY STATEMENT

6. SIMPLIFIED STRUCTURE OF THE GROUP AND THE NEWCO GROUP A1a(28)(2) IMMEDIATELY BEFORE AND AFTER THE REDOMICILE PROPOSAL

The Group is principally engaged in the extraction, refining, blending, bottling, packaging R8.04 and distribution of edible oils and ancillary activities in Hong Kong and the PRC. Set out below is Para.1, the simplified structure of the Group immediately before and after the implementation of the 3rd Sch., CO Redomicile Proposal. For details of how the Redomicile Proposal will be carried out, please refer to the section entitled “Scheme of Arrangement”.

Immediately before implementation of the Redomicile Proposal

The Company (Note 1)

Oil Business and other existing Newco businesses

Immediately after implementation of the Redomicile Proposal

Newco (Note 1)

The Company Fellow New businesses (Note 2) Subsidiaries separated from the existing businesses

Oil Business and other existing New businesses businesses

“”existing holding “”proposed holding

Notes:

1. Listed on the Main Board

2. The listing status of the Company on the Main Board will be withdrawn upon completion of the Redomicile Proposal.

– 43 – EXPLANATORY STATEMENT

Save that the Company will become a wholly-owned subsidiary of the newly established Newco pursuant to the Scheme, no change will be made to the corporate structure of the Group. In particular, the assets held by the Company will be the same under the new structure, except for the expenses related to the Redomicile Proposal. For details of the restructuring, please refer to the section headed “Scheme of Arrangement”.

7. GENERAL MANDATES

The Company, in its capacity as the sole legal and beneficial owner of Newco, has granted to the directors of Newco the following general and unconditional mandates, subject to and conditional upon the Scheme becoming effective:

(i) to allot and issue new securities in Newco up to a maximum of 20% of the aggregate nominal amount of the share capital of Newco in issue immediately following the completion of the allotment and issue to the Scheme Shareholders of Newco Shares as contemplated by and pursuant to the Scheme;

(ii) to repurchase securities in Newco up to a maximum of 10% of the aggregate nominal amount of the share capital of Newco in issue immediately following the completion of the allotment and issue to the Scheme Shareholders of Newco Shares as contemplated by and pursuant to the Scheme; and

(iii) to allot and issue any further Newco Shares repurchased pursuant to the repurchase mandate referred to in (ii) above.

The Repurchase Mandate is valid upon the Scheme becoming effective. Details of the Repurchase Mandate are set out in Appendix VIII to this document.

8. SHARE OPTIONS SCHEMES

On 25 June 2004, the Company adopted the Share Option Scheme. The Old Share Option A1a(44) Scheme was terminated on 25 June 2004 of which no options granted under the Old Share Option Scheme were outstanding as at the Latest Practicable Date.

The Company, in its capacity as the sole legal and beneficial owner of Newco, has conditional upon the Scheme becoming effective, approved the adoption of the Newco Share Option Scheme, which permits the grant of Options to the eligible persons as set out in the Newco Share Option Scheme to subscribe for Newco Shares. The Newco Share Option Scheme will be valid upon and after the Scheme becoming effective. A summary of the principal terms of the Newco Share Option Scheme is set out in Appendix V to this document and the rules of the Newco Share Option Scheme is available for inspection as mentioned in the section headed “Documents available for inspection” in Appendix IX to this document.

– 44 – EXPLANATORY STATEMENT

9. MEMORANDUM AND ARTICLES OF ASSOCIATION

A summary of certain relevant parts of the memorandum and articles of association of Newco as well as the Cayman Islands company law is set out in Appendix VI to this document and copies of the memorandum and articles of association of Newco are available for inspection as mentioned in the section headed “Documents available for inspection” in Appendix IX to this document.

10. LEGAL CONSIDERATIONS

In respect of the differences between the laws of Bermuda and those of the Cayman Islands, save for those legal considerations set out in Appendix VII, such differences as may arise between the laws of these two jurisdictions as a result of the implementation of the Scheme are immaterial from the point of view of the Group and the Shareholders generally.

The Company was incorporated in Bermuda, whereas Newco was incorporated in the Cayman Islands. The laws of the Cayman Islands, including the Companies Law, will therefore apply to Newco. As long as Newco carries on business in Hong Kong or Newco Shares are listed on the Main Board, certain laws of Hong Kong, particularly those governing “non-Hong Kong companies” in Part XI of the Companies Ordinance, and the Listing Rules as well as the Takeovers Code will also be applicable to Newco.

11. STOCK EXCHANGE LISTING AND DEALINGS

Application has been made by Newco to the Listing Committee for the granting of the A1a(14)(1) listing of, by way of introduction, and permission to deal in, Newco Shares in issue and to be R8.19(1) issued pursuant to the Scheme, Newco Warrants in issue and to be issued and any Newco Shares R8.19(2) (not exceeding 10% of the issued share capital of Newco upon the listing of Newco Shares on the Main Board) which may fall to be issued upon the exercise of the Options to be granted under the Newco Share Option Scheme and application will also be made to the Stock Exchange for the simultaneous withdrawal of the listing of the Shares and the Warrants, in both cases subject to the Scheme becoming effective.

Upon the Scheme becoming effective, the listing of the Shares and the Warrants on the Main Board will be withdrawn in accordance with Rule 6.15(2) of the Listing Rules and Newco Shares in issue and to be issued pursuant to the Scheme, Newco Warrants in issue and to be issued and any Newco Shares falling to be issued pursuant to the exercise of the Options will be listed on the Main Board.

– 45 – EXPLANATORY STATEMENT

The Directors currently expect that dealings in the Shares and the Warrants on the Main R15.03(4) Board will cease from 4:00 p.m. on Monday, 21 April 2008 and the listing of the Shares and the Warrants on the Main Board will be withdrawn at the close of business on Monday, 28 April 2008. Dealings in Newco Shares and Newco Warrants on the Main Board are expected to commence from 9:30 a.m. on Tuesday, 29 April 2008.

Subject to the granting of the listing of, and permission to deal in, Newco Shares and R8.13A(1) Newco Warrants on the Main Board as well as compliance with the stock admission requirements R8.13A(2) of HKSCC, Newco Shares and Newco Warrants will be accepted as eligible securities by HKSCC R8.13A(5) for deposit, clearance and settlement in CCASS with effect from the commencement date of dealings in Newco Shares and Newco Warrants on the Main Board 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.

All necessary arrangements will be made to enable the Newco Shares and the Newco Warrants A1a(14)(2) to be admitted into CCASS.

Dealings in Newco Shares and Newco Warrants in issue and to be issued pursuant to the R19.05(3)(a) Scheme and any Newco Shares (not, in aggregate, exceeding 10% of the issued share capital of Newco upon the listing of Newco Shares on the Main Board) which may fall to be issued upon the exercise of the Options and the Newco Warrants will be subject to the payment of stamp duty in Hong Kong if they are kept on the branch register of members of Newco and the register of Newco Warrantholders respectively that will be maintained in Hong Kong.

**Newco Shares will be traded in the board lot size of 4,000 Newco Shares.**

**Newco Warrants will be traded in the board of 20,000 Newco Warrants.**

The Directors propose to change the board lot size for trading on the Stock Exchange from 2,000 Shares to 4,000 Newco Shares upon the Scheme becomes effective. Upon the Scheme becomes effective, new certificates for Newco Shares will be issued to the Shareholders who are registered in the register of members of the Company at the Record Time. New certificates for Newco Warrants will be issued to the Warrantholders who are registered in the register of Warrantholders at the Record Time.

– 46 – EXPLANATORY STATEMENT

In order to alleviate the difficulties in trading odd lots of Newco Shares arising from the change in the board lot size, the Company has appointed CIMB-GK as an agent to provide matching services to those Newco Shareholders who wish to top up or sell their holdings of odd lots of Newco Shares during the period from 29 April 2008 to 29 May 2008 (both dates inclusive). The above provision of matching services will also be extended to Newco Warrantholders who would like to top up or sell their holdings of odd lots of Newco Warrants.

Holders of Newco Shares and Newco Warrants in odd lots who wish to take advantage of this facility either to dispose of their odd lots of Newco Shares or Newco Warrants or to round them up to a full new board lot may contact Mr. Boby Ho at (852) 2532 1131 during the aforesaid period.

Holders of Newco Shares and Newco Warrants in odd lots should note that successful matching of the sale and purchase of odd lots of Newco Shares or Newco Warrants is not guaranteed. The Newco Shareholders and Newco Warrantholders are advised to consult their professional advisers if they are in doubt about the above procedures.

12. SHARE AND WARRANT CERTIFICATES A1a(15)(2)(g)

Under the Scheme, each share certificate for the Scheme Shares and/or warrant certificate for the Warrants validly subsisting as at the Record Time will, subject to Newco having despatched the certificates for Newco Shares and/or Newco Warrants falling to be allotted and issued under the Scheme to the persons entitled thereto, ceased to be valid for all purposes as a share certificate for the Scheme Shares and/or warrant certificate for the Warrants.

Share and warrant certificates representing the appropriate number of Newco Shares and Newco Warrants respectively, will be issued at the expense of Newco to the holders of the Scheme Shares and Newco Warrants whose names appear on the register of members of the Company and the register of Warrantholders at the Record Time or such other persons entitled thereto.

Share certificates for Newco Shares and Newco Warrants will be posted to the persons entitled thereto at their respective registered addresses (or in the case of joint holders, at the address of that joint holder whose name stands first on the register of members of the Company and the register of Warrantholders in respect of that joint holding) by ordinary post at their own risk.

The existing share certificates for the Shares (in board lots of 2,000 Shares) are green background. In order to distinguish between the existing and new share certificates, share certificates for Newco Shares will be yellow background and green border. Certificates for the Newco Share certificates will be issued, at the expense of the Company, to the Newco Shareholders. Unless otherwise instructed by the Newco Shareholders in writing, only one Newco Share certificate covering the entire shareholdings of each of the Newco Shareholders will be issued.

The existing warrant certificates for the Warrants (in board lots of 20,000 Warrants) are pink background. In order to distinguish between the existing and new warrant certificates, share certificates for Newco Warrants will be grey background and green border. Certificates for the Newco Warrant certificates will be issued, at the expense of the Company, to the Newco Warrantholders. Unless otherwise instructed by the Newco Warrantholders in writing, only one Newco Warrant certificate covering the entire warrantholdings of each of the Newco Warrantholders will be issued.

– 47 – EXPLANATORY STATEMENT

Shareholders and Warrantholders should note that the last day of dealings in the Shares and the Warrants is expected to be on Monday, 21 April 2008 and the latest time for lodging forms of transfer of Shares and Warrants in order to be entitled to Newco Shares and Newco Warrants is expected to be at 4:00 p.m. on Thursday, 24 April 2008. Shareholders are recommended to consult their professional advisers if they are in any doubt as to the above procedures.

13. REGISTRATION PROCEDURES AND INSTRUCTIONS TO THE COMPANY

Subject to the provisions of the Companies Law, the principal register of members of Newco and the register of Newco Warrantholders will be maintained in the Cayman Islands by Appleby Trust (Cayman) Limited and a branch register of members of Newco and the register of Newco Warrantholders will be maintained in Hong Kong by Computershare Hong Kong Investor Services Limited at 46th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong. The issued Newco Share will be transferred from the principal register of members to the branch register of members and unless the Directors otherwise agree, all transfers of, and other documents of title to, Newco Shares and Newco Warrants must be lodged for registration with, and registered by, the branch share registrar and the transfer office of Newco in Hong Kong.

A valid instrument of transfer relating to a transfer of the Shares and the Warrants executed before the Effective Date but not registered in the register of members of the Company and register of Warrantholders before that date shall, on or after the listing of Newco Shares and Newco Warrants on the Main Board, be deemed to be a valid instrument of transfer in respect of the same number of Newco Shares and Newco Warrants.

Shareholders and Warrantholders are recommended to consult their professional advisers if they are in any doubt as to the above procedures.

14. TAXATION, STAMP DUTY AND EXCHANGE CONTROL

14.1 Taxation

The Cayman Islands currently levy no taxes on individuals or corporations based upon profits, income, gains or appreciations and there is no taxation in the nature of inheritance tax or estate duty. There are no other taxes likely to be material to the Newco levied by the Government of the Cayman Islands save certain stamp duties which may be applicable, from time to time, on certain instruments. The Cayman Islands are not a party to any double tax treaties.

There is no stamp duty payable in the Cayman Islands on transfers of shares of Cayman Islands companies save for those which hold interests in land in the Cayman Islands.

– 48 – EXPLANATORY STATEMENT

14.2 Exchange Control

There are no exchange control regulations or currency restrictions in effect in the Cayman Islands.

14.2.1 Hong Kong

Under current legislation, implementation of the Redomicile Proposal is not expected, of itself, to have any adverse Hong Kong tax consequences, except that those persons who are classified for tax purposes as dealers in securities may be subject to profits tax in respect of any deemed profits which may arise from the substitution of Newco Shares for the Shares pursuant to or in connection with the Redomicile Proposal, based on the difference between the market value of Newco Shares on the Effective Date and the market value of the Scheme Shares at the Record Time.

Dealings in Newco Shares registered on Newco’s Hong Kong branch register of members will be subject to Hong Kong stamp duty.

14.2.2 General

Shareholders are recommended to consult their own professional advisers if they are in any doubt as to the taxation or other implications of the Redomicile Proposal. It is emphasised that none of the Company, Newco or CIMB-GK or any of their respective directors or associates or any other persons involved in the Redomicile Proposal accepts responsibility for any tax or other effects on, or liabilities of, any person or persons in connection with the Redomicile Proposal in Hong Kong or any other jurisdictions.

15. OVERSEAS SHAREHOLDERS

The making of the Redomicile Proposal to Shareholders not resident in Hong Kong may be subject to the laws of the relevant jurisdictions. Such Shareholders should inform themselves about and observe any applicable legal and regulatory requirements. It is the responsibility of any Shareholder not resident in Hong Kong to satisfy himself as to the full observance of the laws of the relevant jurisdiction in connection therewith, including the obtaining of any governmental, exchange control or other consents which may be required, or the compliance with other necessary formalities and the payment of any issue, transfer or other taxes due in such jurisdiction.

– 49 – EXPLANATORY STATEMENT

As at the Latest Practicable Date, there were 6 Shareholders whose addresses as registered in the register of members of the Company were outside Hong Kong. The Company has made enquiries with foreign legal counsels regarding the legal restrictions under the laws of the relevant jurisdictions and the requirements of the relevant regulatory bodies or stock exchanges regarding the issue of Newco Shares and/or Newco Warrants to these Overseas Shareholders as a result of the implementation of the Scheme.

According to the foreign legal advisers to the Company, save for a holder of 2,000 Shares in Malaysia mentioned below, there is no legal restriction on the issue of Newco Shares and/or Newco Warrants to these Overseas Shareholders.

For the Overseas Shareholder situated in Malaysia, the Company understands that prior approval of the Securities Commission of Malaysia is required for issue of Newco Shares to him. As this will cause additional costs to the Company, the Company proposes to send a notice to the Overseas Shareholder informing the aforesaid and advising him either to update or change his registered address to address in Hong Kong or other jurisdiction outside Malaysia where the issue of Newco Shares is not restricted by any regulatory bodies or to collect the certificates of Newco Shares which he is entitled to in Hong Kong.

16. MEETINGS

In accordance with the direction of the Court, the Court Meeting will be convened for the purpose of considering and, if thought fit, passing a resolution to approve the Scheme.

The SGM will be held immediately following the Court Meeting to approve, amongst other matters, the implementation of the Scheme.

The Warrantholders’ Meeting will be held immediately following the SGM to approve, inter alia, the Warrant Proposal and the implementation thereof.

A notice convening the Court Meeting is set out on pages 270 to 271 of this document. The notice of SGM is set out on pages 272 to 274 of this document. The notice of the Warrantholders’ Meeting is set out on pages 275 to 278 of this document. The Court Meeting, the SGM and the Warrantholders’ Meeting have been scheduled to be held on 7 April 2008 at the respective times and addresses specified in the notices.

– 50 – EXPLANATORY STATEMENT

17. PROCEDURES TO DEMAND A POLL BY THE SHAREHOLDERS AT THE EXTRAORDINARY GENERAL MEETING

Pursuant to Bye-law 59 of the Bye-laws of the Company, at any general meeting a resolution put to the vote of the meeting shall be decided on a show of hands unless (before or on the declaration of the result of the show of hands or on the withdrawal of any other demand for a poll) a poll is duly demanded. Subject to the Companies Act, a poll may be demanded by:–

a) the chairman of the meeting; or

b) notwithstanding any other provisions in the Bye-laws, if the chairman of the meeting and/or the directors individually or collectively holding proxies in respect of the Shares representing five (5) per cent or more of the total voting rights at a particular meeting and if on a show of hands the meeting votes in the opposite manner to that instructed in those proxies, the chairman of the meeting and/or the directors holding proxies as aforesaid individually or collectively shall demand a poll; provided that if it is apparent to the chairman of the meeting from the total proxies held that a vote taken on a poll will not reverse the vote taken on a show of hands, then no poll shall be required; or

c) at least three Shareholders present in person or by proxy and entitled to vote; or

d) any Shareholder or Shareholders present in person or by proxy and representing in the aggregate not less than one-tenth of the total voting rights of all Shareholders having the right to attend and vote at the meeting; or

e) any Shareholder or Shareholders present in person or by proxy and holding Shares conferring a right to attend and vote at the meeting on which there have been paid up sums in the aggregate equal to not less than one-tenth of the total sum paid up on all Shares conferring that right.

18. RECOMMENDATIONS

Having taken into account (i) the background to the Proposals; and (ii) the detailed reasons for the implementation and the effects of the Proposals as set out in the Explanatory Statement, the Directors consider that the Proposals are in the interests of the Company and the Shareholders and the Warrantholders as a whole. Accordingly, the Directors recommend the Shareholders and the Warrantholders to vote in favour of the relevant resolutions to be proposed at the Court Meeting and/or the SGM or the Warrantholders Meeting (as the case may be) to approve the Scheme, the Proposals, and the implementation thereof (as the case may be).

– 51 – EXPLANATORY STATEMENT

19. ACTIONS TO BE TAKEN

A pink form of proxy for use at the Court Meeting, a blue form of proxy for use at the SGM and a yellow form of proxy for use at the Warrantholders’ Meeting are enclosed with this document and letter to shareholders.

Whether or not you are able to attend the Court Meeting and/or the SGM and/or the Warrantholders’ Meeting or any of them, you are strongly urged to complete and sign the enclosed pink form of proxy in respect of the Court Meeting and also the enclosed blue form of proxy in respect of the SGM and/or the enclosed yellow form of proxy in respect the Warrantholders’ Meeting, in accordance with the respective instructions printed thereon, and to lodge them with the Registrar, Computershare Hong Kong Investor Services Limited at 46th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong. In order to be valid, the pink form of proxy for use at the Court Meeting should be lodged not later than 11:00 a.m. on Saturday, 5 April 2008. If the form of proxy is not so lodged, it may be handed to the Chairman of the Court Meeting at the Court Meeting. The blue form of proxy for use at the SGM and the yellow form of proxy for use at the Warrantholders’ Meeting should be lodged not later than 11:30 a.m. and 12:00 noon respectively on Saturday, 5 April 2008. The completion and return of the relevant forms of proxy will not preclude you from attending and voting in person at the relevant meeting should you so wish. In such event, the returned form of proxy for that meeting will be deemed to have been revoked.

Further announcements will be made giving details of the results of the Court Meeting, the SGM and the Warrantholders’ Meeting, the result of the hearing of the petition to sanction the Scheme by the Court, the last day for dealings in the Shares and the Warrants, the Record Time, the Effective Date and the date of withdrawal of the listing of the Shares and the Warrants on the Main Board.

20. ADDITIONAL INFORMATION

Further information is set out in the appendices to, and elsewhere in, this document, all of which form part of this Explanatory Statement.

– 52 – WAIVERS FROM COMPLIANCE WITH THE LISTING RULES AND THE TAKEOVERS CODE

1. WAIVERS FROM STRICT COMPLIANCE WITH THE REQUIREMENTS OF THE LISTING RULES

Waiver from Strict Compliance with the Requirements under Rule 8.05 of the Listing Rules

As the implementation of the Scheme will render Newco being treated as a new listing applicant, Newco shall therefore be subject to, among other things, the relevant requirements set out in Rule 8.05 of the Listing Rules in respect of, amongst others, the track record. Since the Company incurred losses for the three financial years ended 31 December 2006, it is envisaged that Newco would not be able to strictly comply with the requirements set out in Rule 8.05 of the Listing Rules. Therefore, Newco has made an application to the Stock Exchange for, and the Stock Exchange has granted, a waiver from strict compliance with the requirements under Rule 8.05 of the Listing Rules.

Waiver from Strict Compliance with the Requirements under Rule 10.08 and Rule 10.07(1)(a) of the Listing Rules

As required by Rule 10.08 of the Listing Rules, a new issuer is restricted from further issuing securities within six months of its listing on the Stock Exchange. Although Newco is deemed to be a new listing applicant by reason of the Redomicile Proposal, the Newco Shareholders are in fact the Shareholders and there is no change in their shareholdings in Newco, save that Newco Shares will be listed on the Main Board and the listing status of the Company will be withdrawn.

As referred to in the Letter from the Board, given the prolonged unsatisfactory performance of the Group’s businesses, the Directors have decided to act more proactively to try to diversify the Group’s business to other related sectors so as to balance and enhance the overall financial performance of the Group to create value for the Shareholders. Should the right opportunities arise, the Newco Group may need to finance its investments by issuing new Newco Shares within six months following the listing of Newco Shares on the Main Board.

In view of the principal reasons set out above, Newco has applied to the Stock Exchange for, and the Stock Exchange has granted, a waiver from strict compliance with Rule 10.08 of the Listing Rules. A consequential technical waiver from strict compliance with Rule 10.07(1)(a) of the Listing Rules has also been applied from and granted by the Stock Exchange.

– 53 – WAIVERS FROM COMPLIANCE WITH THE LISTING RULES AND THE TAKEOVERS CODE

2. WAIVERS FROM STRICT COMPLIANCE WITH THE REQUIREMENTS OF THE TAKEOVERS CODE

As one of the effects of the Redomicile Proposal is that the Company will be privatised and at the same time the listing of the Shares on the Stock Exchange will be withdrawn, the Scheme, if implemented, is subject to Rule 2.10 of the Takeovers Code which imposes more onerous voting requirements than those imposed by the Companies Act. As such, the Company has obtained a waiver from the SFC from strict compliance with Rule 2.10 of the Takeovers Code on the basis that (a) there is no change in the percentage shareholding of any Shareholder in the holding company of the Group; (b) there is no acquisition or consolidation of control by any person or a group of persons; and (c) the economic interests in the Company of all the Shareholders and the Warrantholders will not be affected, as a result of the implementation of the Redomicile Proposal.

– 54 – APPENDIX I INFORMATION ON THE GROUP

1. PRINCIPAL ACTIVITIES R11.07

The Group is principally engaged in the extraction, refining, blending, bottling, packaging A1a(28)(1)(a) and distribution of edible oils and ancillary activities in Hong Kong and the PRC. R8.04 Para.1, Set out below are the consolidated results of the Group for the three financial years ended 3rd Sch., CO 31 December 2006 and the six months ended 30 June 2007:

Six months Financial year ended ended 31 December 30 June 2004 2005 2006 2007 HK$’000 HK$’000 HK$’000 HK$’000 (Audited) (Audited) (Audited) (Unaudited) Restated (Note 2)

Turnover 699,674 677,425 672,792 368,306 Profit from operating activities 4,566 3,002 12,879 6,771 Profit/(Loss) attributable to equity holders of the Company (11,952) (9,730) (6,764) 449 Total assets 828,667 660,997 677,352 672,444 Total liabilities 407,134 241,787 260,754 252,680 Minority interests 11,948 11,693 12,388 12,281 Net assets (excluding minority interests) 409,585 407,517 404,210 407,483 Net assets per Share (HK$) (Note 1) 1.00 0.98 0.96 0.96

Notes:

1. Based on 409,252,938 Shares in issue as at 31 December 2004, 417,090,711 Shares in issue as at 31 December 2005, 419,438,434 Shares in issue as at 31 December 2006 and 423,562,658 Shares in issue as at 30 June 2007.

2. The financial figures are restated to conform with the presentations of 2006.

– 55 – APPENDIX I INFORMATION ON THE GROUP

2. SHARE CAPITAL

2.1 Authorised and issued share capital A1a(23)(1) Para.2, 9 As at the close of business on the Latest Practicable Date, the authorised and issued 3rd Sch., CO share capital of the Company were as follows:

Authorised: HK$’000

800,000,000 Shares 80,000 Ordinary shares with a par value of US$0.10 each in the share capital 120,000 of the Company 93

Issued and fully paid:

435,875,692 Shares 43,588 A1a(15)(2)(a)

All the Shares presently in issue are fully paid or credited as fully paid and rank pari A1a(25)(1) passu in all respects with each other, including as to dividends, voting rights and return of R19.10(5)(b) capital or other distributions that may be declared, paid or made.

2.2 Changes in share capital of the Company A1a(26)(1) A1a(26)(2) The following changes in the share capital of the Company have taken place within R19.10(5)(c) the two years preceding the date of this document:

(i) In the period from 1 January 2007 to the Latest Practicable Date, the subscription rights attaching to 15,747,218 share options were exercised at the following subscription prices resulting in the issue of 15,747,218 shares of HK$0.10 each for a total cash consideration, before expenses, of approximately HK$3,146,000:

Subscription price No. of share options per share option (HK$)

13,264,852 0.1834 2,064,993 0.2860 417,373 0.2940

15,747,218

– 56 – APPENDIX I INFORMATION ON THE GROUP

(ii) During the year ended 31 December 2006, the subscription rights attaching to 2,045,565 share options were exercised at the subscription price of HK$0.1834 per share resulting in the issue of 2,045,565 shares of HK$0.10 each for a total cash consideration, before expenses, of approximately HK$375,000. During the year ended 31 December 2005, the subscription rights attaching to 2,045,565 and 2,045,565 share options were exercised at the subscription prices of HK$0.1834 and HK$0.2112 per share, respectively, resulting in the issue of 4,091,130 shares of HK$0.10 each for a total cash consideration, before expenses, of approximately HK$807,000.

(iii) In the period from 1 January 2007 to the Latest Practicable Date, 690,040 shares of HK$0.10 each were issued pursuant to the exercise of the Company’s warrants, for cash at the subscription price of HK$0.25 per share for a total cash consideration, before expenses, of approximately HK$173,000.

(iv) During the year ended 31 December 2006, 302,158 shares of HK$0.10 each were issued for cash at the subscription price of HK$0.25 per share, pursuant to the exercise of the Company’s warrants, for a total cash consideration, before expenses, of approximately HK$75,000. During the year ended 31 December 2005, 3,745,853 and 790 shares of HK$0.10 each were issued for cash at subscription prices of HK$0.27 and HK$0.25 per share, respectively, pursuant to the exercise of the Company’s warrants for a total cash consideration, before expenses, of approximately HK$1,012,000.

2.3 Changes to the issued capital of the Company’s subsidiaries

The following alterations in the share capital of the Company’s subsidiaries have A1a(26)(1) taken place within the two years preceding the date of this document: A1a(26)(2)

(i) As announced on 30 August 2006, 12,896 ordinary shares in Able Mark (HK) Limited (“AMHK”) representing the entire issued ordinary share capital of AMHK were transferred from Hop Hing Oil (Holdings) Limited (“HHOH”) to Hung’s Investments Limited, a connected person of the Company, on the same day. The transaction complied with Rules 14A.45 to 14A.47 of the Listing Rules.

(ii) On 19 December 2006, 71 ordinary shares in Cyber Rays Limited (“CRL”) representing 71% of the entire issued ordinary share capital of CRL were acquired by Hop Hing Strategic Holdings Limited, an indirect wholly-owned subsidiary of the Company, at a consideration of HK$71.

(iii) On 15 January 2007, Hop Hing Shing Oil Factory (Macau) Limited was liquidated by way of members’ voluntary winding up.

(iv) On 25 September 2007, 2 ordinary shares in Ocean Empire Limited (“OEL”) representing the entire issued ordinary share capital of OEL were transferred from Ginsome Limited to Fit Gain Holdings Limited, a connected person of the Company, at a consideration of HK$2. It only constitutes a de minimis transaction under Rule 14A.31(2) of the Listing Rules.

– 57 – APPENDIX I INFORMATION ON THE GROUP

(v) On 10 December 2007, 2 ordinary shares in Hop Hing Food Products Limited (“HHFP”) representing the entire issued ordinary share capital of HHFP were transferred from Hop Hing (BVI) Limited (“HHBVI”) to Hop Hing Oil Terminals (Pan Yu) Limited (“HHOTPY”). Both HHBVI and HHOTPY are indirect wholly-owned subsidiaries of the Company.

(vi) On 10 December 2007, 10,000 ordinary shares in Hop Hing Development Limited (“HHDL”) representing the entire issued ordinary share capital of HHDL were transferred from Hop Hing Industrial Building Limited (“HHIB”) to Hop Hing Oil Terminals (Guangzhou) Limited (“HHOTGZ”). Both HHIB and HHOTGZ are indirect wholly-owned subsidiaries of the Company.

(vii) On 25 December 2007, the entire registered capital of HK$75 million in Panyu Hop Hing was transferred from HHOTPY to HHFP. Both HHOTPY and HHFP are indirect wholly-owned subsidiaries of the Company.

(viii) On 25 December 2007, the entire registered capital of HK$50 million in Panyu Kwong Hing was transferred from HHOTGZ to HHDL. Both HHOTGZ and HHDL are indirect wholly-owned subsidiaries of the Company.

(ix) On 28 January 2008, 3 ordinary shares in Hop Kee Oil Factory (Macau) Limited (subsequently known as Hung’s Management Services (Macau) Limited) (“HKOFM”) representing the entire issued ordinary share capital of HKOFM were transferred from Hop Hing (Tortola) Limited, an indirect wholly-owned subsidiary of the Company, to Hung’s Management Services Limited, a connected person of the Company, at a consideration of MOP$10,000. It only constitutes a de minimis transaction under Rule 14A.31(2) of the Listing Rules.

Save as disclosed in this section, within the two years preceding the date of this A1a(13) document, no share or loan capital of the Company or any of its subsidiaries had been issued or was proposed to be issued for cash or otherwise and no commission, discounts or other special terms had been granted by the Company in connection with the issue or sale of any such capital.

As at the Latest Practicable Date, the Company had 81,606,770 Warrants outstanding. A1a(27) These Warrants were issued under bonus issue and carry the rights to subscribe for an aggregate of 81,606,770 Shares at an initial subscription price of HK$0.25 per Share at any time during the period between 15 September 2005 and 30 April 2009. Assuming all the Warrants are exercised in full, an additional 81,606,770 Shares will be issued. Save as disclosed in this section, none of the issued share capital of the Company is under option or agreed conditionally to be put under option.

Save as disclosed in this section, there was no alteration in the capital of any member of the Group within the two years immediately preceding the date of this document.

– 58 – APPENDIX I INFORMATION ON THE GROUP

2.4 Listing

All the existing Shares in issue are listed on the Main Board. No part of the securities A1a(11) of the Company is listed on or dealt in, nor is any listing of, or permission to deal in, the R19.09(1) securities of the Company being or proposed to be sought on, any other recognised stock R19.09(2) exchange.

A1a(32)(1) 3. STATEMENT OF INDEBTEDNESS Para. 23, 3rd Sch., CO As at the close of business on 31 December 2007, being the latest practicable date prior to the printing of this document for ascertaining information for inclusion in this indebtedness A1a(32)(2) statement, the Group (including the jointly-controlled entities) had outstanding bank loans of HK$148 million, and bills payable of HK$30.5 million.

The Group had contingent liabilities in respect of the following as at 31 December 2007: A1a(32)(4)

(a) At 31 December 2007, 31 (30 June 2007: 32; 31 December 2006: 32) employees had completed the required number of years of service under the Hong Kong Employment Ordinance (the “Employment Ordinance”) to be eligible for long service payments on termination of their employment. The Group is only liable to make such payments where the termination meets the required circumstances specified in the Employment Ordinance. If the termination of all these employees met the circumstances required by the Employment Ordinance, the Group’s liability at 31 December 2007 would be approximately HK$358,000 (30 June 2007: HK$444,000; 31 December 2006: HK$383,000).

(b) At 31 December 2007, the contingent liabilities in respect of guarantees given to banks to secure banking facilities utilised by a jointly controlled entity of the Group amounted to HK$13,628,000 (30 June 2007: HK$32,363,000; 31 December 2006: HK$32,849,000).

Save as aforesaid and apart from intra-group liabilities, the Group did not have any A1a(32)(3) outstanding mortgages, charges, debentures or other loan capital or bank overdrafts, loans, debt Para. 24, securities or other similar indebtedness or acceptance credits or hire purchase commitments or any 3rd Sch., CO guarantees or other material contingent liabilities as at the close of business on 31 December 2007.

The Directors have confirmed that there has been no material changes in the indebtedness and contingent liabilities of the Group since 31 December 2007 and up to the Latest Practicable Date.

– 59 – APPENDIX I INFORMATION ON THE GROUP

As at the 31 December 2007, the Group (including the jointly-controlled entities) had unaudited net assets (including minority interest) of approximately HK$424.0 million, comprising A1a (32)(5)(b) non-current assets of approximately HK$409.3 million (comprising property, plant and equipment R.11.07 of approximately HK$255.3 million, prepaid land lease payments of HK$26.7 million, trademarks of approximately HK$123.7 million, a negative investment in an associate of HK$1.4 million and deferred tax assets of approximately HK$5.0 million), net current assets of approximately HK$18.3 million and non-current liabilities of approximately HK$3.6 million (comprising deferred tax liabilities of approximately HK$3.6 million).

As at 31 December 2007, the bank loans of the Group (including the jointly-controlled A1a (32)(5)(b) entities) in Hong Kong was HK$47.5 million. The other bank loans of the Group (including the R.11.07 jointly-controlled entities), as at the year end were PRC bank loans of HK$100.5 million. Loans of approximately HK$93.4 million were secured by assets of certain PRC subsidiaries of the Group (including the jointly-controlled entities) and have no recourse to other members of the Group (including the jointly-controlled entities). As at 31 December 2007, the Group (including the jointly-controlled entities) also had PRC bills payable of approximately HK$30.5 million.

4. EMPLOYEES

As at 31 December 2007, the Company and its subsidiaries had approximately 360 employees A1a(28)(7) with approximately 100 in Hong Kong and approximately 260 in the PRC. All employees are engaged in the Oil Business and the breakdown by function is as follows:

Management 7 Sales and Marketing 75 Production, Quality Assurance and Engineering 192 Accounting, Secretarial and Administration 86

360

5. MATERIAL ADVERSE CHANGE A1a(38)

The Directors are not aware of any material adverse change in the financial or trading position of the Group since 31 December 2006, the date to which the latest published audited consolidated financial statements of the Group were made up.

6. RULES 13.13 TO 13.22 OF THE LISTING RULES

As at 31 December 2006, the total advances and guarantees made to an affiliated company by the Group amounted to approximately HK$68.1 million which comprised of trade receivables arising from the ordinary course of business of the Group and guarantees given for banking facilities granted to the affiliated company. Save as disclosed on pages 22 to 23 of the annual report of the Company for the year ended 31 December 2006, the Directors have confirmed that they are not aware of any circumstances which would give rise to a disclosure requirement under Rules 13.13 to 13.22 of the Listing Rules as at the Latest Practicable Date.

– 60 – APPENDIX I INFORMATION ON THE GROUP

7. MAJOR CUSTOMERS AND SUPPLIERS

The percentages of the Group’s purchases and sales for the three years ended 31 December 2006 attributable to major suppliers and customers were as follows:

Year ended 31 December 2004 2005 2006 A1a(28)(1)(b)(i) Purchases the largest supplier 13.6% 10.9% 19.0% A1a(28)(1)(b)(ii) five largest suppliers 38.4% 36.4% 42.2%

Year ended 31 December 2004 2005 2006 A1a(28)(1)(b)(iii) Sales the largest customer 10.6% 10.7% 8.7% A1a(28)(1)(b)(iv) five largest customers 30.6% 32.4% 29.2%

To the best knowledge of the Directors, none of the Directors, chief executives of the A1a(28)(1)(b)(v) Company or substantial Shareholders has any interests in the share capital of the suppliers or customers referred to above.

The customers of the Group mainly consist of retailing chains, edible oils distributors and catering institutions. The payment terms are based upon the relevant sales agreements and the settlements are mainly payments in cash on or before the payment due dates. A1a(28)(1)(b)(vii)

The suppliers of the Group mainly consist of edible oil trading companies and oil manufacturers. The payment terms are based upon the relevant purchase agreements and the settlements are mainly payments in cash on or before the payment due dates.

8. FINANCIAL ANALYSIS AND TRADING PROSPECTS OF THE GROUP

For the year ended 31 December 2006

Financial review A1a(34)(1)(a) A1a(34)(1)(b) For the year ended 31 December 2006, the loss attributable to equity holders was HK$6.8 million, an improvement of 30% when compared to the net loss of HK$9.7 million for the year ended 31 December 2005. The loss per share for the year was 1.62 HK cents (2005: loss per share 2.36 HK cents).

– 61 – APPENDIX I INFORMATION ON THE GROUP

The loss for the year was mainly attributable to an additional tax provision of HK$7.5 million made for the Group’s royalty income in respect of prior years. The profit before tax for 2006 was HK$3.5 million, representing an improvement of HK$11.4 million or 144% over the loss before tax of HK$7.9 million for last year. In the second half of 2006, the Group recorded a profit before tax of HK$5.4 million (second half of 2005: loss before tax of HK$3.0 million), the first half year period recording a positive profit before tax since 2002. The earnings before interest, tax and depreciation and amortisation (“EBITDA”) for the year was HK$35.3 million, an increase of 36% over the EBITDA of HK$26.0 million for the year 2005.

Capital structure A1a(32)(5)(b)

As at 31 December 2006, the Group had net assets (including minority interest) of approximately HK$416.6 million, comprising non-current assets of approximately HK$428.5 million (comprising property, plant and equipment of approximately HK$275.1 million, prepaid land lease payments of HK$26.3 million, trademarks of approximately HK$123.4 million, a negative investment in an associate of HK$1.4 million and deferred tax assets of approximately HK$5.1 million), net current assets of approximately HK$89.8 million and non-current liabilities of approximately HK$101.7 million (comprising interest-bearing bank loans of approximately HK$98.0 million and deferred tax liabilities of approximately HK$3.7 million).

Business review A1a(28)(1)(a) A1a(28)(6) In the year ended 31 December 2006, the edible oil markets remained competitive and challenging, in particular, the abrupt upsurge of edible oil costs towards the end of the year. Despite all these challenges, the Group was able to capture business opportunities improving the performance of this year, including capitalizing the record high market refinery premium and taking advantage of the improving market sentiment and passing out part of the raw material and operational costs to the market. Together with the Group’s management’s persistence in adopting appropriate strategies and improving operational efficiency and streamlining operational costs in past years, the Group has been able to report an increase in gross profit margin and a profit before tax in 2006, the first time in the last five years.

Following the Group’s disposal of certain of its subsidiaries, whose major assets and liabilities were certain properties in Hong Kong and a syndicated bank loan, in April 2005 and the restructuring of bank loans in these two years, the Group’s financial health has improved substantially. The bank loans have been reduced from HK$292.2 million at the end of 2004 to HK$148.8 million at the end of 2006. The net interest expense has gone down from HK$14.9 million for 2004 to HK$9.4 million for the year ended 31 December 2006. As at 31 December 2006, the Group had a net current asset of HK$89.8 million.

– 62 – APPENDIX I INFORMATION ON THE GROUP

In Hong Kong, strengthening brand loyalty and providing customers with variety of quality products remain the strategies of the Group. During 2006, a number of new products, such as Extra Light Olive oil, Sunflower Healthy oil and Olive Sunflower oil, which ride on the healthy trend of the society, were launched. Together with appropriate marketing and pricing strategies being executed, the Group had been able to capture significant market shares in these fast growing market segments. For the year ended 31 December 2006, the Hong Kong edible oil operation continued to increase her contribution to the Group’s bottomline.

Having gone through a difficult period of corporate restructuring and cost streamlining, the PRC operation is now much more efficient than before. Despite the keen competition and the escalating raw material costs during 2006, the Group’s PRC retail edible oil segment recorded a significant increase in sales tonnage and gross profit. In addition, the cooperation with fast-growing retailing chains for providing them with exclusive branded products enabled the Group to improve the utilization and operational efficiency of her PRC facilities. For the year ended 31 December 2006, the Group’s PRC operation reported a positive profit before depreciation of properties, plant and equipment and amortisation of prepaid land lease payments.

Lion & Globe brand, the flagship brand of the Group, has recently been awarded the Trusted Brand 2007 Gold Award by Reader’s Digest. This award is the eighth gold award in a row received by the Group from Readers’ Digest. In PRC, Administration of Industry and Commerce of Guangzhou Municipality has recently awarded “廣州市著名商標” to the Group’s Lion & Globe brand and Camel brand. Apart from receiving awards confirming the quality and market recognition of the Group’s products, the Group has also been awarded as a Green Medalist of The One Factory – One Year – One Environmental Project (One-One- One) Programme 2006 by Federation of Hong Kong Industries. As a good corporate citizen, the Group has subscribed to Wage Protection Movement as promulgated by the Government of HKSAR.

Since the Group is now gradually back to health and as part of the Group’s corporate restructuring exercise, the Directors have decided to act more proactively to try to diversify the Group’s business to other related sectors so as to balance and enhance the overall financial performance of the Group. The Directors have therefore proposed to incorporate a Newco to be the new holding company of the Group so that any new businesses which the Group may acquire in future will be put under Newco, rather than the Company. In doing so, the business risks and associated liabilities of the new businesses can be kept separate from those of the existing business of the Group.

– 63 – APPENDIX I INFORMATION ON THE GROUP

Outlook A1a(34)(1)(c)

Providing quality and premium products catering for the needs of the market has always been a long-term strategy of the Group. While the market sentiment in Hong Kong continues to improve and the PRC economy grows persistently, the high raw material costs will be a challenge. With a better financial position and an improved operational efficiency, the management of the Group has confidence that the Group is in a much better position to meet with any challenges lying ahead.

Liquidity and financial resources R11.07 As at 31 December 2006, the Group’s bank borrowing, including bank loans and bills A1a (32)(5)(a) payable, in Hong Kong was HK$40.8 million. The Group’s other bank borrowings, including bank loans and bills payable, as at the year end were PRC bank borrowings, including bank loans and bills payable, amounted to HK$129.8 million. Loans of approximately HK$101.0 million were secured by assets of certain PRC subsidiaries of the Group and have no recourse to other members of the Group.

As at 31 December 2006, the Group’s total bank loans amounted to HK$148.8 million (31 December 2005: HK$156.5 million), of which HK$50.8 million was either repayable or subject to renewal within one year and the balance was repayable within two to five years.

The net interest expenses for the year was HK$9.4 million (2005: HK$10.9 million). Such decrease was mainly attributable to repayments of bank loans and the disposal of certain subsidiaries of the Group which carried certain of the Group’s bank loans in Hong Kong in 2005.

The Group’s funding policy is to finance the business operations with internally generated cash and banking facilities. The Group’s bank borrowings, including bank loans and bills payable, are denominated in Hong Kong dollars and Renminbi. The Group continues to adopt the policy of hedging foreign currency liabilities with foreign currency assets.

Details of charges in group assets

As at 31 December 2006, the Group’s land use rights, classified as prepaid land lease payments, and certain leasehold land and buildings and plant and machinery, which had an aggregate carrying value at 31 December 2006 of approximately HK$26,716,000 (2005: HK$16,206,000) and HK$137,255,000 (2005: HK$176,960,000), respectively, were pledged to secure general banking facilities granted to the Group.

As at 31 December 2006, certain stock with aggregate carrying value of approximately HK$13,670,000 (2005: HK$6,870,000), certain accounts receivable of approximately HK$18,163,000 (2005: HK$16,454,000) and a cash deposit of approximately HK$6,529,000 (2005: HK$1,226,000) were pledged to secure certain bank loans granted to the Group.

– 64 – APPENDIX I INFORMATION ON THE GROUP

Gearing ratio

The Group’s gearing ratio (expressed as a percentage of total bank loans over shareholders’ funds) as at 31 December 2006 was 36.8% (31 December 2005: 38.4%).

Contingent liabilities A1a(32)(4)

Group

(a) As at 31 December 2006, 32 (2005: 35) employees had completed the required number of years of service under the Employment Ordinance to be eligible for long service payments on termination of their employment. The Group is only liable to make such payments where the termination meets the required circumstances specified in the Employment Ordinance. If the termination of all these employees met the circumstances required by the Employment Ordinance, the Group’s liability at 31 December 2006 would be approximately HK$383,000 (2005: HK$439,000). No provision has been made for this amount in the 2006 financial statements as it is not considered probable that there will be a significant outflow of resources in respect thereof.

(b) As at 31 December 2006, the contingent liabilities in respect of guarantees given to banks to secure banking facilities utilised by a jointly-controlled entity of the Group amounted to HK$32,849,000 (2005: HK$25,338,000).

Company

As at 31 December 2006, the contingent liabilities of the Company in respect of guarantees given to banks to secure banking facilities utilised by certain subsidiaries and a jointly-controlled entity amounted to HK$41,190,000 (2005: HK$41,338,000).

For the six months ended 30 June 2007

Financial review

For the six months ended 30 June 2007, the profit attributable to equity holders was HK$0.5 million, as compared to the loss of HK$2.6 million for the same period in 2006. The basic earnings per share for the period was 0.11 HK cent (2006: basic loss per share 0.61 HK cent).

The profit from operating activities for the six months ended 30 June 2007 was HK$6.8 million, representing an increase of 156% from HK$2.6 million for the first half of 2006. EBITDA was HK$18.1 million, as compared to HK$13.8 million in 2006.

– 65 – APPENDIX I INFORMATION ON THE GROUP

Capital structure

As at 30 June 2007, the Group had net assets (including minority interest) of approximately HK$419.8 million, comprising non-current assets of approximately HK$422.4 million (comprising property, plant and equipment of approximately HK$268.6 million, prepaid land lease payments of HK$26.5 million, trademarks of approximately HK$123.7 million, a negative investment in an associate of HK$1.4 million and deferred tax assets of approximately HK$5.0 million), net current assets of approximately HK$1.0 million and non-current liabilities of approximately HK$3.6 million.

Business review

In the first half of 2007, the edible oil market had been significantly affected by the escalating raw material costs, which was mainly due to the increasing market tendency of using agricultural raw materials to produce bio-diesel and fuel ethanol which can be used as a gasoline blending additive. The Group has been successful in maintaining its market shares and minimizing the impact of such cost increase by revising the selling prices of the Group’s products at appropriate time and increasing the Group’s sales market coverage. Together with the Group’s efficient operation which has been striving for by the management in the past years, the Group is able to report a profit for the first half of 2007, the first profitable six-month period since 2002. The other production and service costs as a percentage of turnover has decreased from 10.4% in the first half of 2006 to 8.2% in the first half of 2007, representing an improvement of over 20%.

The Hong Kong economy has well recovered and the people are getting more health conscious than ever. To respond to the market trends and needs, a number of new healthy products under the Group’s leading brand names, such as Lion & Globe and Camel, were launched these years. According to the researches carried out by one of the most reputable international research companies, the Group’s branded products had the highest market share in the fast-growing healthy edible oil segment in Hong Kong, which includes Canola oil, Olive oil, Sunflower oil and Rice Bran oil, in the first half of 2007. In addition, the Group’s Hong Kong made products have added confidence to the customers who care about the quality of the products they pay for. All these together enable us to record a satisfactory contribution from the Group’s Hong Kong edible oil operation.

In PRC, the Group’s strategy of increasing the depth and width of the market coverage in the more profitable Southern China sales region is now paying back. The sales for the first half of 2007 increased significantly by 56% as compared to the first half of last year, despite operating under limited financial resources. The cooperation with fast growing retailing chains for providing them with exclusive branded products helps to improve the utilization and operational efficiency of the PRC facilities. In the first half of 2007, the PRC edible oil operation continued to record a positive EBITDA.

– 66 – APPENDIX I INFORMATION ON THE GROUP

In the first half of 2007, the Company received The Best Brand Enterprise Award from Hong Kong Productivity Council recognizing the Group’s effort in building up its various leading brands in the edible oil industry. In PRC, Lion & Globe brand has been listed as Chinese Madame’s Best Favourite Brand（中華太太最喜歡的品牌）by Madame Box magazine（太太信箱雜誌）.

Outlook

Although the edible oil market will remain competitive and the raw material costs will continue to stay at a high level in the foreseeable future, the management has confidence that continuation of the proven strategies of providing quality and premium products that meet the needs of the markets, strengthening customers’ loyalty and increasing the Group’s penetration and presence in more profitable sales regions will enable the Group to face with these challenges. Opportunities that will improve the profitability of the Group, such as providing customers with OEM or edible oil related services and opportunities created by Closer Economic Partnership Arrangement (CEPA), will be explored by the management.

Liquidity and financial resources

As at 30 June 2007, the Group’s bank borrowing, including bank loans and bills payable, in Hong Kong was HK$44.5 million. The Group’s other bank borrowings, including bank loans and bills payable, as at 30 June 2007 were PRC bank borrowings amounted to HK$135.9 million. Loans of approximately HK$94.9 million were secured by assets of certain PRC subsidiaries of the Group and have no recourse to other members of the Group.

As at 30 June 2007, the Group’s total bank loans amounted to HK$144.3 million (31 December 2006: HK$148.8 million) have all been classified as current liabilities which are repayable or subject to renewal within one year.

The net interest expense for the first half of 2007 was HK$5.2 million (2006: HK$4.6 million). Such increase was mainly attributable to the increase in interest rates during the first half of 2007.

The Group’s funding policy is to finance the business operations with internally generated cash and bank facilities. The Group’s bank borrowings are denominated in Hong Kong dollars and Renminbi. The Group continues to adopt the policy of hedging foreign currency liabilities with foreign currency assets.

– 67 – APPENDIX I INFORMATION ON THE GROUP

Details of charges in group assets

As at 30 June 2007, certain prepaid land lease payments, certain leasehold land and buildings and certain plant and machinery of the Group with an aggregate carrying value of approximately HK$158,026,000 (31 December 2006: HK$163,971,000), certain accounts receivable and stocks of the Group of approximately HK$31,119,000 (31 December 2006: HK$31,833,000), and a cash deposit of the Group of approximately HK$10,253,000 (31 December 2006: HK$6,529,000) were pledged to banks to secure banking facilities granted to the Group.

Gearing ratio

The Group’s gearing ratio (expressed as a percentage of total bank loans over shareholders’ funds) as at 30 June 2007 was 35.4% (31 December 2006: 36.8%).

Contingent liabilities

Group

a. As at 30 June 2007, 32 (31 December 2006: 32) employees had completed the required number of years of service under the Hong Kong Employment Ordinance (the “Employment Ordinance”) to be eligible for long service payments on termination of their employment. The Group is only liable to make such payments where the termination meets the required circumstances specified in the Employment Ordinance. If the termination of all these employees met the circumstances required by the Employment Ordinance, the Group’s liability at 30 June 2007 would be approximately HK$444,000 (31 December 2006: HK$383,000).

b. As at 30 June 2007, the contingent liabilities in respect of guarantees given to banks to secure banking facilities utilised by a jointly-controlled entity of the Group amounted to HK$32,363,000 (31 December 2006: HK$32,849,000).

Company

As at 30 June 2007, the contingent liabilities of the Company in respect of guarantees given to banks to secure banking facilities utilised by certain subsidiaries and a jointly controlled entity amounted to HK$42,914,000 (31 December 2006: HK$41,190,000).

– 68 – APPENDIX I INFORMATION ON THE GROUP

9. WORKING CAPITAL A1a(30) R8.21A(1) After taking into account the banking facilities currently available to the Group and the internal resources of the Group, the Directors are of the view that the Group or the Newco Group has sufficient working capital for its present requirements and for the period ending 12 months from the date of this document.

10. CONNECTED TRANSACTIONS AND CONTINUING CONNECTED TRANSACTIONS

(a) Wytak Limited (“Wytak”), a former indirect wholly-owned subsidiary of the Company, as the landlord, let certain premises of the Group, under eight tenancy agreements dated 12 August 2004 (the “Old Tenancy Agreements”) to Hung’s Management Services Limited, Yoshinoya Fast Food (Hong Kong) Limited and HFG Procurement Limited (formerly known as Food Procurement Limited) (collectively referred to herein as the “Tenants”) in which the Tenants agreed to lease certain premises of the Group from Wytak. GZ Trust Corporation (“GZTC”), a connected person of the Company, is indirectly interested in the Tenants as to exercise or control the exercise of 30% or more of the voting power at the general meeting of each of the Tenants. The Tenants are therefore associates of GZTC and constitute connected persons of the Company under the Listing Rules. The Old Tenancy Agreements and all the transactions contemplated thereunder constituted continuing connected transactions of the Company. As certain percentage ratios (as defined in Rule 14.07 of the Listings Rules) in respect of transactions contemplated under the Old Tenancy Agreements, on an annual basis, were more than 2.5% but less than 25%, and the total annual income receivable under the transactions contemplated under the Old Tenancy Agreements was less than HK$10 million, the transactions contemplated under the Old Tenancy Agreements were subject to the reporting and announcement requirements under Rules 14A.45 to 14A.47 of the Listing Rules but were exempt from the independent shareholder’s approval requirements. The Old Tenancy Agreements were terminated on 28 April 2005.

(b) On 29 April 2005, Hop Hing Oil Factory Limited (“HHOF”), an indirect wholly- owned subsidiary of the Company, entered into a sale and purchase agreement (the “Share Purchase Agreement I”) with Merry Capital Investments Limited (“Merry Capital”), a connected person of the Company under the Listing Rules by virtue of her being an associate of a substantial shareholder of the Company. Pursuant to the Share Purchase Agreement I, Merry Capital acquired and HHOF disposed of 12 ordinary shares of HK$1.00 each in the issued share capital of Express Associates Limited (“EAL”), a former wholly-owned subsidiary of HHOF, and all shareholders’ loans owned by EAL to HHOF and outstanding at completion of the Share Purchase Agreement I for an aggregate consideration of HK$5.8 million.

– 69 – APPENDIX I INFORMATION ON THE GROUP

The transaction contemplated under the Share Purchase Agreement I constituted a discloseable and connected transaction of the Company under the Listing Rules. As the Share Purchase Agreement I was entered into on normal commercial terms with each of the applicable percentage ratios as defined under Rule 14.07 of the Listing Rules is more than 2.5% but less than 25% and the total consideration payable under the Share Purchase Agreement I was less than HK$10 million, pursuant to Rule 14A.32 of the Listing Rules, the Share Purchase Agreement I was subject to the reporting and announcement requirements set out in Rules 14A.45 to 14A.47 of the Listing Rules but was exempt from the independent shareholders’ approval requirements.

On 29 April 2005 and following the completion of the Share Purchase Agreement I, HHOF entered into a tenancy agreement (the “Tenancy Agreement”) with Wytak, a wholly-owned subsidiary of EAL, for renting certain premises from Wytak, for an aggregate annual rental of approximately HK$3.34 million (inclusive of government rates and air-conditioning charges). The maximum rental paid by the Company under the Tenancy Agreement was approximately HK$2.24 million for the year ended 31 December 2005 and approximately HK$1.1 million for the period from 1 January 2006 to 28 April 2006, the date on which the Tenancy Agreement was terminated. As Wytak became a subsidiary of a substantial shareholder of the Company, under the Listing Rules, Wytak is therefore a connected person of the Company by virtue of it being an associate of a substantial shareholder of the Company and the transaction contemplated under the Tenancy Agreement constituted a continuing connected transaction for the Company. As the Tenancy Agreement was entered into on normal commercial terms and the relevant percentage ratios as defined under Rule 14.07 of the Listing Rules were more than 2.5% but less than 25% and the annual consideration was less than HK$10 million, pursuant to Rule 14A.34 of the Listing Rules, the Tenancy Agreement was subject to the reporting and announcement requirements set out in Rules 14A.45 to 14A.47 of the Listing Rules but was exempt from the independent shareholders’ approval requirements

On 8 May 2006, Hop Hing Oil entered into two tenancy agreements (the “New Tenancy Agreements”) with Wytak for renting certain premises from Wytak in the period from 29 April 2006 to 28 April 2009. Wytak is an associate of a substantial shareholder of the Company and hence is a connected person of the Company within the meaning of the Listing Rules. Pursuant to the New Tenancy Agreements, the aggregate annual rent payable by the Group to Wytak during the first two years of the respective term amounts to approximately HK$3.5 million. On this basis, the cap amounts of rent payable by the Group to Wytak under the New Tenancy Agreements are HK$2,354,660, HK$3,502,800, HK$3,738,270 and HK$1,262,960 for the period from 29 April 2006 to 31 December 2006, for the years ending 31 December 2007 and 2008 and for the period from 1 January 2009 to 28 April 2009 respectively.

– 70 – APPENDIX I INFORMATION ON THE GROUP

The transactions under the New Tenancy Agreements are subject to the reporting and announcement requirements under Listing Rules 14A.45 to 14A.47 but do not require approval by independent shareholders of the Company as the aggregate rent under the New Tenancy Agreements, on an annual basis, is more than 2.5% but less than 25% for the relevant percentage ratios (except the profits ratio) under Listing Rule 14.07 and the annual consideration is less than HK$10 million.

(c) On 5 August 2005, Panyu Hop Hing entered into a sales agreement (the “Sales Agreement”) with Shenzhen You Rong Retail Co. Ltd. (“Shenzhen You Rong”) for the sale of various edible oil products manufactured by the Group to Shenzhen You Rong. The maximum aggregate annual value of sales by Panyu Hop Hing to Shenzhen You Rong under the Sales Agreement for each of the three financial years ended 31 December 2007 is estimated to be RMB9,500,000 (equivalent to approximately HK$9,048,000 at the exchange rate of HK$1.00 = RMB1.05 on the date of the Sales Agreement), which represents the target sale agreed between Panyu Hop Hing and Shenzhen You Rong.

Subsequent to the expiry of the Sales Agreement and on 6 February 2008, Panyu Hop Hing entered into a new sales agreement with Shenzhen You Rong with similar terms and conditions of the Sales Agreement. The maximum aggregate annual value of sales by Panyu Hop Hing to Shenzhen You Rong under the new sales agreement for each of the three financial years ending 31 December 2010 is estimated to be RMB9,000,000 (equivalent to approximately HK$9,600,000 at the exchange rate of HK$1.00 = RMB0.94).

The transactions contemplated under the Sales Agreement (the “Transactions”) constitute continuing connected transactions of the Company for the purposes of the Listing Rules. As certain percentage ratios (as defined in Rule 14.07 of the Listings Rules) in respect of Transactions are more than 2.5% but less than 25%, and the total annual income received under the Transaction is less than HK$10 million, the Transactions are subject to the reporting and announcement requirements under Rules 14A.45 to 14A.47 of the Listing Rules but are exempt from the independent shareholder’s approval requirements.

(d) On 30 August 2006, HHOH, an indirect wholly-owned subsidiary of the Company, entered into a sale and purchase agreement (the “Share Purchase Agreement II”) with Hung’s Investments Limited (“HIL”). Pursuant to the Share Purchase Agreement II, HIL acquired and HHOH disposed of 12,896 ordinary shares of HK$1.00 each in the issued share capital of AMHK, a former indirect wholly-owned subsidiary of HHOH, and all shareholders’ loans owed by AMHK to HHOH and outstanding at the completion of the Share Purchase Agreement II for an aggregate consideration of approximately HK$2.6 million.

– 71 – APPENDIX I INFORMATION ON THE GROUP

HIL is a connected person of the Group under the Listing Rules in that the entire issued share capital of HIL is held by a trustee of a discretionary trust whose discretionary beneficiaries include associates of Mr. Hung Hak Hip, Peter, the non-executive Chairman of the Company. As the Share Purchase Agreement II was entered into on normal commercial terms and each of the applicable percentage ratios (other than the profits ratio) as defined under Rule 14.07 of the Listing Rules is less than 2.5%, pursuant to Rule 14A.32 of the Listing Rules, the Share Purchase Agreement II was only subject to the reporting and announcement requirements set out in Rules 14A.45 to 14A.47 of the Listing Rules and was exempt from the Company’s independent shareholders’ approval requirements.

(e) On 17 July 2007, Knight Investment Limited (“KIL”), an indirect wholly-owned subsidiary of the Company, entered into an agreement for sale and purchase (the “S&P Agreement”) with Wytak. Pursuant to the S&P Agreement, Wytak acquired and KIL disposed of a property known as Portion A1 of Front Portion of Factory A on the Upper Ground Floor of Hop Hing Industrial Building, No. 704 Castle Peak Road, Kowloon, Hong Kong for a consideration of HK$2.7 million.

Wytak is a connected person of the Company for the reasons below. GZTC, which is a substantial shareholder of the Company, is a holder of the units of a unit trust, the trustee of which indirectly controls over 30% of the voting power at general meetings of Wytak, therefore Wytak is an associate of GZTC and hence a connected person of the Company. Accordingly, the above transaction was a connected transaction of the Company under the Listing Rules.

Each of the relevant percentage ratios (as defined in Rule 14.07 of the Listing Rules) for the transaction was less than 2.5%. Pursuant to Rule 14A.32 of the Listing Rules, the S&P Agreement would only be subject to the reporting and announcement requirements under Rules 14A.45 to 14A.47 but would be exempt from the independent shareholders’ approval requirements under the Listing Rules.

The transactions listed out above were connected transactions and continuing connected transactions of the Group that were subject to the reporting and announcement requirements under Rules 14A.45 to 14A.47 but would be exempt from the independent shareholder’s approval requirements under the Listing Rules. The Company has complied with the relevant Listing Rules to fulfill the announcement, reporting and/or independent shareholders’ approval requirements for the aforesaid transactions. Save as disclosed above, the Group has not entered into any transactions that are subject to the reporting and announcement requirements under the Listing Rules with its connected persons during the Track Record Period and up to the Latest Practicable Date.

– 72 – APPENDIX I INFORMATION ON THE GROUP

11. ARRANGEMENT OF EDIBLE OIL BUSINESS WITH EVERGREEN IN HONG KONG AND MACAU

Evergreen, a jointly-controlled entity whose interests are held as to 50% by an indirectly wholly-owned subsidiary of the Company and 50% by an independent third party, is principally engaged in the business of warehousing, marketing and selling edible oil in Hong Kong and A1a(28)(8) Macau. Evergreen sells edible oil with individual packing of 150 kilograms or less manufactured A1a(29)(2) by her parents, as well as edible fats and shortenings (in either case for human consumption) (the “Products”). Pursuant to the Supply Agreement, the Manufacturing Subsidiary manufactures and supply edible oil products to Evergreen.

The trademarks for the Products being sold by Evergreen are owned either by Evergreen herself or by companies of her parents who have granted licences in favour of Evergreen at royalties which are based on the sales achieved by Evergreen.

12. PRODUCTION FACILITIES

As at the Latest Practicable Date, the Group’s products were primarily manufactured in two production bases located in Yuen Long, New Territories, Hong Kong (the “HK Production Facilities”), and Nansha, Guangzhou, the PRC (the “Panyu Production Facilities”). The production premises in Yuen Long, New Territories, Hong Kong are leased from Wytak and the production premises in Nansha, Guangzhou, the PRC is owned by the Group.

HK Production Facilities A1a(28)(4)

The HK Production Facilities are situated at 9 Ping Tong Street East, Tong Yan San Tsuen, Yuen Long, New Territories, Hong Kong and are housed in one block of industrial building with an aggregate gross floor area of approximately 1,758 sq.m. for refining, of approximately 904 sq.m. for blending and bottling and of approximately 2,400 sq.m. for the warehouse of packaging materials and finished goods. Apart from the industrial building, the HK Production Facilities also comprises of tank farm and product tanks located outside of the building with an aggregate gross floor area of approximately 1,300 sq.m. and crude oil and refined oil storage capacity of approximately 5,000 metre tones. This factory is principally engaged in extraction, refining, blending, bottling, packaging and warehousing of edible oils for the Group. As at 31 December 2006, this factory had a daily refining capacity of approximately 100 metre tones. Operation of this factory commenced since 1990 and the utilization rate of this factory remained steady at approximately 80% for each of the three years ended 31 December 2006.

As at 31 December 2006, the number of staff working for this factory was approximately 100.

– 73 – APPENDIX I INFORMATION ON THE GROUP

Panyu Production Facilities A1a(28)(5)

The Panyu Production Facilities are situated at 18 Hop Hing Road, Hengli, Nansha, Guangzhou, China. It comprises a bottling plant occupying an aggregate gross floor area of approximately 5,000 sq.m. and warehouses for the storage of packaged material and finished goods with an aggregate gross floor area of approximately 10,000 sq.m. Apart from the bottling plant and the warehouse, the production premises also comprises of tank farm located outside of the bottling plant with an aggregate gross floor area of approximately 4,500 sq.m. and crude oil and refined oil storage capacity of approximately 32,000 metre tones. This factory is principally engaged in extraction, refining, blending, bottling, packaging and warehousing of edible oils for the Group. As at 31 December 2006, this factory had a daily refining capacity of approximately 400 metre tones. Operation of this factory commenced since 1997 and the utilization rate of this factory remained steady at approximately 25% for each of the three year ended 31 December 2006.

As at 31 December 2006, the number of staff working for this factory was approximately 130.

In addition to the production facilities mentioned above, certain of the Group’s products were manufactured in the production base located in Pinghu, Zhejiang Province, the PRC.

13. RESEARCH AND DEVELOPMENT

The Directors consider that research and development is important in maintaining their competitive edge and enhancing the growth of the Group’s business and have set up a research and development team which comprises of three members for conducting basic research, applied research and experimental development. These activities consist of experimential or theoretical work undertaken primarily to acquire knowledge, which will be directed to producing innovative materials, products or new processes and technologies that distinguish the Group from its competitors and satisfy its customers’ needs. The Group contributed HK$50,000, HK$80,000, HK$140,000, HK$190,000 and HK$200,000 on research and development activities in the five financial years ended 31 December 2006. The Group will also continue to collaborate with the Hong Kong University of Science and Technology and the Hong Kong Polytechnic University on projects that help to seek manufacturing solutions and hence reduce production costs and enhance its competitiveness.

14. INTELLECTUAL PROPERTY RIGHTS

As at the Latest Practicable Date, the Group owned a number of registered trademarks, designs and domain names and submitted registration applications for certain trademarks, designs and domains names. The details of all the major trademarks, designs and domains names are set out in the paragraph headed “Intellectual property rights” in Appendix IX to this document. All the registration applications of the Group’s trademarks, designs and domain names are under normal application process and the Directors consider that there should not be any material legal impediments in relation to those applications. The Directors consider it is important to protect the Group against infringement of its trademarks, designs and domains names; if necessary, the Group will take appropriate legal actions to defend its trademarks, designs and domain names. As at the Latest Practicable Date, the Group did not have any outstanding third-party intellectual property infringement claims. Other than its trademarks, designs and domain names, the Group has no other intellectual property rights which are material to the Group.

– 74 – APPENDIX II INFORMATION ON NEWCO

1. INTRODUCTION

Newco was incorporated in the Cayman Islands on 1 August 2007 as a company with A1a(5) limited liability under the Companies Law. As at the Latest Practicable Date, Newco was a R8.02 wholly-owned subsidiary of the Company. Newco has established a place of business in Hong R19.05(1)(b) Kong at Units E & F, 2/F, Hop Hing Building, 9 Ping Tong Street East, Tong Yan San Tsuen, Yuen R19.05(2)(a) Long, New Territories, Hong Kong and has been registered in Hong Kong as a non-Hong Kong R11.07 company under Part XI of the Companies Ordinance. In compliance with the requirements of the S. 342(1), CO Companies Ordinance, Mr. Hung Hak Hip, Peter and Mr. Wong Kwok Ying have been appointed as the authorised representatives of Newco for the acceptance of service of process and any notice required to be served on Newco in Hong Kong. As Newco is incorporated in the Cayman Islands, it operates subject to the laws of the Cayman Islands and to its constitution, which comprise the R8.04 memorandum and articles of association. It has not carried on any business since the date of its incorporation. Upon the implementation of the Scheme, Newco will become the holding company of the Newco Group, which will continue to carry on its present business activities, and the principal activity of Newco will be investment holding.

2. DIRECTORS, COMPANY SECRETARY, QUALIFIED ACCOUNTANT AND SENIOR R8.15 EXECUTIVES R11.07

The particulars of the directors and senior executives of Newco are set out in the section headed “Directors and senior executives of the Company and Newco” above.

Brief particulars of each of the directors and senior executives of Newco are set out below:

(a) Independent non-executive directors

Dr. The Hon Wong Yu Hong, Philip, GBS, JD, Ph D, aged 69, appointed a director of the Group in 1989, is a prominent businessman who serves on the board of a number of public organisations, including member of the Legislative Council for Hong Kong, Life Honorary Chairman of the Chinese General Chamber of Commerce and board member of the Hong Kong Trade Development Council. Dr. Wong received the Gold Bauhinia Star Award from the Hong Kong Government in 2003. He received the Courvoisier Awards for Business Excellency from the then Chief Justice of Hong Kong, Sir Denys Roberts, in 1986.

Sze Tsai To, Robert, aged 67, appointed a director of the Group on 1 June 2000. Mr. Sze is a fellow of the Institute of Chartered Accountants in England and Wales and the Hong Kong Institute of Certified Public Accountants and was a partner in an international firm of accountants with which he practised for over 20 years. He is also a non-executive director of a number of Hong Kong listed companies.

– 75 – APPENDIX II INFORMATION ON NEWCO

Cheung Wing Yui, aged 58, appointed a director of the Group in 1989, is a consultant of Woo, Kwan, Lee & Lo, solicitors. Mr. Cheung is also a qualified solicitor in England and Singapore and a member of CPA Australia.

Seto Gin Chung, John, aged 59, appointed a director of the Group on 25 April 2006, is a director of Pacific Eagle Asset Management Limited since January 2006. He is an independent non-executive director of China Everbright Limited and Kowloon Development Company Limited. He was the Chief Executive Officer of HSBC Broking Services (Asia) Limited from 1982 to 2001. He was the chairman and a non-executive director of International Financial Network Holdings Limited from 2001 to 2005. He was a non-executive director of Hong Kong Exchanges and Clearing Limited from 2000 to 2003, a council member of The Stock Exchange of Hong Kong Limited (the ”Stock Exchange”) from 1994 to 2000 and was the first vice chairman of the Stock Exchange from 1997 to 2000. He holds a Master of Business Administration degree from New York University, USA and has over 30 years of experience in the securities and futures industry.

Hon Shek Lai Him, Abraham, J.P., aged 62, appointed a director of the Group on 1 January 2007. Mr. Shek graduated from the University of Sydney, Australia with a Bachelor of Arts. Mr. Shek is a member of the Legislative Council for the Hong Kong SAR representing real estate and construction functional constituency since 2000. Currently, Mr. Shek is a member of the Council of The Hong Kong University of Science & Technology and member of the Court of The University of Hong Kong. He is also a member of the Managing Board of Kowloon-Canton Railway Corporation and a director of The Hong Kong Mortgage Corporation Limited. Mr. Shek was appointed as a Justice of the Peace in 1995. Mr. Shek is an independent non-executive director of a number of Hong Kong listed companies.

(b) Non-executive directors

Hung Hak Hip, Peter, aged 63, Chairman, is a chartered accountant and worked in A1a(41) the Hong Kong securities industry before joining the Group in 1975. Mr. Hung is a brother Para. 6, of Ms. Hung Chiu Yee, a non-executive director of the Group. Certain associates of Mr. 3rd Sch., CO Hung are discretionary beneficiaries of a discretionary trust which beneficially owns securities in the Company.

Hung Chiu Yee, aged 67, appointed a director of the Group in 1988, holds a Bachelor of Science degree and was a former senior executive of the Group. She has business interests in cosmetics and trading. Ms. Hung is a sister of Mr. Hung Hak Hip, Peter.

Lee Pak Wing, aged 62, holds a Master of Science degree in production technology. He joined the Group in 1979 prior to which he was a systems manager with Tyco Industries Limited. He was formerly the Vice-chairman of the Group.

– 76 – APPENDIX II INFORMATION ON NEWCO

(c) Executive directors

Wong Kwok Ying, aged 48, is the Chief Financial Officer and Company Secretary of R8.17(2) the Group and was appointed a director of the Group on 10 January 2000. Mr. Wong is a certified public accountant (practising) in Hong Kong and a fellow member of the Hong Kong Institute of Certified Public Accountants. He has over 25 years’ finance, accounting and audit experience. Prior to joining the Group in 1990, he worked with one of the international accounting firms in Hong Kong.

Lam Fung Ming, Tammy, aged 44, is the Chief Operating Officer of the Group and is responsible for the Group’s sales activities, manufacturing, quality assurance and product development. She holds a Bachelor of Science degree in Food Science and Technology and a Higher Diploma in Chemical Technology from the Hong Kong Polytechnic University. She has over 15 years’ experience in the oil and food industry. She joined the Group in 1990 and was appointed a director on 1 November 2004.

(d) Senior executives

Lian Bai Xiang, aged 59, is the General Manager for the Group’s PRC operations. He obtained a Diploma in Industrial Enterprise Management from the Shanghai University of Textile in 1987. He has held various managerial positions with PRC entities for over 20 years. He is also the general manager of a Sino-foreign equity joint venture of the Group. Mr. Lian joined the Group in 1993.

Wan Kam Shing, aged 59, is the project manager of the Group. He has managerial experience in cold storage, food service sales and sales of fast moving consumer goods gained in Hong Kong and Mainland China. Mr. Wan joined the Group in 1997.

Tai Bik Yin, aged 46, is the company secretarial and human resources manager of the Group. She is an associate of the Hong Kong Institute of Chartered Secretaries and the Institute of Chartered Secretaries and Administrators in UK. She holds a bachelor of law degree from Peking University, a master of law degree in Chinese and Comparative Law from the City University of Hong Kong and a master of business administration degree from the Open University of Hong Kong. Ms. Tai joined the Group in 2005.

None of the Directors has any existing or proposed service contracts with Newco or any of A1a(46)(1) its subsidiaries other than contracts expiring or determinable by the Newco Group within one (1) year without payment of compensation (other than statutory compensation).

The aggregate amount of remuneration of the Directors paid for the year ended 31 December A1a(46)(2) 2006 was approximately HK$4.6 million. Details of which can be found in note 8 to the Accounts as extracted from the Group’s 2006 annual report set out in Appendix III to this document.

– 77 – APPENDIX II INFORMATION ON NEWCO

Under the arrangement currently in force, the estimated aggregate amount of remuneration A1a(46)(3) of the Directors payable for the year ending 31 December 2007 will be approximately HK$4.7 million, excluding discretionary bonuses which are payable at the Newco Group’s discretion.

3. AUDIT COMMITTEE

The Company has set up an audit committee which comprises 3 independent non-executive Directors, Mr. Sze Tsai To, Robert, Mr. Cheung Wing Yui and Mr. Seto Gin Chung, John, and a non-executive Director, Mr. Hung Hak Hip, Peter, with terms of reference prepared based on the Code on Corporate Governance Practices of the Listing Rules. The chairman of the audit committee was appointed by the Board and must be an independent non-executive Director. The principal duties of the audit committee are to review and supervise the Newco Group’s financial reporting process and internal control system and maintain an appropriate relationship with the Company’s auditors.

Upon implementation of the Scheme, Newco will set up an audit committee comprising the same members and with the same terms of reference as the existing audit committee of the Company.

4. SHARE CAPITAL

Upon implementation of the Scheme, the authorised and issued share capital of Newco will A1a(15)(2)(c) be as follows: A1a(23(1) Para. 2, Authorised: HK$’000 3rd Sch., CO

800,000,000 Newco Shares 80,000

Issued and fully paid:

435,875,692 Newco Shares 43,588 A1a(15)(1)

All Newco Shares presently in issue and to be issued will be fully paid or credited as fully A1a(25)(1) paid and rank pari passu in all respects with each other, including as to dividends, voting rights R19.10(5)(b) and return of capital or other distributions that may be declared, paid or made.

As at the Latest Practicable Date, no Options had been granted under the Newco Share Option Scheme and no securities convertible into Newco Shares had been issued. A1a(10)

5. ESTATE DUTY

No adverse material liability for estate duty within the meaning of the Estate Duty Ordinance (Chapter 111 of the Laws of Hong Kong) would be likely to fall upon any member of the Newco Group in relation to the implementation of the Scheme.

– 78 – APPENDIX II INFORMATION ON NEWCO

6. SHAREHOLDING STRUCTURE R8.08(1)(a)

Set out below is the shareholding structure of Newco on the Effective Date, assuming that no Warrants had been exercised and no new Shares had been issued prior to the Record Time:

Number of Newco Shares held Shareholders Notes on the Effective Date %

Hung’s (i),(iii),(iv) 117,136,083 26.9 HHO (ii),(iii),(iv) 155,392,698 35.7

Directors: Hung Hak Hip, Peter (v) 7,161,672 1.6 Wong Yu Hong, Philip 2,045,565 0.5 Sze Tsai To, Robert 2,045,565 0.5 Cheung Wing Yui 2,443,565 0.6 Seto Gin Chung, John 417,373 0.1 Hung Chiu Yee 2,460,238 0.5 Lee Pak Wing 2,376,052 0.5

Public Newco Shareholders: Hap Seng Consolidated Berhad (“HSCB”) (vi),(vii) 21,335,277 4.9 Sallisaw (2003) Limited 2,848,134 0.6 Suen Kuen Kuen 800,000 0.2 Other public Newco Shareholders 119,413,470 27.4

435,875,692 100.0

Notes:

(i) Hung’s is the registered holder of the shares disclosed above.

(ii) HHO is the registered holder of the shares disclosed above.

(iii) GZ Trust Corporation (“GZTC”) is the registered holder of the units of certain unit trusts, of which Hung’s and HHO are trustees. By virtue of the SFO, GZTC is deemed to be interested in the shares held by Hung’s and HHO.

(iv) Mr. Hung Cheung Pui is the founder of two discretionary trusts, of which GZTC is the trustee. By virtue of the SFO, Mr. Hung Cheung Pui is deemed to be interested in the disclosed interest of GZTC mentioned in note (iii).

– 79 – APPENDIX II INFORMATION ON NEWCO

(v) By virtue of the SFO, Mr. Hung Hak Hip, Peter is deemed to be interested in the shares held through his spouse and controlled corporation and the shares which were beneficially owned by a discretionary trust whose discretionary beneficiaries include certain associates of Mr. Hung Hak Hip, Peter.

(vi) HSCB is held as to 57.18% by Gek Poh (Holdings) Sdn. Bdh (“GPHSB”). By virtue of the SFO, GPHSB is deemed to be interested in the disclosed interest of HSCB mentioned above.

(vii) Datuk Seri Panglima Lau Cho Kun (“DSPL”) holds 56% interest in GPHSB. By virtue of the SFO, DSPL is deemed to be interested in the disclosed interest of GPHSB mentioned above.

7. WORKING CAPITAL

Assuming the Scheme had become effective, after taking into account the banking facilities available to the Newco Group and the internal resources of the Newco Group, the Directors are of the view that the Newco Group has sufficient working capital for its present requirements and for the period ending 12 months from the date of this document.

8. GENERAL MANDATES

The Company, in its capacity as the sole legal and beneficial owner of Newco, has granted to the directors of Newco the general and unconditional mandates, subject to and conditional upon the Scheme becoming effective:

(i) to allot and issue new securities in Newco up to a maximum of 20% of the aggregate nominal amount of the share capital of Newco in issue immediately following the completion of the allotment and issue to the Scheme Shareholders of Newco Shares as contemplated by and pursuant to the Scheme;

(ii) to repurchase securities in Newco up to a maximum of 10% of the aggregate nominal amount of the share capital of Newco in issue immediately following the completion of the allotment and issue to the Scheme Shareholders of Newco Shares as contemplated by and pursuant to the Scheme; and

(iii) to allot and issue any further Newco Shares repurchased pursuant to the repurchase mandate referred to in (ii) above.

Details of the Repurchase Mandate are set out in Appendix VIII to this document.

– 80 – APPENDIX III FINANCIAL INFORMATION OF THE GROUP

I. SUMMARY OF FINANCIAL RESULTS FOR THE THREE YEARS ENDED Para. 31, 31 DECEMBER 2006 AND SIX MONTHS ENDED 30 JUNE 2007 3rd Sch., CO

The following is a summary of the consolidated income statement of the Group (including the jointly-controlled entities) principally extracted from the Group’s 2006 annual report and the Group’s 2007 interim report.

CONSOLIDATED INCOME STATEMENT

Six months ended Year ended 31 December 30 June 2004 2005 2006 2007 HK$’000 HK$’000 HK$’000 HK$’000 (Audited) (Audited) (Audited) (Unaudited) Restated (Note 1)

Sale of goods and services 686,464 669,218 667,045 365,397 Royalties 5,391 5,305 5,086 2,608 Rental and other income 7,819 2,902 661 301

Turnover 699,674 677,425 672,792 368,306 Para. 27, 3rd Sch., CO

Profit from operating activities 4,566 3,002 12,879 6,771 Finance costs, net (14,921) (10,910) (9,407) (5,209)

Profit/(loss) before tax (10,355) (7,908) 3,472 1,562 Tax (1,405) (2,077) (9,895) (1,333)

Profit/(loss) for the period (11,760) (9,985) (6,423) 229

Attributable to equity holders of the Company (11,952) (9,730) (6,764) 449 Minority interests 192 (255) 341 (220)

(11,760) (9,985) (6,423) 229

Note 1: The financial figures are restated to confirm with the presentations of 2006.

– 81 – APPENDIX III FINANCIAL INFORMATION OF THE GROUP

CONSOLIDATED BALANCE SHEET

Six months ended Year ended 31 December 30 June 2004 2005 2006 2007 HK$’000 HK$’000 HK$’000 HK$’000 (Audited) (Audited) (Audited) (Unaudited) Restated (Note 1)

ASSETS Property, plant and equipment 376,175 290,575 275,124 268,628 Investment property 58,400 ––– Prepaid land lease payments 16,029 15,802 26,302 26,500 Trademarks 122,659 122,944 123,423 123,688 Interests in associates (1,425) (1,425) (1,425) (1,425) Deferred tax assets 10,763 6,271 5,047 5,047 Current assets 246,066 226,830 248,881 250,006

TOTAL ASSETS 828,667 660,997 677,352 672,444

LIABILITIES Current liabilities 174,101 228,804 159,052 249,015 Long-term portion of bank loans 222,958 8,000 98,000 – Deferred tax liabilities 10,075 4,983 3,702 3,665

TOTAL LIABILITIES 407,134 241,787 260,754 252,680

NET ASSETS 421,533 419,210 416,598 419,764

No dividend has been paid or declared by the Company for each of the three years ended 31 December 2006.

No qualified opinion has been issued by the Company’s auditors for the three years ended 31 December 2006.

Note 1: The financial figures are restated to confirm with the presentations of 2006.

– 82 – APPENDIX III FINANCIAL INFORMATION OF THE GROUP

II. AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR A1a(53)(5) THE YEAR ENDED 31 DECEMBER 2006

The following is the audited financial statements of the Group (including the jointly-controlled entities) for the year ended 31 December 2006, together with the comparative figures for the year ended 31 December 2005 and the accompanying notes to the audited financial statements of the Group (including the jointly-controlled entities) for the year ended 31 December 2006 as extracted from the annual report of the Group for the year ended 31 December 2006.

CONSOLIDATED INCOME STATEMENT Year ended 31 December 2006

2006 2005 Notes HK$’000 HK$’000

TURNOVER 5 672,792 677,425 Direct cost of stocks sold and services provided (490,148) (503,258) Other production and service costs (including depreciation and amortisation of HK$22,381,000 (2005: HK$22,952,000)) (62,226) (63,081) Selling and distribution costs (71,094) (70,535) General and administrative expenses (36,445) (37,549)

PROFIT FROM OPERATING ACTIVITIES 6 12,879 3,002 Finance costs, net 7 (9,407) (10,910)

PROFIT/(LOSS) BEFORE TAX 3,472 (7,908) Tax 10 (9,895) (2,077)

LOSS FOR THE YEAR (6,423) (9,985)

ATTRIBUTABLE TO: Equity holders of the Company 11 (6,764) (9,730) Minority interests 341 (255)

(6,423) (9,985)

LOSS PER SHARE (HK cents) 12 Basic (1.62) (2.36)

Diluted N/A N/A

– 83 – APPENDIX III FINANCIAL INFORMATION OF THE GROUP

CONSOLIDATED BALANCE SHEET 31 December 2006

2006 2005 Notes HK$’000 HK$’000

ASSETS

Non-current assets Property, plant and equipment 13 275,124 290,575 Prepaid land lease payments 14 26,302 15,802 Trademarks 15 123,423 122,944 Interests in associates 17 (1,425) (1,425) Deferred tax assets 25 5,047 6,271

Total non-current assets 428,471 434,167

Current assets Stock 19 101,856 83,415 Accounts receivable 20 83,196 81,226 Prepayments, deposits and other receivables 37,050 36,411 Pledged bank deposits 21 6,529 1,226 Cash and cash equivalents 20,250 24,552

Total current assets 248,881 226,830

Total assets 677,352 660,997

EQUITY AND LIABILITIES Equity attributable to equity holders of the Company Issued share capital 26 41,943 41,709 Reserves 28(a) 362,267 365,808

404,210 407,517 Minority interests 12,388 11,693

Total equity 416,598 419,210

Non-current liabilities Interest-bearing bank loans 24 98,000 8,000 Deferred tax liabilities 25 3,702 4,983

Total non-current liabilities 101,702 12,983

– 84 – APPENDIX III FINANCIAL INFORMATION OF THE GROUP

2006 2005 Notes HK$’000 HK$’000

Current liabilities Accounts payable 22 34,431 40,020 Bills payable 23 21,765 4,099 Other payables and accrued charges 42,098 35,032 Interest-bearing bank loans 24 50,849 148,463 Tax payable 9,909 1,190

Total current liabilities 159,052 228,804

Total liabilities 260,754 241,787

Total equity and liabilities 677,352 660,997

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY Year ended 31 December 2006

Attributable to equity holders of the Company Other Issued Share Share Exchange properties Capital share premium option fluctuation revaluation and other Accumulated Minority Total capital account reserve reserve reserve reserves losses Total interests equity HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000

At 1 January 2005 40,925 374,079 ––16,892 58,759 (81,070 ) 409,585 11,948 421,533 Deferred tax reversed upon disposal (note 25) ––––3,019 ––3,019 – 3,019 Transfer upon disposal ––––(17,252 ) – 17,252 ––– Exchange realignment –––2,842 –––2,842 – 2,842 Loss for the year ––––––(9,730 ) (9,730 ) (255 ) (9,985 )

Total income and expenses for the year –––2,842 (14,233 ) – 7,522 (3,869 ) (255 ) (4,124 ) Issue of shares (note 26) 784 1,035 –––––1,819 – 1,819 Share issue expenses (note 26) – (240 ) –––––(240 ) – (240 ) Equity-settled share option expenses (note 27) ––222 ––––222 – 222

At 31 December 2005 and 1 January 2006 41,709 374,874 222 2,842 2,659 58,759 (73,548 ) 407,517 11,693 419,210 Exchange realignment –––2,863 –––2,863 354 3,217 Profit/(loss) for the year ––––––(6,764 ) (6,764 ) 341 (6,423 )

Total income and expenses for the year –––2,863 ––(6,764 ) (3,901 ) 695 (3,206 ) Issue of shares (note 26) 234 216 –––––450 – 450 Equity-settled share option expenses (note 27) ––144 ––––144 – 144

At 31 December 2006 41,943 375,090 366 5,705 2,659 58,759 (80,312 ) 404,210 12,388 416,598

– 85 – APPENDIX III FINANCIAL INFORMATION OF THE GROUP

CONSOLIDATED CASH FLOW STATEMENT Year ended 31 December 2006

2006 2005 Notes HK$’000 HK$’000

CASH FLOWS FROM OPERATING ACTIVITIES Profit/(loss) before tax 3,472 (7,908) Adjustments for: Interest income 7 (335) (233) Para. 42, Interest expenses 7 9,742 11,143 3rd Sch., CO Depreciation 6 21,882 22,548 Amortisation of prepaid land lease payments 6 499 404 Loss on disposal of items of property, plant and equipment, net 6 906 110 Gain on disposal of subsidiaries 6 (2,520) (452) Equity-settled share option expenses 6, 27 144 222

Operating profit before working capital changes 33,790 25,834 Decrease/(increase) in stock (18,441) 11,733 Increase in accounts receivable (1,970) (9,674) Decrease/(increase) in prepayments, deposits and other receivables 30 (8,389) 23 Decrease in accounts payable (5,589) (7,358) Increase/(decrease) in bills payable 17,666 (7,364) Increase/(decrease) in other payables and accrued charges 7,066 (4,427)

Cash generated from operations 24,133 8,767 Interest received 335 233 Hong Kong profits tax paid (1,081) (3,312) Overseas tax paid (152) (189)

Net cash inflow from operating activities 23,235 5,499

CASH FLOWS FROM INVESTING ACTIVITIES Purchases of items of property, plant and equipment (1,586) (2,399) Increase in prepaid land lease payments (1,331) – Proceeds from disposal of items of property, plant and equipment 2,469 1,370 Disposal of subsidiaries 29 3,015 4,700 Increase in trademarks (479) (285)

Net cash inflow from investing activities 2,088 3,386

– 86 – APPENDIX III FINANCIAL INFORMATION OF THE GROUP

2006 2005 Notes HK$’000 HK$’000

CASH FLOWS FROM FINANCING ACTIVITIES Interest paid 7 (9,742) (11,143) New bank loans – 32,203 Net repayment of bank loans (15,030) (47,977) Decrease/(increase) in pledged bank deposits (5,303) 4,718 Issue of shares, including share premium 450 1,819 Share issue expenses – (240)

Net cash outflow from financing activities (29,625) (20,620)

NET DECREASE IN CASH AND CASH EQUIVALENTS (4,302) (11,735) Cash and cash equivalents at 1 January 24,552 36,287

CASH AND CASH EQUIVALENTS AT 31 DECEMBER 20,250 24,552

ANALYSIS OF BALANCES OF CASH AND CASH EQUIVALENTS Cash and bank balances 20,250 24,552

– 87 – APPENDIX III FINANCIAL INFORMATION OF THE GROUP

BALANCE SHEET 31 December 2006

2006 2005 Notes HK$’000 HK$’000

ASSETS

Non-current assets Interests in subsidiaries 16 406,608 406,661

Current assets Prepayments, deposits and other receivables 288 78 Cash and cash equivalents 128 155

Total current assets 416 233

Total assets 407,024 406,894

EQUITY AND LIABILITIES

Equity Issued share capital 26 41,943 41,709 Reserves 28(b) 363,966 363,770

405,909 405,479

Current liabilities Other payables and accrued charges 1,115 1,415

Total equity and liabilities 407,024 406,894

– 88 – APPENDIX III FINANCIAL INFORMATION OF THE GROUP

NOTES TO FINANCIAL STATEMENTS 31 December 2006

1. Corporate information

Hop Hing Holdings Limited is a limited liability company incorporated in Bermuda. The principal activity of the Company is investment holding. The subsidiaries of the Group are primarily engaged in the extraction, refining, blending, bottling, packaging and distribution of edible oils and ancillary activities.

2.1 Basis of preparation

These financial statements have been prepared in accordance with Hong Kong Financial Reporting Standards (“HKFRSs”) (which also include Hong Kong Accounting Standards (“HKASs”) and Interpretations), issued by the Hong Kong Institute of Certified Public Accountants (“HKICPA”), accounting principles generally accepted in Hong Kong and the disclosure requirements of the Hong Kong Companies Ordinance. They have been prepared under the historical cost convention, except for certain land and buildings which were carried at 1993 valuation. These financial statements are presented in Hong Kong dollars (“HK$”) and all values are rounded to the nearest thousand except when otherwise indicated.

Basis of consolidation

The consolidated financial statements include the financial statements of the Company and its subsidiaries and the Group’s share of the financial statements of the Group’s jointly-controlled entities for the year ended 31 December 2006. The results of subsidiaries are consolidated from the date of acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases. All significant intercompany transactions and balances within the Group are eliminated on consolidation.

Minority interests represent the interests of outside shareholders in the results and net assets of the Company’s subsidiaries.

– 89 – APPENDIX III FINANCIAL INFORMATION OF THE GROUP

2.2 Impact of new and revised Hong Kong Financial Reporting Standards

The HKICPA has issued a number of new and revised HKFRSs that are effective for accounting periods commencing on or after 1 January 2006. The Group has adopted the following new and revised HKFRSs for the first time for the current year’s financial statements:

HKAS 21 Amendment Net Investment in a Foreign Operation HKAS 39 Amendment Cash Flow Hedge Accounting of Forecast Intragroup Transactions HKAS 39 Amendment The Fair Value Option HKAS 39 and HKFRS 4 Financial Guarantee Contracts Amendments HK(IFRIC)-Int 4 Determining whether an Arrangement contains a Lease

The principal changes in accounting policies are as follows:

(a) HKAS 21 – The Effects of Changes in Foreign Exchange Rates

Upon the adoption of HKAS 21 Amendment regarding a net investment in a foreign operation, all exchange differences arising from a monetary item that forms part of the Group’s net investment in a foreign operation are recognised in the exchange fluctuation reserve in the consolidated financial statements irrespective of the currency in which the monetary item is denominated. This change has had no material impact on these financial statements as at 31 December 2006 or 31 December 2005.

(b) HKAS 39 – Financial Instruments: Recognition and Measurement

(i) Amendment for cash flow hedge accounting of forecast intragroup transactions

This amendment has revised HKAS 39 to permit the foreign currency risk of a highly probable intragroup forecast transaction to qualify as a hedged item in a cash flow hedge, provided that the transaction is denominated in a currency other than the functional currency of the entity entering into that transaction and that the foreign currency risk will affect the consolidated income statement. As the Group currently has no such transactions, the amendment has had no effect on these financial statements.

– 90 – APPENDIX III FINANCIAL INFORMATION OF THE GROUP

(ii) Amendment for the fair value option

This amendment has changed the definition of a financial instrument classified as fair value through profit or loss and has restricted the use of the option to designate any financial asset or any financial liability to be measured at fair value through the income statement. The Group had not previously used this option, and hence the amendment has had no effect on the financial statements.

(iii) Amendment for financial guarantee contracts

In prior years, financial guarantees provided by the Company to various banks in connection with the bank loans and other banking facilities granted to a subsidiary and a jointly-controlled entity were disclosed as contingent liabilities. Upon the adoption of this amendment, the scope of HKAS 39 has been revised to require financial guarantee contracts issued that are not considered insurance contracts, to be recognised initially at fair value and to be remeasured at the higher of the amount determined in accordance with HKAS 37 Provisions, Contingent Liabilities and Contingent Assets and the amount initially recognised less, when appropriate, cumulative amortisation recognised in accordance with HKAS 18 Revenue. The adoption of this amendment has had no material impact on these financial statements.

(c) HK(IFRIC)-Int 4 – Determining whether an Arrangement contains a Lease

The Group has adopted this interpretation as of 1 January 2006, which provides guidance in determining whether arrangements contain a lease to which lease accounting must be applied. The Group had reassessed all the relevant arrangements and concluded that this interpretation has had no material impact on these financial statements.

– 91 – APPENDIX III FINANCIAL INFORMATION OF THE GROUP

2.3 Impact of issued but not yet effective Hong Kong Financial Reporting Standards

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

HKAS 1 Amendment Capital Disclosures1 HKFRS 7 Financial Instruments: Disclosures1 HKFRS 8 Operating Segments2 HK(IFRIC)-Int 7 Applying the Restatement Approach under HKAS 29 Financial Reporting in Hyperinflationary Economies3 HK(IFRIC)-Int 8 Scope of HKFRS 24 HK(IFRIC)-Int 9 Reassessment of Embedded Derivates5 HK(IFRIC)-Int 10 Interim Financial Reporting and Impairment6 HK(IFRIC)-Int 11 HKFRS 2 – Group and Treasury Share Transactions7 HK(IFRIC)-Int 12 Service Concession Arrangements8

1 Effective for annual periods beginning on or after 1 January 2007 2 Effective for annual periods beginning on or after 1 January 2009 3 Effective for annual periods beginning on or after 1 March 2006 4 Effective for annual periods beginning on or after 1 May 2006 5 Effective for annual periods beginning on or after 1 June 2006 6 Effective for annual periods beginning on or after 1 November 2006 7 Effective for annual periods beginning on or after 1 March 2007 8 Effective for annual periods beginning on or after 1 January 2008

HKAS 1 Amendment will affect the disclosures about qualitative information about the Group’s objective, policies and processes for managing capital; quantitative data about what the Company regards as capital; and compliance with any capital requirements and the consequences of any non-compliance.

HKFRS 7 requires disclosures that enable users of the financial statements to evaluate the significance of the Group’s financial instruments and the nature and extent of risk arising from those financial instruments and also incorporates many of the disclosure requirements of HKAS 32.

HKFRS 8 shall be applied for annual periods beginning on or after 1 January 2009. The standard requires the disclosure of information about the operating segments of the Group, the products and services provided by the segments, the geographical areas in which the Group operates, and revenues from the Group’s major customers. This standard will supersede HKAS 14 Segment Reporting.

The Group is in the process of making an assessment of the impact of these new and revised HKFRSs upon initial application. So far, it has concluded that while the adoption of HKAS 1 Amendment, HKFRS 7 and HKFRS 8 may result in new or amended disclosures, these new and revised HKFRSs should not have any significant impact on the Group’s results of operations and financial position.

– 92 – APPENDIX III FINANCIAL INFORMATION OF THE GROUP

2.4 Summary of significant accounting policies

Subsidiaries

A subsidiary is an entity whose financial and operating policies the Company controls, directly or indirectly, so as to obtain benefits from its activities.

The results of subsidiaries are included in the Company’s income statement to the extent of dividends received and receivable. The Company’s interests in subsidiaries are stated in the Company’s balance sheet at cost less any impairment losses. Details of the principal subsidiaries are set out in note 16 to the financial statements.

Joint ventures

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

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

A joint venture is treated as:

(a) a subsidiary, if the Group has unilateral control, directly or indirectly, over the joint venture;

(b) a jointly-controlled entity, if the Group does not have unilateral control, but has joint control, directly or indirectly, over the joint venture;

(c) an associate, if the Group does not have unilateral or joint control, but holds, directly or indirectly, generally not less than 20% of the joint venture’s registered capital and is in a position to exercise significant influence over the joint venture; or

(d) an entity investment accounted for in accordance with HKAS 39, if the Group holds, directly or indirectly, less than 20% of the joint venture’s registered capital and has neither joint control of, nor is in a position to exercise significant influence over, the joint venture.

– 93 – APPENDIX III FINANCIAL INFORMATION OF THE GROUP

Jointly-controlled entities

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

The Group’s interests in its jointly-controlled entities are accounted for by proportionate consolidation, which involves recognising its share of the jointly- controlled entities’ assets, liabilities, income and expenses with similar items in the consolidated financial statements on a line-by-line basis.

Associates

An associate is an entity, not being a subsidiary or a jointly-controlled entity, in which the Group has a long-term interest of generally not less than 20% of the equity voting rights and over which it is in a position to exercise significant influence.

The Group’s share of the post-acquisition results of associates is included in the consolidated income statement. The Group’s interests in the associates are stated in the consolidated balance sheet at the Group’s share of net assets under the equity method of accounting less any impairment losses.

Goodwill

Goodwill arising on acquisition of subsidiaries, associates and jointly-controlled entities is initially measured at cost, being the excess of the cost of the business combination over the acquirer’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities assumed as at the date of acquisition. Goodwill arising on the acquisition of subsidiaries is recognised in the consolidated balance sheet as an asset. In the case of associates, goodwill is included in the carrying amount thereof, rather than as a separately identified asset on the consolidated balance sheet.

Following initial recognition, goodwill is measured at cost less any accumulated impairment losses. Goodwill is reviewed for impairment annually or more frequently if events or changes in circumstances indicate that the carrying value may be impaired.

As at the acquisition date, any goodwill acquired is allocated to each of the cash-generating units expected to benefit from the synergy of the combination. Impairment is determined by assessing the recoverable amount of the cash-generating unit, to which the goodwill relates. Where the recoverable amount of the cash- generating unit is less than the carrying amount, an impairment loss is recognised.

– 94 – APPENDIX III FINANCIAL INFORMATION OF THE GROUP

Where goodwill forms part of a cash-generating unit and part of the operation within that unit are disposed of, the goodwill associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal of the operation. Goodwill disposed of in this circumstance is measured on the basis of the relative values of the operation disposed of and the portion of the cash-generating unit retained.

Goodwill previously eliminated against the consolidated reserves

Goodwill arising on acquisitions before 1 January 2001 was eliminated against the consolidated capital reserve in the year of acquisition. The Group applied the transitional provision of HKFRS 3 that permitted such goodwill to remain eliminated against the consolidated capital reserve and requires such goodwill not to be recognised in the consolidated income statement when the Group disposes of all or part of the business to which that goodwill relates or when a cash-generating unit to which the goodwill relates become impaired.

Impairment of non-financial assets other than goodwill

Where an indication of impairment exists, or when annual impairment testing for an asset is required (other than stock, deferred tax assets, financial assets and goodwill), the asset’s recoverable amount is estimated. An asset’s recoverable amount is calculated as the higher of the asset’s or cash-generating unit’s value in use and its fair value less costs to sell, and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets, in which case, the recoverable amount is determined for the cash- generating unit to which the asset belongs.

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

– 95 – APPENDIX III FINANCIAL INFORMATION OF THE GROUP

An assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. If such indication exists, the recoverable amount is estimated. A previously recognised impairment loss of an asset other than goodwill is reversed only if there has been a change in the estimates used to determine the recoverable amount of that asset, however not to an amount higher than the carrying amount that would have been determined (net of any depreciation/amortisation), had no impairment loss been recognised for the asset in prior years. A reversal of such impairment loss is credited to the income statement in the period in which it arises, unless the asset is carried at a revalued amount, in which case the reversal of the impairment loss is accounted for in accordance with the relevant accounting policy for that revalued asset.

Property, plant and equipment and depreciation

Property, plant and equipment are stated at cost or valuation less accumulated depreciation and any impairment losses. The cost of an item of property, plant and equipment is comprised of its purchase price and any directly attributable costs of bringing the asset to its working condition and location for its intended use. Expenditure incurred after items of property, plant and equipment have been put into operation, such as repairs and maintenance, is normally charged to the income statement in the period in which it is incurred. In situations where it can be clearly demonstrated that the expenditure has resulted in an increase in the future economic benefits expected to be obtained from the use of an item of property, plant and equipment, and where the cost of the item can be measured reliably, the expenditure is capitalised as an additional cost of that asset or as a replacement.

The transitional provision set out in paragraph 80A of HKAS 16 Property, plant and equipment issued by HKICPA has been adopted for certain properties which are stated at valuation. As a result, those assets stated at revalued amounts based on revaluations which were reflected in the financial statements for the year ended 31 December 1993 have not been revalued by class at 31 December 2006.

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

Leasehold land Over the remaining terms of the leases

Buildings 2% to 2.5% or over the terms of the leases, if shorter

Barges, vehicles, leasehold 5% to 20% improvements, machinery and equipment

– 96 – APPENDIX III FINANCIAL INFORMATION OF THE GROUP

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

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

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss on disposal or retirement recognised in the income statement in the year the asset is derecognised is the difference between the net sale proceeds and the carrying amount of the relevant asset. On disposal of a revalued asset, the relevant portion of the other properties revaluation reserve realised in respect of previous valuations is transferred to accumulated losses as a movement in reserves.

Trademarks

Trademarks with indefinite useful lives are stated at cost and are tested for impairment annually either individually or at the cash-generating unit level, and are not amortised. The useful life of a trademark with an indefinite life is reviewed annually to determine whether indefinite life assessment continues to be supportable. If not, the change in the useful life assessment from indefinite to finite is accounted for on a prospective basis.

Stock

Stock is stated at the lower of cost, on the weighted average method, and net realisable value. Cost is comprised of direct materials and the related purchase costs. In the case of finished goods and work in progress, cost also includes direct labour and an appropriate proportion of manufacturing overheads. Net realisable value is based on estimated selling prices less all costs to be incurred to completion and disposal.

Financial assets

When financial assets are recognised initially, they are measured at fair value plus directly attributable transaction costs. The Group determines the classification of its financial assets after initial recognition and, where allowed and appropriate, re- evaluates this designation at the balance sheet date.

– 97 – APPENDIX III FINANCIAL INFORMATION OF THE GROUP

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

Loans and receivables

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

Impairment of financial assets

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

Assets carried at amortised cost

If there is objective evidence that an impairment loss on loans and receivables carried at amortised cost has been incurred, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate (i.e. the effective interest rate computed at initial recognition). The carrying amount of the asset is reduced either directly or through the use of an allowance account. The amount of the impairment loss is recognised in the income statement.

The Group first assesses whether objective evidence of impairment exists individually for financial assets that are individually significant, and individually or collectively for financial assets that are not individually significant. If it is determined that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, the asset is included in a group of financial assets with similar credit risk characteristics and that group is collectively assessed for impairment. Assets that are individually assessed for impairment and for which an impairment loss is or continues to be recognised are not included in a collective assessment of impairment.

– 98 – APPENDIX III FINANCIAL INFORMATION OF THE GROUP

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

In relation to accounts receivable, a provision for impairment is made when there is objective evidence (such as the probability of insolvency or significant financial difficulties of the debtor) that the Group will not be able to collect all of the amounts due under the original terms of an invoice. The carrying amount of the receivables is reduced through the use of an allowance account. Impaired debts are derecognised when they are assessed as uncollectible.

Derecognition of financial assets

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

• the rights to receive cash flows from the asset have expired;

• the Group retains the rights to receive cash flows from the asset, but has assumed an obligation to pay them in full without material delay to a third party under a “pass-through” arrangement; or

• the Group has transferred its rights to receive cash flows from the asset and either (a) has transferred substantially all the risks and rewards of the asset, or (b) has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

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

– 99 – APPENDIX III FINANCIAL INFORMATION OF THE GROUP

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

Financial liabilities including accounts and other payables, and interest-bearing bank loans and borrowings are initially stated at fair value less directly attributable transaction costs and are subsequently measured at amortised cost, using the effective interest method unless the effect of discounting would be immaterial, in which case they are stated at cost.

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

Derecognition of financial liabilities

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

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

Income tax

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

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

Deferred tax is provided, using the liability method, on all temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

– 100 – APPENDIX III FINANCIAL INFORMATION OF THE GROUP

Deferred tax liabilities are recognised for all taxable temporary differences, except:

• where the deferred tax liability arises from goodwill or the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and

• in respect of taxable temporary differences associated with interests in subsidiaries, associates and joint ventures, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

Deferred tax assets are recognised for all deductible temporary differences, carryforward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carryforward of unused tax credits and unused tax losses can be utilised except:

• where the deferred tax asset relating to the deductible temporary differences arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and

• in respect of deductible temporary differences associated with interests in subsidiaries, associates and joint ventures, deferred tax assets are only recognised to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised.

The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Conversely, previously unrecognised deferred tax assets are reassessed at each balance sheet date and are recognised to the extent that it is probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised.

– 101 – APPENDIX III FINANCIAL INFORMATION OF THE GROUP

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the balance sheet date.

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

Foreign currencies

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

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

For the purpose of the consolidated cash flow statement, the cash flows of subsidiaries outside Hong Kong are translated into Hong Kong dollars at the exchange rates ruling at the dates of the cash flows. Frequently recurring cash flows of subsidiaries outside Hong Kong which arise throughout the year are translated into Hong Kong dollars at the weighted average exchange rates for the year.

– 102 – APPENDIX III FINANCIAL INFORMATION OF THE GROUP

Revenue recognition

Revenue is recognised when it is probable that the economic benefits will flow to the Group and when the revenue can be measured reliably, on the following bases:

(i) from the sale of goods, on delivery of the goods to the customers;

(ii) from provision of management, marketing, bottling and packaging services, in the period in which the services are rendered;

(iii) rental income, on the straight-line basis over the lease terms;

(iv) royalties, in the period in which the related products are sold; and

(v) interest income, on an accrual basis using the effective interest method by applying the rate that discounts the estimated future cash receipts through the expected life of the financial instrument to the net carrying amount of the financial asset.

Employee benefits

Share-based payment transactions

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

The cost of equity-settled transactions with employees is measured by reference to the fair value at the date at which they are granted. The fair value is determined using Black-Scholes option pricing model (the “Black-Scholes Model”), further details of which are given in note 27 to the financial statements. In valuing equity-settled transactions, no account is taken of any performance conditions, other than conditions linked to the price of the shares of the Company (“market conditions”), if applicable.

The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in which the performance and/or service conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the award (the “vesting date”). The cumulative expense recognised for equity-settled transactions at each balance sheet date until the vesting date reflects the extent to which the vesting period has expired and the Group’s best estimate of the number of equity instruments that will ultimately vest. The charge or credit to the income statement for a period represents the movement in the cumulative expense recognised as at the beginning and end of that period.

– 103 – APPENDIX III FINANCIAL INFORMATION OF THE GROUP

No expense is recognised for awards that do not ultimately vest, except for awards where vesting is conditional upon a market condition, which are treated as vesting irrespective of whether or not the market condition is satisfied, provided that all other performance conditions are satisfied.

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

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

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

The Group has adopted the transitional provisions of HKFRS 2 in respect of equity-settled awards and has applied HKFRS 2 only to equity-settled awards granted after 7 November 2002 that had not vested by 1 January 2005 and to those granted on or after 1 January 2005.

Paid leave carried forward

The Group provides paid annual leave to its employees under their employment contracts on a calendar year basis. Under certain circumstances, such leave which remains untaken as at the balance sheet date is permitted to be carried forward and utilised by the respective employees in the following year. An accrual is made at the balance sheet date for the expected future cost of such paid leave earned during the year by the employees and carried forward.

Employment Ordinance long service payments

Certain of the Group’s employees have completed the required number of years of service to the Group in order to be eligible for long service payments under the Hong Kong Employment Ordinance (the “Employment Ordinance”) in the event of the termination of their employment. The Group is liable to make such payments in the event that such a termination of employment meets the circumstances specified in the Employment Ordinance.

– 104 – APPENDIX III FINANCIAL INFORMATION OF THE GROUP

A contingent liability is disclosed in respect of possible future long service payments to employees, as a number of current employees have achieved the required number of years of service to the Group, to the balance sheet date, in order to be eligible for long service payments under the Employment Ordinance if their employment is terminated in the circumstances specified. A provision has not been recognised in respect of such future payments, as it is not considered probable that the situation will result in a material future outflow of resources from the Group.

Retirement benefits schemes

The Group operates defined contribution retirement benefits schemes, namely, the Mandatory Provident Fund Scheme (the “MPF Scheme”) and the scheme registered under the Occupational Retirement Scheme Ordinance which has been exempted under the MPF Schemes Ordinance (the “Exempted Scheme”) for those employees who are eligible to participate. Contributions are made based on a percentage of the employees’ salaries and are charged to the income statement as they become payable in accordance with the rules of the respective schemes. The assets of the respective schemes are held separately from those of the Group in independently administered funds. In accordance with the MPF Schemes Ordinance, when an employee leaves the Exempted Scheme prior to his/her interest in the employer contributions vesting fully, the ongoing contributions payable by the Group may be reduced by the relevant amount of forfeited contributions. For the MPF Scheme, the employer contributions vest fully with the employees when contributed into the MPF Scheme.

The employees of the Group’s subsidiaries which operate in Mainland China are required to participate in a central pension scheme operated by the local municipal government. These subsidiaries are required to contribute a certain percentage of its payroll costs to the central pension scheme. The contributions are charged to the income statement as they become payable in accordance with the rules of the central pension scheme.

Provisions

A provision is recognised when a present obligation (legal or constructive) has arisen as a result of a past event and it is probable that a future outflow of resources will be required to settle the obligation, provided that a reliable estimate can be made of the amount of the obligation.

When the effect of discounting is material, the amount recognised for a provision is the present value at the balance sheet date of the future expenditures expected to be required to settle the obligation. The increase in the discounted present value amount arising from the passage of time is included in finance costs in the income statement.

– 105 – APPENDIX III FINANCIAL INFORMATION OF THE GROUP

Operating leases

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

Prepaid land lease payments under operating leases are initially stated at cost and subsequently recognised on the straight-line basis over the lease terms. When the lease payment cannot be allocated reliably between the land and buildings elements, the entire lease payments are included in the cost of the land and buildings as a finance lease in property, plant and equipment.

Related parties

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

(a) the party, directly or indirectly through one or more intermediaries, (i) controls, is controlled by, or is under common control with, the Group; (ii) has an interest in the Group that gives it significant influence over the Group; or (iii) has joint control over the Group;

(b) the party is an associate;

(c) the party is a jointly-controlled entity;

(d) the party is a member of the key management personnel of the Group;

(e) the party is a close member of the family of any individual referred to in (a) or (d);

(f) the party is an entity that is controlled, jointly-controlled or significantly influenced by or for which significant voting power in such entity resides with, directly or indirectly, any individual referred to in (d) or (e); or

(g) the party is a post-employment benefit plan for the benefit of the employees of the Group, or of any entity that is a related party of the Group.

– 106 – APPENDIX III FINANCIAL INFORMATION OF THE GROUP

Cash and cash equivalents

For the purpose of the consolidated cash flow statement, cash and cash equivalents are comprised of cash on hand and demand deposits, and short-term highly liquid investments which are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value, and have a short maturity of generally within three months when acquired, less bank overdrafts which are repayable on demand and form an integral part of the Group’s cash management.

For the purpose of the balance sheet, cash and bank balances are comprised of cash on hand and at banks, including term deposits, which are not restricted as to use.

3. Significant accounting judgements

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

Income tax

Deferred tax is provided using the liability method, on all temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred tax assets are recognised for unused tax losses carried forward to the extent that it is probable (that is, more likely than not) that future taxable profits will be available against which the unused tax losses can be utilised, based on all available evidence. Recognition primarily involves judgement regarding the future performance of the particular legal entity or tax group in which the deferred tax asset has been recognised. A variety of other factors are also evaluated in considering whether there is convincing evidence that it is probable that some portion or all of the deferred tax assets will ultimately be realised, such as the existence of taxable temporary differences, tax planning strategies and the periods in which estimated tax losses can be utilised. The carrying amount of deferred tax assets and related financial models and budgets are reviewed at each balance sheet date. To the extent that there is insufficient convincing evidence that sufficient taxable profits will be available within the utilisation periods to allow utilisation of the carryforward tax losses, the asset balance will be reduced and charged to the income statement.

– 107 – APPENDIX III FINANCIAL INFORMATION OF THE GROUP

4. Segment information

The Group’s primary segment is the edible oils and food related business. Since this is the only business segment of the Group, no further analysis thereof is presented.

Segment information is presented below in respect of the Group’s geographical areas, which is regarded as the secondary segment. In determining the Group’s geographical segments, revenue 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.

Hong Kong Mainland China Consolidated 2006 2005 2006 2005 2006 2005 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000

Segment Revenue: Revenue from external customers 393,738 404,771 279,054 272,654 672,792 677,425

Other segment information: Segment assets 339,223 327,570 334,507 328,581 673,730 656,151 Unallocated assets 5,047 6,271

678,777 662,422

Capital expenditure incurred during the year 1,976 1,894 8,685 790 10,661 2,684

5. Turnover

Turnover represents the aggregate of the net invoiced value of goods sold, services rendered, rental and royalties, but excludes intra-group transactions.

2006 2005 HK$’000 HK$’000

Sale of goods and services 667,045 669,218 Royalties 5,086 5,305 Rental and other income 661 2,902

672,792 677,425

– 108 – APPENDIX III FINANCIAL INFORMATION OF THE GROUP

6. Profit from operating activities

2006 2005 Notes HK$’000 HK$’000

The Group’s profit from operating activities is arrived at after crediting: Rental income 597 2,395 Less: Outgoings – (671)

Net rental income 597 1,724

Foreign exchange gains, net 690 1,168 Gain on disposal of subsidiaries* 29 2,520 452

and after charging:

Cost of stock sold 490,148 502,587 Loss on disposal of items of property, plant and equipment, net 906 110 Employee benefits expenses (including directors’ emoluments in note 8): Wages and salaries 41,018 40,159 Equity-settled share option expenses 27 144 222

Pension scheme contributions 1,230 1,687 Less: Unvested contributions forfeited ** (67) (256)

1,163 1,431

42,325 41,812

Depreciation *** 13 21,882 22,548 Amortisation of prepaid land lease payments *** 14 499 404 Minimum lease payments under operating leases in respect of land and buildings 6,937 4,394 Auditors’ remuneration 1,198 1,147

Notes:

* Gain on disposal of subsidiaries is included in “General and administrative expenses” on the face of the consolidated income statement.

** At 31 December 2006, the Group had no forfeited contributions available to reduce its future contributions to the Exempted Scheme (2005: HK$48,000).

*** Depreciation and amortisation of prepaid land lease payments are included in “Other production and service costs” on the face of the consolidated income statement.

– 109 – APPENDIX III FINANCIAL INFORMATION OF THE GROUP

7. Finance costs, net

Group 2006 2005 HK$’000 HK$’000

Interest on bank borrowings wholly repayable within five years 9,742 11,143 Less: Bank interest income (335) (233)

9,407 10,910

8. Directors’ emoluments A1a(28)(7)

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

(a) Independent non-executive directors

The fees paid to independent non-executive directors during the year were as follows:

2006 2005 HK$’000 HK$’000

Sze Tsai To, Robert 250 250 Wong Yu Hong, Philip 200 200 Cheung Wing Yui 200 200 Seto Gin Chung, John 138 –

788 650

On 4 August 2006, 417,373 share options were granted to Seto Gin Chung, John, for a cash consideration of HK$1.00 under the Share Option Scheme adopted by the Company in its special general meeting held on 25 June 2004, entitling him to subscribe for 417,373 shares of HK$0.10 each in the Company at a price of HK$0.294 per share upon exercise of his subscription rights in the exercise period from 4 August 2007 to 3 August 2012 (both dates inclusive), further details of which are set out in note 27 to the financial statements.

– 110 – APPENDIX III FINANCIAL INFORMATION OF THE GROUP

The fair value of these options, which has been recognised to the income statement over the vesting period, was determined as at the date of grant and the amount of HK$24,000 included in the financial statements for the current year has not been included in the above directors’ remuneration disclosures. Save for the above, there were no other emoluments payable to the independent non-executive directors during the year (2005: Nil). A1a(28)(7) (b) Executive directors and non-executive directors For the year ended 31 December 2006 Salaries, Discretionary/ Employee allowances performance share Pension and benefits related option scheme Total Fees in kind bonuses benefits contributions remuneration HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 Executive directors: Wong Kwok Ying – 1,410 155 – 113 1,678 Lam Fung Ming, Tammy – 938 87 120 75 1,220

– 2,348 242 120 188 2,898

Non-executive directors: Hung Hak Hip, Peter 300 560* –––860 Hung Chiu Yee 30 ––––30 Lee Pak Wing 30 ––––30

360 560 –––920

For the year ended 31 December 2005 Salaries, Discretionary/ Employee allowances performance share Pension and benefits related option scheme Total Fees in kind bonuses benefits contributions remuneration HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 Executive directors: Wong Kwok Ying – 1,210 55 – 97 1,362 Lam Fung Ming, Tammy – 872 38 222 69 1,201 Chan Sai On, David – 500 ––26 526

– 2,582 93 222 192 3,089

Non-executive directors: Hung Hak Hip, Peter – 660* –––660 Hung Chiu Yee 30 ––––30 Lee Pak Wing 30 ––––30

60 660 –––720

* Including fees paid to a management company in which a director is indirectly interested.

– 111 – APPENDIX III FINANCIAL INFORMATION OF THE GROUP

At 31 December 2006, certain directors held share options of the Company, the details of which are set out in note 27 to the financial statements. The fair value of the share options, which have been recognised to the income statements over the respective vesting periods, were determined as at the dates of grant, and the amounts included in the financial statements are included in the above disclosure of directors’ emoluments.

There was no arrangement under which a director waived or agreed to waive any remuneration during the year.

9. Senior executives’ emoluments A1a(28)(7)

The aggregate emoluments of the five highest paid employees including three (2005: three) directors, whose emoluments are set out in note 8 above for the year are as follows:

Group 2006 2005 HK$’000 HK$’000

Salaries, allowances and other emoluments 4,493 3,781 Discretionary/performance related bonuses 421 152 Employee share option benefits 120 222 Pension scheme contributions 214 226

5,248 4,381

The above emoluments are analysed as follows:

Number of employees 2006 2005

Nil to HK$1,000,000 3 3 HK$1,000,001 to HK$1,500,000 1 2 HK$1,500,001 to HK$2,000,000 1 –

55

– 112 – APPENDIX III FINANCIAL INFORMATION OF THE GROUP

10. Tax

Hong Kong profits tax has been provided at the rate of 17.5% (2005: 17.5%) on the estimated assessable profits arising in Hong Kong during the year. Taxes on profits assessable elsewhere have been calculated at the rates of tax prevailing in the jurisdictions in which the Group operates, based on existing legislation, interpretations and practices in respect thereof.

2006 2005 HK$’000 HK$’000

Group: Current – Hong Kong Charge for the year 2,069 1,927 Under/(over) provision in prior years (note) 7,719 (8)

9,788 1,919 Current – elsewhere Charge for the year 164 158 Overprovision in prior years – (25)

164 133

Deferred tax charge/(credit) (note 25) (57) 25

Total tax charge for the year 9,895 2,077

Note: An additional tax provision of HK$7,536,000 was made in respect of the Group’s royalty income for the years of assessment from 1994/95 to 2005/06.

– 113 – APPENDIX III FINANCIAL INFORMATION OF THE GROUP

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

Group 2006 2005 HK$’000 HK$’000

Profit/(loss) before tax 3,472 (7,908)

Tax at the applicable tax rate 608 (1,384) Effect of different tax rates in other jurisdictions (68) (218) Income not subject to tax (8) (15) Expenses not deductible for tax 348 2 Tax losses not recognised 2,258 4,447 Under/(over) provision in respect of prior years, net 7,719 (33) Tax losses from previous periods utilised (1,307) (1,216) Others 345 494

Tax charge at the Group’s effective rate 9,895 2,077

11. Loss attributable to equity holders of the company

The consolidated loss attributable to the equity holders of the Company for the year ended 31 December 2006 included a loss of HK$164,000 (2005: HK$5,170,000) which has been dealt with in the financial statements of the Company (note 28(b)).

12. Loss per share

(a) Basic loss per share

Basic loss per share is calculated based on the consolidated loss attributable to equity holders of the Company of HK$6,764,000 (2005: HK$9,730,000), and the weighted average of 417,583,316 (2005: 412,881,844) shares in issue during the year.

(b) Diluted loss per share

Diluted loss per share for both years have not been presented as the share options and warrants outstanding during the years had anti-dilutive effects on the basic loss per share for these years.

– 114 – APPENDIX III FINANCIAL INFORMATION OF THE GROUP

13. PROPERTY, PLANT AND EQUIPMENT Group Barges, vehicles, leasehold improvements, Leasehold machinery land and and buildings equipment Total HK$’000 HK$’000 HK$’000 31 December 2006 Cost or valuation: At 1 January 2006 239,041 347,685 586,726 Additions – 1,586 1,586 Disposals (1,830) (7,902) (9,732) Reclassified to prepaid land lease payments (note 14) – (1,228) (1,228) Exchange realignment 6,707 8,777 15,484

At 31 December 2006 243,918 348,918 592,836

Accumulated depreciation: At 1 January 2006 88,329 207,822 296,151 Provided during the year 5,025 16,857 21,882 Disposals (41) (6,316) (6,357) Exchange realignment 1,518 4,518 6,036

At 31 December 2006 94,831 222,881 317,712

Net book value: At 31 December 2006 149,087 126,037 275,124

31 December 2005 Cost or valuation: At 1 January 2005 311,656 345,552 657,208 Additions – 2,399 2,399 Disposals (1,004) (2,543) (3,547) Disposal of subsidiaries (note 29) (73,329) (45) (73,374) Exchange realignment 1,718 2,322 4,040

At 31 December 2005 239,041 347,685 586,726

Accumulated depreciation: At 1 January 2005 89,381 191,652 281,033 Provided during the year 5,458 17,090 22,548 Disposals (58) (2,009) (2,067) Disposal of subsidiaries (note 29) (6,727) (11) (6,738) Exchange realignment 275 1,100 1,375

At 31 December 2005 88,329 207,822 296,151

Net book value: At 31 December 2005 150,712 139,863 290,575

– 115 – APPENDIX III FINANCIAL INFORMATION OF THE GROUP

The leasehold land and buildings included above are held on the following lease terms:

Hong Kong, professional valuation at 31 December 1993 Hong Kong, Elsewhere, less accumulated at cost less at cost less depreciation and accumulated accumulated impairment losses depreciation depreciation Total HK$’000 HK$’000 HK$’000 HK$’000

Long-term leases ––4,320 4,320 Medium-term leases 11,972 3,546 129,249 144,767

11,972 3,546 133,569 149,087

Had the Group’s land and buildings been carried at cost less accumulated depreciation, they would have been included in the financial statements at approximately HK$146,368,000 (2005: HK$147,864,000).

At 31 December 2006, certain leasehold land and buildings and certain plant and machinery of the Group with an aggregate carrying value of approximately HK$137,255,000 (2005: HK$176,960,000) were pledged to secure general banking facilities granted to the Group (note 24(a)).

14. Prepaid land lease payments

Group 2006 2005 HK$’000 HK$’000

Carrying amount at 1 January 16,206 16,433 Additions 8,596 – Reclassified from property, plant and equipment (note 13) 1,228 – Amortised during the year (499) (404) Exchange realignment 1,185 177

Carrying amount at 31 December 26,716 16,206 Current portion included in prepayments, deposits and other receivables (414) (404)

Non-current portion 26,302 15,802

Prepaid land lease payments represent payments for land use rights held under medium- term leases in Mainland China. At 31 December 2006, these land use rights were pledged to secure general banking facilities granted to the Group (note 24(a)).

– 116 – APPENDIX III FINANCIAL INFORMATION OF THE GROUP

15. Trademarks

Group 2006 2005 HK$’000 HK$’000

Cost: At 1 January 122,944 122,659 Additions 479 285

At 31 December 123,423 122,944

The directors are in the opinion that the Group’s trademarks have indefinite useful life due to the following reasons:

(i) The trademarks, which were acquired by the Group in 1988, have been in use for a very long period of time, some of them since the 1930s, and will continue to be used for the long term; and

(ii) The Group has incurred and intends to continue to incur significant advertising and promotion expenses, which are charged to the income statement when incurred, to maintain and increase the market value of its trademarks and brands.

Sallmanns (Far East) Limited, a firm of independent professionally qualified valuers, has confirmed in their valuation of the Group’s trademarks that, as at 31 December 2006, the market value of the trademarks exceeded the carrying value. Based on that, the directors considered that no impairment provision is necessary.

16. Interests in subsidiaries

Company 2006 2005 HK$’000 HK$’000

Unlisted shares, at cost 260,476 260,476 Amounts due from subsidiaries 255,132 255,185

515,608 515,661 Provision for impairment (109,000) (109,000)

406,608 406,661

The amounts due from subsidiaries are unsecured, interest-free and are not expected to be repaid in the next 12 months. The carrying amounts of the amounts due from subsidiaries approximate to their fair values.

– 117 – APPENDIX III FINANCIAL INFORMATION OF THE GROUP

Details of the principal subsidiaries of the Company at 31 December 2006 were as follows:

Percentage Place of of equity incorporation/ Issued/ interest registration registered and fully to the Principal Name and operations paid share capital Company activities

Hop Hing International British Virgin Islands US$1,000 100 Investment holding Limited

Hop Hing Oil Factory Hong Kong HK$24,000,010 100 Bottling, packaging Limited and distribution of edible oils

Hop Hing Oil (Holdings) Hong Kong HK$88,241,505 100 Investment holding Limited

Hop Hing Oil Investment Hong Kong HK$1,000,010 100 Bottling, packaging Limited (formerly known and distribution as Shine Action Company of edible oils Limited)

Hop Hing Oil Procurement Hong Kong HK$2 100 Procurement of Limited edible oils

Hop Hing Oil Refinery Hong Kong HK$10,000,000 100 Edible oils refinery Limited

Hop Hing Oil Trading Hong Kong HK$2 100 Distribution of (2000) Limited edible oils

Hop Hing Oil Terminals British Virgin Islands US$1,385,941 100 Investment holding (Guangzhou) Limited

Hop Hing Oil Terminals British Virgin Islands US$4,034,699 100 Investment holding (Pan Yu) Limited

Knight Investment Limited Hong Kong HK$22 100 Property holding

Lapidus (1985) Limited Hong Kong HK$12 100 Barge ownership

Monitor Ltd. British Virgin Islands US$1 100 Trademark holding

Panyu Hop Hing Oils & People’s Republic of HK$75,000,000 100 Bottling, packaging Fats Co. Ltd.** China/Mainland China and distribution of edible oils

Panyu Kwong Hing Packaging People’s Republic of HK$50,000,000 100 Blending and Company, Limited** China/Mainland China distribution of edible oils

Pinghu Hop Hing Vegetable People’s Republic of US$1,400,000 51 Edible oils refinery Oils Company, Limited* China/Mainland China

– 118 – APPENDIX III FINANCIAL INFORMATION OF THE GROUP

Percentage Place of of equity incorporation/ Issued/ interest registration registered and fully to the Principal Name and operations paid share capital Company activities

Sino Food Products Company Hong Kong HK$10 100 Distribution of (Holdings) Limited edible oils

Zhejiang Hop Hing Oils & People’s Republic of US$1,400,000 61 Edible oils refinery Fats Company, Limited* China/Mainland China

* Registered as equity joint ventures under PRC law.

** Registered as wholly-foreign-owned enterprises under PRC law.

Except for Hop Hing International Limited, all subsidiaries are indirectly held by the Company.

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

17. Interests in associates

Group 2006 2005 HK$’000 HK$’000

Share of net assets 24,646 24,646 Due to associates (26,071) (26,071)

(1,425) (1,425)

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

Details of the associates of the Group at 31 December 2006 date were as follows:

Percentage of ownership Particulars Place of interest of issued incorporation attributable Principal Name shares held and operations to the Group activities

Omeron Profits Limited Ordinary shares of British Virgin 50 Dormant US$1 each Islands

Tepac Profits Limited Ordinary shares of British Virgin 50 Dormant US$1 each Islands

– 119 – APPENDIX III FINANCIAL INFORMATION OF THE GROUP

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

2006 2005 HK$’000 HK$’000

Assets 49,301 49,301 Liabilities (9) (9) Revenues –– Loss ––

18. Interests in jointly-controlled entities

Particulars of the jointly-controlled entities are as follows:

Place of Percentage of Particulars of incorporation/ Ownership Voting Profit Name issued shares held operations interest power sharing Principal activities

Evergreen Oils & Ordinary shares Cayman 50 50 50 Trading and distribution Fats Limited of HK$1 each Islands/ of edible oils, Hong Kong fats and shortening

Hop Hing Oils Ordinary shares Hong Kong 50 50 50 Trading and distribution and Fats Limited of HK$1 each of edible oils, fats and shortening

Lam Soon Oils and Ordinary shares Hong Kong 50 50 50 Trading and distribution Fats Limited of HK$1 each of edible oils, fats and shortening

Landex Investments Ordinary shares Hong Kong 50 50 50 Property holding Limited of HK$1 each

Evergreen Oils & Fats Ordinary shares Macau 50 50 50 Trading and distribution (Macau) Limited of MOP1 each of edible oils, fats and shortening

These investments in jointly-controlled entities are indirectly held by the Company.

– 120 – APPENDIX III FINANCIAL INFORMATION OF THE GROUP

The following table illustrates the summarised financial information of the Group’s jointly-controlled entities:

Share of the jointly-controlled entities’ assets and liabilities:

2006 2005 HK$’000 HK$’000

Current assets 119,580 110,491 Non-current assets 9,029 9,394 Current liabilities (69,854) (60,996) Non-current liabilities (644) (700)

Net assets 58,111 58,189

Share of the jointly-controlled entities’ results:

2006 2005 HK$’000 HK$’000

Turnover 293,086 305,315 Costs and expenses (289,619) (301,805)

Profit before tax 3,467 3,510 Tax (546) (541)

Profit after tax 2,921 2,969

19. Stock

Group 2006 2005 HK$’000 HK$’000

Finished goods 17,051 16,658 Work in progress 436 302 Raw materials 84,369 66,455

101,856 83,415

At 31 December 2006, certain stock with aggregate carrying value of approximately HK$13,670,000 (2005: HK$6,870,000) was pledged to secure certain bank loans (note 24(a)).

– 121 – APPENDIX III FINANCIAL INFORMATION OF THE GROUP

20. Accounts receivable

An aged analysis of the accounts receivable as at the balance sheet date, based on payment due date and net of provisions, is as follows:

Group 2006 2005 HK$’000 HK$’000

Current and less than 60 days 80,864 79,202 Over 60 days 2,332 2,024

83,196 81,226

The Group’s products are sold either on a cash on delivery basis, or on an open account basis ranging from 7 to 70 days of credit. Each customer has a maximum credit limit and overdue balances are regularly reviewed by senior management. In view of the aforementioned and the fact that the Group’s accounts receivable relate to a large number of diversified customers, the concentration of credit risk is not considered significant. Accounts receivable are non-interest-bearing.

Included in the Group’s accounts receivable are amounts due from the Group’s jointly- controlled entities totalling HK$6,804,000 (2005: HK$5,692,000) which are repayable on credit terms comparable to those offered to other unrelated customers of the Group.

At 31 December 2006, accounts receivable of approximately HK$18,163,000 (2005: HK$16,454,000) were pledged to secure certain bank loans granted to the Group (note 24(a)).

21. Pledged bank deposits

The deposits were pledged to certain banks to secure certain bills payable.

22. Accounts payable

An aged analysis of accounts payable as at the balance sheet date, based on the payment due date, is as follows:

Group 2006 2005 HK$’000 HK$’000

Current and less than 60 days 33,644 37,376 Over 60 days 787 2,644

34,431 40,020

– 122 – APPENDIX III FINANCIAL INFORMATION OF THE GROUP

The accounts payable are non-interest-bearing and are normally settled within credit terms of 7 to 60 days.

Included in the Group’s accounts payable are amounts of HK$5,805,000 (2005: HK$7,612,000) due to certain companies associated with another venturer of the Group’s jointly-controlled entities which are payable on credit terms comparable to those offered by other unrelated suppliers of the Group.

23. Bills payable

Certain bills payable are secured by bank deposits of HK$6,529,000 (2005: HK$1,226,000) of the Group (note 21).

24. Interest-bearing bank loans

Average interest Group rate per annum Maturity 2006 2005 % HK$’000 HK$’000

Current Bank loans – unsecured 5.1% 2007 36,349 27,771 Bank loans – secured 6.7% 2007 14,500 120,692

50,849 148,463 Non-current Bank loans – secured 6.7% 2008–2009 98,000 8,000

148,849 156,463

Group 2006 2005 HK$’000 HK$’000

Repayable: Within one year or on demand 50,849 148,463 In the second year 3,000 5,000 In the third to fifth years, inclusive 95,000 3,000

148,849 156,463

– 123 – APPENDIX III FINANCIAL INFORMATION OF THE GROUP

Notes:

(a) Certain of the Group’s bank loans are secured by:

(i) legal charges over the Group’s land use rights, classified as prepaid land lease payments, and certain leasehold land and buildings and plant and machinery, which had an aggregate carrying value at 31 December 2006 of approximately HK$26,716,000 (2005: HK$16,206,000) and HK$137,255,000 (2005: HK$176,960,000), respectively.

(ii) floating charges over certain of the Group’s stock of HK$13,670,000 (2005: HK$6,870,000);

(iii) floating charges over certain of the Group’s accounts receivable of HK$18,163,000 (2005: HK$16,454,000);

(iv) corporate guarantees given to banks by the Company of HK$40,849,000 (2005: HK$41,338,000);

(v) a personal guarantee given to a bank by a senior executive of the Group of HK$7,000,000 (2005: HK$5,616,000); and

(vi) a corporate guarantee given to a bank by an independent third party of HK$5,000,000 (2005: Nil).

(b) Fixed interest rate bank loans are denominated in Renminbi. All other bank loans are denominated in Hong Kong dollars.

(c) Secured interest-bearing bank loans included certain of the Group’s bank loans of approximately HK$101,000,000 (2005: HK$111,000,000) in Mainland China which were borrowed by a PRC subsidiary of the Group and secured on certain property, plant and equipment and prepaid land lease payments of certain PRC subsidiaries and have no recourse to other members of the Group.

Other interest rate information:

Group 2006 2005 Fixed Floating Fixed Floating rate rate rate rate HK$’000 HK$’000 HK$’000 HK$’000

Bank loans – unsecured 3,500 32,849 2,433 25,338 Bank loans – secured 104,500 8,000 112,692 16,000

The carrying amounts of the Group’s interest-bearing bank loans approximate to their fair values.

– 124 – APPENDIX III FINANCIAL INFORMATION OF THE GROUP

25. Deferred tax

The movements in deferred tax liabilities and assets during the year are as follows:

Deferred tax liabilities

Group

2006 Accelerated tax Revaluation depreciation of properties Total HK$’000 HK$’000 HK$’000

At 1 January 2006 4,420 563 4,983 Deferred tax credited to the income statement during the year (note 10) (1,281) – (1,281)

Gross deferred tax liabilities at 31 December 2006 3,139 563 3,702

Deferred tax assets

Group

2006 Losses available for offsetting against future taxable profit HK$’000

At 1 January 2006 6,271 Deferred tax charged to the income statement during the year (note 10) (1,224)

Gross deferred tax assets at 31 December 2006 5,047

Net deferred tax assets at 31 December 2006 1,345

– 125 – APPENDIX III FINANCIAL INFORMATION OF THE GROUP

Deferred tax liabilities

Group

2005 Accelerated Revaluation tax depreciation of properties Total HK$’000 HK$’000 HK$’000

At 1 January 2005 6,493 3,582 10,075 Deferred tax charged to the income statement during the year (note 10) 682 – 682 Reversed upon disposal – (3,019) (3,019) Disposal of subsidiaries (note 29) (2,755) – (2,755)

Gross deferred tax liabilities at 31 December 2005 4,420 563 4,983

Deferred tax assets

Group

2005 Losses available for offsetting against future taxable profit HK$’000

At 1 January 2005 10,763 Deferred tax credited to the income statement during the year (note 10) 657 Disposal of subsidiaries (note 29) (5,149)

Gross deferred tax assets at 31 December 2005 6,271

Net deferred tax assets at 31 December 2005 1,288

Deferred tax assets have been recognised in respect of tax losses of HK$28,840,000 (2005: HK$35,834,000) on the expected future profit streams.

– 126 – APPENDIX III FINANCIAL INFORMATION OF THE GROUP

The Group has tax losses of HK$55,912,000 (2005: HK$48,476,000) arising in Hong Kong that are available indefinitely for offsetting against future taxable profits of the companies in which the losses arose. The Group also has tax losses arising in Mainland China of HK$65,231,000 (2005: HK$65,107,000) that are available for offsetting against future taxable profits of the companies in which the losses arose for a maximum of five years. Deferred tax assets have not been recognised in respect of these losses as they have arisen in subsidiaries that have been loss-making for some time and it is not considered probable that taxable profits will be available against which the tax losses can be utilised.

At 31 December 2006, there is no significant unrecognised deferred tax liability (2005: Nil) for taxes that would be payable on the unremitted earnings of the Group’s subsidiaries, associates or jointly-controlled entities.

26. Share capital

Shares

2006 2005 HK$’000 HK$’000

Authorised: 800,000,000 (2005: 800,000,000) ordinary shares of HK$0.10 each (2005: HK$0.10 each) 80,000 80,000 120,000 (2005: 120,000) ordinary shares of US$0.10 each (2005: US$0.10 each) 93 93

80,093 80,093

Issued and fully paid: 419,438,434 (2005: 417,090,711) ordinary shares of HK$0.10 each (2005: HK$0.10 each) 41,943 41,709

– 127 – APPENDIX III FINANCIAL INFORMATION OF THE GROUP

A summary of the movements in the Company’s issued ordinary share capital during the year is as follows:

Number of Issued Share shares in share premium issue capital account Total HK$’000 HK$’000 HK$’000

At 1 January 2005 409,252,938 40,925 231,469 272,394 Share options exercised (note a) 4,091,130 409 398 807 Warrants exercised (note b) 3,746,643 375 637 1,012 Share issue expenses ––(240) (240)

At 31 December 2005 and 1 January 2006 417,090,711 41,709 232,264 273,973

Share options exercised (note a) 2,045,565 204 171 375 Warrants exercised (note b) 302,158 30 45 75

At 31 December 2006 419,438,434 41,943 232,480 274,423

Notes:

(a) During the year ended 31 December 2006, the subscription rights attaching to 2,045,565 share options were exercised at the subscription price of HK$0.1834 per share resulting in the issue of 2,045,565 shares of HK$0.10 each for a total cash consideration, before expenses, of approximately HK$375,000. During the year ended 31 December 2005, the subscription rights attaching to 2,045,565 and 2,045,565 share options were exercised at the subscription prices of HK$0.1834 and HK$0.2112 per share, respectively, resulting in the issue of 4,091,130 shares of HK$0.10 each for a total cash consideration, before expenses, of approximately HK$807,000.

(b) During the year ended 31 December 2006, 302,158 shares of HK$0.10 each were issued for cash at subscription prices of HK$0.25 per share, pursuant to the exercise of the Company’s warrants for a total cash consideration, before expenses, of approximately HK$75,000. During the year ended 31 December 2005, 3,745,853 and 790 shares of HK$0.10 each were issued for cash at subscription prices of HK$0.27 and HK$0.25 per share, respectively, pursuant to the exercise of the Company’s warrants for a total cash consideration, before expenses, of approximately HK$1,012,000.

– 128 – APPENDIX III FINANCIAL INFORMATION OF THE GROUP

Share options

Details of the Company’s share option schemes and the share options issued under the schemes are included in note 27 to the financial statements.

Warrants

At 31 December 2006, the Company had 82,296,810 warrants outstanding. The exercise in full of such warrants would, under the present capital structure of the Company, result in the issue of 82,296,810 additional shares of HK$0.10 each.

27. Share options A1a(44)

On 25 June 2004, the shareholders of the Company approved the termination of the R.17.02(1)(b) share option scheme adopted by the Company on 30 June 2000 (the “2000 Share Option Para. 10, Scheme”) and the adoption of a new share option scheme (the “2004 Share Option Scheme”) 3rd Sch., CO with rules complying with the new requirements of Chapter 17 of the Listing Rules. Upon termination of the 2000 Share Option Scheme, no further share options can be granted thereunder but in all other respects the provisions of the 2000 Share Option Scheme shall remain in force and all share options granted prior to such termination shall continue to be valid and exercisable in accordance therewith.

(a) 2000 Share Option Scheme A1a(28)(7)

The purpose of this scheme is to provide incentives and rewards to eligible participants who contribute to the success of the Group’s operations. Eligible participants of this scheme include any full-time employee in the service of the Company or its subsidiaries. This scheme became effective on 30 June 2000 and, unless otherwise cancelled or amended, will remain in force for 10 years from that date.

The maximum number of shares of HK$0.10 each in the Company in respect of which share options may be granted will not exceed 10% of the issued shares of the Company (excluding any shares issued upon the exercise of options granted pursuant to this scheme) from time to time. The maximum entitlement of each participant under this scheme is limited to 25% of the shares issued and issuable under this scheme from time to time.

The offer of a grant of share options may be accepted within 21 days from the date of the offer. The exercise period of the share options granted is determinable by the directors and shall in any event not less than 3 years or more than 10 years from the date on which it commences.

– 129 – APPENDIX III FINANCIAL INFORMATION OF THE GROUP

The exercise price of the share options is determinable by the directors, but may not be less than the higher of (a) 80% of the average Stock Exchange closing price of the Company’s shares for the 5 business days immediately preceding the date of grant of the options, and (b) the nominal value of the shares.

Share options do not confer rights on the holders to dividends or to vote at shareholders’ meetings.

(b) 2004 Share Option Scheme A1a(28)(7)

The purpose of this scheme is to provide incentives and rewards to the participants and to enhance their contribution to the success of the Group’s operations. The participants of this scheme include any full-time employee and any director of the Company and its subsidiaries, and any person approved by the shareholders of the Company. This scheme became effective on 25 June 2004 and, unless otherwise cancelled or amended, will remain in force for 10 years from that date.

The maximum aggregate number of shares of HK$0.10 each in the Company which may be issued upon exercise of all outstanding options granted and yet to be exercised under this scheme and any other schemes of the Company must not exceed in aggregate 10% of the shares in issue from time to time (the “Overall Scheme Limit”). No options may be granted under any scheme of the Company if such grant will result in the Overall Scheme Limit being exceeded.

The total number of shares which may be issued upon exercise of all options to be granted under this scheme and any other scheme must not in aggregate exceed 10% of the shares in issue as at the date of approval of this scheme (the “Scheme Mandate Limit”). Options lapsed in accordance with the terms of this scheme shall not be counted for the purpose of calculating the Scheme Mandate Limit.

Subject to the Overall Scheme Limit, the Company may seek approval from its shareholders in a general meeting for refreshing the Scheme Mandate Limit. However, the total number of shares which may be issued upon exercise of all options to be granted under the refreshed limit must not exceed 10% of the shares in issue as at the date of approval of the shareholders of the Company of the refreshing of the Scheme Mandate Limit.

The total number of shares issued and to be issued upon exercise of the options granted to each participant (including exercised, cancelled and outstanding options) in any 12-month period must not exceed 1% of the shares of the Company in issue.

– 130 – APPENDIX III FINANCIAL INFORMATION OF THE GROUP

The period within which the options may be exercised in accordance with the terms of this scheme, shall: (i) be determined by the directors; (ii) commence on the expiration of 12 months (or such shorter period as may be determined by the directors) from the date of offer of options; and (iii) in any event not less than 3 years or more than 10 years from the date on which it commences.

The offer of a grant of options must be accepted within 21 days from the date of the offer. The exercise price of an option to subscribe for shares granted pursuant to this scheme shall not be less than whichever is the highest of: (i) the closing price of the shares as stated in the Stock Exchange’s daily quotations sheet on the date on which an offer is made to a participant, which must be a business day; (ii) the average closing price of the shares as stated in the Stock Exchange’s daily quotations sheets for the 5 business days immediately preceding the date on which an offer is made; and (iii) the nominal value of the shares of the Company.

Share options do not confer rights on the holders to dividends or to vote at shareholders’ meetings.

The following share options were outstanding under the schemes during the year:

Number of share options Price of Company’s shares*** At 1 Granted Exercised At 31 Immediately Name or category January during during December Exercise At date before the At date of participant 2006 the year the year 2006 Date of grant Exercise period price** of grant exercise date of exercise HK$ HK$ HK$ HK$ per share per share per share per share

Directors 2000 Share Option Scheme Hung Hak Hip, Peter 4,752,105 ––4,752,105 17 November 2000 17 November 2000 0.1834 0.227 –– to 16 November 2010

Sze Tsai To, Robert 2,045,565 – (2,045,565) – 22 November 2000 22 November 2001 0.1834 0.230 0.335 0.360 to 21 November 2006

Hung Chiu Yee 2,045,565 ––2,045,565 17 November 2000 17 November 2000 0.1834 0.227 –– to 16 November 2010

Lee Pak Wing 2,376,052 ––2,376,052 17 November 2000 17 November 2000 0.1834 0.227 –– to 16 November 2010

Wong Kwok Ying 4,091,130 ––4,091,130 17 November 2000 17 November 2000 0.1834 0.227 –– to 16 November 2010

2004 Share Option Scheme Lam Fung Ming, Tammy 2,064,993 ––2,064,993 26 May 2005* 26 May 2006 0.2860 0.280 –– to 25 May 2016

Seto Gin Chung, John – 417,373 – 417,373 4 August 2006* 4 August 2007 0.2940 0.290 –– to 3 August 2012

17,375,410 417,373 (2,045,565) 15,747,218

* The vesting period of the share option is from the date of grant until the commencement of the exercise period.

– 131 – APPENDIX III FINANCIAL INFORMATION OF THE GROUP

** The exercise price of the share options is subject to adjustments.

*** The price of the Company’s shares disclosed is the closing price of the shares as stated in the Stock Exchange’s daily quotations sheet on the day specified.

The fair value of the share options granted for Lam Fung Ming, Tammy last R.17.02(3) year was HK$342,000, of which the Group recognised a share option expense of HK$120,000 during the year ended 31 December 2006 (2005: HK$222,000). The fair value of the share options granted for Seto Gin Chung, John during the year was HK$60,000, of which the Group recognised a share option expense of HK$24,000 during the year ended 31 December 2006.

The fair value of equity-settled share options granted during the year was estimated, using Black-Scholes Model, taking into account the terms and conditions upon which the options were granted. The following table lists the inputs to the model used for the year ended 31 December 2006:

Expected volatility (%) 55.3 Historical volatility (%) 55.3 Risk-free interest rate (%) 3.0 Expected life of option (year) 5 Weighted average share price (HK$) 0.29

The expected life of the options is based on the historical data over the past three years and is not necessarily indicative of the exercise patterns that may occur. The expected volatility reflects the assumption that the historical volatility is indicative of future trends, which may also not necessarily be the actual outcome.

No other feature of the options granted was incorporated into the measurement of fair value.

At 31 December 2006, the Company had 13,264,852 and 2,482,366 share options outstanding under the 2000 Share Option Scheme and the 2004 Share Option Scheme, respectively, which in aggregate represented approximately 3.8% of the Company’s shares in issue as at that date. The exercise in full of the remaining share options would, under the present capital structure of the Company, result in the issue of 15,747,218 additional ordinary shares of the Company and additional share capital of approximately HK$1,575,000 and share premium of approximately HK$1,571,000 (before issue expenses).

– 132 – APPENDIX III FINANCIAL INFORMATION OF THE GROUP

28. Reserves

(a) Group

The amounts of the Group’s reserves and the movements therein for the current and prior years are presented in the consolidated statement of changes in equity of the financial statements.

(b) Company

Share Share premium Contributed option Accumulated account surplus reserve losses Total HK$’000 HK$’000 HK$’000 HK$’000 HK$’000

Balance at 1 January 2005 231,469 231,383 – (94,929) 367,923 Issue of shares (note 26) 795 –––795 Equity-settled share option expense ––222 – 222 Loss for the year –––(5,170) (5,170)

Balance at 31 December 2005 and 1 January 2006 232,264 231,383 222 (100,099) 363,770

Issue of shares (note 26) 216 –––216

Equity-settled share option expenses ––144 – 144 Loss for the year –––(164) (164)

Balance at 31 December 2006 232,480 231,383 366 (100,263) 363,966

The Company’s contributed surplus arose in 1990 as a result of the Group reorganisation and represented the difference between the nominal value of the Company’s shares allotted under the reorganisation scheme and the then consolidated net asset value of the acquired subsidiaries, net of the subsequent distribution therefrom.

Under the Companies Act 1981 of Bermuda, the contributed surplus is distributable to shareholders in certain circumstances. As at 31 December 2006, the total amount of reserves distributable to shareholders, including the Company’s accumulated losses, amounted to HK$131,120,000 (2005: HK$131,284,000).

The share option reserve comprises the fair value of share options granted which are yet to be exercised, as further explained in the accounting policy for share- based payment transactions in note 2.4 to the financial statements. The amount will either be transferred to the share premium account when the related options are exercised, or be transferred to accumulated losses should the related options expire or be forfeited.

– 133 – APPENDIX III FINANCIAL INFORMATION OF THE GROUP

29. Disposal of subsidiaries

Group 2006 2005 HK$’000 HK$’000

Net assets disposed of: Property, plant and equipment – 66,636 Investment property – 58,400 Deferred tax assets, net – 2,394 Prepayments, deposits and other receivables 495 701 Cash and bank balances – 1,103 Other payables and accrued charges – (3,883) Interest-bearing bank borrowings, secured – (120,000)

495 5,351 Gain on disposal of subsidiaries 2,520 452

3,015 5,803

Satisfied by: Cash 3,015 5,803

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

Cash consideration 3,015 5,803 Cash and bank balances disposed of – (1,103)

3,015 4,700

(a) On 25 January 2006, the Group disposed of a subsidiary to a company associated with a non-executive director of the Company. The major asset of the subsidiary was a piece of land in Hong Kong. The consideration of HK$430,000 was arrived at by reference to the net book value of the subsidiary at the date of disposal (the “Disposal Date”), adjusted by the market value of that piece of land as at the Disposal Date in accordance with the valuation performed by an independent valuer.

– 134 – APPENDIX III FINANCIAL INFORMATION OF THE GROUP

(b) On 30 August 2006, Hop Hing Oil (Holdings) Limited (“HHOH”), an indirect wholly-owned subsidiary of the Company, entered into an agreement with Hung’s Investments Limited (“HIL”), an associate of a non-executive director of the Company, to transfer the entire issued ordinary share capital of Able Mark (HK) Limited (“AMHK”), a then indirect wholly-owned subsidiary of the Company, and assign the shareholder’s loan in the sum of HK$495,000 due to HHOH by AMHK to HIL for a total consideration of HK$2,585,000 and made a gain of approximately HK$2,090,000. Details of the transaction were summarised in a press announcement dated 30 August 2006.

(c) On 29 April 2005, Hop Hing Oil Factory Limited, an indirect wholly-owned subsidiary of the Company, entered into a sale and purchase agreement with Merry Capital Investments Limited (“Merry Capital”), a company associated with a substantial shareholder of the Company, for the disposal (the “Disposal”) of 12 shares (the “Sale Shares”) of Express Associates Limited (“EAL”), a then wholly-owned subsidiary of the Group, and its wholly-owned subsidiary, Wytak Limited (“Wytak”), for a cash consideration of HK$5.8 million.

EAL ceased to be accounted for as a subsidiary of the Company upon the completion of the Disposal on 29 April 2005. EAL and Wytak contributed turnover of HK$5,595,000 and profit after tax of HK$273,000 to the Group during the year ended 31 December 2005.

30. Note to the consolidated cash flow statement

Major non-cash transaction

During the year, deposit of HK$7,265,000 was transferred to prepaid land lease payments.

31. Operating lease arrangements

The Group leases certain of its offices under operating lease arrangements. Leases for properties are negotiated for terms ranging from one to five years.

– 135 – APPENDIX III FINANCIAL INFORMATION OF THE GROUP

At 31 December 2006, the Group had total future minimum lease payments under non-cancellable operating leases falling due as follows:

Group 2006 2005 HK$’000 HK$’000

Within one year 6,794 3,944 In the second to fifth years, inclusive 9,052 6,995

15,846 10,939

32. Commitments

In addition to the operating lease commitments detailed in note 31 above, the Group had the following commitments at 31 December 2006:

Group 2006 2005 HK$’000 HK$’000

Capital commitments for the acquisition of property, plant and equipment: Contracted for 9 1,438 Authorised, but not contracted for 1,076 1,399

The Company had no significant commitments at 31 December 2006 (2005: Nil).

33. Contingent liabilities

Group

(a) At 31 December 2006, 32 (2005: 35) employees had completed the required number of years of service under the Employment Ordinance to be eligible for long service payments on termination of their employment. The Group is only liable to make such payments where the termination meets the required circumstances specified in the Employment Ordinance. If the termination of all these employees met the circumstances required by the Employment Ordinance, the Group’s liability at 31 December 2006 would be approximately HK$383,000 (2005: HK$439,000). No provision has been made for this amount in the financial statements as it is not considered probable that there will be a significant outflow of resources in respect thereof.

– 136 – APPENDIX III FINANCIAL INFORMATION OF THE GROUP

(b) At 31 December 2006, the contingent liabilities in respect of guarantees given to banks to secure banking facilities utilised by a jointly-controlled entity of the Group amounted to HK$32,849,000 (2005: HK$25,338,000).

Company

At 31 December 2006, the contingent liabilities of the Company in respect of guarantees given to banks to secure banking facilities utilised by certain subsidiaries and a jointly-controlled entity amounted to HK$41,190,000 (2005: HK$41,338,000).

34. Related party transactions

(a) In addition to those transactions and balances disclosed elsewhere in the financial statements, the Group had the following material transactions with related parties during the year:

2006 2005 Notes HK$’000 HK$’000

Transactions with jointly-controlled entities*: Sale of goods (i) 60,935 63,771 Purchases of goods/services (ii) 82 680 Production and oil refinement income (iii) 40,785 45,750 Royalty income (iv) 10,173 10,610 Property rental income (v) 2,983 4,694 Other property related income (vi) – 790 Management fee income (vii) 2,000 2,000

Transactions with companies associated with the controlling shareholder of the Company: Sale of goods (i) 3,376 1,971 Rental income (viii) – 828 Rental expenses (ix) 3,449 2,244 Consideration received for disposal of subsidiaries (x) 3,015 5,803

Transactions with a company in which a director of the Company has an indirect interest: Management fee expense (xi) 560 660

* The Group has proportionately consolidated 50% of its transactions with jointly-controlled entities in the consolidated income statement.

– 137 – APPENDIX III FINANCIAL INFORMATION OF THE GROUP

Notes:

(i) The sale of goods were on normal commercial terms in the ordinary and usual course of business of the Company.

(ii) The purchases of goods/services were at prices comparable to those offered by other unrelated suppliers/providers of the Group.

(iii) The production and oil refinement income was based on agreements entered into with the jointly-controlled entities after an arm’s length negotiation and was at rates comparable to those offered to other unrelated customers of the Group.

(iv) Pursuant to trademark licence agreements entered into between the Group and the jointly- controlled entities, the royalties received for the use of the trademarks are calculated based on a percentage, as agreed between the parties from time to time, on the gross sales value of licensed products sold by the jointly-controlled entities within Hong Kong and Macau.

(v) The property rental income related to the properties and barges included in property, plant and equipment. The property rental income was charged by reference to the relevant industry practice and open market rental, and was subject to review on a regular basis.

(vi) For the year ended 31 December 2005, the other property related income included air- conditioning charges and property management fee and were charged based on the cost incurred in managing the properties and providing air-conditioning services.

(vii) The management fee income was charged based on the cost incurred for providing such services.

(viii) For the year ended 31 December 2005, the rental income was charged by reference to open market rental and was subject to review according to the terms of the relevant tenancy agreements.

(ix) The rental expenses were paid by reference to open market rental, and was subject to the terms of the relevant tenancy agreements.

(x) (a) On 25 January 2006, the Group disposed of a subsidiary to a company associated with a non-executive director of the Company. The major asset of the subsidiary was a piece of land in Hong Kong. The consideration of disposal was arrived at by reference to the net book value of the subsidiary at the date of disposal (the “Disposal Date”), adjusted by the market value of that piece of land as at the Disposal Date in accordance with the valuation performed by DTZ Debenham Tie Leung, an independent valuer.

(b) On 30 August 2006, the Group disposed of another subsidiary to a company associated with a non-executive director of the Company. Details of the transaction were summarised in a press announcement dated 30 August 2006.

(c) The transaction in 2005 was approved by the directors at a meeting held on 29 April 2005, and details of the transaction were summarised in a circular to the shareholders dated 23 May 2005.

– 138 – APPENDIX III FINANCIAL INFORMATION OF THE GROUP

(xi) The management fee expenses represented the payment for services rendered by a director of the Company and his staff through a company in which the director has an indirect interest.

Save for item (x)(a), the transactions with companies associated with the controlling shareholders of the Company as set out above also constitute connected transactions or continuing connected transactions that are subject to the reporting requirement under the Listing Rules. Further details are disclosed in the Report of the Directors under the heading “Connected transactions and continuing connected transactions”.

(b) Outstanding balances with related parties:

(i) Details of the Group’s trade balances with jointly-controlled entities as at the balance sheet date are disclosed in note 20 to the financial statements.

(ii) The Group’s jointly-controlled entities had outstanding balances payable to certain companies associated with its another venturer. Further details are disclosed in note 22 to the financial statements.

(c) Compensation of key management personnel of the Group:

2006 2005 HK$’000 HK$’000

Short-term employee benefits 2,590 2,675 Post-employment benefits 188 192 Share-based payment 120 222

Total compensation paid to key management personnel 2,898 3,089

Further details of directors’ emoluments are included in note 8 to the financial statements.

35. Financial risk management objectives and policies

The Group’s major financial instruments comprise bank loans, short-term deposits and cash. The Group has various other financial assets and liabilities such as accounts receivable and accounts payable, which arise directly from its operations.

The risks associated with the Group’s financial instruments are mainly interest rate risk, foreign currency risk and credit risk. Details of such risks are summarised below.

Interest rate risk

The Group’s current banking facilities maintained with commercial banks are mainly at fixed rates. Hence, the Group currently does not have an interest rate hedging policy. However, the management monitors the Group’s interest exposure and will consider hedging significant interest rate exposure should the need arise.

– 139 – APPENDIX III FINANCIAL INFORMATION OF THE GROUP

Foreign currency risk

The Group’s monetary assets, liabilities and transactions are principally denominated in Hong Kong dollars, Renminbi or US dollars. Given that Hong Kong dollars are pegged to US dollars and fluctuations between Renminbi and US dollars are under the control of the PRC government, the Group does not have a foreign currency hedging policy. However, the management monitors the Group’s foreign exchange exposure and will consider hedging significant foreign currency exposure when needs arise.

Credit risk

It is the Group’s policy that all customers who wish to trade on credit terms are subject to credit verification procedures. In addition, receivable balances are monitored on an ongoing basis. With such policies in place, the Group has been able to maintain its bad debts at a reasonable level.

36. Post balance sheet events

(a) On 31 January 2007, the Company announced a redomicile proposal, pursuant to which the structure of the Group will be reorganised such that Hop Hing Group Holdings Limited, a company proposed to be incorporated in the Cayman Islands with limited liability, will become the new holding company of the Group.

(b) During the 5th Session of the 10th National People’s Congress, which was concluded on 16 March 2007, the PRC Corporate Income Tax Law (the “New Corporate Income Tax Law”) was approved and will become effective on 1 January 2008. The New Corporate Income Tax Law introduces a wide range of changes which include, but are not limited to, the unification of the income tax rate for domestic-invested and foreign-invested enterprises at 25%. Since the detailed implementation and administrative rules and regulations have not yet been announced, the financial impact of the New Corporate Income Tax Law to the Group cannot be reasonably estimated at this stage.

37. Approval of the financial statements

The financial statements were approved and authorised for issue by the board of directors on 19 April 2007.

– 140 – APPENDIX III FINANCIAL INFORMATION OF THE GROUP

III. UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR THE SIX MONTHS ENDED 30 JUNE 2007

The following is the unaudited financial statements of the group (including the jointly- controlled entities) for the six months ended 30 June 2007 and the accompanying notes to the unaudited financial statements of the Group (including the jointly-controlled entities) for the six months ended 30 June 2007 as extracted from the interim report of the Group for the six months ended 30 June 2007.

CONDENSED CONSOLIDATED INCOME STATEMENT For six months ended 30 June 2007

Unaudited For the six months ended 30 June 2007 2006 Notes HK$’000 HK$’000

TURNOVER 3 368,306 297,502

Direct cost of stocks sold (275,218) (213,213) Other production and service costs (including depreciation and amortisation of HK$10,959,000 and HK$343,000 (2006: HK$10,977,000 and HK$210,000), respectively) (30,288) (30,980) Selling and distribution costs (38,809) (33,993) General and administrative expenses (17,220) (16,667)

PROFIT FROM OPERATING ACTIVITIES 4 6,771 2,649 Finance costs, net 5 (5,209) (4,573)

PROFIT/(LOSS) BEFORE TAX 1,562 (1,924) Tax 6 (1,333) (678)

PROFIT/(LOSS) FOR THE PERIOD 229 (2,602)

ATTRIBUTABLE TO: Equity holders of the Company 449 (2,558) Minority interests (220) (44)

229 (2,602)

EARNINGS/(LOSS) PER SHARE 7 – Basic HK0.11 cent HK(0.61) cent

– Diluted HK0.10 cent N/A

– 141 – APPENDIX III FINANCIAL INFORMATION OF THE GROUP

CONDENSED CONSOLIDATED BALANCE SHEET At 30 June 2007

Unaudited Audited 30 June 31 December 2007 2006 Notes HK$’000 HK$’000

ASSETS Non-current assets Property, plant and equipment 8 268,628 275,124 Prepaid land lease payments 26,500 26,302 Trademarks 123,688 123,423 Interests in associates (1,425) (1,425) Deferred tax assets 5,047 5,047

Total non-current assets 422,438 428,471

Current assets Stocks 116,647 101,856 Accounts receivable 9 76,557 83,196 Prepayments, deposits and other receivables 25,223 37,050 Pledged cash deposits 10,253 6,529 Cash and cash equivalents 21,326 20,250

Total current assets 250,006 248,881

Total assets 672,444 677,352

EQUITY AND LIABILITIES Equity attributable to equity holders of the Company Issued share capital 12 42,356 41,943 Reserves 365,127 362,267

407,483 404,210 Minority interests 12,281 12,388

Total equity 419,764 416,598

Non-current liabilities Interest-bearing bank loans 10 – 98,000 Deferred tax liabilities 3,665 3,702

Total non-current liabilities 3,665 101,702

– 142 – APPENDIX III FINANCIAL INFORMATION OF THE GROUP

Unaudited Audited 30 June 31 December 2007 2006 Notes HK$’000 HK$’000

Current liabilities Accounts payable 11 36,683 34,431 Bills payable 36,151 21,765 Other payables and accrued charges 30,965 42,098 Interest-bearing bank loans 10 144,288 50,849 Tax payable 928 9,909

Total current liabilities 249,015 159,052

Total liabilities 252,680 260,754

Total equity and liabilities 672,444 677,352

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY For the six months ended 30 June 2007 (Unaudited)

Attributable to equity holders of the Company Other Issued Share properties Capital share premium revaluation and other Accumulated Minority capital account reserve reserves losses Sub-total interests Total HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000

Balance at 1 January 2007 41,943 375,090 2,659 64,830 (80,312) 404,210 12,388 416,598

Exchange realignment –––2,065 – 2,065 113 2,178

Total income and expenses recognised directly in equity –––2,065 – 2,065 113 2,178 Profit/(loss) for the period ––– –449 449 (220) 229

Total income and expenses for the period –––2,065 449 2,514 (107) 2,407 Issue of shares (note 12) 413 346 –––759 – 759

Balance at 30 June 2007 42,356 375,436* 2,659* 66,895* (79,863)* 407,483 12,281 419,764

* These reserves accounts comprise the reserves of HK$365,127,000 in the condensed consolidated balance sheet as at 30 June 2007.

– 143 – APPENDIX III FINANCIAL INFORMATION OF THE GROUP

For the six months ended 30 June 2006 (Unaudited)

Attributable to equity holders of the Company Other Issued Share properties Capital share premium revaluation and other Accumulated Minority capital account reserve reserves losses Sub-total interests Total HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000

Balance at 1 January 2006 41,709 374,874 2,659 61,823 (73,548) 407,517 11,693 419,210

Exchange realignment ––– (194) – (194) 193 (1)

Total income and expenses recognised directly in equity –––(194) – (194) 193 (1) Loss for the period –––– (2,558) (2,558) (44) (2,602)

Total income and expenses for the period –––(194) (2,558) (2,752) 149 (2,603) Equity-settled share option expenses –––120 – 120 – 120 Issue of shares (note 12) 27 40 –––67 – 67

Balance at 30 June 2006 41,736 374,914 2,659 61,749 (76,106) 404,952 11,842 416,794

CONDENSED CONSOLIDATED CASH FLOW STATEMENT For the six months ended 30 June 2007

Unaudited For the six months ended 30 June 2007 2006 HK$’000 HK$’000

NET CASH INFLOW/(OUTFLOW) FROM:

OPERATING ACTIVITIES 17,221 5,005 INVESTING ACTIVITIES (1,052) 1,312 FINANCING ACTIVITIES (15,093) (10,844)

NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS 1,076 (4,527) Cash and cash equivalents at beginning of period 20,250 24,552

CASH AND CASH EQUIVALENTS AT END OF PERIOD 21,326 20,025

ANALYSIS OF BALANCES OF CASH AND CASH EQUIVALENTS Cash and bank balances 21,326 20,025

– 144 – APPENDIX III FINANCIAL INFORMATION OF THE GROUP

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS For six months ended 30 June 2007

1. Basis of Preparation

The condensed consolidated interim financial statements are prepared in accordance with Hong Kong Accounting Standard (“HKAS”) 34 “Interim Financial Reporting” and other relevant HKASs and Interpretations, Hong Kong Financial Reporting Standards (collectively, the “HKFRSs”) issued by the Hong Kong Institute of Certified Public Accountants (“HKICPA”) and the disclosure requirements of Appendix 16 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited. Save for those new HKFRSs adopted during the period as set out in note 2 below, the accounting policies and basis of preparation adopted in the preparation of the interim financial statements are the same as those used in the annual financial statements for the year ended 31 December 2006.

2. Impact of New and Revised Hong Kong Financial Reporting Standards

The HKICPA has issued a number of new and revised HKFRSs that are effective for accounting periods commencing on or after 1 January 2007. The adoption of the following HKFRSs does not have any material effect on the financial statements of the Group:

HKAS 1 Amendment Capital Disclosures HKFRS 7 Financial Instruments: Disclosures HK(IFRIC) – Int 7 Applying the Restatement Approach under HKAS 29 Financial Reporting in Hyperinflationary Economies HK(IFRIC) – Int 8 Scope of HKFRS 2 HK(IFRIC) – Int 9 Reassessment of Embedded Derivatives HK(IFRIC) – Int 10 Interim Financial Reporting and Impairment

3. Turnover and Segment Information

The Group’s primary segment is the edible oils and food related business segment. Since it is the only business segment of the Group, no further analysis thereof is presented.

Segment information is presented below in respect of the Group’s geographical segment, which is regarded as the secondary segment.

Unaudited For the six months ended 30 June Hong Kong Mainland China Consolidated 2007 2006 2007 2006 2007 2006 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000

Revenue from external customers 199,095 188,911 169,211 108,591 368,306 297,502

– 145 – APPENDIX III FINANCIAL INFORMATION OF THE GROUP

4. Profit from Operating Activities

The Group’s profit from operating activities is arrived at after charging/(crediting):

Unaudited For the six months ended 30 June 2007 2006 HK$’000 HK$’000

Cost of stocks sold 275,218 213,213 Depreciation 10,959 10,977 Amortisation of prepaid land lease payments 343 210 Gain on disposal of items of property, plant and equipment (12) (503) Gain on disposal of a subsidiary – (430)

5. Finance Costs, Net

Unaudited For the six months ended 30 June 2007 2006 HK$’000 HK$’000

Interest on bank borrowings 5,540 4,847 Less: interest income (331) (274)

5,209 4,573

6. Tax

Hong Kong profits tax has been provided at the rate of 17.5% (2006: 17.5%) on the estimated assessable profits arising in Hong Kong during the period. Overseas taxes have been provided for at the applicable tax rates, if required.

Unaudited For the six months ended 30 June 2007 2006 HK$’000 HK$’000

Tax in the income statement represents: Provision for Hong Kong profits tax 1,265 572 Provision for tax elsewhere 105 131

1,370 703 Deferred tax (37) (25)

1,333 678

– 146 – APPENDIX III FINANCIAL INFORMATION OF THE GROUP

7. Earnings/(Loss) per Share

a. Basic earnings/(loss) per share

Basic earnings/(loss) per share is calculated on the net profit attributable to equity holders of the Company of HK$449,000 (2006: net loss attributable to equity holders of the Company of HK$2,558,000) and weighted average of 419,946,334 (2006: 417,206,107) shares in issue during the period.

b. Diluted earnings/(loss) per share

Diluted earnings per share is calculated on the net profit attributable to equity holders of the Company of HK$449,000 and weighted average of 457,738,821 shares in issue during the period after adjustment for the effect of all dilutive potential ordinary shares of 37,792,487 shares for the six months ended 30 June 2007, calculated as follows:

Unaudited For the six months ended 30 June 2007 HK$’000

Profit for the period attributable to equity holders of the Company 449

Number of shares

Weighted average number of shares in calculating diluted earnings per share: Weighted average of shares for the purpose of basic earnings per share 419,946,334 Effect of dilution: Share options 5,799,925 Warrants 31,992,562

457,738,821

Diluted loss per share for the six months ended 30 June 2006 was not presented as the share options and warrants outstanding during the period had an anti-dilutive effect on the basic loss per share.

8. Property, Plant and Equipment

During the six months ended 30 June 2007, the Group acquired items of property, plant and equipment with a cost of HK$852,000 (2006: HK$873,000). Items of property, plant and equipment with a net book value of HK$53,000 were disposed of during the six months ended 30 June 2007 (2006: HK$1,960,000).

– 147 – APPENDIX III FINANCIAL INFORMATION OF THE GROUP

9. Accounts Receivable

An aged analysis of the accounts receivable as at the balance sheet date, based on payment due date and net of provisions, is as follows: Unaudited Audited 30 June 31 December 2007 2006 HK$’000 HK$’000

Current and less than 60 days 74,175 80,864 Over 60 days 2,382 2,332

76,557 83,196

The Group’s products are sold either on a cash on delivery basis, or on an open account basis ranging from 7 to 70 days of credit. Each customer has a maximum credit limit and overdue balances are regularly reviewed by the senior management. In view of the aforementioned and the fact that the Group’s accounts receivable relate to a large number of diversified customers, the concentration of credit risk is not considered significant. Accounts receivable are non-interestbearing. Included in the Group’s accounts receivable are amounts due from the Group’s jointly- controlled entities of HK$4,421,000 (31 December 2006: HK$6,804,000) which are repayable on credit terms comparable to those offered to other unrelated customers of the Group. 10. Interest-bearing Bank Loans Unaudited Audited 30 June 31 December 2007 2006 HK$’000 HK$’000

Current Unsecured 34,098 36,349 Secured (Note) 110,190 14,500

144,288 50,849 Non-current Secured (Note) – 98,000

144,288 148,849

Note:

Secured interest-bearing loans including certain of the Group’s bank loans in mainland China of approximately HK$94,898,000 (31 December 2006: HK$101,000,000) which were borrowed by PRC subsidiaries of the Group. These loans are secured on certain properties, plant and equipment and prepaid land lease payments of certain PRC subsidiaries and have no recourse to other members of the Group. As the renewal of these loans is in progress and the time required for completing such renewal is longer than expected, they have been classified as current liabilities.

– 148 – APPENDIX III FINANCIAL INFORMATION OF THE GROUP

Bank loans amounting to HK$42,552,000 (31 December 2006: HK$40,849,000) and HK$5,102,000 (31 December 2006: HK$5,000,000) are secured by corporate guarantees given by the Company and an independent third party, respectively. 11. Accounts Payable

An aged analysis of accounts payable as at the balance sheet date, based on the payment due date, is as follows: Unaudited Audited 30 June 31 December 2007 2006 HK$’000 HK$’000

Current and less than 60 days 35,676 33,644 Over 60 days 1,007 787

36,683 34,431

The accounts payable are non-interest-bearing and are normally settled within credit terms of 7 to 60 days.

Included in the Group’s accounts payable are amounts due to certain companies associated with another venturer of the Group’s jointly-controlled entities of HK$2,752,000 (31 December 2006: HK$5,805,000) which are payable on credit terms comparable to those offered by other unrelated suppliers of the Group. 12. Issued Share Capital

a. During the period ended 30 June 2007, the subscription rights attaching to 4,091,130 shares options were exercised at the price of HK$0.1834 per share resulting in the issue of 4,091,130 shares of HK$0.10 each for a total cash consideration, before expenses, of approximately HK$751,000.

b. During the period ended 30 June 2007, 33,094 shares of HK$0.10 each were issued for cash at subscription prices of HK$0.25 per share, pursuant to the exercise of the Company’s warrants for a total cash consideration, before expenses, of approximately HK$8,000. During the period ended 30 June 2006, 267,027 shares of HK$0.10 each were issued for cash at subscription price of HK$0.25 per share, pursuant to the exercise of the Company’s warrants for a total cash consideration, before expenses, of approximately HK$67,000. 13. Capital Commitments

Unaudited Audited 30 June 31 December 2007 2006 HK$’000 HK$’000

Capital commitments for the acquisition of property, plant and equipment: Contracted for 9 9 Authorised, but not contracted for 866 1,076

– 149 – APPENDIX III FINANCIAL INFORMATION OF THE GROUP

14. Contingent Liabilities a. At 30 June 2007, 32 (31 December 2006: 32) employees had completed the required number of years of service under the Hong Kong Employment Ordinance (the “Employment Ordinance”) to be eligible for long service payments on termination of their employment. The Group is only liable to make such payments where the termination meets the required circumstances specified in the Employment Ordinance. If the termination of all these employees met the circumstances required by the Employment Ordinance, the Group’s liability at 30 June 2007 would be approximately HK$444,000 (31 December 2006: HK$383,000). b. At 30 June 2007, the contingent liabilities in respect of guarantees given to banks to secure banking facilities utilised by a jointly-controlled entity of the Group amounted to HK$32,363,000 (31 December 2006: HK$32,849,000). 15. Related Party Transactions Unaudited For the six months ended 30 June 2007 2006 Notes HK$’000 HK$’000 Transactions with jointly-controlled entities*: Sales of goods a 20,416 27,628 Purchases of goods/services b 111 35 Production and oil refinement income c 20,266 20,240 Royalty income d 5,216 5,005 Property rental income e 1,492 1,492 Management fee income f 1,000 1,000 Transactions with companies associated with the controlling shareholders of the Company: Sales of goods a 1,933 1,205 Rental expenses g 1,751 1,669 Consideration received for disposal of subsidiaries h – 430 Transactions with a company in which a director of the Company has an indirect interest: Management fee expenses i 330 280

* The Group has proportionately consolidated 50% of the transactions with its jointly-controlled entities in its consolidated income statement.

Notes:

a. The sale of goods was on normal commercial terms in the ordinary and usual course of business of the Company.

– 150 – APPENDIX III FINANCIAL INFORMATION OF THE GROUP

b. The purchases of goods/services were at prices comparable to those offered by other unrelated suppliers/providers of the Group.

c. The production and oil refinement income was charged based on agreements entered into with the jointly-controlled entities after an arm’s length negotiation and was at rates comparable to those offered to other unrelated customers of the Group.

d. Pursuant to trademark license agreements entered into between the Group and the jointlycontrolled entities, the royalties received for the use of the trademarks are calculated based on a percentage, as agreed between the parties from time to time, on the gross sales value of licensed products sold by the jointly-controlled entities within Hong Kong and Macau.

e. The property rental income related to income arising from letting certain properties and barges included in property, plant and equipment. The property rental income was charged by reference to the relevant industry practice and open market rental and was subject to review on a regular basis.

f. The management fee income was charged based on the cost incurred for providing such services.

g. The rental expenses were paid by reference to open market rental and were subject to the terms of the relevant tenancy agreements.

h. On 25 January 2006, the Group disposed of a subsidiary to a company associated with a substantial shareholder of the Company. The major asset of the subsidiary was a piece of land in Hong Kong. The consideration of disposal was arrived at by reference to the net book value of the subsidiary at the date of disposal (“the Disposal Date”), adjusted for the market value of that piece of land as at the Disposal Date in accordance with the valuation performed by DTZ Debenham Tie Leung, an independent firm of professionally qualified valuers.

i. The management fee expenses represented the payment for services by a director of the Company and his staff through a company in which the director has an indirect interest.

j. Certain of the Group’s bank loans in the PRC are secured by a personal guarantee of HK$6,122,000 given by a senior executive of the Group. 16. Pledge of Assets As at 30 June 2007, certain prepaid land lease payments, certain leasehold land and buildings and certain plant and machinery of the Group with an aggregate carrying value of approximately HK$158,026,000 (31 December 2006: HK$163,971,000), certain accounts receivable and stocks of the Group of approximately HK$31,119,000 (31 December 2006: HK$31,833,000), and a cash deposit of the Group of approximately HK$10,253,000 (31 December 2006: HK$6,529,000) were pledged to banks to secure banking facilities granted to the Group. 17. Post Balance Sheet Event On 17 July 2007, Knight Investment Limited (“Knight”), an indirect wholly-owned subsidiary of the Company, entered into an agreement with Wytak Limited (“Wytak”), a company associated with a substantial shareholder of the Company, to sell a property in Hong Kong to Wytak at a consideration of HK$2,700,000, which was the market value of that property as at the date of disposal in accordance with the valuation performed by DTZ Debenham Tie Leung, an independent firm of professionally qualified valuers. The gain (net of expenses) in relation to the disposal was approximately HK$653,900. Details of the transaction were summarised in an announcement dated 17 July 2007. 18. Approval of the Interim Financial Report These condensed consolidated interim financial statements were approved and authorised for issue by the board of directors on 27 September 2007.

– 151 – APPENDIX IV PROPERTY VALUATION A1a(39) R19.10(5)(d)

A1a(9)(3) The following is the text of a letter, summary of valuations and valuation certificates prepared Para. 34, for the purpose of incorporation in this document received from DTZ Debenham Tie Leung Limited, 3rd Sch., CO an independent property valuer, in connection with their opinion of values of the property interests of the Group as at 31 December 2007.

10/F, Jardine House 1 Connaught Place Central Hong Kong

14 March 2008

The Directors Hop Hing Holdings Limited Flats E & F, 2nd Floor Hop Hing Building 9 Ping Tong Street East Tong Yan San Tsuen Yuen Long New Territories

Dear Sirs,

In accordance with your instructions for us to value the property interests held by Hop Hing Holdings Limited (the “Company”) or its subsidiaries (hereinafter together referred to as the “Group”) in Hong Kong and the People’s Republic of China (the “PRC”), we confirm that we have carried out inspections, made relevant enquiries and obtained such further information as we consider necessary for the purpose of providing the Group with our opinion of the values of such property interests as at 31 December 2007 (the “date of valuation”).

Unless otherwise stated, our valuation of each of the properties represents its market value which in accordance with the Valuation Standards on Properties (First Edition 2005) issued by the Hong Kong Institute of Surveyors is defined as “the estimated amount for which a property should exchange on the date of valuation between a willing buyer and a willing seller in an arm’s length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion.”

Our valuation of each of the property interests excludes an estimated price inflated or deflated by special terms or circumstances such as atypical financing, sale and leaseback arrangement, special considerations or concessions granted by anyone associated with the sale, or any element of special value.

In valuing the properties, we have complied with the requirements set out in Chapter 5 and Practice Note 12 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited and Valuation Standards on Properties (First Edition 2005) issued by the Hong Kong Institute of Surveyors.

No allowance has been made in our valuation for any charges, mortgages or amounts owing on the property interests nor for any expenses or taxation which may be incurred in effecting a sale. Unless otherwise stated, it is assumed that the property interests are free from encumbrances, restrictions and outgoings of an onerous nature which could affect their values.

– 152 – APPENDIX IV PROPERTY VALUATION

In valuing the property interests in Hong Kong which are held under Government Leases expiring before 30 June 1997, we have taken account of the provisions contained in Annex III of the Joint Declaration of the Government of the United Kingdom and the Government of the People’s Republic of China on the Question of Hong Kong and the New Territories Leases (Extension) Ordinance 1988 that such leases have been extended without premium until 30 June 2047 and that rents of three per cent of the rateable value for the time being of such property interests are charged per annum from the date of extension.

In the course of our valuation of the property interests in the PRC, we have assumed that transferable land use rights in respect of the property interests for respective specific terms at nominal annual land use fee have been granted and that any premium payable has already been fully paid. We have assumed that the grantees or the users of the property interests have free and uninterrupted rights to use or to assign the property interests for the whole of the respective unexpired terms as granted. We have relied on the advice given by the Group and the Group’s legal advisor on PRC law, Grandall Legal Group (Shenzhen), regarding the title to each of the property interests and the interests of the Group in the properties.

We have valued the property interests in Group I, which are held and occupied by the Group in Hong Kong, on a market basis by making reference to comparable sales transactions as available in the relevant market.

For property Nos. B2-B5 and B8-B9 in Group II, which are held and occupied by the Group in the PRC, we have valued the property interests on a market basis by making reference to comparable sales transactions as available in the relevant market.

For property Nos. B1 and B6 in Group II, which are held and occupied by the Group in the PRC, due to the specific nature of the buildings and structures, there are no readily identifiable market sales comparables and the buildings and structures cannot be valued by comparison with appropriate market transactions. Therefore, we have adopted the Depreciated Replacement Costs (“DRC”) Approach in valuing the interests in the properties. DRC Approach requires a valuation of the market value of the land in its existing use and an estimate of the new replacement cost of the buildings and structures, from which deductions are made to allow for the age, condition and functional obsolescence.

For property No. B7 which is held and occupied by the Group in the PRC, we have ascribed no commercial value for this property interest because the nature of the land use rights of the property is allocation and the property interest is not freely transferable in the market.

The property interests in Group III and Group IV, which are leased to the Group in Hong Kong and the PRC respectively, have no commercial values due to prohibition of assignment or sub-letting or lack of substantial profit rent.

We have been provided with copies of extract of documents in relation to the title to the owned properties and copies of tenancy agreements in relation to the leased properties. For all properties in Hong Kong, we have caused searches to be made at the Land Registry and in some instances we have been provided with extracts from title documents relating to those properties. However, we have not searched the original documents to ascertain ownership or to verify any

– 153 – APPENDIX IV PROPERTY VALUATION

amendments which may not appear on the copies handed to us but have relied upon the information given to us by the Group in the respect of the Group’s interests in the properties. For all the properties in the PRC, we have not caused land searches for the properties. Moreover, we have not searched the original documents to ascertain ownership or to verify any amendments which may not appear on the copies handed to us. In the course of our valuation, we have relied to a very considerable extent on the information given to us by the Group and its legal advisers on the PRC law. We have accepted advice given to us on such matters as planning approvals or statutory notice, easements, tenure, identification of properties, construction costs, ancillary facilities costs within the properties, particulars of occupancy, tenancy details, site and floor areas, attributable interest of the Group in the properties and all other relevant matters.

Dimensions, measurements and areas included in the attached valuation certificates are based on information provided to us and are therefore only approximations. We have not been able to carry out on-site measurements to verify the site and floor areas of the properties and we have assumed that the areas shown on the copies of the documents handed to us are correct. We have had no reason to doubt the truth and accuracy of the information provided to us by the Group which is material to the valuations. We were also advised by the Group that no material facts have been omitted from the information supplied. No on-site measurement has been taken.

We have inspected the exterior and, where possible, the interior of the properties. However, no structural survey has been made, but in the course of our inspection, we did not note any serious defects. We are not, however, able to report whether the properties are free from rot, infestation or any other structural defects nor were any tests carried out to any of the services. Unless otherwise stated, we have not been able to carry out details on-site measurements to verify the site and floor areas of the properties and we have assumed that the areas shown on the copies of documents handed to us are correct.

Unless otherwise stated, all sums stated in our valuations are in Hong Kong dollars. The exchange rate adopted in our valuations is approximately HK$1=RMB0.94, which was approximately the prevailing exchange rates as at the date of valuation.

We enclose herewith a summary of our valuations and our valuation certificates.

Yours faithfully, For and on behalf of DTZ Debenham Tie Leung Limited

K. B. Wong Registered Professional Surveyor (GP) China Real Estate Appraiser M.H.K.I.S., M.R.I.C.S. Director

Note: Mr. K. B. Wong is a Registered Professional Surveyor who has over 20 years’ experience in the valuation of properties in Hong Kong and the PRC.

– 154 – APPENDIX IV PROPERTY VALUATION

SUMMARY OF VALUATIONS

Group I – Property interests held and occupied by the Group in Hong Kong

Capital value in existing state Capital value in Interest attributable to existing state as at attributable the Group as at Property interest 31 December 2007 to the Group 31 December 2007 HK$ % HK$

A1. Car Parking Space 1,800,000 100 1,800,000 Nos. 7, 8 and 10 on Ground Floor, Hop Hing Industrial Building, 704 Castle Peak Road, Cheung Sha Wan, Kowloon

A2. The Remaining Portion 2,100,000 100 2,100,000 of Section G of Lot No. 2008 in Demarcation District No. 121 Tong Yan San Tsuen, Yuen Long, New Territories

A3. The Remaining Portion of 6,900,000 100 6,900,000 Section A of Lot No. 32 in Demarcation District No. 127, Kiu Tau Wai, Ping Shan, Yuen Long, New Territories

Total of Group I: 10,800,000

– 155 – APPENDIX IV PROPERTY VALUATION

Group II – Property interests held and occupied by the Group in the PRC

Capital value in existing state Capital value in Interest attributable to existing state as at attributable the Group as at Property interest 31 December 2007 to the Group 31 December 2007 HK$ % HK$

B1. An industrial complex situated 143,000,000 100 143,000,000 at Hexing Road, Hengli Town, Nansha, Guangzhou, Guangdong Province, the PRC

B2. Unit Nos. 603 and 604, Block 3, 310,000 100 310,000 Yian Garden, Dayuan New Area, Hengli Town, Nansha, Guangzhou, Guangdong Province, the PRC

B3. Unit Nos. 1501, 1502 and 1506, 2,400,000 100 2,400,000 New Century Plaza, 2-6 Hongde Road, Haizhu District, Guangzhou, Guangdong Province, the PRC

B4. Unit No. 504, Block 3, 150,000 100 150,000 Yian Garden, Dayuan New Area, Hengli Town, Nansha, Guangzhou, Guangdong Province, the PRC

– 156 – APPENDIX IV PROPERTY VALUATION

Capital value in existing state Capital value in Interest attributable to existing state as at attributable the Group as at Property interest 31 December 2007 to the Group 31 December 2007 HK$ % HK$

B5. A composite building situated at 13,800,000 100 13,800,000 No. 8 Hexing Road, Nantou Town, Zhongshan, Guangdong Province, the PRC

B6. An industrial factory 1,900,000 51 969,000 situated in Sanzu, Meiyuan Village, Danghu Town, Pinghu, Zhejiang Province, the PRC

B7. An industrial complex situated No commercial 61 No commercial at No. 25 Xigoumishi Street, value value Shaoxing, Zhejiang Province, the PRC

B8. Unit Nos. 205 and 303, Block 5 750,000 61 457,500 and 2 bicycle parking shelters, Dajiang Residence, Shaoxing, Zhejiang Province, the PRC

B9. Unit No. 501, Block 6 420,000 61 256,200 and a bicycle parking shelter, Dajiang Residence, Shaoxing, Zhejiang Province, the PRC

Total of Group II: 161,342,700

– 157 – APPENDIX IV PROPERTY VALUATION

Group III – Property interests leased to the Group in Hong Kong

Capital value in existing state Capital value in Interest attributable to existing state as at attributable the Group as at Property interest 31 December 2007 to the Group 31 December 2007 HK$ % HK$

C1. A piece of land situated at No commercial value Tong Yan San Tsuen in Demarcation District No. 121 which is held under Yuen Long Short Term Tenancy No. 1237

C2. Portion of Unit on Ground Floor, No commercial value Units A, B, C, D, E, F, G, H, J, K, L and M on 1st Floor and Part of Unit B, Units D, E, F, K and L on 2nd Floor, Hop Hing Building, 9 Ping Tong Street East, Tong Yan San Tsuen, Yuen Long, New Territories

C3. Section A of Lot No. 1284 No commercial value in Demarcation District No. 121 and the Remaining Portion of Lot No. 1278 in Demarcation District No. 121, Tong Yan San Tsuen, Yuen Long, New Territories

C4. The Remaining Portion of No commercial value Lot No. 1283 in Demarcation District No. 121, Tong Yan San Tsuen, Yuen Long, New Territories

Total of Group III: No commercial value

– 158 – APPENDIX IV PROPERTY VALUATION

Group IV – Property interests leased to the Group in the PRC

Capital value in existing state Capital value in Interest attributable to existing state as at attributable the Group as at Property interest 31 December 2007 to the Group 31 December 2007 HK$ % HK$

D1. Flat No. 801, No commercial value Unit 2, Block 2, Jade Court, Hong Shi Central Garden, Hushu South Road, Hangzhou City, Zhejiang Province, the PRC

D2. Unit Nos. 301 and 302, No commercial value No. 1 Lane 339, Dapu Road, Luwan District, Shanghai, the PRC

D3. Room 205, Shenkanyuan, No commercial value Qingping Road, Luohu District, Shenzhen, Guangdong Province, the PRC

D4. Unit No. 712, No commercial value No. 77 Zhongshan Avenue, Tianhe District, Guangzhou, Guangdong Province, the PRC

– 159 – APPENDIX IV PROPERTY VALUATION

Capital value in existing state Capital value in Interest attributable to existing state as at attributable the Group as at Property interest 31 December 2007 to the Group 31 December 2007 HK$ % HK$

D5. Two commercial Units situated on Level 1, No commercial value Pinghu Grain Administration Building, South of Jiefang East Road, Danghu Town, Pinghu, Zhejiang Province, the PRC

D6. An industrial complex situated at No commercial value No. 99 Chengnanxi Road, Danghu Town, Pinghu, Zhejiang Province, the PRC

D7. Unit No.28 on Level 1, No commercial value Block 5, Jinwan Plaza, No.111 Nantou Main Road West, Nantou Town, Zhongshan City, Guangdong Province, the PRC

Total of Group IV: No commercial value

Grand Total: 172,142,700

– 160 – APPENDIX IV PROPERTY VALUATION

VALUATION CERTIFICATE

Group I – Property interests held and occupied by the Group in Hong Kong

Capital value in Particulars of existing state as at Property interest Description and tenure occupancy 31 December 2007

A1. Car Parking Space The property comprises three Lorry parking spaces nos. HK$1,800,000 Nos. 7, 8 and 10 on covered lorry parking spaces on 7 and 8 were let for a Ground Floor, the ground floor of a 13-storey term of 4 years from 1 Hop Hing Industrial industrial building completed in March 2004 to 29 Building, 1981. February 2008 at a 704 Castle Peak monthly rent of HK$5,500 Road, The property is held from the exclusive of rates and Cheung Sha Wan, Government under a Government management fees. These Kowloon lease for a term of 75 years parking spaces and the commencing from 1 July 1898 lorry parking space no. 10 3/1727th shares of renewed for a term of 24 years is currently used for and in New Kowloon less the last 3 days thereof which loading and unloading Inland Lot No. 2118 has been statutorily extended for purposes. a further term of 50 years to 30 June 2047. The current Government rent payable for the property is an amount equal to 3% of the rateable value for the time being of the property per annum.

Notes:

(1) The registered owner of the property is Knight Investment Limited, an indirect wholly-owned subsidiary of the Company.

(2) The property is subject to a mortgage and a rental assignment both in favour of The Hongkong and Shanghai Banking Corporation Limited.

(3) The property is zoned on Cheung Sha Wan Outline Zoning Plan No. S/K5/30 dated 1 June 2007 for “Other Specific Uses (Business)” purposes.

– 161 – APPENDIX IV PROPERTY VALUATION

Capital value in Particulars of existing state as at Property interest Description and tenure occupancy 31 December 2007

A2. The Remaining The property comprises a piece The property is currently HK$2,100,000 Portion of Section G of land with a registered area of occupied by the Group for of Lot No. 2008 in approximately 1,229.19 sq.m. storage of edible oil. Demarcation District (13,231 sq.ft.). No. 121 Tong Yan San Tsuen, Currently standing on the site Yuen Long, are a number of oil tanks. New Territories The property is held under New Grant No. 3493 for a term of 99 years less the last 3 days thereof from 1 July 1898 which has been statutorily extended for a further term of 50 years to 30 June 2047. The current Government rent payable for the property is an amount equal to 3% of the rateable value for the time being of the property per annum.

Notes:

(1) The registered owner of the property is Knight Investment Limited, an indirect wholly-owned subsidiary of the Company.

(2) The property is subject to a Short Term Waiver No. 1548 dated 8 September 1989 and an agreement supplementary to short term waiver, granted by the District Lands Office, Yuen Long. The basic terms of the waiver are as follows:

Term : One year certain from 1 October 1989 and thereafter quarterly.

User : Manufacture and storage of edible oil.

Special : (i) Total permitted site coverage shall not exceed 749.92 sq.m. (8,072 sq.ft.). Conditions (ii) Buildings not to be more than 6.7 m. (22 ft.) in height.

Fee : The current waiver fee payable for the property is HK$12,830 per quarter.

(3) The property is subject to a mortgage and a rental assignment both in favour of The Hongkong and Shanghai Banking Corporation Limited.

(4) The property is zoned on Tong Yan San Tsuen Outline Zoning Plan No. S/YL-TYST/10 dated 7 February 2006 for “Industrial (Group D)” purposes.

– 162 – APPENDIX IV PROPERTY VALUATION

Capital value in Particulars of existing state as at Property interest Description and tenure occupancy 31 December 2007

A3. The Remaining The property comprises an The property is currently HK$6,900,000 Portion of Section A irregularly shaped piece of land occupied by the Group for of Lot No. 32 in with a registered area of storage of edible oil. Demarcation District approximately 5,268.67 sq.m. No. 127, (56,712 sq.ft.). Kiu Tau Wai, Ping Shan, The property is currently Yuen Long, developed with various single- New Territories storey structures with a total gross floor area of approximately 612.22 sq.m. (6,590 sq.ft.).

The property is held from the Government for a term of 99 years less the last 3 days thereof commencing from 1 July 1898 which has been statutorily extended for a further term of 50 years to 30 June 2047. The current Government rent payable for the property is an amount equal to 3% of the rateable value for the time being of the property per annum.

Notes:

(1) The registered owner of the property is Knight Investment Limited, an indirect wholly-owned subsidiary of the Company.

(2) The property is subject to a Short Term Waiver No. 3149 dated 9 June 2004 granted by the District Lands Office, Yuen Long. The basic terms of the waiver are as follows:

Term : One year certain from 1 July 2004 and thereafter quarterly.

User : Production of vegetable oil and liquid detergent.

Special : (i) Total permitted built-over shall not exceed 830.62 sq.m. (8,941 sq.ft.). Conditions (ii) Building shall not exceed 7.5 m. (24.6 ft.) in height.

Fee : The current waiver fee payable for the property is HK$21,150 per quarter.

(3) The property is subject to a mortgage and a rental assignment both in favour of The Hongkong and Shanghai Banking Corporation Limited.

(4) The property is zoned on Ping Shan Outline Zoning Plan No. S/YL-PS/11 dated 1 February 2005 for “Industrial (Group D)” purposes.

– 163 – APPENDIX IV PROPERTY VALUATION

Group II – Property interests held and occupied by the Group in the PRC

Capital value in Particulars of existing state as at Property interest Description and tenure occupancy 31 December 2007

B1. An industrial The property comprises an The main portion of the HK$143,000,000 complex situated at industrial complex erected on 4 property is currently Hexing Road, contiguous parcels of land with a occupied by Group for Hengli Town, total site area of approximately production and storage of Nansha, 131,357.00 sq.m. (1,413,927 oil products. Guangzhou, sq.ft.) and an adjacent piece of The remaining land Guangdong Province, land with a site area of portion of the property, the PRC approximately 73,056.00 sq.m. comprising a site area of (786,375 sq.ft.). approximately 73,056 The industrial complex sq.m., is currently used comprises 9 blocks of buildings for storage/maintenance (title certificates have been purposes. issued), various buildings and structures (title certificates have not yet been issued) (please see Note (1) below) and a pier for vessels of 5,000 tons completed in 1997.

The details of the gross floor areas of the main factory buildings and staff quarters of the property (with title certificates) are as follows:

Use Gross Floor Area sq.m. sq.ft.

Factory 12,846.20 138,276 Warehouse and bottling plant 19,800.00 213,127 Staff Quarters and Canteen 9,114.90 98,113

41,761.10 449,516

The land use rights of the property have been granted for the respective terms of 50 years from 20 June 1995, 28 August 1995, 18 December 1995, 19 August 1996 and 16 August 1999 for industrial use.

Notes:

(1) As advised by the Group, there are various buildings and structures (including a power room, four pump rooms and a guard room) erected within the industrial complex of which the relevant building ownership certificates have not been obtained. In the course of our valuation, we have ascribed no commercial value to such buildings and structures of the property.

– 164 – APPENDIX IV PROPERTY VALUATION

(2) According to 2 Certificates for the Use of State-owned Land Nos. 20-000024, (1996) 20-000459 and (2000) 20-000607, (2000) 20-000047 issued by People’s Government of Panyu, the land use rights of two parcels of land comprising a total site area of 104,102 sq.m., are vested in Panyu Hop Hing Oils & Fats Co., Ltd. (an indirect wholly-owned subsidiary of the Company) for a term of 50 years due to expire on 18 August 2046 and 15 August 2049 respectively for industrial use. The details are summarized as follows:

Approximate Certificate No. Address Land Use Term Site Area (sq.m.)

20-000024, (1996) 20-000459 Yisha Village, Hengli Town, 19 August 1996 – 31,046 Panyu 18 August 2046

20-000607, (2000) 20-000047 Yisha Village, Hengli Town, Due to expire on 73,056 Panyu 15 August 2049

According to 3 other Certificates for the Use of State-owned Land Nos. 20-000445, (1996) 20-000010; 20-000446, (1996) 20-000011; 20-000447, (1996) 20-000012 issued by People’s Government of Panyu dated 8 February 1996 and 16 June 1996, the land use rights of three parcels of land comprising a total site area of 100,311 sq.m., are vested in Panyu Kwong Hing Packaging Co., Ltd. (an indirect wholly-owned subsidiary of the Company) for a term of 50 years due to expire on 19 June 2045, 27 August 2045 and 17 December 2045 respectively for industrial use. The details are summarized as follows:

Approximate Certificate No. Address Land Use Term Site Area (sq.m.)

20-000445, (1996) 20-000010 Yisha Village, Hengli Town, 20 June 1995 – 32,083 Panyu 19 June 2045

20-000446, (1996) 20-000011 Yisha Village, Hengli Town, 28 August 1995 – 34,257 Panyu 27 August 2045

20-000447, (1996) 20-000012 Yisha Village, Hengli Town, 18 December 1995 – 33,971 Panyu 17 December 2045

(3) According to 3 Real Estate Title Certificates Nos. 1841614, 1141104 and 1841615 issued by People’s Government of Panyu, the building ownership of the property comprising a total gross floor area of 12,846.20 sq.m. is vested in Panyu Hop Hing Oils & Fats Co., Ltd.. The details are summarized as follows:

Approximate Certificate No. Building No. of Storey Gross Floor Area (sq.m.)

1841614 Main Factory Building Phase 1 4 4,118.20 1141104 Main Factory Building Phase 2 4 3,778.00 1841615 Factory A 1 4,950.00

12,846.20

– 165 – APPENDIX IV PROPERTY VALUATION

According to 6 other Real Estate Title Certificates Nos. 1841611, 1841612, 1841613, 1841616, 1841617 and 1841610 issued by People’s Government of Panyu, the building ownership of the property comprising a total gross floor area of 28,914.90 sq.m. is vested in Panyu Kwong Hing Packaging Co., Ltd. The details are summarized as follows:

Approximate Certificate No. Building No. of Storey Gross Floor Area (sq.m.)

1841611 Warehouse 3 1 4,950.00 1841612 Warehouse 1 1 4,950.00 1841613 Bottling Plant 1 4,950.00 1841616 Warehouse 2 1 4,950.00 1841617 Staff Quarters & Canteen 8 6,892.20 1841610 Senior Staff Quarters 8 2,222.70

28,914.90

(4) According to Business License No. (301556) dated 11 January 2008, Panyu Hop Hing Oils & Fats Co., Ltd. was established with a registered capital of HK$75,000,000 for a valid operation period from 26 December 1995 to 21 December 2045.

According to Business License No. (300192) dated 14 January 2008, Panyu Kwong Hing Packaging Co., Ltd. was established with a registered capital of HK$50,000,000 for a valid operation period from 18 January 1995 to 18 January 2045.

(5) According to the legal opinion issued by the Company’s PRC legal advisers:

(i) The land use rights and building ownership of the property, comprising a total site area of 204,413.00 sq.m. and a total gross floor area of 41,761.10 sq.m., have been vested in Panyu Hop Hing Oils & Fats Co., Ltd. and Panyu Kwong Hing Packaging Co., Ltd. respectively.

(ii) In the remaining land use term, Panyu Hop Hing Oils & Fats Co., Ltd. and Panyu Kwong Hing Packaging Co., Ltd. are entitled to use, transfer, lease and mortgage the property.

(iii) The land use rights and building ownership of the property are subject to a mortgage in favour of Bank of China Panyu Sub-branch.

(6) The status of title and grant of major approvals and licenses in accordance with the PRC legal opinion and information provided by the Group are as follows:

Certificate for the Use of State-owned Land Yes Real Estate Title Certificate Yes (Part) Business License Yes

– 166 – APPENDIX IV PROPERTY VALUATION

Capital value in Particulars of existing state as at Property interest Description and tenure occupancy 31 December 2007

B2. Unit Nos. 603 The property comprises 2 The property is currently HK$310,000 and 604, residential units on Level 6 of a occupied by the Group as Block 3, 7-storey residential building staff quarters. Yian Garden, completed in 1995. Dayuan New Area, Hengli Town, The property has a total gross Nansha, floor area of approximately Guangzhou, 217.10 sq.m. (2,337 sq.ft.). Guangdong Province, the PRC The land use rights of the property have been granted for a term of 70 years from 9 December 1993 to 9 December 2063 for commercial and residential uses.

Notes:

(1) According to the following 2 Real Estate Title Certificates, the legal titles of the property are vested in Panyu Hop Hing Oils & Fats Co., Ltd. (an indirect wholly-owned subsidiary of the Company) for a land use term of 70 years from 9 December 1993 to 9 December 2063 for commercial & residential use. The gross floor areas are summarized as follows:

Approximate Certificate No. Unit No. Gross Floor Area (sq.m.)

0623541 603 108.55 0623542 604 108.55

217.10

(2) According to Business License No. (301556) dated 11 January 2008, Panyu Hop Hing Oils & Fats Co., Ltd. was established with a registered capital of HK$75,000,000 and has an operation period from 26 December 1995 to 21 December 2045.

(3) According to the legal opinion issued by the Company’s PRC legal advisers:

(i) The land use rights and building ownership of the property, comprising a total gross floor area of 217.10 sq.m., have been vested in Panyu Hop Hing Oils & Fats Co., Ltd.

(ii) In the remaining land use term, Panyu Hop Hing Oils & Fats Co., Ltd. is entitled to use, transfer, lease and mortgage the property.

(4) The status of title and grant of major approvals and licenses in accordance with the PRC legal opinion and information provided by the Group are as follows:

Real Estate Title Certificate Yes Business License Yes

– 167 – APPENDIX IV PROPERTY VALUATION

Capital value in Particulars of existing state as at Property interest Description and tenure occupancy 31 December 2007

B3. Unit Nos. 1501, The property comprises 3 office At the date of valuation, HK$2,400,000 1502 and 1506, units on Level 15 of a 28-storey the property was occupied New Century Plaza, composite building completed in by the Group as office. 2-6 Hongde Road, 1994. However, unit Nos. 1501 Haizhu District, and 1502 have been let Guangzhou, The property has a total gross for a term of 3 years Guangdong Province, floor area of approximately from 1 January 2008 to the PRC 344.01 sq.m. (3,703 sq.ft.). 31 December 2010 at a total monthly rent of The land use rights of the RMB11,000. property have been granted for a term of 50 years from April 1994 for office use.

Notes:

(1) According to the following 3 Real Estate Title Certificates, the legal titles of the units are vested in Panyu Hop Hing Oils & Fats Co., Ltd. (an indirect wholly-owned subsidiary of the Company) for office use. The gross floor areas are summarized as follows:

Commencement Date of Approximate Certificate No. Unit No. Land Use Term Gross Floor Area (sq.m.)

0415766 1501 30 April 1994 147.76 0415767 1502 30 April 1994 96.66 0415768 1506 30 April 1994 99.59

344.01

(2) According to Business License No. (301556) dated 11 January 2008, Panyu Hop Hing Oils & Fats Co., Ltd. was established with a registered capital of HK$75,000,000 and has an operation period from 26 December 1995 to 21 December 2045.

(3) According to the legal opinion issued by the Company’s PRC legal advisers:

(i) The land use rights and building ownership of the property, comprising a total gross floor area of 344.01 sq.m., have been vested in Panyu Hop Hing Oils & Fats Co., Ltd.

(ii) In the remaining land use term, Panyu Hop Hing Oils & Fats Co., Ltd. is entitled to use, transfer, lease and mortgage the property.

(4) The status of title and grant of major approvals and licenses in accordance with the PRC legal opinion and information provided by the Group are as follows:

Real Estate Title Certificate Yes Business License Yes

– 168 – APPENDIX IV PROPERTY VALUATION

Capital value in Particulars of existing state as at Property interest Description and tenure occupancy 31 December 2007

B4. Unit No. 504, The property comprises a The property is currently HK$150,000 Block 3, residential unit on Level 5 of a occupied by Group as Yian Garden, 7-storey residential building staff quarters. Dayuan New Area, completed in 1995. Hengli Town, Nansha, The property has a total gross Guangzhou, floor area of approximately Guangdong Province, 108.55 sq.m. (1,168 sq.ft.). the PRC The land use rights of the property have been granted for a land use term of 70 years from 9 December 1993 to 9 December 2063 for commercial and residential uses.

Notes:

(1) According to the following Real Estate Title Certificate No. 0623543, the legal titles of the property are vested in Panyu Kwong Hing Packaging Co., Ltd. (an indirect wholly-owned subsidiary of the Company) for a land use term of 70 years from 9 December 1993 to 9 December 2063 for commercial and residential uses. The gross floor area of the property is 108.55 sq.m.

(2) According to Business License No. (300192) dated 14 January 2008, Panyu Kwong Hing Packaging Co., Ltd. was established with a registered capital of HK$50,000,000 for a valid operation period from 18 January 1995 to 18 January 2045.

(3) According to the legal opinion issued by the Company’s PRC legal advisers:

(i) The land use rights and building ownership of the property, comprising a total gross floor area of 108.55 sq.m., have been vested in Panyu Kwong Hing Packaging Co., Ltd.

(ii) In the remaining land use term, Panyu Kwong Hing Packaging Co., Ltd. is entitled to use, transfer, lease and mortgage the property.

(4) In accordance with the information provided by the Group, the status of the title and grant of major approvals and licenses are as follows:

Real Estate Title Certificate Yes Business License Yes

– 169 – APPENDIX IV PROPERTY VALUATION

Capital value in Particulars of existing state as at Property interest Description and tenure occupancy 31 December 2007

B5. A composite building The property comprises a 5- The property is currently HK$13,800,000 situated at storey residential/commercial vacant and in a bare shell No. 8 Hexing Road, building erected on a site with a condition. Nantou Town, site area of 3,522.50 sq.m. Zhongshan, (37,916 sq.ft.) completed in Guangdong Province, 1997. the PRC The property has a total gross floor area of approximately 5,817.68 sq.m. (62,622 sq.ft.).

The land use rights of the property have been granted for a term due to expire on 30 November 2062 for commercial and residential uses.

Notes:

(1) According to Certificates for the Use of State-owned Land No. (2007) 020755, the land use rights of the property comprising a site area of 3,522.50 sq.m. are vested in Sino Can Edible Oil Manufacturing & Technology Co Ltd (an indirect wholly-owned subsidiary of the Company) for a land use term due to expire on 30 November 2062 for commercial and residential uses.

(2) According to Real Estate Title Certificate No. C5769931, the building ownership of the property, comprising a gross floor area of 5,817.68 sq.m., has been vested in Sino Can Edible Oil Manufacturing & Technology Co Ltd.

(3) According to the legal opinion issued by the Company’s PRC legal advisers:

(i) The land use rights and building ownership of the property, comprising a site area of 3,522.50 sq.m. and a gross floor area of 5,817.68 sq.m., have been vested in Sino Can Edible Oil Manufacturing & Technology Co Ltd.

(ii) In the remaining land use term, Sino Can Edible Oil Manufacturing & Technology Co Ltd is entitled to use, transfer, lease and mortgage the property.

(4) In accordance with the information provided by the Group, the status of the title and grant of major approvals and licenses are as follows:

Certificates for the Use of State-owned Land Yes Real Estate Title Certificate Yes

– 170 – APPENDIX IV PROPERTY VALUATION

Capital value in Particulars of existing state as at Property interest Description and tenure occupancy 31 December 2007

B6. An industrial factory The property comprises an The property is currently HK$1,900,000 situated at Sanzu, industrial factory erected on a occupied by the Group for Meiyuan Village, parcel of land with a site area of production and storage of (51% interest Danghu Jie Dao, approximately 2,500 sq.m. oil products. attributable to Pinghu, (26,910 sq.ft.). the Group: Zhejiang Province, HK$969,000) the PRC The industrial complex comprises a main workshop of 3 storeys and a single storey ancillary warehouse (please see Note (1) below) completed in the 1990’s.

The main workshop has a total gross floor area of approximately 1,197.44 sq.m. (12,889 sq.ft.).

The land use rights of the property have been granted for a term due to expire on 18 January 2023 for industrial use.

Notes:

(1) According to the information provided by the Group, the relevant building ownership certificate for the single- storey ancillary warehouse erected within the subject site with a gross floor area of 88.46 sq.m. (952 sq.ft.) for storage of oil products has not been granted as at the date of valuation. Hence, in the course of our valuation, we have ascribed no commercial value to the said single-storey warehouse.

(2) According to Certificate for the Use of State-owned Land No. (2005) 22-106 dated 15 November 2005 issued by Pinghu Land Administration Bureau, the legal title of the land is vested in Pinghu Hop Hing Vegetable Oils Co., Ltd. (an indirect 51%-owned subsidiary of the Company) for a land use term due to expire on 18 January 2023 for industrial use. The site area of the property is 2,500 sq.m.

(3) According to Building Ownership Certificate No. 006698 dated 28 January 2000, the ownership of a 3-storey building is vested in Pinghu Hop Hing Vegetable Oils Co., Ltd. The gross floor area is 1,197.44 sq.m. for non- residential use.

– 171 – APPENDIX IV PROPERTY VALUATION

(4) According to the Joint Venture Contract and its Amendments, the salient conditions are as follows:

Joint Venture Company : Pinghu Hop Hing Vegetable Oils Co., Ltd.

Parties : A – Pinghu State-owned Asset Operation Co., Ltd. B – Zhejiang Oil & Fat Co., Ltd. C – Hong Kong Hop Hing Oil Refinery (Pinghu) Ltd.

Registered capital : US$1,400,000

Capital contribution : Party A – 29% Party B – 20% Party C – 51%

Party A shall contribute the existing facilities and land together with cash. Party B and C shall contribute cash.

Joint venture period : 30 years from the date of issuance of the Business License.

(5) According to Business License No. 000195 dated 30 September 2005, Pinghu Hop Hing Vegetable Oils Co., Ltd. was established with a registered capital of US$1,400,000 and has an operation period from 17 March 1993 to 16 March 2023.

(6) According to the legal opinion issued by the Company’s PRC legal advisers:

(i) The land use rights and building ownership of the property, comprising a site area of 2,500 sq.m. and a gross floor area of 1,197.44 sq.m., have been vested in Pinghu Hop Hing Vegetable Oils Co., Ltd.

(ii) In the remaining land use term, Pinghu Hop Hing Vegetable Oils Co., Ltd. is entitled to use, transfer, lease and mortgage the property.

(iii) The land use rights and building ownership of the property are subject to a mortgage in favour of Bank of China Pinghu Sub-branch.

(7) In accordance with the information provided by the Group, the status of the title and grant of major approvals and licenses are as follows:

Certificates for the Use of State-owned Land Yes Building Ownership Certificate Yes (Part) Joint Venture Contract Yes Business License Yes

– 172 – APPENDIX IV PROPERTY VALUATION

Capital value in Particulars of existing state as at Property interest Description and tenure occupancy 31 December 2007

B7. An industrial The property comprises an The property is currently No commercial value complex situated at industrial complex erected on a vacant. No.25 Xiguomishi site with an area of (Please see Note (3) Street, approximately 5,004.02 sq.m. below) Shaoxing, (53,863 sq.ft.). Zhejiang Province, the PRC The industrial complex comprises a main workshop of 4 storeys and a single-storey ancillary warehouse with title certificates issued. These buildings were completed in about 1992.

The main workshop and the ancillary warehouse have a total gross floor area of approximately 1,281.42 (13,793 sq.ft.).

In addition, the industrial complex also comprises various buildings and structures that title certificates have not been obtained yet. (please see Note (3) below)

The land use rights of the property have been allocated for industrial use.

Notes:

(1) According to Certificate for the Use of State-owned Land No. (1995) 0131 dated 7 March 1995 issued by Shaoxing Land Administration Bureau, the land use rights of the land have been allocated to Zhejiang Hop Hing Oils & Fats Co., Ltd. (an indirect 61%-owned subsidiary of the Company) for industrial use. The site area of the property is 5,004.02 sq.m. (53,863 sq.ft.).

(2) According to Building Ownership Certificate No. 3312 dated 24 March 2000, the ownership of a 4-storey workshop and a single storey warehouse is vested in Zhejiang Hop Hing Oils & Fats Co., Ltd. with a total gross floor area of 1,281.42 sq.m. for workshop use.

– 173 – APPENDIX IV PROPERTY VALUATION

(3) According to the information provided by the Group, the relevant building ownership certificates for several blocks of buildings and structures have not been obtained as at the date of valuation. Also, the nature of the land use rights of the property interest is designated as allocated land by the competent land administrative authorities. We have ascribed no commercial value to this property interest.

(4) According to the Joint Venture Contract dated 30 May 1995, the salient conditions are as follows:

Joint Venture Company : Zhejiang Hop Hing Oils & Fats Co., Ltd.

Parties : A – Shaoxing Oils & Fats Company B – Shaoxing Industrial State-owned Capital Operation Co., Ltd. C – Hong Kong Hop Hing Oil Refinery (Hangzhou) Ltd.

Registered capital : US$1,400,000

Capital contribution : Party A – 29% Party B – 10% Party C – 61%

Party A shall contribute the existing facilities and land together with cash. Party B and C shall contribute cash.

Joint venture period : 30 years from the date of issuance of the Business License.

(5) According to Business License No. 000303 dated 17 January 2002, Zhejiang Hop Hing Oils & Fats Co., Ltd. was established with a registered capital of US$1,400,000 and has an operation period from 25 March 1993 to 24 March 2023.

(6) According to the legal opinion issued by the Company’s PRC legal advisers:

(i) The land use rights of the property, comprising a site area of 5,004.02 sq.m., have been allocated to Zhejiang Hop Hing Oils & Fats Co., Ltd.

(ii) The building ownership of the property, comprising a gross floor area of 1,281.42 sq.m., has been vested in Zhejiang Hop Hing Oils & Fats Co., Ltd.

(iii) Zhejiang Hop Hing Oils & Fats Co., Ltd. is entitled to use the property.

(7) In accordance with the information provided by the Group, the status of the title and grant of major approvals and licenses are as follows:

Certificates for the Use of State-owned Land Yes (Allocation) Building Ownership Certificate Yes (Part) Joint Venture Contract Yes Business License Yes

– 174 – APPENDIX IV PROPERTY VALUATION

Capital value in Particulars of existing state as at Property interest Description and tenure occupancy 31 December 2007

B8. Unit Nos. 205 and The property comprises 2 The property is currently HK$750,000 303, residential units and 2 bicycle vacant. Block 5 and 2 bicycle parking shelters in a 5-storey (61% interest parking shelters, residential building completed in attributable to Dajiang Residence, about 1993. the Group: Shaoxing, HK$457,500) Zhejiang Province, The property has a total gross the PRC area of approximately 134.10 sq.m. (1,443 sq.ft.).

As advised by the Company’s PRC legal advisers, the land use rights of the property have been allocated for a term due to expire on 31 December 2050 for residential use.

Notes:

(1) According to Certificate for the Use of State-owned Land No. (2000) 1-3199 dated 29 February 2000 issued by Shaoxing Land Administration Bureau, the legal title of the land is vested in Zhejiang Hop Hing Oils & Fats Co., Ltd. (an indirect 61%-owned subsidiary of the Company) for residential use. The nature of the land use rights is allocation.

(2) According to Building Ownership Certificate No. 1034 dated 24 January 2002, the legal title of the property is vested in Zhejiang Hop Hing Oils & Fats Co., Ltd. with a total gross floor area of approximately 134.10 sq.m.

(3) According to Business License No. 000303 dated 17 January 2002, Zhejiang Hop Hing Oils & Fats Co., Ltd. was established with a registered capital of US$1,400,000 and has an operation period from 25 March 1993 to 24 March 2023.

– 175 – APPENDIX IV PROPERTY VALUATION

(4) According to the legal opinion issued by the Company’s PRC legal advisers:

(i) The land use rights of the property have been allocated to Zhejiang Hop Hing Oils & Fats Co., Ltd.

(ii) The building ownership of the property, comprising a total gross floor area of 134.10 sq.m., has been vested in Zhejiang Hop Hing Oils & Fats Co., Ltd.

(iii) According to the relevant regulation of Shaoxing People’s Government Office, the land use term of the buildings with reinforced brick structure built before 1 January 2001 will be expired on 31 December 2050. The building erected on such allocated land can be transferred.

(iv) Within the remaining land use term, Zhejiang Hop Hing Oils & Fats Co., Ltd. is entitled to use the property. Also, Zhejiang Hop Hing Oils & Fats Co., Ltd. is entitled to transfer and lease the property to third parties.

(v) In case the property is to be transferred, Zhejiang Hop Hing Oils & Fats Co., Ltd. may choose to transfer the property by either of the following ways:

(a) The buyer to pay the land premium payable to the government for changing the nature of the land of the property from allocated land to granted land.

(b) Zhejiang Hop Hing Oils & Fats Co., Ltd. may transfer the property to the buyer on the basis that the nature of the land of the property is remained as allocated land and Zhejiang Hop Hing Oils & Fats Co., Ltd. has to pay a land gain fee payable to the government.

(5) In accordance with the information provided by the Group, the status of the title and grant of major approvals and licenses are as follows:

Certificates for the Use of State-owned Land Yes (Allocation) Building Ownership Certificate Yes Joint Venture Contract Yes Business License Yes

– 176 – APPENDIX IV PROPERTY VALUATION

Capital value in Particulars of existing state as at Property interest Description and tenure occupancy 31 December 2007

B9. Unit No. 501, The property comprises a The property is currently HK$420,000 Block 6 and a bicycle residential unit and a bicycle vacant. parking shelter, parking shelter in a 5-storey (61% interest Dajiang Residence, residential building completed in attributable to Shaoxing, about 1993. the Group: Zhejiang Province, HK$256,200) the PRC The unit of the property has a total gross area of approximately 78.44 sq.m. (844 sq.ft.).

As advised by the Company’s PRC legal advisers, the land use rights of the property are allocated for a term due to expire on 31 December 2050 for residential use.

Notes:

(1) According to Certificate for the Use of State-owned Land No. (2000) 1-3198 dated 29 February 2000 issued by Shaoxing Land Administration Bureau, the legal title of the land is vested in Zhejiang Hop Hing Oils & Fats Co., Ltd. (an indirect 61%-owned subsidiary of the Company) for residential use. The nature of the land use rights is allocation.

(2) According to Building Ownership Certificate No. 032475 dated 10 July 1995, the legal title of the property is vested in Zhejiang Hop Hing Oils & Fats Co., Ltd. with a total gross floor area of approximately 78.44 sq.m.

(3) According to Business License No. 000303 dated 17 January 2002 Zhejiang Hop Hing Oils & Fats Co., Ltd. was established with a registered capital of US$1,400,000 and has an operation period from 25 March 1993 to 24 March 2023.

(4) According to the legal opinion issued by the Company’s PRC legal advisers:

(i) The land use rights of the property have been allocated to Zhejiang Hop Hing Oils & Fats Co., Ltd.

(ii) The building ownership of the property, comprising a gross floor area of 78.44 sq.m., has been vested in Zhejiang Hop Hing Oils & Fats Co., Ltd.

(iii) According to the relevant regulation of Shaoxing People’s Government Office, the land use term of the buildings with reinforced brick structure built before 1 January 2001 will be expired on 31 December 2050. The building erected on such allocated land can be transferred.

– 177 – APPENDIX IV PROPERTY VALUATION

(iv) Within the remaining land use term, Zhejiang Hop Hing Oils & Fats Co., Ltd. is entitled to use the property. Also, Zhejiang Hop Hing Oils & Fats Co., Ltd. is entitled to transfer and lease the property to third parties.

(v) In case the property is to be transferred, Zhejiang Hop Hing Oils & Fats Co., Ltd. may choose to transfer the property by either of the following ways:

(a) The buyer to pay the land premium payable to the government for changing the nature of the land of the property from allocated land to granted land.

(b) Zhejiang Hop Hing Oils & Fats Co., Ltd. may transfer the property to the buyer on the basis that the nature of the land of the property is remained as allocated land and Zhejiang Hop Hing Oils & Fats Co., Ltd. has to pay a land gain fee payable to the government.

(5) In accordance with the information provided by the Group, the status of the title and grant of major approvals and licenses are as follows:

Certificates for the Use of State-owned Land Yes (Allocation) Building Ownership Certificate Yes Joint Venture Contract Yes Business License Yes

– 178 – APPENDIX IV PROPERTY VALUATION

Group III – Property interests leased to the Group in Hong Kong

Capital value in existing state as at Property interest Description and tenure 31 December 2007

C1. A piece of land The property comprises a piece of land restricted for storage of No commercial value situated at Tong Yan empty tins and packed vegetable oil uses situated adjacent to San Tsuen in Hop Hing Building and Section A of Lot No. 1284 in Demarcation District Demarcation District No. 121 in Tong Yan San Tsuen in Yuen No. 121 which is Long. held under Yuen Long Short Term The property has a site area of approximately 445 sq.m. (4,790 Tenancy No. 1237 sq.ft.).

Pursuant to Yuen Long Short Term Tenancy No. 1237 made between the Hong Kong SAR Government as the landlord and Wakcorn Limited (an indirect wholly-owned subsidiary of the Group) as the tenant on 23 July 1990, the property is leased to the Group for a term of one year from 1 January 1990 and thereafter on quarterly basis. The tenancy may be terminated by either party giving to the other party three months’ notice in writing. The current rent payable for the property is HK$32,250 per quarter.

The property is currently occupied for storage of vegetable oil.

C2. Portion of Unit on The property comprises a godown unit on the ground floor, the No commercial value Ground Floor, Units whole of the 1st floor and 6 units on the 2nd floor of a 3-storey A, B, C, D, E, F, G, industrial building completed in 1990. H, J, K, L and M on 1st Floor and Part of The property has a total gross floor area of approximately Unit B, Units D, E, 7,737 sq.m. (83,281 sq.ft.). F, K and L on 2nd Floor, The property is leased to Hop Hing Oil Investment Limited, an Hop Hing Building, indirect wholly-owned subsidiary of the Group, by Wytak 9 Ping Tong Limited which is an associate of a substantial shareholder of Street East, the Company for a term of 3 years from 29 April 2006 to 28 Tong Yan San Tsuen, April 2009 at HK$278,200 per month for the first two years Yuen Long, and at the then market rent provided that such rent shall not be New Territories less than HK$278,200 per month nor exceed HK$306,020 per month for the third year. All the rents are inclusive of government rents, rates, air-conditioning charges but exclusive of management fees.

The property is currently occupied by the Group for workshop and ancillary office uses.

– 179 – APPENDIX IV PROPERTY VALUATION

Capital value in existing state as at Property interest Description and tenure 31 December 2007

C3. Section A of Lot No. The property comprises two pieces of agricultural land adjacent No commercial value 1284 in Demarcation to Hop Hing Building situated in Tong Yan San Tsuen in Yuen District No. 121 and Long in the New Territories. Section A of Lot No. 1284 is the Remaining subject to a Short Term Waiver No. 1607 issued by the District Portion of Lot No. Land Office, Yuen Long of the Hong Kong SAR Government 1278 in Demarcation which permit portion of the said lot for the use of District No. 121, manufacturing and storage of vegetable oil. Tong Yan San Tsuen, The total site area of the property is 1,270 sq.m. (13,679 sq.ft.). Yuen Long, New Territories The property is leased to Hop Hing Oil Investment Limited, an indirect wholly owned subsidiary of the Group, by Wytak Limited which is an associate of a substantial shareholder of the Company for a term of 3 years from 29 April 2006 to 28 April 2009 at a monthly rent of HK$13,700 for the first two years and at the then market rent provided such rent shall not be less than HK$13,700 nor exceed HK$15,070 per month for the third year. All the rents are inclusive of government rent, rates and short term waiver fees together with the fixtures and fittings defined in the tenancy agreements.

The property is currently occupied by the Group for storage of vegetable oil.

C4. The Remaining The property comprises a piece of agricultural land adjacent to No commercial value Portion of Lot No. Section A of Lot No. 1284 in Demarcation District No. 121 1283 in Demarcation close to Hop Hing Building in Tong Yan San Tusen in Yuen District No. 121, Long in the New Territories. The property is subject to a Short Tong Yan San Tsuen, Term Waiver No. 1609 issued by the District Lands Office, Yuen Long, Yuen Long of the Hong Kong SAR Government which permits New Territories portion of the property for workshop use. The said short term waiver can be terminated by either the Government or the landlord of the property by giving a 3-months’ notice in writing to the each other. If no notice of determination has been given by either party, the short term waiver shall be deemed to have been renewed subject to the payment of a waiver fee. The current waiver fee payable is HK$4,890 per quarter.

The property has a total site area of approximately 1,300.63 sq.m. (14,000 sq.ft.).

The property is leased to Hop Hing Logistics Limited (formerly known as Dynamic Investment Limited), an indirect wholly- owned subsidiary of the Group, by independent third parties for a term of 2 years from 1 May 2006 to 30 April 2008 at a monthly rent of HK$32,300, exclusive of rates and waiver fee. The tenant is granted an option to renew on 1 May 2008 at the then market rent.

The property is currently occupied by the Group for workshop.

– 180 – APPENDIX IV PROPERTY VALUATION

Group IV – Property interests leased to the Group in the PRC

Capital value in existing state as at Property interest Description and tenure 31 December 2007

D1. Flat No. 801, The property comprises a flat unit on level 8 of an 18-storey No commercial value Unit 2, Block 2, building completed in about 2006. Jade Court, Hong Shi Central Garden, The property has a leased area of approximately 130.59 sq.m. Hushu South Road, (1,406 sq.ft.). Hangzhou City, Zhejiang Province, The property was leased from He Liang, an independent third the PRC party, to Hangzhou representative office of Panyu Hop Hing Oils & Fats Co., Ltd. (an indirect wholly-owned subsidiary of the Company) for a term of 1 year from 1 August 2007 to 31 July 2008 at a monthly rent of RMB3,500 for office use.

The property is currently occupied by the Group for office use.

D2. Unit Nos. 301 The property comprises 2 office units on level 3 of a 4-storey No commercial value and 302, office building completed in 1996. No. 1 Lane 339, Dapu Road, The property has a leased area of approximately 60 sq.m. Luwan District, (646 sq.ft.). Shanghai, the PRC The property was leased from Shanghai Yonglongxingye Economic Development Co., Ltd., an independent third party to Shanghai branch of Panyu Hop Hing Oils & Fats Co., Ltd. (an indirect wholly-owned subsidiary of the Company) for a term of 1 year from 1 May 2007 to 30 April 2008 at a monthly rent of RMB4,500 for office use.

The property is currently occupied by the Group for office use.

D3. Room 205, The property comprises a unit on level 2 of an 8-storey No commercial value Shenkanyuan, residential/office building. Qingping Road, Luohu District, The property has a leased area of approximately 79 sq.m. Shenzhen, (850 sq.ft.). Guangdong Province, the PRC The property was leased from Wang You Fu and Fan Qian Gui, an independent third party to Panyu Hop Hing Oils & Fats Co., Ltd. (an indirect wholly-owned subsidiary of the Company) for a term expired on 31 December 2007 at a monthly rent of RMB2,450 for residential uses.

The property is currently occupied by the Group for residential use, based on the terms and monthly rent of the expired tenancy agreement.

– 181 – APPENDIX IV PROPERTY VALUATION

Capital value in existing state as at Property interest Description and tenure 31 December 2007

D4. Unit No. 712, The property comprises an office unit on level 7 of a 21-storey No commercial value No.77 Zhongshan office building completed in 2006. Avenue, Tianhe District, The property has a gross floor area of approximately Guangzhou, 22.86 sq.m. (246 sq.ft.). Guangdong Province, the PRC The property was leased from Jiang Ji Zhou, an independent third party to Hop Hing Oil Terminals (Panyu) Limited (an indirect wholly-owned subsidiary of the Company) for a term from 8 June 2007 to 7 June 2009 at a monthly rent of RMB1,650 for office use. The rent free period is from 8 June 2007 to 8 July 2007.

The property is currently occupied by the Group for office use.

D5. Two commercial The property comprises 2 commercial units on level 1 of a No commercial value Units situated on 5-storey composite building. Level 1, Pinghu Grain The property has a gross floor area of approximately 51.6 sq.m. Administration (555 sq.ft.). Building, South of Jiefang East The property was leased from Pinghu Grain Bureau, an Road, independent third party to Pinghu Hop Hing Vegetable Oils Danghu Town, Co., Ltd. (an indirect 51%-owned subsidiary of the Company) Pinghu, for a term from 1 January 2005 to 31 December 2008 at an Zhejiang Province, annual rent of RMB18,000 for commercial use. the PRC The property is currently occupied by the Group for commercial use.

– 182 – APPENDIX IV PROPERTY VALUATION

Capital value in existing state as at Property interest Description and tenure 31 December 2007

D6. An industrial The property comprises various industrial buildings and No commercial value complex situated at machinery. No. 99 Chengnanxi Road, The property has a total gross floor area of approximately Danghu Town, 3,556.80 sq.m. (38,285 sq.ft.). Pinghu, Zhejiang Province, The property was leased from Pinghu Industrial Asset the PRC Management Co., Ltd., an independent third party to Pinghu Hop Hing Vegetable Oils Co., Ltd. (an indirect 51%-owned subsidiary of the Company) for a term from 1 January 2005 to 31 December 2005 at an annual rent of RMB180,000 for industrial use. The leasing also includes the production equipment in the property.

As advised by the Group, the property is still occupied by the Group for industrial use, based on the terms and annual rent of the expired tenancy agreement.

D7. Unit No. 28 on The property comprises a commercial unit on level 1 of a No commercial value Level 1, 6-storey composite building completed in about 2005. Block 5, Jinwan Plaza, The property has a leased area of approximately 34.24 sq.m. No. 111 Nantou Main (369 sq.ft.). Road West, Nantou Town, The property was leased from Zhou Lin, an independent third Zhongshan City, party, to Sino Can Edible Oil Manufacturing & Technology Co Guangdong Province, Ltd (an indirect wholly-owned subsidiary of the Company) for the PRC a term of 1 year from 15 August 2007 to 14 August 2008 at a monthly rent of RMB1,200 for office use.

The property is currently occupied by the Group for office use.

– 183 – APPENDIX V SUMMARY OF THE RULES OF NEWCO SHARE OPTION SCHEME A1a(44)

SUMMARY OF THE RULES OF THE NEW SHARE OPTION SCHEME A1a(19)(1) A1a(19)(2) This Appendix summarizes the principal terms of the New Share Option Scheme but does R.17.02(1)(b) not form part of nor was it intended to be, part of the New Share Option Scheme nor should it be R.17.02(2)(a) taken as effecting the interpretation of the rules of the New Share Option Scheme.

For the purpose of this Appendix, unless the context otherwise requires:

“associate(s)” means the same definition as ascribed to it under Rule 1.01 of the Listing Rules

“culpable termination” means termination of the employment of an Employee on the grounds that he has been guilty of serious misconduct, or there exists grounds allowing his summary dismissal under his employment contract or under common law, or he is unable or has no reasonable prospects of being able to pay his debts within the meaning of the Bankruptcy Ordinance or any other applicable law, or he has become otherwise insolvent or has made any arrangement or composition with his creditors generally, or he has been convicted of any criminal offence involving his integrity or honesty

“Date of Grant” means the date of grant of the Option, which must be a Business Day

“Employee” means any executive director of, manager of, or other full- time employee of any member of the Newco Group

“Newco Shares” means fully-paid ordinary shares of HK$0.10 each in the share capital of Newco (or, if there has been a consolidation, reduction, re-classification, sub-division or reconstruction of the share capital of Newco, ordinary shares forming part of the equity share capital Newco of such revised amount as shall result from such consolidation, reduction, re- classification, subdivision or reconstruction of such ordinary shares from time to time)

“Option(s)” means option(s) to subscribe for Newco Shares granted or to be granted under the Newco Share Option Scheme

– 184 – APPENDIX V SUMMARY OF THE RULES OF NEWCO SHARE OPTION SCHEME

“Option Period” means in respect of any Option, the period within which the Option may be exercised in accordance with the terms this New Share Option Scheme, such period shall:–

(a) be determined by the Directors;

(b) commence on the expiration of 12 months (or such R.17.03(6) shorter period as may be determined by the Directors) from the Date of Grant; and

(c) in any event not less than three (3) years or more than ten (10) years from the date on which it commences

“Subsidiary” when used in the context of references to the New Share Option Scheme, means a subsidiary (within the meaning of Rule 1.01 of the Listing Rules as amended from time to time) of Newco (a) Who may join

The Directors may at their absolute discretion grant options to an Employee (being any R.17.03(2) executive director of, manager of, or other full-time employee of any member of the Group); a non-executive director (whether independent or not) of any member of the Group; and any person approved by the Newco Board or the Newco Shareholders (“Eligible Person(s)”).

(b) Purpose of the Newco Share Option Scheme

The purpose of the New Share Option Scheme is to advance the interests of the Newco R.17.03(1) Group and the Newco Shareholders by enabling Newco to grant Options to attract, retain and reward the Eligible Persons, to provide to the Eligible Persons a performance incentive for continued and improved services with the Newco Group and its subsidiaries, and to enhance such persons’ contribution to increase the profits by encouraging capital accumulation and share ownership.

(c) Conditions

The New Share Option Scheme shall take effect subject to and is conditional upon:

(i) the passing of the necessary resolution to approve and adopt the New Share Option R.17.02(1)(a) Scheme by the Newco Shareholders in a general meeting;

– 185 – APPENDIX V SUMMARY OF THE RULES OF NEWCO SHARE OPTION SCHEME

(ii) the Listing Committee granting approval of the listing of, and permission to deal in, any Newco Shares which may be issued pursuant to the exercise of Options granted under the New Share Option Scheme, limited to 10% of the Shares in issue as at the date of approval of the New Share Option Scheme;

(iii) the New Share Option Scheme, with or without modification, being sanctioned by the Court and an office copy of the order of the Court required under section 99 of the Companies Act being delivered to and registered by the Registrar of Companies; and

(iv) all Authorisations (if any) from the relevant authorities in the Cayman Islands including the issue of the Newco Shares pursuant to the Newco Share Option Scheme and the issue of Newco Warrants pursuant to the Warrant Proposal and the issue of the Newco Shares pursuant to the exercise of the Newco Warrants and options to be granted under the Newco Share Option Scheme having been obtained.

(d) Duration and administration A1a(18)(2) R.17.03(11) The Newco Share Option Scheme shall continue in force for the period commencing from the date on which the Newco Share Option Scheme is conditionally approved and adopted by ordinary resolution of the Newco Shareholders in a general meeting (the “Adoption Date”) and expiring at the close of business on the tenth anniversary of the Adoption Date (“Newco Scheme Period”), after which period no further options shall be granted but the provisions of the Newco Share Option Scheme shall remain in full force and effect in all other respects in respect of Options remaining outstanding and exercisable on the expiry of the Newco Scheme Period.

The Newco Share Option Scheme shall be subject to the administration of the board of directors of Newco (the “Board”) whose decision (save as otherwise provided in the Newco Share Option Scheme) shall be final and binding on all parties.

(e) Offer of the grant of Options

An offer of the grant of an Option shall be made to an Eligible Person in writing in such form as the Board may from time to time determine specifying, inter alia, the maximum number of Newco Shares in respect of which such offer is made and requiring the Eligible Person to undertake to hold the Option on the terms on which it is to be granted and to be bound by the provisions of the Newco Share Option Scheme and shall remain open for acceptance by the Eligible Person to whom the offer is made for a period of twenty-one (21) days (or such other period as the Board may determine) from the date upon which the offer is issued, provided that no such offer shall be open for acceptance after the expiry of the Newco Scheme Period or after the Newco Share Option Scheme has been terminated in accordance with the terms of the Newco Share Option Scheme.

– 186 – APPENDIX V SUMMARY OF THE RULES OF NEWCO SHARE OPTION SCHEME

On and subject to the terms of the Newco Share Option Scheme, the Board shall be entitled at any time during the Newco Scheme Period to offer to grant an Option to any Eligible Person as the Board may in its absolute discretion select, and subject to such conditions and restrictions as the Board may think fit (to be stated in the letter containing the offer of the grant of the Option) including (without prejudice to the generality of the foregoing) qualifying and/or continuing eligibility criteria, conditions, restrictions or limitations relating to the achievement of performance, operating or financial targets by Newco and/or the Grantee, the satisfactory performance or maintenance by the Grantee of certain conditions or obligations or the time or period when the right to exercise the Option in respect of all or some of the Option Shares shall vest.

An offer shall be deemed to have been accepted when the duplicate letter comprising R.17.03(8) acceptance of the Option, duly signed by the Eligible Person, together with a remittance of HK$1.00 Para. 10, in favor of Newco, irrespective of the number of Newco Shares in respect of which the Option is 3rd Sch., CO accepted, as consideration for the grant is received by Newco and the Option shall be deemed to have taken effect on the Offer Date. Upon the Eligible Person’s acceptance of an offer to grant an Option, Newco shall, within seven (7) days from such date of acceptance, issue to such Grantee Option certificate under the Common Seal of Newco.

The Date of Grant shall be the date on which the offer relating to such Option is duly approved by the Board in accordance with the Newco Share Option Scheme.

(f) Price sensitive information

No offer of Options shall be made after a price sensitive development has occurred or a price sensitive matter has been the subject of a decision, until an announcement of such price sensitive information has been published. In particular, during the period commencing one month immediately preceding the earlier of: (a) the date of the Board meeting (as such date is first notified to the Stock Exchange in accordance with the Listing Rules) for the approval of Newco’s results for any year, half-year, quarterly, or any interim period (whether or not required under the Listing Rules), and (b) the deadline for Newco to publish an announcement of its results for any year or half-year under the Listing Rules, or quarterly or any other interim period (whether or not required under the Listing Rules), and ending on the date of the results announcement, no Options may be granted. The period during which no Option may be granted will cover any period of delay in the publication of a results announcement.

(g) Grant of Options to connected persons

Each grant of Option(s) to a connected person (as defined in the Listing Rules) of Newco R.17.04 under the Newco Share Option Scheme must be approved by the independent non-executive Directors of Newco (excluding any independent non-executive Director who is the Grantee of the Options).

– 187 – APPENDIX V SUMMARY OF THE RULES OF NEWCO SHARE OPTION SCHEME

Where any Options granted to a substantial shareholder of Newco or an independent non- executive Director or any of their respective associates would result in the number and value of Newco Shares issued and to be issued upon exercise of all Options already granted and to be granted (including Options exercised, cancelled and outstanding but excluding Options which have lapsed) to such person in the 12-month period up to and including the date of such grant (a) representing in aggregate over 0.1% of the Newco Shares in issue; and (b) having an aggregate value, based on the closing price of the Newco Shares on the Stock Exchange at the date of each grant, in excess of HK$5 million, such further grant of Options must be approved by the Newco Shareholders by the taking of a poll in a general meeting. Approvals from the Newco Shareholders is required for any change in the terms of options granted to a participant who is a substantial shareholder or an independent non-executive Director of Newco, or any of their respective associates. Newco must send a circular to the New Shareholders. All connected persons of Newco must abstain from voting (except that any connected person may vote against the relevant resolution at the general meeting provided that his intention to do so has been stated in the circular) at the general meeting. The circular must contain the following:

(i) details of the number and terms (including the Subscription Price) of the Options to be granted to each Eligible Person, which must be fixed before the general meeting;

(ii) a recommendation from the independent non-executive Directors of Newco (excluding any independent non-executive Director of Newco who is the Grantee of the Options) to the independent shareholders as to voting; and

(iii) the details and information required under the relevant provisions of Chapter 17 of the Listing Rules.

(h) Subscription price

The subscription price in respect of any particular Option shall be such price as the Board R.17.03(9) may in its absolute discretion determine at the time of the grant of the relevant Option (and shall Para. 10, be stated in the letter containing the offer of the grant of the Option (the “Subscription Price”)), 3rd Sch., CO but in any case the Subscription Price must be at least the higher of (i) the closing price of the Newco Shares as stated in the Stock Exchange’s daily quotations sheet on the Date of Grant, which must be a Business Day; and (ii) the average closing price of the Newco Shares as stated in the Stock Exchange’s daily quotations sheets for the five (5) Business Days immediately preceding the Date of Grant.

– 188 – APPENDIX V SUMMARY OF THE RULES OF NEWCO SHARE OPTION SCHEME

(i) Rights are personal to Grantee R.17.03(17)

An Option shall be personal to the Grantee and shall not be transferrable or assignable and no Grantee shall in any way sell, transfer, charge, mortgage, encumber or create any interest (legal or beneficial) in favour of any third party over or in relation to any Option or attempt to do so.

(j) Exercise of Options R.17.03(5) Para. 10, Subject to any condition or restriction in connection with the exercise of the Option which 3rd Sch., CO may be imposed by the Board when granting the Option and other provisions of the Newco Share Option Scheme, the Option may be exercised by the Grantee at any time during the Option Period.

(k) Rights on ceasing employment R.17.03(10)

(i) in the event of the Grantee ceasing to be an Employee for any reason (including his employing company ceasing to be a member of the Newco Group) other than his death, permanent disability, or the termination of his employment with the relevant member of the Newco Group by resignation or culpable termination, the Option (to the extent not already exercised) shall lapse on the date of cessation of such employment and not be exercisable unless the Board otherwise determines in which event the Option (or such remaining part thereof) shall be exercisable within such period as the Board may in its absolute discretion determine following the date of such cessation;

(ii) in the event of the Grantee ceasing to be an Employee by reason of the termination of his employment by resignation or culpable termination, the Option (to the extent not already exercised) shall lapse on the date on which the notice of termination is served (in the case of resignation) or the date on which the Grantee is notified of the termination of his employment (in the case of culpable termination) and not be exercisable unless the Board otherwise determines in which event the Option (or such remaining part thereof) shall be exercisable within such period as the Board may in its absolute discretion determine following the date of such service or notification;

(iii) if:

(aa) the Board in its absolute discretion at any time determines that a Grantee has ceased to be an Eligible Person; or

– 189 – APPENDIX V SUMMARY OF THE RULES OF NEWCO SHARE OPTION SCHEME

(bb) a Grantee has failed to or no longer satisfies or complies with such criteria or terms and conditions that may be attached to the grant of the Option or which were the basis on which the Option was granted,

the Option (to the extent not already exercised) shall lapse on the date on which the Grantee is notified thereof (in the case of (aa)) or on the date on which the Grantee has failed to or no longer satisfies or complies with such criteria or terms and conditions as aforesaid (in the case of (bb)) and not be exercisable unless the Board otherwise determines in which event the Option (or such remaining part thereof) shall be exercisable within such period as the Board may in its absolute discretion determine following the date of such notification or the date of such failure, non-satisfaction or non-compliance. In the case of (aa), a resolution of the Board resolving that the Grantee’s Option has lapsed pursuant to this paragraph shall be final and conclusive.

(l) Rights on death or disability

In the event of the Grantee dies or becomes permanently disabled before exercising an Option (or exercising it in full), he (or his legal representative(s)) may exercise the Option up to the Grantee’s entitlement (to the extent not already exercised) within a period of 12 months following his death or permanent disability or such longer period as the Board may determine.

(m) Rights on a general offer

If a general offer is made to all holders of Newco Shares and such offer becomes or is declared unconditional (in the case of a takeover offer) or is approved by the requisite majorities at the relevant meetings of shareholders of Newco (in the case of a scheme of arrangement), then the Directors shall as soon as practicable thereafter notify every Grantee accordingly and each Grantee shall be entitled at any time within the period of 21 days of the notice given by Newco to exercise all of his outstanding Options, and such Options shall, to the extent not having been exercised, lapse and determine upon the expiry of such period.

(n) Rights on voluntary winding-up

In the event that a notice is given by Newco to its members to convene a general meeting for the purposes of considering, and if thought fit, approving a resolution to voluntarily wind-up Newco, Newco shall, on the same day or soon after it has despatched such notice to each member of Newco, give notice thereof to all Grantees and thereupon each Grantee (or his or her legal personal representatives) shall be entitled to exercise all or any of his Options (to the extent not

– 190 – APPENDIX V SUMMARY OF THE RULES OF NEWCO SHARE OPTION SCHEME

already exercised) at any time but not later than two (2) Business Days prior to the date of the proposed general meeting of Newco by giving notice in writing to Newco, accompanied by a remittance for the full amount of the aggregate Subscription Price for the Newco Shares in respect of which the notice is given whereupon the Newco shall as soon as possible and, in any event, no later than the Business Day immediately prior to the date of the proposed general meeting referred to above, allot the relevant Newco Shares to the Grantee credited as fully paid and register the Grantee as holder thereof.

(o) Rights on a compromise or arrangement

In the event of a compromise or arrangement, between Newco and its members or creditors is proposed for the purpose of or in connection with a scheme for the reconstruction of Newco or its amalgamation with any other company, Newco shall give notice thereof to the Grantees who have Options unexercised at the same time as it gives notice to all members or creditors of Newco summoning the meeting to consider such a compromise or arrangement and thereupon each Grantee (or his legal representatives or receiver) may until the expiry of the earlier of (i) the Option Period; (ii) the period of two months from the date of such notice; or (iii) the date on which such compromise or arrangement is sanctioned by the court, exercise in whole or in part his Option. Except insofar as exercised in accordance with this paragraph, all Options outstanding at the expiry of the relevant period referred to in this paragraph shall lapse. Newco may thereafter require each Grantee to transfer or otherwise deal with the Newco Shares issued on exercise of the Option to place the Grantee in the same position as would have been the case had such Newco Shares been the subject of such compromise or arrangement;

(p) Rights of the Grantee in becoming insolvent

In case any of the events mentioned in this paragraph (as the case may be) occurs on the part of the Grantee (being a corporation), the Option (to the extent not already exercised) shall lapse on the date of appointment of the liquidator or receiver or on the date of suspension or cessation of business or on the date when the Grantee is deemed to be unable to pay its debts or on the date of notification by Newco that the change in constitution, management, directors or shareholding is material or on the date of the breach of contract entered into between the Grantee or his associate and any member of the Newco Group (as the case may be) and not be exercisable unless the Board otherwise determines in which event the Option (or such remaining part thereof) shall be exercisable within such period as the Board may in its absolute discretion determine following the date of such occurrence.

– 191 – APPENDIX V SUMMARY OF THE RULES OF NEWCO SHARE OPTION SCHEME

(q) Rights of the Grantee in becoming bankrupt

In case any of the events mentioned in this paragraph (as the case may be) occurs on the part of the Grantee (being an individual), the Option (to the extent not already exercised) shall lapse on the date on which he is deemed unable or to have no reasonable prospects of being able to pay his debts within the meaning of the Bankruptcy Ordinance or any other applicable law or has otherwise become insolvent or on the date on which a petition for bankruptcy has been presented in any jurisdiction or on the date on which he enters into the arrangement or composition with his creditors or on the date of his conviction of any criminal offence involving his integrity or honesty or on the date of the breach of contract entered into between the Grantee or his associate and any member of the Newco Group (as the case may be) and not be exercisable unless the Board otherwise determines in which event the Option (or such remaining part thereof) shall be exercisable within such period as the Board may in its absolute discretion determine following the date of such occurrence.

(r) Ranking of shares

The Newco Shares to be allotted and issued upon the exercise of an Option will be subject to the Bye-laws of Newco and the laws of Bermuda from time to time including with respect to voting and transfer rights and rights arising on a liquidation of Newco and will rank pari passu in all respects with the fully paid Newco Shares in issue as at the date of allotment and thereafter the holders thereof will be entitled to participate in all dividends or other distributions paid or made on or after the date of allotment, 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 before the day of allotment.

(s) Performance target R.17.03(7)

The Grantee will not be required to achieve, meet or exceed any performance targets before that particular Grantee can exercise the Option(s) granted, except those otherwise imposed by the Board pursuant to paragraph (e) and/or stated in the offer of grant of the Option.

(t) Lapse of options R.17.03(11)

An Option shall lapse automatically (to the extent not already exercised) on the earliest of:–

(i) the expiry of the Option Period;

(ii) the expiry of any of the periods referred to in paragraphs (k), (1), (m), (n), (o), (p) and (q) above;

– 192 – APPENDIX V SUMMARY OF THE RULES OF NEWCO SHARE OPTION SCHEME

(iii) subject to paragraph (n) above, the date of commencement of the winding-up of Newco;

(iv) there is an unsatisfied judgment, order or award outstanding against the Grantee or the Board has reason to believe that the Grantee is unable to pay or to have no reasonable prospect of being able to pay his/its debts;

(v) there are circumstances which entitle any person to take any action, appoint any person, commence proceedings or obtain any order of the type mentioned in paragraph (p) or t(iv) above; or

(vi) a bankruptcy order has been made against any director or shareholder of the Grantee (being a corporation) in any jurisdiction.

No compensation shall be payable upon the lapse of any Option, provided that the Board shall be entitled in its discretion to pay such compensation to the Grantee in such manner as it may consider appropriate in any particular case.

(u) Maximum number of Newco Shares available for subscription R.17.03(3)

The maximum aggregate number of Newco Shares which may be issued upon exercise of all outstanding Options granted and yet to be exercised under the Newco Share Option Scheme and any other schemes of Newco must not exceed in aggregate 10% of the Newco Shares in issue from time to time (“Overall Scheme Limit”) (being 43,587,569 Shares as at the Latest Practicable Date). No Options may be granted under any scheme of Newco if such grant will result in the Overall Scheme Limit being exceeded.

The total number of Newco Shares which may be issued upon exercise of all Options to be granted under the Newco Share Option Scheme and any other scheme must not in aggregate exceed 10% of the Newco Shares in issue as at the date of approval of the Newco Share Option Scheme (“Scheme Mandate Limit”). Options lapsed in accordance with the terms of the Newco Share Option Scheme shall not be counted for the purpose of calculating the Scheme Mandate Limit.

Subject to the Overall Scheme Limit, Newco may seek approval from its Shareholders in general meeting for “refreshing” the “Scheme Mandate Limit”. However, the total number of Newco Shares which may be issued upon exercise of all Options to be granted under the “refreshed” limit must not exceed 10% of the Shares in issue as at the date of approval of the Newco Shareholders of the refreshing of the Scheme Mandate Limit (the “Refreshed Scheme Mandate Limit”). Options

– 193 – APPENDIX V SUMMARY OF THE RULES OF NEWCO SHARE OPTION SCHEME

previously granted under any existing schemes (including those outstanding, cancelled or lapsed or exercised in accordance with the Newco Share Option Scheme or exercised Options) shall not be counted for the purpose of calculating the Refreshed Scheme Mandate Limit. Newco must send a circular to its shareholders containing the details and information required under the relevant provisions of Chapter 17 of the Listing Rules.

Subject to the Overall Scheme Limit, Newco may seek separate approval from its Shareholders in general meeting for granting Options to subscribe for Shares beyond the Scheme Mandate Limit or the Refreshed Scheme Mandate Limit (as the case may be) provided that the Options in excess of the Scheme Mandate Limit or the Refreshed Scheme Mandate Limit are granted only to Eligible Persons specifically identified by Newco before such approval is sought. Newco must send a circular to its Shareholders containing the details and information specified in the relevant provisions of the Listing Rules.

Unless approved by Newco Shareholders in general meeting at which the relevant Eligible R.17.03(4) Person and his/her associates abstain from voting in the manner prescribed by the relevant provisions of Chapter 17 of the Listing Rules, the total number of Shares issued and to be issued upon exercise of the Options granted to such Eligible Person (including exercised, cancelled and outstanding Options) in any 12-month period must not exceed 1% of the Newco Shares in issue (the “Individual Limit”) at such time. With respect to any further grant of Options to an Eligible Person exceeding in aggregate the Individual Limit, Newco must send a circular to its shareholders and the circular must disclose the identity of the Eligible Person, the number and terms of the Options to be granted (and Options previously granted to such Eligible Person), and the details and information required under the Listing Rules. The number and terms (including the Subscription Price) of Options to be granted to such Eligible Person must be fixed before the general meeting at which the same are approved, and the date of the Board meeting for proposing such further grant should be taken as the Date of Grant for the purpose of calculating the Subscription Price.

(v) Cancellation of Options R.17.03(14)

The Board shall be entitled for the following causes to cancel any Option in whole or in part by giving notice in writing to the Grantee stating that such Option is thereby cancelled with effect from the date specified in such notice (the “Cancellation Date”):

(i) the Grantee commits or permits or attempts to commit or permit a breach of paragraph (i) above or any terms or conditions attached to the grant of the Option;

(ii) the Grantee makes a written request to the Board for the Option to be cancelled; or

(iii) if the Grantee has, in the opinion of the Board, conducted himself in any manner whatsoever to the detriment of or prejudicial to the interests of Newco or any Subsidiary.

– 194 – APPENDIX V SUMMARY OF THE RULES OF NEWCO SHARE OPTION SCHEME

(w) Alteration of capital structure R.17.03(13)

In the event of any alteration in the capital structure of Newco whilst any Option has been granted and remains exercisable, whether by way of capitalisation of profits or reserves or rights issue, consolidation, reclassification, reconstruction, subdivision, or reduction of the share capital of Newco, Newco shall make corresponding adjustment (if any) to:

(i) the maximum number of Newco Shares subject to the Newco Share Option Scheme; and/or

(ii) the number of the Newco Shares subject to the Option already granted so far as they remain exercisable; and/or

(iii) the Subscription Price.

Where the Board determines that such adjustments are appropriate (other than an adjustment arising from a capitalization issue), the Auditors appointed by Newco Share Option Scheme shall certify in writing to the Board that any such adjustments are in their opinion fair and reasonable, provided that:

(i) any such adjustments shall be made on the basis that the aggregate Subscription Price payable by the Grantee on the full exercise of any Option shall remain as nearly as practicable the same as (but shall not be greater than) as it was before such event;

(ii) no such adjustments shall be made the effect of which would be to enable a Newco Share to be issued at less than its nominal value;

(iii) any such adjustments shall, as nearly as practicable, be made on the basis that the proportion of the issued share capital of Newco Share for which any Grantee is entitled to subscribe pursuant to the Options held by him shall remain the same as (but shall not be greater than) it was before such grant; and

(iv) the issue of securities as consideration in a transaction shall not be regarded as a circumstance requiring any such adjustments.

– 195 – APPENDIX V SUMMARY OF THE RULES OF NEWCO SHARE OPTION SCHEME

(x) Alteration of Newco Share Option Scheme R.17.03(18)

Subject to the following, the Board may by resolution alter any of the provisions of the Newco Share Option Scheme:

(a) the provisions of the Newco Share Option Scheme relating to matters contained in Rule 17.03 of the Listing Rules shall not be altered to the advantage of the Option holders or prospective Option holders without the prior approval of the Newco Shareholders in general meeting of Newco, provided that no such alteration shall operate to affect adversely the terms of issue of any Option granted or agreed to be granted prior to such alteration except with the consent or sanction of such majority of the Option holders as would be required of the Newco Shareholders under the Bye-laws for the time being of Newco for a variation of the rights attached to the Shares;

(b) any alterations to the terms and conditions of the Newco Share Option Scheme, which are of a material nature or any change to the terms of the Options granted, must be approved by the Newco Shareholders, except where the alterations take effect automatically under the terms of the Newco Share Option Scheme;

(c) the amended terms of the Newco Share Option Scheme must comply with the relevant requirements of Chapter 17 of the Listing Rules; and

(d) any change to the authority of the Board in relation to any alteration to the terms of the Newco Share Option Scheme must be approved by the Newco Shareholders in general meeting of Newco.

(y) Termination of Scheme R.17.03(16)

Newco may by resolution in general meeting at any time terminate the operation of the Newco Share Option Scheme and in such event no further Options will be offered but in all other respects the provisions of the Newco Share Option Scheme shall remain in full force and effect. Options complying with the provisions of Chapter 17 of the Listing Rules which are granted during the Newco Scheme Period and which remain unexpired immediately prior to the termination of the operation of Newco Share Option Scheme shall, subject to the terms of the Newco Share Option Scheme, continue to be valid and exercisable thereafter.

– 196 – APPENDIX VI SUMMARY OF THE CONSTITUTION OF NEWCO 19.10(5)(a) AND CAYMAN ISLANDS COMPANY LAW

Set out below is a summary of certain provisions of the Memorandum and Articles of S.342(1)(a) Association of Newco and of certain aspects of Cayman Islands company law. CO

Newco was incorporated in the Cayman Islands as an exempted company with limited R8.02 liability on 1 August 2007 under the Cayman Companies Law. Newco’s constitutional documents consist of its Amended and Restated Memorandum of Association (the “Memorandum”) and the Amended and Restated Articles of Association (the “Articles”).

1. MEMORANDUM

(a) The Memorandum provides, inter alia, that the liability of members of Newco is R19.08(3) limited and that the objects for which Newco is established are unrestricted (and R19.10(2) therefore include acting as an investment company), and that Newco shall have and be capable of exercising any and all of the powers at any time or from time to time exercisable by a natural person or body corporate whether as principal, agent, contractor or otherwise and since Newco is an exempted company that Newco will not trade in the Cayman Islands with any person, firm or corporation except in furtherance of the business of Newco carried on outside the Cayman Islands.

(b) By special resolution Newco may alter the Memorandum with respect to any objects, R11.07 powers or other matters specified therein. R19.08(3) R19.10(2) 2. ARTICLES

The Articles will be adopted by the Newco. The following is a summary of certain provisions R8.14 of the Articles:

(a) Shares A1a(15)(1)

(i) Classes of shares

The share capital of Newco consists of ordinary shares.

– 197 – APPENDIX VI SUMMARY OF THE CONSTITUTION OF NEWCO 19.10(5)(a) AND CAYMAN ISLANDS COMPANY LAW

(ii) Share certificates A1a(7)(9)

Every person whose name is entered as a member in the register of members shall be entitled without payment to receive a certificate for his shares. The Cayman Companies Law prohibits the issue of bearer shares to any person other than an authorised or recognised custodian defined in the Cayman Companies Law. The requirement on all service providers to implement appropriate due diligence procedures on the identity of a client in order to “know your client” as a result of proceeds of crime legislation mandates that special procedures should be followed when issuing bearer shares.

Every certificate for shares, warrants or debentures or representing any other form of securities of Newco shall be issued under the seal of Newco, and shall be signed autographically by one Director and the Secretary, or by 2 Directors, or by some other person(s) appointed by the Board for the purpose. As regards any certificates for shares or debentures or other securities of Newco, the Board may by resolution determine that such signatures or either of them shall be dispensed with or affixed by some method or system of mechanical signature other than autographic as specified in such resolution or that such certificates need not be signed by any person. Every share certificate issued shall specify the number and class of shares in respect of which it is issued and the amount paid thereon and may otherwise be in such form as the Board may from time to time prescribe. A share certificate shall relate to only one class of shares, and where the capital of Newco includes shares with different voting rights, the designation of each class of shares, other than those which carry the general right to vote at general meetings, must include the words “restricted voting” or “limited voting” or “non-voting” or some other appropriate designation which is commensurate with the rights attaching to the relevant class of shares. Newco shall not be bound to register more than 4 persons as joint holders of any share.

(b) Directors

(i) Power to allot and issue shares and warrants

Subject to the provisions of the Cayman Companies Law, the Memorandum and Articles and without prejudice to any special rights conferred on the holders of any shares or class of shares, any share may be issued with or have attached thereto such rights, or such restrictions, whether with regard to dividend, voting, return of capital, or otherwise, as Newco may by ordinary resolution determine (or, in the absence of any such determination or so far as the same may not make specific provision, as the Board may determine). Any share may be issued on terms that upon the happening of a specified event or upon a given date and either at the option of Newco or the holder thereof, they are liable to be redeemed.

– 198 – APPENDIX VI SUMMARY OF THE CONSTITUTION OF NEWCO 19.10(5)(a) AND CAYMAN ISLANDS COMPANY LAW

The Board may issue warrants to subscribe for any class of shares or other securities of Newco on such terms as it may from time to time determine.

Where warrants are issued to bearer, no certificate thereof shall be issued to replace one that has been lost unless the Board is satisfied beyond reasonable doubt that the original certificate thereof has been destroyed and Newco has received an indemnity in such form as the Board shall think fit with regard to the issue of any such replacement certificate.

Subject to the provisions of the Cayman Companies Law, the Articles and, where applicable, the rules of any stock exchange of the Relevant Territory (as defined in the Articles) and without prejudice to any special rights or restrictions for the time being attached to any shares or any class of shares, all unissued shares in Newco shall be at the disposal of the Board, which may offer, allot, grant options over or otherwise dispose of them to such persons, at such times, for such consideration and on such terms and conditions as it in its absolute discretion thinks fit, but so that no shares shall be issued at a discount.

Neither Newco nor the Board shall be obliged, when making or granting any allotment of, offer of, option over or disposal of shares, to make, or make available, any such allotment, offer, option or shares to members or others whose registered addresses are in any particular territory or territories where, in the absence of a registration statement or other special formalities, this is or may, in the opinion of the Board, be unlawful or impracticable. However, no member affected as a result of the foregoing shall be, or be deemed to be, a separate class of members for any purpose whatsoever.

(ii) Power to dispose of the assets of Newco or any subsidiary

While there are no specific provisions in the Articles relating to the disposal of the assets of Newco or any of its subsidiaries, the Board may exercise all powers and do all acts and things which may be exercised or done or approved by Newco and which are not required by the Articles or the Cayman Companies Law to be exercised or done by Newco in general meeting, but if such power or act is regulated by Newco in general meeting, such regulation shall not invalidate any prior act of the Board which would have been valid if such regulation had not been made.

– 199 – APPENDIX VI SUMMARY OF THE CONSTITUTION OF NEWCO 19.10(5)(a) AND CAYMAN ISLANDS COMPANY LAW

(iii) Compensation or payments for loss of office

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

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

There are provisions in the Articles prohibiting the making of loans to Directors and their associates which are equivalent to provisions of Hong Kong law prevailing at the time of adoption of the Articles.

Newco shall not directly or indirectly make a loan to a Director or a director of any holding company of Newco or any of their respective associates, enter into any guarantee or provide any security in connection with a loan made by any person to a Director or a director of any holding company of Newco or any of their respective associates, or if any one or more of the Directors hold (jointly or severally or directly or indirectly) a controlling interest in another company, make a loan to that other company or enter into any guarantee or provide any security in connection with a loan made by any person to that other company.

(v) Disclosure of interest in contracts with Newco or with any of its subsidiaries

With the exception of the office of auditor of Newco, a Director may hold any other office or place of profit with Newco in conjunction with his office of Director for such period and, upon such terms as the Board may determine, and may be paid such extra remuneration therefor (whether by way of salary, commission, participation in profits or otherwise) in addition to any remuneration provided for by or pursuant to any other Articles. A Director may be or become a director or other officer or member of any other company in which Newco may be interested, and shall not be liable to account to Newco or the members for any remuneration or other benefits received by him as a director, officer or member of such other company. The Board may also cause the voting power conferred by the shares in any other company held or owned by Newco to be exercised in such manner in all respects as it thinks fit, including the exercise thereof in favour of any resolution appointing the Directors or any of them to be directors or officers of such other company.

– 200 – APPENDIX VI SUMMARY OF THE CONSTITUTION OF NEWCO 19.10(5)(a) AND CAYMAN ISLANDS COMPANY LAW

No Director or intended Director shall be disqualified by his office from contracting with Newco, either as vendor, purchaser or otherwise, nor shall any such contract or any other contract or arrangement in which any Director is in any way interested be liable to be avoided, nor shall any Director so contracting or being so interested be liable to account to Newco for any profit realised by any such contract or arrangement by reason only of such Director holding that office or the fiduciary relationship thereby established. A Director who is, in any way, materially interested in a contract or arrangement or proposed contract or arrangement with Newco shall declare the nature of his interest at the earliest meeting of the Board at which he may practically do so.

There is no power to freeze or otherwise impair any of the rights attaching to any Share by reason that the person or persons who are interested directly or indirectly therein have failed to disclose their interests to Newco.

A Director shall not vote (nor shall he be counted in the quorum) on any A1a(7)(1) resolution of the Board in respect of any contract or arrangement or other proposal in which he or his associate(s) is/are materially interested, and if he shall do so his vote shall not be counted nor shall he be counted in the quorum for that resolution, but this prohibition shall not apply to any of the following matters namely:

(aa) the giving of any security or indemnity to the Director or his associate(s) in respect of money lent or obligations incurred or undertaken by him or any of them at the request of or for the benefit of Newco or any of its subsidiaries;

(bb) any contract or arrangement for the giving of any security or indemnity to a third party in respect of a debt or obligation of Newco or any of its subsidiaries for which the Director or his associate(s) has/have himself/themselves assumed responsibility in whole or in part whether alone or jointly under a guarantee or indemnity or by the giving of security;

(cc) any contract or arrangement concerning an offer of shares or debentures or other securities of or by Newco or any other company which Newco may promote or be interested in for subscription or purchase, where the Director or his associate(s) is/are or is/are to be interested as a participant in the underwriting or sub-underwriting of the offer;

– 201 – APPENDIX VI SUMMARY OF THE CONSTITUTION OF NEWCO 19.10(5)(a) AND CAYMAN ISLANDS COMPANY LAW

(dd) any contract or arrangement in which the Director or his associate(s) is/are interested in the same manner as other holders of shares or debentures or other securities of Newco by virtue only of his/their interest in shares or debentures or other securities of Newco;

(ee) any contract or arrangement concerning any other company in which the Director or his associate(s) is/are interested only, whether directly or indirectly, as an officer or an executive or a member or in which the Director or his associate(s) is/are beneficially interested in shares of that company in which the Director and any of his associate(s) are not in aggregate beneficially interested in 5% or more of the issued shares of any class of the equity share capital of such company (or of any third company through which his interest or that of his associate(s) is derived) or of the voting rights;

(ff) any proposal or arrangement for the adoption, modification or operation of a share option scheme, a pension fund or retirement, death or disability benefits scheme which relates both to Directors, his associate(s) and employees of Newco or of any of its subsidiaries and does not give the Director, or his associate(s), as such any privilege or advantage not generally accorded to the class of persons to whom such scheme or fund relates;

(gg) any proposal or arrangement concerning the adoption, modification or operation of any employees’ share scheme involving the issue or grant of options over shares or other securities by Newco to, or for the benefit of, the employees of Newco or its subsidiaries under which the Director or his associate(s) may benefit; or

(hh) any contract for the purchase or maintenance for any Director or Directors of insurance against any liability.

(vi) Remuneration A1a(7)(2) A1a(28)(7) The Directors shall be entitled to receive, as ordinary remuneration for their Para. 5, services, such sums as shall from time to time be determined by Newco in general 3rd Sch., CO meeting, such sum (unless otherwise directed by the resolution by which it is determined) to be divided amongst the Directors in such proportions and in such manner as they may agree or failing agreement, equally, except that in such event any Director holding office for only a portion of the period in respect of which the remuneration is payable shall only rank in such division in proportion to the time during such period for which he has held office. The Directors shall also be entitled to be repaid all travelling, hotel and other expenses reasonably incurred by them in

– 202 – APPENDIX VI SUMMARY OF THE CONSTITUTION OF NEWCO 19.10(5)(a) AND CAYMAN ISLANDS COMPANY LAW

attending any Board meetings, committee meetings or general meetings or otherwise in connection with the discharge of their duties as Directors. Such remuneration shall be in addition to any other remuneration to which a Director who holds any salaried employment or office in Newco may be entitled by reason of such employment or office.

Any Director who, at the request of Newco performs services which in the opinion of the Board go beyond the ordinary duties of a Director may be paid such special or extra remuneration (whether by way of salary, commission, participation in profits or otherwise) as the Board may determine and such extra remuneration shall be in addition to or in substitution for any ordinary remuneration as a Director. An executive Director appointed to be a managing director, joint managing director, deputy managing director or other executive officer shall receive such remuneration (whether by way of salary, commission or participation in profits or otherwise or by all or any of those modes) and such other benefits (including pension and/or gratuity and/or other benefits on retirement) and allowances as the Board may from time to time decide. Such remuneration shall be in addition to his ordinary remuneration as a Director.

The Board may establish, either on its own or jointly in concurrence or agreement with other companies (being subsidiaries of Newco or with which Newco is associated in business), or may make contributions out of Newco’s monies to, such schemes or funds for providing pensions, sickness or compassionate allowances, life assurance or other benefits for employees (which expression as used in this and the following paragraph shall include any Director or former Director who may hold or have held any executive office or any office of profit with Newco or any of its subsidiaries) and former employees of Newco and their dependents or any class or classes of such persons.

In addition, the Board may also pay, enter into agreements to pay or make grants of revocable or irrevocable, whether or not subject to any terms or conditions, pensions or other benefits to employees and former employees and their dependents, or to any of such persons, including pensions or benefits additional to those, if any, to which such employees or former employees or their dependents are or may become entitled under any such scheme or fund as mentioned above. Such pension or benefit may, if deemed desirable by the Board, be granted to an employee either before and in anticipation of, or upon or at any time after, his actual retirement.

– 203 – APPENDIX VI SUMMARY OF THE CONSTITUTION OF NEWCO 19.10(5)(a) AND CAYMAN ISLANDS COMPANY LAW

(vii) Appointment, retirement and removal

At any time or from time to time, the Board shall have the power to appoint any person as a Director either to fill a casual vacancy on the Board or as an additional Director to the existing Board subject to any maximum number of Directors, if any, as may be determined by the members in general meeting. Any Director so appointed to fill a casual vacancy shall hold office only until the next following general meeting of Newco and any Director so appointed as additional Director shall hold office until the next following annual general meeting shall then be eligible for re-election. There is no shareholding qualification for Directors.

At each annual general meeting, one third of the Directors for the time being will retire from office by rotation. However, if the number of Directors is not a multiple of three, then the number nearest to but not less than one third shall be the number of retiring Directors. The Directors who shall retire in each year will be those who have been longest in the office since their last re-election or appointment but as between persons who become or were last re-elected Directors on the same day those to retire will (unless they otherwise agree among themselves) be determined by lot.

No person, other than a retiring Director, shall, unless recommended by the Board for election, be eligible for election to the office of Director at any general meeting, unless notice in writing of the intention to propose that person for election as a Director and notice in writing by that person of his willingness to be elected shall have been lodged at the head office or at the registration office. The period for lodgment of such notices will commence no earlier than the day after the despatch of the notice of the meeting appointed for such election and end no later than 7 days prior to the date of such meeting provided that such period shall be at least 7 days.

A Director is not required to hold any shares in Newco by way of qualification A1a(7)(4) nor is there any specified upper or lower age limit for Directors either for accession A1a(7)(5) to the Board or retirement therefrom.

A Director may be removed by an ordinary resolution of Newco before the expiration of his term of office (but without prejudice to any claim which such Director may have for damages for any breach of any contract between him and Newco) and Newco may by ordinary resolution appoint another in his place. Unless otherwise determined by Newco in general meeting, the number of Directors shall not be less than two.

– 204 – APPENDIX VI SUMMARY OF THE CONSTITUTION OF NEWCO 19.10(5)(a) AND CAYMAN ISLANDS COMPANY LAW

In addition to the foregoing, the office of a Director shall be vacated:

(aa) if he resigns his office by notice in writing delivered to Newco at the registered office or head office of Newco for the time being or tendered at a meeting of the Board;

(bb) if he dies or becomes of unsound mind as determined pursuant to an order made by any competent court or official on the grounds that he is or may be suffering from mental disorder or is otherwise incapable of managing his affairs and the Board resolves that his office be vacated;

(cc) if, without special leave, he is absent from meetings of the Board for six (6) consecutive months, and the Board resolves that his office is vacated;

(dd) if he becomes bankrupt or has a receiving order made against him or suspends payment or compounds with his creditors generally;

(ee) if he is prohibited from being a director by law;

(ff) if he ceases to be a director by virtue of any provision of law or is removed from office pursuant to the Articles;

(gg) if he has been validly required by the stock exchange of the Relevant Territory (as defined in the Articles) to cease to be a Director and the relevant time period for application for review of or appeal against such requirement has lapsed and no application for review or appeal has been filed or is underway against such requirement; or

(hh) if he is removed from office by notice in writing served upon him signed by not less than three-fourths in number (or, if that is not a round number, the nearest lower round number) of the Directors (including himself) then in office.

From time to time the Board may appoint one or more of its body to be managing director, joint managing director, or deputy managing director or to hold any other employment or executive office with Newco for such period and upon such terms as the Board may determine and the Board may revoke or terminate any of such appointments. The Board may also delegate any of its powers to committees consisting of such Director or Directors and other person(s) as the Board thinks fit, and from time to time it may also revoke such delegation or revoke the appointment of and discharge any such committees either wholly or in part, and either as to persons or purposes, but every committee so formed shall, in the exercise of the powers so delegated, conform to any regulations that may from time to time be imposed upon it by the Board.

– 205 – APPENDIX VI SUMMARY OF THE CONSTITUTION OF NEWCO 19.10(5)(a) AND CAYMAN ISLANDS COMPANY LAW

(viii) Borrowing powers A1a(7)(3) Para. 22, Pursuant to the Articles, the Board may exercise all the powers of Newco to 3rd Sch., CO raise or borrow money, to mortgage or charge all or any part of the undertaking, property and uncalled capital of Newco and, subject to the Cayman Companies Law, to issue debentures, debenture stock, bonds and other securities of Newco, whether outright or as collateral security for any debt, liability or obligation of Newco or of any third party. The provisions summarized above, in common with the Articles of Association in general, may be varied with the sanction of a special resolution of Newco.

(ix) Register of Directors and officers

Pursuant to the Cayman Companies Law, Newco is required to maintain at its registered office a register of directors and officers which is not available for inspection by the public. A copy of such register must be filed with the Registrar of Companies in the Cayman Islands and any change must be notified to the Registrar within 30 days of any change in such directors or officers.

(x) Proceedings of the Board

Subject to the Articles, the Board may meet anywhere in the world for the despatch of business and may adjourn and otherwise regulate its meetings as it thinks fit. Questions arising at any meeting shall be determined by a majority of votes. In the case of an equality of votes, the chairman of the meeting shall have a second or casting vote.

(c) Alterations to the constitutional documents

To the extent that the same is permissible under Cayman Islands law and subject to the Articles, the Memorandum and Articles of Newco may only be altered or amended, and the name of Newco may only be changed by Newco by special resolution.

– 206 – APPENDIX VI SUMMARY OF THE CONSTITUTION OF NEWCO 19.10(5)(a) AND CAYMAN ISLANDS COMPANY LAW

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

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

Any special rights conferred upon the holders of any shares or class of shares shall not, unless otherwise expressly provided in the rights attaching to the terms of issue of such shares, be deemed to be varied by the creation or issue of further shares ranking pari passu therewith.

(e) Alteration of capital A1a(7)(6)

Newco may, by an ordinary resolution of its members, (a) increase its share capital by the creation of new shares of such amount as it thinks expedient; (b) consolidate or divide all or any of its share capital into shares of larger or smaller amount than its existing shares; (c) divide its unissued shares into several classes and attach thereto respectively any preferential, deferred, qualified or special rights, privileges or conditions; (d) subdivide its shares or any of them into shares of an amount smaller than that fixed by the Memorandum; and (e) cancel shares which, at the date of the passing of the resolution, have not been taken or agreed to be taken by any person and diminish the amount of its share capital by the amount of the shares so cancelled; (f) make provision for the allotment and issue of shares which do not carry any voting rights; (g) change the currency of denomination of its share capital; and (h) reduce its share premium account in any manner authorized and subject to any conditions prescribed by law.

Reduction of share capital – subject to the Companies Law and to confirmation by the court, a company limited by shares may, if so authorised by its Articles of Association, by special resolution, reduce its share capital in any way.

– 207 – APPENDIX VI SUMMARY OF THE CONSTITUTION OF NEWCO 19.10(5)(a) AND CAYMAN ISLANDS COMPANY LAW

(f) Special resolution – majority required

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

Under Cayman Companies Law, a copy of any special resolution must be forwarded to the Registrar of Companies in the Cayman Islands within 15 days of being passed.

An “ordinary resolution”, by contrast, is defined in the Articles to mean a resolution passed by a simple majority of the votes of such members of Newco as, being entitled to do so, vote in person or, in the case of members which are corporations, by their duly authorised representatives or, where proxies are allowed, by proxy at a general meeting of which not less than fourteen clear days’ notice has been given and held in accordance with the Articles. A resolution in writing signed by or on behalf of all members shall be treated as an ordinary resolution duly passed at a general meeting of Newco duly convened and held, and where relevant as a special resolution so passed.

(g) Voting rights (generally and on a poll) and right to demand a poll A1a(13A)

Subject to any special rights, restrictions or privileges as to voting for the time being attached to any class or classes of shares at any general meeting on a show of hands, every member who is present in person or by proxy or being a corporation, is present by its duly authorised representative shall have one vote, and on a poll every member present in person or by proxy or, in the case of a member being a corporation, by its duly authorised representative shall have one vote for every share which is fully paid or credited as fully paid registered in his name in the register of members of Newco but so that no amount paid up or credited as paid up on a share in advance of calls or instalments is treated for the foregoing purpose as paid up on the share. Notwithstanding anything contained in the Articles, where more than one proxy is appointed by a member which is a Clearing House (as defined in the Articles) (or its nominee(s)), each such proxy shall have one vote on a show of hands. On a poll, a member entitled to more than one vote need not use all his votes or cast all the votes he does use in the same way.

– 208 – APPENDIX VI SUMMARY OF THE CONSTITUTION OF NEWCO 19.10(5)(a) AND CAYMAN ISLANDS COMPANY LAW

At any general meeting a resolution put to the vote of the meeting is to be decided on a show of hands unless (before or on the declaration of the result of the show of hands or on the withdrawal of any other demand for a poll) a poll is demanded or otherwise required under the rules of the stock exchange of the Relevant Territory (as defined in the Articles). A poll may be demanded by:

(i) the chairman of the meeting; or

(ii) at least three members present in person or, in the case of a member being a corporation, by its duly authorised representative or by proxy for the time being entitled to vote at the meeting; or

(iii) any member or members present in person or, in the case of a member being a corporation, by its duly authorised representative or by proxy and representing not less than one-tenth of the total voting rights of all the members having the right to vote at the meeting; or

(iv) a member or members present in person or, in the case of a member being a corporation, by its duly authorised representative or by proxy and holding shares in Newco conferring a right to vote at the meeting being shares on which an aggregate sum has been paid equal to not less than one-tenth of the total sum paid up on all the shares conferring that right; or

(v) if required by the Listing Rules, by any Director or Directors who, individually or collectively, hold proxies in respect of shares representing 5% or more of the total voting right at such meeting.

Should a Clearing House or its nominee(s), be a member of Newco, such person or persons may be authorised as it thinks fit to act as its representative(s) at any meeting of Newco or at any meeting of any class of members of Newco provided that, if more than one person is so authorised, the authorisation shall specify the number and class of shares in respect of which each such person is so authorised. A person authorised in accordance with this provision shall be entitled to exercise the same rights and powers on behalf of the Clearing House or its nominee(s), as if such person were an individual member including the right to vote individually on a show of hands.

Where any member is, under the Listing Rules, required to abstain from voting on any particular resolution of Newco or restricted to voting only for or only against any particular resolution of Newco, any votes cast by or on behalf of such member in contravention of such requirement or restriction shall not be counted.

– 209 – APPENDIX VI SUMMARY OF THE CONSTITUTION OF NEWCO 19.10(5)(a) AND CAYMAN ISLANDS COMPANY LAW

(h) Annual general meetings

Newco must hold an annual general meeting each year. Such meeting must be held not more than 15 months after the holding of the last preceding annual general meeting, or such longer period as may be authorised by the Stock Exchange at such time and place as may be determined by the Board.

(i) Accounts and audit

The Board shall cause proper books of account to be kept of the sums of money received and expended by Newco, and the matters in respect of which such receipt and expenditure take place, and of the assets and liabilities of Newco and of all other matters required by the Cayman Companies Law necessary to give a true and fair view of the state of Newco’s affairs and to show and explain its transactions.

The books of accounts of Newco shall be kept at the head office of Newco or at such other place or places as the Board decides and shall always be open to inspection by any Director. No member (other than a Director) shall have any right to inspect any account or book or document of Newco except as conferred by the Cayman Companies Law or ordered by a court of competent jurisdiction or authorised by the Board or Newco in general meeting.

The Board shall from time to time cause to be prepared and laid before Newco at its annual general meeting balance sheets and profit and loss accounts (including every document required by law to be annexed thereto), together with a copy of the Directors’ report and a copy of the auditors’ report not less than 21 days before the date of the annual general meeting. Copies of these documents shall be sent to every person entitled to receive notices of general meetings of Newco under the provisions of the Articles together with the notice of annual general meeting, not less than 21 days before the date of the meeting.

Subject to the rules of the stock exchange of the Relevant Territory (as defined in the Articles), Newco may send summarized financial statements to shareholders who has, in accordance with the rules of the stock exchange of the Relevant Territory (as defined in the Articles), consented and elected to receive summarized financial statements instead of the full financial statements. The summarized financial statements must be accompanied by any other documents as may be required under the rules of the stock exchange of the Relevant Territory (as defined in the Articles), and must be sent to the shareholders not less than twenty-one days before the general meeting to those shareholders that have consented and elected to receive the summarized financial statements.

– 210 – APPENDIX VI SUMMARY OF THE CONSTITUTION OF NEWCO 19.10(5)(a) AND CAYMAN ISLANDS COMPANY LAW

The requirements referred to above shall be deemed satisfied where, in accordance with all applicable laws, Newco publishes copies of the documents referred to above or a summary thereof in accordance with the articles of association of Newco (as the case may be) on Newco’s computer network or in any other permitted manner and that person has agreed or is deemed to have agreed to treat the publication or receipt of such documents in such manner as discharging Newco’s obligation to lend to him a printed copy of these documents or a summary thereof, as the case may be.

Newco shall appoint auditor(s) to hold office until the conclusion of the next annual general meeting on such terms and with such duties as may be agreed with the Board. The auditors’ remuneration shall be fixed by Newco in general meeting or by the Board if authority is so delegated by the members.

The auditors shall audit the financial statements of Newco in accordance with generally accepted accounting principles of Hong Kong, the International Accounting Standards or such other standards as may be permitted by the Stock Exchange.

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

An annual general meeting and any extraordinary general meeting at which it is proposed to pass a special resolution must be called by at least 21 days’ notice in writing, and any other extraordinary general meeting shall be called by at least 14 days’ notice in writing. The notice shall be exclusive of the day on which it is served or deemed to be served and of the day for which it is given, and must specify the time, place and agenda of the meeting, and particulars of the resolution(s) to be considered at that meeting, and, in the case of special business, the general nature of that business.

Except where otherwise expressly stated, any notice or document (including a share certificate) to be given or issued under the Articles shall be in writing, and may be served by Newco on any member either personally or by sending it through the post in a prepaid envelope or wrapper addressed to such member at his registered address as appearing in Newco’s register of members or by leaving it at such registered address as aforesaid or (in the case of a notice) by advertisement in the newspapers or as the case may be, by transmitting it to any such address or transmitting it to any telex, facsimile transmission number of electronic number or address or website supplied by the member to Newco for the giving of notice or document to him or which the person transmitting the notice reasonably and bona fide believes at the relevant time will result in the notice being duly received by the member, or to the extent permitted by all applicable laws, by placing it on Newco’s computer network, giving access to such network to members. Any member whose registered address is outside Hong Kong may notify Newco in writing of an address in Hong Kong which for the purpose of service of notice shall be deemed to be his registered address. Where the registered address of the member is outside Hong Kong, notice, if given through the post, shall be sent by prepaid airmail letter where available.

– 211 – APPENDIX VI SUMMARY OF THE CONSTITUTION OF NEWCO 19.10(5)(a) AND CAYMAN ISLANDS COMPANY LAW

Although a meeting of Newco may be called by shorter notice than as specified above, such meeting may be deemed to have been duly called if it is so agreed:

(i) in the case of a meeting called as an annual general meeting, by all members of Newco entitled to attend and vote thereat; and

(ii) in the case of any other meeting, by a majority in number of the members having a right to attend and vote at the meeting, being a majority together holding not less than 95% in nominal value of the issued shares giving that right.

All business transacted at an extraordinary general meeting shall be deemed special business and all business shall also be deemed special business where it is transacted at an annual general meeting with the exception of the following, which shall be deemed ordinary business:

(aa) the declaration and sanctioning of dividends;

(bb) the consideration and adoption of the accounts and balance sheet and the reports of the directors and the auditors;

(cc) the election of Directors in place of those retiring;

(dd) the appointment of auditors;

(ee) the fixing of the remuneration of the Directors and of the auditors;

(ff) the granting of any mandate or authority to the Board to offer, allot, grant options over, or otherwise dispose of the unissued shares of Newco representing not more than 20% in nominal value of its existing issued share capital (or such other percentage as may from time to time be specified in the rules of the Stock Exchange) and the number of any securities repurchased by Newco since the granting of such mandate; and

(gg) the granting of any mandate or authority to the Board to repurchase securities in Newco.

– 212 – APPENDIX VI SUMMARY OF THE CONSTITUTION OF NEWCO 19.10(5)(a) AND CAYMAN ISLANDS COMPANY LAW

(k) Transfer of shares A1a(7)(8) A1a(15)(2)(e) Subject to the Cayman Companies Law, all transfers of shares shall be effected by an instrument of transfer in the usual or common form or in such other form as the Board may approve provided always that it shall be in such form prescribed by the Stock Exchange and may be under hand or, if the transferor or transferee is a Clearing House or its nominee(s), under hand or by machine imprinted signature or by such other manner of execution as the Board may approve from time to time.

Execution of the instrument of transfer shall be by or on behalf of the transferor and the transferee provided that the Board may dispense with the execution of the instrument of transfer by the transferor or transferee or accept mechanically executed transfers in any case in which it in its discretion thinks fit to do so, and the transferor shall be deemed to remain the holder of the share until the name of the transferee is entered in the register of members of Newco in respect thereof.

The Board may, in its absolute discretion, at any time and from time to time remove any share on the principal register to any branch register or any share on any branch register to the principal register or any other branch register.

Unless the Board otherwise agrees, no shares on the principal register shall be removed to any branch register nor shall shares on any branch register be removed to the principal register or any other branch register. All removals and other documents of title shall be lodged for registration and registered, in the case of shares on any branch register, at the relevant registration office and, in the case of shares on the principal register, at the place at which the principal register is located.

The Board may, in its absolute discretion, decline to register a transfer of any share (not being a fully paid up share) to a person of whom it does not approve or any share issued under any share option scheme upon which a restriction on transfer imposed thereby still subsists, and it may also refuse to register any transfer of any share to more than four joint holders or any transfer of any share (not being a fully paid up share) on which Newco has a lien.

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

– 213 – APPENDIX VI SUMMARY OF THE CONSTITUTION OF NEWCO 19.10(5)(a) AND CAYMAN ISLANDS COMPANY LAW

The registration of transfers may be suspended and the register closed on giving notice in writing or, where applicable, by any other electronic means in accordance with the requirements of the Stock Exchange, at such times and for such periods as the Board may determine. The register of members shall not be closed for periods exceeding in the whole 30 days in any year.

Fully paid shares shall be free from any restriction with respect to the right of the holder thereof to transfer such shares (except when permitted by the Stock Exchange) and shall also be free from all liens.

(l) Power of Newco to purchase its own shares

Newco is empowered by the Cayman Companies Law and the Articles to purchase its own shares subject to certain restrictions and the Board may only exercise this power on behalf of Newco subject to any applicable requirement imposed from time to time by code, rules or regulations issued from time to time by the Stock Exchange and/or the Securities and Futures Commission of Hong Kong.

Where Newco purchases for redemption a redeemable Share, purchases not made through the market or by tender shall be limited to a maximum price, and if purchases are by tender, tenders shall be available to all members alike.

(m) Power of any subsidiary of Newco to own shares in Newco

There are no provisions in the Articles relating to the ownership of shares in Newco by a subsidiary.

(n) Dividends and other methods of distribution

Newco in general meeting may declare dividends in any currency to be paid to the members but no dividend shall be declared in excess of the amount recommended by the Board.

Except in so far as the rights attaching to, or the terms of issue of, any share may otherwise provide:

(i) all dividends shall be declared and paid according to the amounts paid up on the shares in respect whereof the dividend is paid, although no amount paid up on a share in advance of calls shall for this purpose be treated as paid up on the share; and

– 214 – APPENDIX VI SUMMARY OF THE CONSTITUTION OF NEWCO 19.10(5)(a) AND CAYMAN ISLANDS COMPANY LAW

(ii) all dividends shall be apportioned and paid pro rata in accordance with the A1a(7)(7) amount paid up on the shares during any portion or portions of the period in respect of which the dividend is paid. The Board may deduct from any dividend or other monies payable to any member all sums of money (if any) presently payable by him to Newco on account of calls, instalments or otherwise.

Where the Board or Newco in general meeting has resolved that a dividend should be paid or declared on the share capital of Newco, the Board may resolve:

(aa) that such dividend be satisfied wholly or in part in the form of an allotment of shares credited as fully paid up, provided that the members entitled thereto will be entitled to elect to receive such dividend (or part thereof) in cash in lieu of such allotment; or

(bb) that the members entitled to such dividend will be entitled to elect to receive an allotment of shares credited as fully paid up in lieu of the whole or such part of the dividend as the Board may think fit.

Upon the recommendation of the Board Newco may by ordinary resolution in respect of any one particular dividend of Newco determine that it may be satisfied wholly in the form of an allotment of shares credited as fully paid up without offering any right to members to elect to receive such dividend in cash in lieu of such allotment.

Any dividend, bonus or other sum payable in cash to the holder of shares may be paid by cheque or warrant sent through the post addressed to the holder at his registered address, but in the case of joint holders, shall be addressed to the holder whose name stands first in the register of members of Newco in respect of the shares at his address as appearing in the register, or addressed to such person and at such address as the holder or joint holders may in writing so direct. Every such cheque or warrant shall be made payable to the order of the person to whom it is sent and shall be sent at the holder’s or joint holders’ risk and payment of the cheque or warrant by the bank on which it is drawn shall constitute a good discharge to Newco. Any one of two or more joint holders may give effectual receipts for any dividends or other moneys payable or property distributable in respect of the shares held by such joint holders.

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

The Board may, if it thinks fit, receive from any member willing to advance the same, and either in money or money’s worth, all or any part of the money uncalled and unpaid or instalments payable upon any shares held by him, and in respect of all or any of the moneys so advanced may pay interest at such rate (if any) not exceeding 20% per annum, as the

– 215 – APPENDIX VI SUMMARY OF THE CONSTITUTION OF NEWCO 19.10(5)(a) AND CAYMAN ISLANDS COMPANY LAW

Board may decide, but a payment in advance of a call shall not entitle the member to receive any dividend or to exercise any other rights or privileges as a member in respect of the share or the due portion of the shares upon which payment has been advanced by such member before it is called up.

All dividends, bonuses or other distributions unclaimed for one year after having been declared may be invested or otherwise made use of by the Board for the benefit of Newco until claimed and Newco shall not be constituted a trustee in respect thereof. All dividends, bonuses or other distributions unclaimed for six years after having been declared may be forfeited by the Board and, upon such foreiture, shall revert to Newco.

No dividend or other monies payable by Newco on or in respect of any share shall bear interest against Newco.

Newco may exercise the power to cease sending cheques for dividend entitlements or dividend warrants by post if such cheques or warrants remain uncashed on two consecutive occasions or after the first occasion on which such a cheque or warrant is returned undelivered.

(o) Proxies

Any member of Newco entitled to attend and vote at a meeting of Newco is entitled to appoint another person as his proxy to attend and vote instead of him. A member who is the holder of two or more shares may appoint more than one proxy to represent him and vote on his behalf at a general meeting of Newco or at a class meeting. A proxy need not be a member of Newco and shall be entitled to exercise the same powers on behalf of a member who is an individual and for whom he acts as proxy as such member could exercise. In addition, a proxy shall be entitled to exercise the same powers on behalf of a member which is a corporation and for which he acts as proxy as such member could exercise if it were an individual member including the right to vote on a show of hands in accordance with the Articles. On a poll or on a show of hands, votes may be given either personally (or, in the case of a member being a corporation, by its duly authorized representative) or by proxy. Subject to the approval of the Board, a member may appoint standing proxies or standing corporate representatives (in the case where a member is a corporation) to attend and vote at general meetings.

The instrument appointing a proxy shall be in writing under the hand of the appointor or of his attorney duly authorised in writing, or if the appointor is a corporation, either under seal or under the hand of an officer or attorney duly authorised. Every instrument of proxy, whether for a specified meeting or otherwise, shall be in such form as the Board may from time to time approve, provided that any form issued to a member for use by him for appointing a proxy to attend and vote at an extraordinary general meeting or at an annual general meeting at which any business is to be transacted shall be such as to enable the member, according to his intentions, to instruct the proxy to vote in favour of or against (or, in default of instructions, to exercise his discretion in respect of) each resolution dealing with any such business.

– 216 – APPENDIX VI SUMMARY OF THE CONSTITUTION OF NEWCO 19.10(5)(a) AND CAYMAN ISLANDS COMPANY LAW

(p) Calls on shares and forfeiture of shares

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

If a member fails to pay any call or instalment of a call on the day appointed for payment thereof, the Board may, at any time thereafter during such time as any part of the call or instalment remains unpaid, serve not less than 14 days’ notice on him requiring payment of so much of the call or instalment as is unpaid, together with any interest which may have accrued and which may still accrue up to the date of actual payment. The notice will name a further day (not earlier than the expiration of 14 days from the date of the notice) on or before which the payment required by the notice is to be made, and it shall also name the place where payment is to be made. The notice shall also state that, in the event of non-payment at or before the time appointed, the shares in respect of which the call was made will be liable to be forfeited.

If the requirements of any such notice are not complied with, any share in respect of which the notice has been given may at any time thereafter, before the payment required by the notice has been made, be forfeited by a resolution of the Board to that effect. Such forfeiture will include all dividends and bonuses declared in respect of the forfeited share and not actually paid before the forfeiture.

A person whose shares have been forfeited shall cease to be a member in respect of the forfeited shares but shall, nevertheless, remain liable to pay to Newco all moneys which, at the date of forfeiture, were payable by him to Newco in respect of the shares together with (if the Board shall in its discretion so require) interest thereon from the date of forfeiture until payment at such rate not exceeding 20 per cent per annum as the Board may prescribe.

– 217 – APPENDIX VI SUMMARY OF THE CONSTITUTION OF NEWCO 19.10(5)(a) AND CAYMAN ISLANDS COMPANY LAW

(q) Inspection of corporate records

Members of Newco have no general right under the Cayman Companies Law to inspect or obtain copies of the register of members or corporate records of Newco. However, the members of Newco will have such rights as may be set forth in the Articles. The Articles provide that for so long as any part of the share capital of Newco is listed on the Stock Exchange, any member may inspect any register of members of Newco maintained in Hong Kong (except when the register of member is closed) without charge and require the provision to him of copies or extracts thereof in all respects as if Newco were incorporated under and were subject to the Hong Kong Companies Ordinance.

An exempted company may, subject to the provisions of its articles of association, maintain its principal register of members and any branch registers at such locations, whether within or outside the Cayman Islands, as its directors may, from time to time, think fit.

(r) Quorum for meetings and separate class meetings

No business shall be transacted at any general meeting unless a quorum is present when the meeting proceeds to business, and continues to be present until the conclusion of the meeting.

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

(s) Rights of minorities in relation to fraud or oppression

There are no provisions in the Articles concerning the rights of minority members in relation to fraud or oppression. However, certain remedies may be available to members of Newco under Cayman Islands law, as summarized in paragraph 3(f) of this Appendix.

(t) Procedures on liquidation

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

– 218 – APPENDIX VI SUMMARY OF THE CONSTITUTION OF NEWCO 19.10(5)(a) AND CAYMAN ISLANDS COMPANY LAW

Subject to any special rights, privileges or restrictions as to the distribution of available surplus assets on liquidation for the time being attached to any class or classes of shares:

(i) if Newco shall be wound up and the assets available for distribution amongst the members of Newco shall be more than sufficient to repay the whole of the capital paid up at the commencement of the winding up, then the excess shall be distributed pari passu amongst such members in proportion to the amount paid up on the shares held by them respectively; and

(ii) if Newco shall be wound up and the assets available for distribution amongst the members as such shall be insufficient to repay the whole of the paid-up capital, such assets shall be distributed so that, as nearly as may be, the losses shall be borne by the members in proportion to the capital paid up, on the shares held by them respectively.

In the event that Newco is wound up (whether the liquidation is voluntary or compelled by the court) the liquidator may, with the sanction of a special resolution and any other sanction required by the Cayman Companies Law divide among the members in specie or kind the whole or any part of the assets of Newco whether the assets shall consist of property of one kind or shall consist of properties of different kinds and the liquidator may, for such purpose, set such value as he deems fair upon any one or more class or classes of property to be divided as aforesaid and may determine how such division shall be carried out as between the members or different classes of members and the members within each class. The liquidator may, with the like sanction, vest any part of the assets in trustees upon such trusts for the benefit of members as the liquidator shall think fit, but so that no member shall be compelled to accept any shares or other property upon which there is a liability.

(u) Untraceable members

Newco may exercise the power to cease sending cheques for dividend entitlements or dividend warrants by post if such cheques or warrants remain uncashed on two consecutive occasions or after the first occasion on which such a cheque or warrant is returned undelivered.

In accordance with the Articles, Newco is entitled to sell any of the shares of a member who is untraceable if:

(i) all cheques or warrants, being not less than three in total number, for any sum payable in cash to the holder of such shares have remained uncashed for a period of 12 years;

(ii) upon the expiry of the 12 years and 3 months period (being the 3 months notice period referred to in sub-paragraph (iii)), Newco has not during that time received any indication of the existence of the member; and

– 219 – APPENDIX VI SUMMARY OF THE CONSTITUTION OF NEWCO 19.10(5)(a) AND CAYMAN ISLANDS COMPANY LAW

(iii) Newco has caused an advertisement to be published in accordance with the rules of the stock exchange of the Relevant Territory (as defined in the Articles) giving notice of its intention to sell such shares and a period of three months has elapsed since such advertisement and the stock exchange of the Relevant Territory (as defined in the Articles) has been notified of such intention. The net proceeds of any such sale shall belong to Newco and upon receipt by Newco of such net proceeds, it shall become indebted to the former member of Newco for an amount equal to such net proceeds.

(v) Subscription rights reserve

Pursuant to the Articles, provided that it is not prohibited by and is otherwise in compliance with the Cayman Companies Law, if warrants to subscribe for shares have been issued by Newco and Newco does any act or engages in any transaction which would result in the subscription price of such warrants being reduced below the par value of the shares to be issued on the exercise of such warrants, a subscription rights reserve shall be established and applied in paying up the difference between the subscription price and the par value of such shares.

3. CAYMAN ISLANDS COMPANY LAW R19.08(3) R19.10(3) Newco was incorporated in the Cayman Islands as an exempted company on 1 August 2007 R19.05(6)(a)(i) subject to the Cayman Companies Law. Certain provisions of Cayman Islands company law are set out below but this section does not purport to contain all applicable qualifications and exceptions R19.05(6)(a)(ii) or to be a complete review of all matters of the Cayman Companies Law and taxation, which may differ from equivalent provisions in jurisdictions with which interested parties may be more familiar.

(a) Newco’s operations

As an exempted company, Newco must conduct its operations mainly outside the Cayman Islands. Moreover, Newco is required to file an annual return each year with the Registrar of Companies of the Cayman Islands and pay a fee which is based on the amount of its authorized share capital.

(b) Share capital

In accordance with the Cayman Companies Law, a Cayman Islands company may issue ordinary, preference or redeemable shares or any combination thereof. The Cayman Companies Law provides that where a company issues shares at a premium, whether for cash or otherwise, a sum equal to the aggregate amount or value of the premiums on those shares shall be transferred to an account, to be called the “share premium account”. At the

– 220 – APPENDIX VI SUMMARY OF THE CONSTITUTION OF NEWCO 19.10(5)(a) AND CAYMAN ISLANDS COMPANY LAW

option of a company, these provisions may not apply to premiums on shares of that company allotted pursuant to any arrangements in consideration of the acquisition or cancellation of shares in any other company and issued at a premium. The Cayman Companies Law provides that the share premium account may be applied by Newco subject to the provisions, if any, of its memorandum and articles of association, in such manner as Newco may from time to time determine including, but without limitation, the following:

(i) paying distributions or dividends to members;

(ii) paying up unissued shares of Newco to be issued to members as fully paid bonus shares;

(iii) in the redemption and repurchase of shares (in accordance with the detailed provisions of section 37 of the Cayman Companies Law);

(iv) writing-off the preliminary expenses of the company;

(v) writing-off the expenses of, or the commission paid or discount allowed on, any issue of shares or debentures of the company; and

(vi) providing for the premium payable on redemption or purchase of any shares or debentures of the company.

Notwithstanding the foregoing, the Cayman Companies Law provides that no distribution or dividend may be paid to members out of the share premium account unless, immediately following the date on which the distribution or dividend is proposed to be paid, Newco will be able to pay its debts as they fall due in the ordinary course of business.

It is further provided by the Cayman Companies Law that, subject to confirmation by the court, a company limited by shares or a company limited by guarantee and having a share capital may, if authorized to do so by its articles of association, by special resolution reduce its share capital in any way.

The Articles include certain protections for holders of special classes of shares, requiring their consent to be obtained before their rights may be varied. The consent of the specified proportions of the holders of the issued shares of that class or the sanction of a resolution passed at a separate meeting of the holders of those shares is required.

– 221 – APPENDIX VI SUMMARY OF THE CONSTITUTION OF NEWCO 19.10(5)(a) AND CAYMAN ISLANDS COMPANY LAW

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

There are no statutory prohibitions in the Cayman Islands on the granting of financial assistance by a company to another person for the purchase of, or subscription for, its own, its holding company’s or a subsidiary’s shares. Therefore, a company may provide financial assistance provided the directors of Newco when proposing to grant such financial assistance discharge their duties of care and acting in good faith, for a proper purpose and in the interests of the company. Such assistance should be on an arm’s-length basis.

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

A company limited by shares or a company limited by guarantee and having a share capital may, if so authorized by its articles of association, issue shares which are to be redeemed or are liable to be redeemed at the option of Newco or a member. In addition, such a company may, if authorized to do so by its articles of association, purchase its own shares, including any redeemable shares. Nonetheless, if the articles of association do not authorize the manner of purchase, a company cannot purchase any of its own shares without the manner of purchase first being authorized by an ordinary resolution of the company. A company may not redeem or purchase its shares unless they are fully paid. Furthermore, a company may not redeem or purchase any of its shares if, as a result of the redemption or purchase, there would no longer be any member of Newco holding shares. In addition, a payment out of capital by a company for the redemption or purchase of its own shares is not lawful unless immediately following the date on which the payment is proposed to be made, Newco shall be able to pay its debts as they fall due in the ordinary course of business.

A Cayman Islands company may be able to purchase its own warrants subject to and in accordance with the terms and conditions of the relevant warrant instrument or certificate. Thus there is no requirement under Cayman Islands law that a company’s memorandum or articles of association contain a specific provision enabling such purchases. The directors of a company may under the general power contained in its memorandum of association be able to buy and sell and deal in personal property of all kinds.

Under Cayman Islands law, a subsidiary may hold shares in its holding company and, in certain circumstances, may acquire such shares.

(e) Dividends and distributions

With the exception of section 34 of the Cayman Companies Law, there are no statutory provisions relating to the payment of dividends. Based upon English case law which is likely to be persuasive in the Cayman Islands, dividends may be paid only out of profits. In addition, section 34 of the Cayman Companies Law permits, subject to a solvency test and the provisions, if any, of the company’s memorandum and articles of association, the payment of dividends and distributions out of the share premium account (see sub-paragraph 2(n) of this Appendix for further details).

– 222 – APPENDIX VI SUMMARY OF THE CONSTITUTION OF NEWCO 19.10(5)(a) AND CAYMAN ISLANDS COMPANY LAW

(f) Protection of minorities and shareholders’ suits

It can be expected that the Cayman Islands courts will ordinarily follow English case law precedents (particularly the rule in the case of Foss v. Harbottle and the exceptions thereto) which permit a minority member to commence a representative action against or derivative actions in the name of Newco to challenge:

(i) an act which is ultra vires Newco or illegal;

(ii) an act which constitutes a fraud against the minority and the wrongdoers are themselves in control of the company; and

(iii) an irregularity in the passing of a resolution the passage of which requires a qualified (or special) majority which has not been obtained.

Where a company (not being a bank) is one which has a share capital divided into shares, the court may, on the application of members thereof holding not less than one-fifth of the shares of Newco in issue, appoint an inspector to examine the affairs of Newco and, at the direction of the court, to report thereon.

Moreover, any member of a company may petition the court which may make a winding up order if the court is of the opinion that it is just and equitable that Newco should be wound up.

In general, claims against a company by its members must be based on the general laws of contract or tort applicable in the Cayman Islands or be based on potential violation of their individual rights as members as established by a company’s memorandum and articles of association.

(g) Disposal of assets

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

(h) Accounting and auditing requirements

Section 59 of the Cayman Companies Law provides that a company shall cause proper records of accounts to be kept with respect to (i) all sums of money received and expended by Newco and the matters with respect to which the receipt and expenditure takes place; (ii) all sales and purchases of goods by Newco and (iii) the assets and liabilities of the company.

– 223 – APPENDIX VI SUMMARY OF THE CONSTITUTION OF NEWCO 19.10(5)(a) AND CAYMAN ISLANDS COMPANY LAW

Section 59 of the Cayman Companies Law further states that proper books of account shall not be deemed to be kept if there are not kept such books as are necessary to give a true and fair view of the state of the company’s affairs and to explain its transactions.

(i) Exchange control

There are no exchange control regulations or currency restrictions in effect in the Cayman Islands.

(j) Taxation

Pursuant to section 6 of the Tax Concessions Law (1999 Revision) of the Cayman Islands, Newco has obtained an undertaking from the Governor-in-Council:

(i) that no law which is enacted in the Cayman Islands imposing any tax to be levied on profits or income or gains or appreciation shall apply to Newco or its operations; and

(ii) in addition, that no tax be levied on profits, income gains or appreciations or which is in the nature of estate duty or inheritance tax shall be payable by Newco:

(aa) on or in respect of the shares, debentures or other obligations of Newco; or

(bb) by way of withholding in whole or in part of any relevant payment as defined in section 6(3) of the Tax Concessions Law (1999 Revision).

The undertaking for Newco is for a period of twenty years from 4 September 2007.

The Cayman Islands currently levy no taxes on individuals or corporations based upon profits, income, gains or appreciations and there is no taxation in the nature of inheritance tax or estate duty. There are no other taxes likely to be material to Newco levied by the Government of the Cayman Islands save certain stamp duties which may be applicable, from time to time, on certain instruments executed in or brought within the jurisdiction of the Cayman Islands. The Cayman Islands are not a party to any double tax treaties.

(k) Stamp duty on transfers

There is no stamp duty payable in the Cayman Islands on transfers of shares of Cayman Islands companies save for those which hold interests in land in the Cayman Islands.

– 224 – APPENDIX VI SUMMARY OF THE CONSTITUTION OF NEWCO 19.10(5)(a) AND CAYMAN ISLANDS COMPANY LAW

(l) Loans to directors

The Cayman Companies Law contains no express provision prohibiting the making of loans by a company to any of its directors. However, the Articles provide for the prohibition of such loans under specific circumstances.

(m) Inspection of corporate records

The members of Newco have no general right under the Cayman Companies Law to inspect or obtain copies of the register of members or corporate records of the company. They will, however, have such rights as may be set out in the company’s articles of association.

(n) Register of members

A Cayman Islands exempted company may, subject to the provisions of its articles of association, maintain its principal register of members and any branch registers at such locations, whether within or outside the Cayman Islands, as the directors may, from time to time, think fit. The Cayman Companies Law contains no requirement for an exempted company to make any returns of members to the Registrar of Companies in the Cayman Islands. The names and addresses of the members are, accordingly, not a matter of public record and are not available for public inspection.

(o) Winding up

A Cayman Islands company may be wound up either by (i) an order of the court or (ii) voluntarily by a special resolution of its members. The court also has authority to order winding up in a number of specified circumstances including where, in the opinion of the court, it is just and equitable that such company be so wound up.

A voluntary winding up of a company occurs where the members so resolve in general meeting by special resolution, or, in the case of a limited duration company, when the period fixed for the duration of Newco by its memorandum expires, or where the event occurs on the occurrence of which the memorandum provides that Newco is to be dissolved. In the case of a voluntary winding up, such company is obliged to cease to carry on its business from the time of passing the resolution for voluntary winding up or upon the expiry of the period or the occurrence of the event referred to above. Upon appointment of a liquidator, the responsibility for the company’s affairs rests entirely in his hands and no further executive action may be carried out without his approval.

– 225 – APPENDIX VI SUMMARY OF THE CONSTITUTION OF NEWCO 19.10(5)(a) AND CAYMAN ISLANDS COMPANY LAW

A company is placed in liquidation either by an order of the court or by a special resolution of its members. A liquidator is appointed whose duties are to collect the assets of Newco (including the amount (if any) due from the contributories), settle the list of creditors and discharge the company’s liability to them, ratably if insufficient assets exist to discharge the liabilities in full, and settle the list of contributories (“members”) and divide the surplus assets (if any) amongst them in accordance with the rights attaching to the shares.

In the case of a members’ voluntary winding up of a company, Newco in general meeting must appoint one or more liquidators for the purpose of winding up the affairs of Newco and distributing its assets.

When the affairs of a company are fully wound up, the liquidator must make up an account of the winding up, showing how the winding up has been conducted and the property of Newco has been disposed of, and thereupon call a general meeting of Newco for the purposes of laying before it the account and giving an explanation thereof. This general meeting shall be called by public notice or such other means as the Registrar of Companies may direct.

For the purpose of conducting the proceedings in winding up a company and assisting the court, there may be appointed one or more persons to be called an official liquidator or official liquidators; and the court may appoint to such office such person or persons, either provisionally or otherwise, as it thinks fit, and if more than one persons are appointed to such office, the court shall declare whether any act required or authorized to be done by the official liquidator is to be done by all or any one or more of such persons. The court may also determine whether any and what security is to be given by an official liquidator on his appointment; if no official liquidator is appointed, or during any vacancy in such office, all the property of Newco shall be in the custody of the court.

(p) Reconstructions

Reconstructions and amalgamations are governed by specific statutory provisions under the Cayman Companies Law whereby such arrangements may be approved by a majority in number representing 75% in value of members or creditors, depending on the circumstances, as are present at a meeting called for such purpose and thereafter sanctioned by the courts. Whilst a dissenting member would have the right to express to the court his view that the transaction for which approval is being sought would not provide the members with a fair value for their shares, nonetheless the courts are unlikely to disapprove the transaction on that ground alone in the absence of evidence of fraud or bad faith on behalf of management and if the transaction were approved and consummated the dissenting member would have no rights comparable to the appraisal rights (i.e. the right to receive payment in cash for the judicially determined value of their shares) ordinarily available, for example, to dissenting members of a United States corporation.

– 226 – APPENDIX VI SUMMARY OF THE CONSTITUTION OF NEWCO 19.10(5)(a) AND CAYMAN ISLANDS COMPANY LAW

(q) Take-overs

Where an offer is made by a company for the shares of another company and, within four months of the offer, the holders of not less than 90% of the shares which are the subject of the offer accept, the offeror may at any time within two months after the expiration of the said four months, by notice require the dissenting members to transfer their shares on the terms of the offer. A dissenting member may apply to the court of the Cayman Islands within one month of the notice objecting to the transfer. The burden is on the dissenting member to show that the court should exercise its discretion, which it will be unlikely to do unless there is evidence of fraud or bad faith or collusion as between the offeror and the holders of the shares who have accepted the offer as a means of unfairly forcing out minority members.

(r) Indemnification

Cayman Islands law does not limit the extent to which a company’s articles of association may provide for indemnification of officers and directors, save to the extent any such provision may be held by the court to be contrary to public policy, for example, where a provision purports to provide indemnification against the consequences of committing a crime.

4. GENERAL

Appleby, Newco’s legal adviser on Cayman Islands law, have sent to Newco a letter of advice which summarises certain aspects of the Cayman Islands company law. This letter, together with a copy of the Cayman Companies Law, is available for inspection as referred to in the paragraph headed “Documents Available for Inspection” in Appendix IX. Any person wishing to have a detailed summary of Cayman Islands company law or advice on the differences between it and the laws of any jurisdiction with which he is more familiar is recommended to seek independent legal advice.

– 227 – APPENDIX VII SUMMARY OF THE DIFFERENCES OF CERTAIN PROVISIONS OF THE BERMUDA AND CAYMAN ISLANDS COMPANY LAW

The Companies Act 1981 of Bermuda (as amended) (the “Companies Act”) is the principal R19.05(6)(a)(i) statute governing the operation of the Company in Bermuda while the Companies Law (2007 R19.05(6)(a)(ii) Revision) (the “Companies Law”) is the principal statute governing the operations of Newco in the R19.10(2) Cayman Islands. Generally, many of the provisions of the Companies Act and the Companies Law have been taken from the Companies Act, 1948 of the United Kingdom although their application has, in certain instances, been adapted to conform to the respective general concepts of company law in the Cayman Islands and in Bermuda.

However, in some circumstances, certain statutory provisions of the Companies Law and the Companies Act differ quite substantially from their equivalent in the United Kingdom Companies Act, in particular, certain aspects of Canadian company law have been included in the Companies Act.

In general, principles of English company law apply in Bermuda and courts in Bermuda will look to English decisions for guidance in interpreting these principles, subject to the statutory differences and this is also the case in the Cayman Islands where the courts treat English common law relating to companies as of strong persuasive authority. The Interpretation Act 1951 of Bermuda also provides that, except as otherwise expressly provided therein or many other Act, a court in Bermuda shall, in interpreting or construing any statutory provisions, apply as nearly as practicable the rules for the interpretation and construction of provisions of law for the time being binding upon the Supreme Court of Judicature is England.

A summary of the differences of certain provisions of the Companies Act and the Companies Law is set out below.

BERMUDA CAYMAN ISLANDS

Constitutional documents

The constitutional documents of an exempted The memorandum and articles of association company are its memorandum of association and are the constitutional documents of an bye-laws. exempted company.

The memorandum of association generally sets The articles of association of an exempted out the objects for which an exempted company company may be registered and the articles of was formed and its powers. The memorandum of association only bind the company and its association is filed with the Registrar of members when registered. The articles of Companies in Bermuda and is available for public association sets out the rights and duties as inspection. between the company, the shareholders and the directors and provide for the regulation of the company’s affairs.

– 228 – APPENDIX VII SUMMARY OF THE DIFFERENCES OF CERTAIN PROVISIONS OF THE BERMUDA AND CAYMAN ISLANDS COMPANY LAW

BERMUDA CAYMAN ISLANDS

The bye-laws generally prescribe the rights and If the articles of association have been duties between the company, the shareholders and registered, a copy of every special resolution the directors and they are not filed with the must be filed with the Registrar of Companies Registrar of Companies in Bermuda and are not in the Cayman Islands, either annexed to or available for public inspection. embodied in the articles of association.

The articles of association are not generally available for inspection by the public.

Directors, officers and representatives

A company must have a minimum of two A company must have a minimum of one directors. director and there is no requirement under the Companies Law that any of the directors be An exempted company must satisfy one of the resident in the Cayman Islands. Corporate Bermuda residency requirements, namely: appoint directors are permitted. (i) two directors, or (ii) a secretary and a director, or (iii) a secretary and a resident representative, The articles of association of an exempted each of whom must be individuals ordinarily company may provide that a director must hold resident in Bermuda. Listed companies may at least one share in the company. appoint a resident representative only, whether a corporation or an individual. An exempted company must appoint such officers as are set out in its articles of Corporate directors are not permitted. association.

Financial assistance

Certain financial assistance provisions are set out The provision of financial assistance by a in the Companies Act which historically intended company to another person for the purchase to preserve the capital of a company. of, or subscription for, its own or its holding company’s shares is not prohibited by the However, financial assistance is not prohibited if, Companies Law. Financial assistance may be after the giving of any such assistance, the provided by a company if the directors of the company will be able to pay its liabilities as they company consider, in discharging their duties become due. of care and acting in good faith, for a proper purpose and in the interests of the company, that such assistance can properly be given. Such assistance should be given on an arm’s- length basis.

– 229 – APPENDIX VII SUMMARY OF THE DIFFERENCES OF CERTAIN PROVISIONS OF THE BERMUDA AND CAYMAN ISLANDS COMPANY LAW

BERMUDA CAYMAN ISLANDS

Shareholders’ meetings

An annual general meeting must be held by an An annual general meeting is not required to exempted company once in every calendar year. be held by an exempted company. Subject to the bye-laws, a meeting of shareholders may be validly convened with at least one person Subject to the memorandum and articles of present representing shareholders. The minimum association, a meeting of shareholders, or a notice for calling of an annual general meeting or class of shareholders, may be validly convened any special general meeting as set out in the and business conducted with only one Companies Act is five days. A shorter notice shareholder present in person, or as the articles period requires special agreement of the members. of association provide, on such notice to The notice period can be further extended by the shareholders as the articles of association bye-laws. Shareholders holding at the date of the prescribe. request not less than 10% of the paid up capital of the company may request the directors to The articles of association may provide that convene a special general meeting. general meetings of shareholders be called only by the directors or at the written request of Shareholders’ meetings need not be held in shareholders in accordance with the articles Bermuda. of association.

A meeting shall be duly summoned where 5 days’ notice is served on every member, 3 members are competent to summon the meeting, and any person elected by the members present is competent to preside as chairman, unless the articles of association provide otherwise.

Shareholders’ meetings need not be held in the Cayman Islands.

– 230 – APPENDIX VII SUMMARY OF THE DIFFERENCES OF CERTAIN PROVISIONS OF THE BERMUDA AND CAYMAN ISLANDS COMPANY LAW

BERMUDA CAYMAN ISLANDS

Voting

Shareholders may vote at general meetings in Shareholders may vote at general meetings in person or by proxy and a shareholder who holds person. In so far as the company’s articles of more than one share may appoint more than one association provide, shareholders may vote by proxy. The holder of a proxy may, but need not, proxy; the holder of a proxy may, but need be a shareholder. A shareholder which is a not, be a shareholder and a shareholder which corporation may appoint such person as it thinks is a corporation may appoint such person as it fit to be its representative at general meetings. thinks fit to be its representative at any general meeting of the company or class of Resolutions of shareholders generally require to shareholders of the company. Certain decisions be approved by a simple majority unless the bye- of the shareholders in general meeting must laws provide otherwise. be approved by a “special resolution” under the provisions of the Companies Law. A Resolutions may be approved by written consent. special resolution is a resolution passed by a A resolution in writing is passed when it is signed majority of not less than two-thirds (or such by, or, in the case of a member that is a greater number as specified in the articles) of corporation, on behalf of: the shareholders who vote in person or by proxy at a general meeting and notice of the (a) the members of the company who at the meeting specified the intention to propose a date of the notice represent such majority special resolution. If authorised by the articles of votes as would be required if the of association, a special resolution will also resolution had been voted on at a meeting be passed when a special resolution in writing of members; or is approved and signed by all shareholders entitled to vote at a general meeting. Apart (b) all the members of the company or such from the aforesaid, resolutions generally other majority of members as may be require to be approved by simple majority. provided by the bye-laws of the company. In the absence of any regulations as to voting, every member has one vote.

– 231 – APPENDIX VII SUMMARY OF THE DIFFERENCES OF CERTAIN PROVISIONS OF THE BERMUDA AND CAYMAN ISLANDS COMPANY LAW

BERMUDA CAYMAN ISLANDS

Share premium and contributed surplus

When shares are issued at a premium, the When shares are issued at a premium, the premium will be transferred to the share premium amount of the premium will generally be account and its use is more restrictive than that transferred to the share premium account. under the Companies Law. Under the provisions Subject to the provisions of the memorandum of the Companies Act, share premium is not and articles of association, the money in the distributable but it may be used to pay up unissued share premium account may be applied in such shares to be issued to members of the company manner as the company may, from time to as fully paid bonus shares. time, determine including, but without limitation, among other things, paying Where premium arises from an exchange of distributions or dividends to members. shares, the excess value of the shares acquired over the nominal value of the shares being issued may be credited to a contributed surplus account of the issuing company.

Subject to there being reasonable grounds for believing that, after the payment (a) the company would be able to pay its liabilities as they become due; and (b) the realisable value of the company’s assets would thereby be more than the aggregate of its liabilities and its issued share capital and share premium account, funds from contributed surplus can, among other things, be distributed to the shareholders.

Increase of share capital

The company may increase its authorised share The share capital may be increased if capital if authorised by its bye-laws and by authorised by its articles of association. The resolution of shareholders in general meeting. A articles of association may provide that this memorandum of increase must be filed with the be approved by an ordinary resolution of the Registrar of Companies in Bermuda within 30 shareholders in general meeting. days of the increase.

– 232 – APPENDIX VII SUMMARY OF THE DIFFERENCES OF CERTAIN PROVISIONS OF THE BERMUDA AND CAYMAN ISLANDS COMPANY LAW

BERMUDA CAYMAN ISLANDS

Reduction of share capital

The share capital of the company may be reduced A company, subject to the Companies Law if authorised by a general meeting of shareholders, and to confirmation by the court and if so provided that publication of the intention to reduce authorised by its articles of association, may the capital has been made in an appointed reduce its share capital by special resolution newspaper in Bermuda and there are no reasonable of its shareholders. After the resolution is grounds for believing that the company is, or after passed, an application may be made to the the reduction would be, unable to pay its liabilities court for an order confirming the reduction. A as they become due. A memorandum of reduction minute approved by the court setting out of share capital must be filed with the Registrar particulars prescribed in the Companies Law of Companies in Bermuda. and a copy of the court order must be registered with the Registrar of Companies in the Cayman Islands. Further, a notice of the registration must be published in the manner directed by the court.

Redemption and repurchase of shares

Where an exempted company has the power to If authorised by its articles of association, an redeem or repurchase its shares, the bye-laws must exempted company may issue shares which are set out the manner of effecting such redemptions to be redeemed or are liable to be redeemed at or purchases. A redemption or purchase must be the option of the company or the shareholder. made out of the capital paid up thereon or out of Also, an exempted company may purchase its the funds of the company which would otherwise own shares, including any redeemable shares. be available for dividend or distribution or out of the proceeds of a fresh issue of shares made for A redemption or purchase may be made out the purposes of the redemption. Further, the of profits, or the proceeds of a fresh issue of premium, if any, payable on redemption, must be shares made for the purpose of the redemption provided for out of funds of the company which or purchase, or, under certain circumstances, would otherwise be available for dividend or out of capital. No redemption or purchase may distribution or out of the company’s share take place unless the shares are fully paid, or premium account before the shares are redeemed. if as a result of the redemption or purchase, No redemption or purchase may take place if, there would no longer be any other member there are reasonable grounds for believing that of the company holding shares. Shares the company would be unable to pay its liabilities redeemed are treated as cancelled and are as they become due. Shares redeemed or available for reissue. purchased are treated as cancelled and are available for reissue. An exempted company cannot hold treasury shares. Subject to the provisions of the Companies Act, a company may, if authorized to do so by its memorandum of association or bye-laws, acquire its own shares, to be held as treasury shares, for cash or any other consideration.

– 233 – APPENDIX VII SUMMARY OF THE DIFFERENCES OF CERTAIN PROVISIONS OF THE BERMUDA AND CAYMAN ISLANDS COMPANY LAW

BERMUDA CAYMAN ISLANDS

Dividends

Subject to its bye-laws, a company may, by Subject to the provisions of the Companies resolution of the directors declare and pay a Law, dividends may be paid from profits. The dividend, or make a distribution out of contributed payment of a distribution or dividend to surplus, provided there are reasonable grounds for shareholders out of share premium account is believing that after any such payment (a) the prohibited by the Companies Law unless, company will be solvent and (b) the realisable immediately following the date on which the value of its assets will be greater than the proposed payment is to be made, the company aggregate of its liabilities, issued share capital is able to pay its debts as they fall due in the and share premium account. ordinary course of business.

Protection of minority shareholders

Under the Companies Act, shareholders are A shareholder of a company may petition the entitled to complain to the court that the affairs court and the court may, if it is of the opinion of a Bermuda company are being conducted in a that it is just and equitable to do so, make a manner which is oppressive or prejudicial to the winding up order to wind up the company. shareholders or a part of them. If the court is of Apart from a bank, if the share capital of a the opinion that it is just and equitable that the company is divided into shares, an inspector company be wound up, a Bermuda company may may be appointed by the court to examine into be wound up by the court. One of the grounds the affairs of the company and to report which is considered to be a just and equitable thereon in such manner as the court shall direct ground is a complaint by a shareholder that the on the application of members holding not less affairs of a company are being conducted or have than one-fifth of the shares of the company in been conducted in a manner oppressive or unfairly issue. prejudicial to the interest of some part of the members.

Stamp duty

Stamp duty is no longer chargeable in respect of There is no stamp duty payable in the Cayman the incorporation, registration or licensing of an Islands on transfers of shares of Cayman exempted company, nor, subject to certain minor Islands companies save for those which hold exceptions, on their transactions. Accordingly, no interests in land in the Cayman Islands. stamp duty will be payable on the increase in or the issue or transfer of the share capital of an exempted company.

– 234 – APPENDIX VII SUMMARY OF THE DIFFERENCES OF CERTAIN PROVISIONS OF THE BERMUDA AND CAYMAN ISLANDS COMPANY LAW

BERMUDA CAYMAN ISLANDS

Taxation

In Bermuda there are no taxes on profits, income Pursuant to section 6 of the Tax Concessions or dividends, nor is there any capital gains tax, Law (1999 Revision) of the Cayman Islands, estate duty or inheritance duty. Profits can be an exempted company can obtain an accumulated and it is not obligatory for a company undertaking from the Governor-in-Council: to pay dividends. i) that no law which is enacted in the The Bermuda government has enacted legislation Cayman Islands imposing any tax to be under which the Minister of Finance is authorised levied on profits or income or gains or to give an assurance to an exempted company or appreciation shall apply to the exempted a partnership that, in the event of there being company or its operations; and enacted in Bermuda any legislation imposing tax ii) in addition, that no tax be levied on computed on profits or income or computed on profits, income gains or appreciations any capital asset, gain or appreciation, then the or which is in the nature of estate duty imposition of any such tax shall not be applicable or inheritance tax shall be payable by to such entities or any of their operations. In the exempted company: addition, there may be included an assurance that any such tax or any tax in the nature of estate aa) on or in respect of the shares, duty or inheritance tax, shall not be applicable to debentures or other obligations of the shares, debentures or other obligations of such the exempted company; or entities. This assurance is for a period ending 28th March, 2016. bb) by way of withholding in whole or in part of any relevant payment as defined in section 6(3) of the Tax Concessions Law (1999 Revision).

The undertaking for an exempted company is for a period of twenty years.

The Cayman Islands currently levy no taxes on individuals or corporations based upon profits, income, gains or appreciations and there is no taxation in the nature of inheritance tax or estate duty. There are no other taxes likely to be material to an exempted company levied by the Government of the Cayman Islands save certain stamp duties which may be applicable, from time to time, on certain instruments executed in or brought within the jurisdiction of the Cayman Islands. The Cayman Islands are not a party to any double tax treaties.

– 235 – APPENDIX VIII EXPLANATORY STATEMENT ON REPURCHASE MANDATE

This section sets out all the information required under Rule 10.06(1)(b) of the Listing Rules to be given to the Newco Shareholders for their consideration of the Repurchase Mandate

SHARE CAPITAL 10.06(1)(b)(i)

As at the Latest Practicable Date, the issued share capital of the Company was HK$43,587,569 comprising 435,875,692 Shares.

Assuming that no Shares are issued or repurchased by the Company after the Latest Practicable Date, the total number of Newco Shares in issue will be 435,875,692 upon the Scheme becoming effective, and Newco will be allowed under the Repurchase Mandate to repurchase up to 43,587,569 fully paid-up Newco Shares.

REASONS FOR REPURCHASE 10.06(1) (b)(ii) The Directors believe that it is in the best interests of Newco and Newco Shareholders to have a general authority from Newco Shareholders to enable the Directors to repurchase securities in the market. Such repurchases may, depending on market conditions and funding arrangements at the time, lead to an enhancement of the value of Newco’s securities and/or its earnings per Newco Share and will only be made when the Directors believe that such repurchases will benefit Newco and the Newco Shareholders.

FUNDING OF REPURCHASE

Repurchases of Newco Shares must be funded out of funds legally available for the purpose 10.06(1) in accordance with the memorandum and articles of association of Newco and the laws of the (b)(iii) Cayman Islands, being profits of Newco or out of a fresh issue of Newco Shares made for the purpose of the repurchase, or, if authorised by the articles of association of Newco and subject to the Companies Law, out of capital, and, in the case of any premium payable on the repurchase, out of the profits of Newco or from sums standing to the credit of the share premium account of Newco before or at the time the shares are repurchased, or if authorised by the articles of association of Newco and subject to the Companies Law, out of capital of Newco. It is envisaged that the funds required for any repurchase would be derived from such sources.

The Directors do not propose to exercise the Repurchase Mandate to such an extent as 10.06(1) would, in the circumstances, have a material adverse effect on the working capital requirements of (b)(iv) Newco or the gearing levels which in the opinion of the Directors are from time to time appropriate for Newco.

DISCLOSURE OF INTEREST

Save as disclosed in this document, the Directors have no material interests in the Proposals as directors, shareholders or creditors of the Company or otherwise. All Scheme Shareholders are being treated the same under the Scheme, regardless of the size of their holding.

None of the Directors nor, to the best of their knowledge having made all reasonable 10.06(1) enquiries, any of their respective associates, has a present intention to sell Newco Shares to (b)(v) Newco.

– 236 – APPENDIX VIII EXPLANATORY STATEMENT ON REPURCHASE MANDATE

No connected person (as defined in the Listing Rules) of the Company and/or Newco has 10.06(1) notified the Company and/or Newco that he/she has a present intention to sell Newco Shares to (b)(ix) Newco, or has undertaken not to do so.

UNDERTAKING OF THE DIRECTORS

The Directors have undertaken to the Stock Exchange that they will exercise the power of 10.06(1) Newco to make repurchases pursuant to the Repurchase Mandate in accordance with the Listing (b)(vi) Rules, the laws of the Cayman Islands and the Articles.

A repurchase of securities by Newco may result in an increase in the proportionate interests 10.06(1) of a Newco Shareholder in the voting rights of Newco, which could give rise to an obligation to (b)(vi) make a mandatory offer in accordance with Rule 26 of the Takeovers Code. The Directors are not aware of any consequence which may arise under the Takeovers Code as a result of any repurchases made by Newco under the Repurchase Mandate.

PRICES OF SHARES AND WARRANTS R.10.06(1) (b)(x) The highest and lowest prices at which the Shares the Warrants were traded on the Stock Exchange during each of the previous twelve calendar months preceding the Latest Practicable Date are as follows:

Price per Share Price per Warrant Month Highest Lowest Highest Lowest HK$ HK$ HK$ HK$

2007 March 0.380 0.320 0.213 0.158 April 0.460 0.350 0.215 0.090 May 0.660 0.390 0.420 0.250 June 0.700 0.520 0.430 0.260 July 0.970 0.500 0.650 0.265 August 0.980 0.500 0.800 0.280 September 0.720 0.600 0.445 0.350 October 0.860 0.660 0.570 0.420 November 0.850 0.620 0.530 0.390 December 0.730 0.600 0.445 0.440

2008 January 0.700 0.500 0.335 0.310 February 0.590 0.520 0.345 0.345

The Company has not repurchased any Shares (whether on the Stock Exchange or otherwise) R.10.06(1) in the six months preceding the Latest Practicable Date. (b)(viii)

– 237 – APPENDIX IX ADDITIONAL INFORMATION

1. DISCLOSURE OF INTERESTS A1a(45)(1) (a-c) (a) Directors and chief executive A1a(45)(1a) R.17.03(9) As at the Latest Practicable Date, the interests and short positions of each of the Para. 19, Directors and chief executive of the Company in the shares, underlying shares and debentures 3rd Sch., CO of the Company and its associated corporations (within the meaning of Part XV of the SFO) which were required (i) to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests or short positions which they are taken or deemed to have under such provisions of the SFO) or (ii) pursuant to Section 352 of the SFO, to be entered in the register maintained by the Company referred to therein or (iii) to be notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers were as follows:

(i) Interests in Shares

Number of shares held, capacity and nature of interest Percentage Through of the Directly spouse Through Company’s beneficially or minor controlled Beneficiary issued share Name of Director owned children corporation of a trust Total capital

Hung Hak Hip Peter – 1,396,645 3,601,607 2,163,420* 7,161,672 1.6 Wong Yu Hong, Philip 2,045,565 –––2,045,565 0.5 Sze Tsai To, Robert 2,045,565 –––2,045,565 0.5 Cheung Wing Yui 2,443,565 –––2,443,565 0.6 Seto Gin Chung, John 417,373 –––417,373 0.1 Shek Lai Him, Abraham –––––– Hung Chiu Yee 2,460,238 –––2,460,238 0.5 Lee Pak Wing 2,376,052 –––2,376,052 0.5 Wong Kwok Ying –––––– Lam Fung Ming, Tammy ––––––

* 2,163,420 Shares were beneficially owned by a discretionary trust whose discretionary beneficiaries include certain associates of Mr. Hung Hak Hip, Peter.

– 238 – APPENDIX IX ADDITIONAL INFORMATION

(ii) Interests in Warrants

Number of shares held, capacity and nature of interest Through Directly spouse Through beneficially or minor controlled Beneficiary Name of Director owned children corporation of a trust Total

Hung Hak Hip Peter – 279,329 720,321 645,483** 1,645,133 Wong Yu Hong, Philip ––––– Sze Tsai To, Robert ––––– Cheung Wing Yui 79,600 –––79,600 Seto Gin Chung, John ––––– Shek Lai Him, Abraham ––––– Hung Chiu Yee 154,534 –––154,534 Lee Pak Wing ––––– Wong Kwok Ying ––––– Lam Fung Ming, Tammy –––––

** 645,483 Warrants were beneficially owned by a discretionary trust whose discretionary beneficiaries include certain associates of Mr. Hung Hak Hip Peter.

Save as disclosed above, as at the Latest Practicable Date, none of the Directors and chief executive of the Company had or was deemed to have any interests or short positions in the shares, underlying shares or debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) which were required (i) to be notified to the Company and Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests or short positions which they were taken or deemed to have under such provisions of the SFO) or (ii) pursuant to Section 352 of the SFO, to be entered in the register referred to therein or (iii) to be notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers.

– 239 – APPENDIX IX ADDITIONAL INFORMATION

(b) Substantial Shareholders Para. 30, 3rd Sch., CO Save as disclosed below, as at the Latest Practicable Date, according to the register of interest kept by the Company under Section 336 of the SFO and so far as was known to the Directors and the chief executive of the Company, no persons or companies (other than a Director or chief executive of the Company whose interests are disclosed above) had, or were deemed or taken to have, interests or short positions in the shares or underlying shares which would fall to be disclosed to the Company and the Stock Exchange under the provisions of Divisions 2 and 3 of Part XV of the SFO or who were, directly or indirectly, interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any other member of the Group or had any option in respect of any such class of share capital:

(i) Interests in Shares

Percentage of Number of the Company’s Name of holder Notes ordinary shares held share capital

Hung’s (i) 117,136,083 26.9% HHO (ii) 155,392,698 35.7% GZ Trust Corporation (“GZTC”) (iii) 272,528,781 62.6% Hung Cheung Pui (iv) 272,528,781 62.6% Hap Seng Consolidated Berhad (“HSCB”) 21,335,277 4.9% Gek Poh (Holdings) Sdn. Bhd (“GPHSB”) (v) 21,335,277 4.9% Datuk Seri Panglima Lau Cho Kun (“DSPL”) (vi) 21,335,277 4.9%

Notes:

(i) Hung’s is the registered holder of the shares disclosed above.

(ii) HHO is the registered holder of the shares disclosed above.

(iii) GZTC is the registered holder of the units of certain unit trusts, of which Hung’s and HHO are trustees. By virtue of the SFO, GZTC is deemed to be interested in the shares held by Hung’s and HHO.

(iv) Mr. Hung Cheung Pui is the founder of two discretionary trusts, of which GZTC is the trustee. By virtue of the SFO, Mr. Hung Cheung Pui is deemed to be interested in the disclosed interest of GZTC mentioned in note (iii).

(v) HSCB is held as to 57.18% by GPHSB. By virtue of the SFO, GPHSB is deemed to be interested in the disclosed interest of HSCB mentioned above.

(vi) DSPL holds 56% interest in GPHSB. By virtue of the SFO, DSPL is deemed to be interested in the disclosed interest of GPHSB mentioned in note (v).

– 240 – APPENDIX IX ADDITIONAL INFORMATION

(ii) Interests in Warrants A1a(45)(2)

Number of Name of holder Notes Warrants held

Hung’s (i) 23,427,216 HHO (ii) 31,078,539 GZTC (iii) 54,505,755 Hung Cheung Pui (iv) 54,505,755 HSCB 4,267,055 GPHSB (v) 4,267,055 DSPL (vi) 4,267,055

Notes:

(i) Hung’s is the registered holder of the warrants disclosed above.

(ii) HHO is the registered holder of the warrants disclosed above.

(iii) GZTC is the registered holder of the units of certain unit trusts, of which Hung’s and HHO are trustees. By virtue of the SFO, GZTC is deemed to be interested in the warrants held by Hung’s and HHO.

(iv) Mr. Hung Cheung Pui is the founder of two discretionary trusts, of which GZTC is the trustee. By virtue of the SFO, Mr. Hung Cheung Pui is deemed to be interested in the disclosed interest of GZTC mentioned above.

(v) HSCB is held as to 57.18% by GPHSB. By virtue of the SFO, GPHSB is deemed to be interested in the disclosed interest of HSCB mentioned above.

(vi) DSPL holds 56% interest in GPHSB. By virtue of the SFO, DSPL is deemed to be interested in the disclosed interest of GPHSB mentioned in note (v).

Save as disclosed above, as at the Latest Practicable Date, the Company had not been notified of any persons, other than the directors of the Company whose interests are set out in the section “Directors’ and Chief Executive’s Interests and Short Positions in Shares and Underlying Shares” above, who had interests or short positions in the shares or underlying shares of the Company, which are required to be recorded in the register required to be kept by the Company pursuant to Section 336 of the SFO.

Save as disclosed in this document, the Directors have no material interests in the Scheme as directors, shareholders or creditors of the Company and of Newco or otherwise. All Scheme Shareholders are being treated the same under the Scheme regardless of the size of their shareholding.

– 241 – APPENDIX IX ADDITIONAL INFORMATION

2. CONNECTED TRANSACTIONS AND CONTINUING CONNECTED TRANSACTIONS

(a) Wytak Limited (“Wytak”), a former indirect wholly-owned subsidiary of the Company, as the landlord, let certain premises of the Group, under eight tenancy agreements dated 12 August 2004 (the “Old Tenancy Agreements”) to Hung’s Management Services Limited, Yoshinoya Fast Food (Hong Kong) Limited and HFG Procurement Limited (formerly known as Food Procurement Limited) (collectively referred to herein as the “Tenants”) in which the Tenants agreed to lease certain premises of the Group from Wytak. GZ Trust Corporation (“GZTC”), a connected person of the Company, is indirectly interested in the Tenants as to exercise or control the exercise of 30% or more of the voting power at the general meeting of each of the Tenants. The Tenants are therefore associates of GZTC and constitute connected persons of the Company under the Listing Rules. The Old Tenancy Agreements and all the transactions contemplated thereunder constituted continuing connected transactions of the Company. As certain percentage ratios (as defined in Rule 14.07 of the Listings Rules) in respect of transactions contemplated under the Old Tenancy Agreements, on an annual basis, were more than 2.5% but less than 25%, and the total annual income receivable under the transactions contemplated under the Old Tenancy Agreements was less than HK$10 million, the transactions contemplated under the Old Tenancy Agreements were subject to the reporting and announcement requirements under Rules 14A.45 to 14A.47 of the Listing Rules but were exempt from the independent shareholder’s approval requirements. The Old Tenancy Agreements were terminated on 28 April 2005.

(b) On 29 April 2005, Hop Hing Oil Factory Limited (“HHOF”), an indirect wholly- owned subsidiary of the Company, entered into a sale and purchase agreement (the “Share Purchase Agreement I”) with Merry Capital Investments Limited (“Merry Capital”), a connected person of the Company under the Listing Rules by virtue of her being an associate of a substantial shareholder of the Company. Pursuant to the Share Purchase Agreement I, Merry Capital acquired and HHOF disposed of 12 ordinary shares of HK$1.00 each in the issued share capital of Express Associates Limited (“EAL”), a former wholly-owned subsidiary of HHOF, and all shareholders’ loans owned by EAL to HHOF and outstanding at completion of the Share Purchase Agreement I for an aggregate consideration of HK$5.8 million.

– 242 – APPENDIX IX ADDITIONAL INFORMATION

The transaction contemplated under the Share Purchase Agreement I constituted a discloseable and connected transaction of the Company under the Listing Rules. As the Share Purchase Agreement I was entered into on normal commercial terms with each of the applicable percentage ratios as defined under Rule 14.07 of the Listing Rules is more than 2.5% but less than 25% and the total consideration payable under the Share Purchase Agreement I was less than HK$10 million, pursuant to Rule 14A.32 of the Listing Rules, the Share Purchase Agreement I was subject to the reporting and announcement requirements set out in Rules 14A.45 to 14A.47 of the Listing Rules but was exempt from the independent shareholders’ approval requirements.

On 29 April 2005 and following the completion of the Share Purchase Agreement I, HHOF entered into a tenancy agreement (the “Tenancy Agreement”) with Wytak, a wholly-owned subsidiary of EAL, for renting certain premises from Wytak, for an aggregate annual rental of approximately HK$3.34 million (inclusive of government rates and air-conditioning charges). The maximum rental paid by the Company under the Tenancy Agreement was approximately HK$2.24 million for the year ended 31 December 2005 and approximately HK$1.1 million for the period from 1 January 2006 to 28 April 2006, the date on which the Tenancy Agreement was terminated. As Wytak became a subsidiary of a substantial shareholder of the Company, under the Listing Rules, Wytak is therefore a connected person of the Company by virtue of it being an associate of a substantial shareholder of the Company and the transaction contemplated under the Tenancy Agreement constituted a continuing connected transaction for the Company. As the Tenancy Agreement was entered into on normal commercial terms and the relevant percentage ratios as defined under Rule 14.07 of the Listing Rules were more than 2.5% but less than 25% and the annual consideration was less than HK$10 million, pursuant to Rule 14A.34 of the Listing Rules, the Tenancy Agreement was subject to the reporting and announcement requirements set out in Rules 14A.45 to 14A.47 of the Listing Rules but was exempt from the independent shareholders’ approval requirements

On 8 May 2006, Hop Hing Oil entered into two tenancy agreements (the “New Tenancy Agreements”) with Wytak for renting certain premises from Wytak in the period from 29 April 2006 to 28 April 2009. Wytak is an associate of a substantial shareholder of the Company and hence is a connected person of the Company within the meaning of the Listing Rules. Pursuant to the New Tenancy Agreements, the aggregate annual rent payable by the Group to Wytak during the first two years of the respective term amounts to approximately HK$3.5 million. On this basis, the cap amounts of rent payable by the Group to Wytak under the New Tenancy Agreements are HK$2,354,660, HK$3,502,800, HK$3,738,270 and HK$1,262,960 for the period from 29 April 2006 to 31 December 2006, for the years ending 31 December 2007 and 2008 and for the period from 1 January 2009 to 28 April 2009 respectively.

– 243 – APPENDIX IX ADDITIONAL INFORMATION

The transactions under the New Tenancy Agreements are subject to the reporting and announcement requirements under Listing Rules 14A.45 to 14A.47 but do not require approval by independent shareholders of the Company as the aggregate rent under the New Tenancy Agreements, on an annual basis, is more than 2.5% but less than 25% for the relevant percentage ratios (except the profits ratio) under Listing Rule 14.07 and the annual consideration is less than HK$10 million.

(c) On 5 August 2005, Panyu Hop Hing entered into a sales agreement (the “Sales Agreement”) with Shenzhen You Rong Retail Co. Ltd. (“Shenzhen You Rong”) for the sale of various edible oil products manufactured by the Group to Shenzhen You Rong. The maximum aggregate annual value of sales by Panyu Hop Hing to Shenzhen You Rong under the Sales Agreement for each of the three financial years ended 31 December 2007 is estimated to be RMB9,500,000 (equivalent to approximately HK$9,048,000 at the exchange rate of HK$1.00 = RMB1.05 on the date of the Sales Agreement), which represents the target sale agreed between Panyu Hop Hing and Shenzhen You Rong.

Subsequent to the expiry of the Sales Agreement and on 6 February 2008, Panyu Hop Hing entered into a new sales agreement with Shenzhen You Rong with similar terms and conditions of the Sales Agreement. The maximum aggregate annual value of sales by Panyu Hop Hing to Shenzhen You Rong under the new sales agreement for each of the three financial years ending 31 December 2010 is estimated to be RMB9,000,000 (equivalent to approximately HK$9,600,000 at the exchange rate of HK$1.00 = RMB0.94).

The transactions contemplated under the Sales Agreement (the “Transactions”) constitute continuing connected transactions of the Company for the purposes of the Listing Rules. As certain percentage ratios (as defined in Rule 14.07 of the Listings Rules) in respect of Transactions are more than 2.5% but less than 25%, and the total annual income received under the Transaction is less than HK$10 million, the Transactions are subject to the reporting and announcement requirements under Rules 14A.45 to 14A.47 of the Listing Rules but are exempt from the independent shareholder’s approval requirements.

– 244 – APPENDIX IX ADDITIONAL INFORMATION

(d) On 30 August 2006, HHOH, an indirect wholly-owned subsidiary of the Company, entered into a sale and purchase agreement (the “Share Purchase Agreement II”) with Hung’s Investments Limited (“HIL”). Pursuant to the Share Purchase Agreement II, HIL acquired and HHOH disposed of 12,896 ordinary shares of HK$1.00 each in the issued share capital of AMHK, a former indirect wholly-owned subsidiary of HHOH, and all shareholders’ loans owed by AMHK to HHOH and outstanding at the completion of the Share Purchase Agreement II for an aggregate consideration of approximately HK$2.6 million.

HIL is a connected person of the Group under the Listing Rules in that the entire issued share capital of HIL is held by a trustee of a discretionary trust whose discretionary beneficiaries include associates of Mr. Hung Hak Hip, Peter, the non-executive Chairman of the Company. As the Share Purchase Agreement II was entered into on normal commercial terms and each of the applicable percentage ratios (other than the profits ratio) as defined under Rule 14.07 of the Listing Rules is less than 2.5%, pursuant to Rule 14A.32 of the Listing Rules, the Share Purchase Agreement II was only subject to the reporting and announcement requirements set out in Rules 14A.45 to 14A.47 of the Listing Rules and was exempt from the Company’s independent shareholders’ approval requirements.

(e) On 17 July 2007, Knight Investment Limited (“KIL”), an indirect wholly-owned subsidiary of the Company, entered into an agreement for sale and purchase (the “S&P Agreement”) with Wytak. Pursuant to the S&P Agreement, Wytak acquired and KIL disposed of a property known as Portion A1 of Front Portion of Factory A on the Upper Ground Floor of Hop Hing Industrial Building, No. 704 Castle Peak Road, Kowloon, Hong Kong for a consideration of HK$2.7 million.

Wytak is a connected person of the Company for the reasons below. GZTC, which is a substantial shareholder of the Company, is a holder of the units of a unit trust, the trustee of which indirectly controls over 30% of the voting power at general meetings of Wytak, therefore Wytak is an associate of GZTC and hence a connected person of the Company. Accordingly, the above transaction was a connected transaction of the Company under the Listing Rules.

Each of the relevant percentage ratios (as defined in Rule 14.07 of the Listing Rules) for the transaction was less than 2.5%. Pursuant to Rule 14A.32 of the Listing Rules, the S&P Agreement would only be subject to the reporting and announcement requirements under Rules 14A.45 to 14A.47 but would be exempt from the independent shareholders’ approval requirements under the Listing Rules.

– 245 – APPENDIX IX ADDITIONAL INFORMATION

3. MAJOR INTELLECTUAL PROPERTY RIGHTS A1a(28)(4)

(a) Trademarks and Design

As at the Latest Practicable Date, the Group has the following registered trademarks and designs which are material in relation to the Group’s business:

Trademark/ Place of Design registration Class Registration no. Registration period (Note)

Hong Kong 29 200202326 17 February 2008 to 16 February 2018

HOP HING Hong Kong 29&30 3009494343 13 September 2005 to 12 September 2015

Hong Kong 29&30 300494352 13 September 2005 to 12 September 2015

Lion & Globe Brand Hong Kong 29 19947869 26 November 1997 to 25 November 2011 30 199608882 26 November 1997 to 25 November 2011

Hong Kong 29 199407868 26 November 1997 to 25 November 2011 30 199407867 26 November 1997 to 25 November 2011

Hong Kong 30 19500354 17 November 2004 to 16 November 2014 3 19500355 17 November 2004 to 16 November 2014

Hong Kong 29 19852757 23 March 2005 to 22 March 2015 30 19852758 23 March 2005 to 22 March 2015

Hong Kong 31 200111149 31 January 2007 to 30 January 2017

Hong Kong 32 200307308 5 September 2002 to 4 September 2009

– 246 – APPENDIX IX ADDITIONAL INFORMATION

Trademark/ Place of Design registration Class Registration no. Registration period (Note)

Hong Kong 29 & 30 300520037 28 October 2005 to 27 October 2015

Hong Kong 29 & 30 300520046 28 October 2005 to 27 October 2015

Camel Brand Hong Kong 29 199405726 26 November 1997 to 25 November 2011 30 199405725 26 November 1997 to 25 November 2011

Hong Kong 29 199405724 26 November 1997 to 25 November 2011 30 199407866 26 November 1997 to 25 November 2011

Hong Kong 29 19500357 17 November 2004 to 16 November 2014

Hong Kong 29 199405723 26 November 1997 to 25 November 2011 30 199407865 26 November 1997 to 25 November 2011

Hong Kong 29 199405727 28 December 1997 to 27 December 2011 30 199407870 28 December 1997 to 27 December 2011

CROWN HOPE合冠 Hong Kong 29 199700739 10 February 2002 to 9 February 2016

– 247 – APPENDIX IX ADDITIONAL INFORMATION

Trademark/ Place of Design registration Class Registration no. Registration period (Note)

Hong Kong 29 199500611 6 June 1998 to 5 June 2012

Hong Kong 29 1996B08886 15 April 1999 to 14 April 2013

Hong Kong 29 199406901 23 March 2005 to 22 March 2015 30 199406902 23 March 2005 to 22 March 2015

Hong Kong 29 19820850 2 June 2002 to 1 June 2016

Hong Kong 29 19860133 26 May 2005 to 25 May 2015 30 19860134 26 May 2005 to 25 May 2015

HUANG LUNG Hong Kong 29 1989B4024 24 August 1994 to 25 August 2008 30 1989B4025 24 August 1994 to 25 August 2008

黃龍 Hong Kong 29 1992B04024 24 June 1994 to 25 June 2008 30 1991B3388 24 June 1994 to 25 June 2008

Hong Kong 29 19891641 24 June 1994 to 25 June 2008 30 19891642 24 June 1994 to 25 June 2008

KITCHEN KING Hong Kong 29 1997B04863 5 January 2001 to 4 January 2015 30 1997B00531 5 January 2001 to 4 January 2015

– 248 – APPENDIX IX ADDITIONAL INFORMATION

Trademark/ Place of Design registration Class Registration no. Registration period (Note)

Hong Kong 29 1997B02471 5 January 2001 to 4 January 2015 30 1997B00530 5 January 2001 to 4 January 2015

KING CHEF Hong Kong 29 1999B16104 5 January 2001 to 4 January 2015

廚皇 Hong Kong 29 1997B04862 5 January 2001 to 4 January 2015 30 1997B00529 5 January 2001 to 4 January 2015

PEACH BLOSSOM Hong Kong 29 1997B00985 11 November 1999 to 10 November 2013 30 199700981 28 January 1999 to 27 January 2013

Hong Kong 29 1997B11801 11 November 1999 to 10 November 2013 30 199700982 28 January 1999 to 27 January 2013

Hong Kong 29 19990663 14 July 2001 to 13 July 2015

Hong Kong 29 19832651 29 March 2004 to 28 March 2014

Hong Kong 29 199700988 28 January 2000 to 27 January 2014 30 199700989 28 January 2000 to 27 January 2014

Hong Kong 29 199700984 11 November 1999 to 10 November 2013 30 199700983 28 January 1999 to 27 January 2013

– 249 – APPENDIX IX ADDITIONAL INFORMATION

Trademark/ Place of Design registration Class Registration no. Registration period (Note)

Hong Kong 29 19601105 3 February 1995 to 2 February 2009

Hong Kong 16 19840164 30 June 2004 to 29 June 2014

SUNNY LION Hong Kong 16 199403018 14 December 1996 to 13 December 2010 21 19912150 6 November 1996 to 5 November 2010 25 19912806 6 November 1996 to 5 November 2010 28 19912151 6 November 1996 to 5 November 2010 29 199201095 6 November 1996 to 5 November 2010 35 199801912 13 June 2003 to 12 June 2013 42 199916544 13 June 2003 to 12 June 2013

Hong Kong 35 199811683 13 June 2003 to 12 June 2013 42 199802611 13 June 2003 to 12 June 2013

Unicorn Brand Hong Kong 29 199407965 26 November 1997 to 25 November 2011 30 199407964 26 November 1997 to 25 November 2011

Hong Kong 29 199407963 26 November 1997 to 25 November 2011 30 199407962 26 November 1997 to 25 November 2011

Hong Kong 29 199901059 4 May 1998 to 3 May 2015 30 199901060 4 May 1998 to 3 May 2015 – 250 – APPENDIX IX ADDITIONAL INFORMATION

Trademark/ Place of Design registration Class Registration no. Registration period (Note)

Hong Kong 29 19681184 29 May 2003 to 28 May 2013

Hong Kong 29 199606961 18 March 1998 to 17 March 2012

Hong Kong 29 199911615 2 July 2005 to 1 July 2015

Hong Kong DESIGN 0000258.6 21 September 2005 to 20 September 2010

Hong Kong DESIGN 0602331.9 6 September 2006 to 5 September 2011

PRC 29 1730565 14 March 2002 to 13 March 2012

PRC 3 542120 10 February 2001 to 9 February 2011 29 602471 10 July 2002 to 9 July 2012 30 542302 10 February 2001 to 9 February 2011

Lion & Globe PRC 29 790856 14 November 2005 to 13 November 2015

獅球 PRC 29 624750 10 January 2003 to 9 January 2013

PRC 29 201140 15 November 2003 to 14 November 2013 29 790859 14 November 2005 to 13 November 2015

– 251 – APPENDIX IX ADDITIONAL INFORMATION

Trademark/ Place of Design registration Class Registration no. Registration period (Note)

PRC 29 790860 14 November 2005 to 13 November 2015

PRC 30 1271432 7 May 1999 to 6 May 2009

PRC 29 201143 15 November 2003 to 14 November 2013

PRC 29 622191 20 December 2002 to 19 December 2012

PRC 30 1219493 28 October 1998 to 27 October 2008

CROWN HOPE合冠 PRC 29 1085209 21 August 1997 to 20 August 2007 (renewal in process)

PRC 29 317474 30 June 1998 to 29 June 2008 30 383590 30 June 1998 to 29 June 2008

PRC 29 907660 28 November 2006 to 27 November 2016

PRC 29 922893 28 December 2006 to 27 December 2016

– 252 – APPENDIX IX ADDITIONAL INFORMATION

Trademark/ Place of Design registration Class Registration no. Registration period (Note)

PRC 29 1133681 7 December 1997 to 6 December 2007 (renewal in process)

PRC 29 317476 30 June 1998 to 29 June 2008 30 383589 30 June 1998 to 29 June 2008

PRC 29 317473 30 June 1998 to 29 June 2008 30 383588 30 June 1998 to 29 June 2008

SUNNY LION PRC 35 1115238 28 September 1997 to 27 September 2007 (renewal in process) 42 1115358 28 September 1997 to 27 September 2007 (renewal in process)

PRC 28 599442 20 June 2002 to 19 June 2012 29 598918 20 June 2002 to 19 June 2012 35 1115239 28 September 1997 to 27 September 2007 (renewal in process) 42 1115122 28 September 1997 to 27 September 2007 (renewal in process)

PRC 29 1690651 28 December 2001 to 27 December 2011

PRC 29 1333861 14 November 1999 to 13 November 2009 29 3218698 28 January 2004 to 27 January 2014 – 253 – APPENDIX IX ADDITIONAL INFORMATION

Trademark/ Place of Design registration Class Registration no. Registration period (Note)

Macau 29 N/018749 5 January 2006 to 5 January 2013

Macau 29 3611-M 13 December 2001 to 13 December 2008 30 3612-M 13 December 2001 to 13 December 2008

Macau 29 N/007586 4 July 2001 to 4 July 2008

Macau 29 N/019416 9 February 2006 to 9 February 2013

Macau 29 N/019417 9 February 2006 to 9 February 2013

Macau 29 3613-M 13 December 2001 to 13 December 2008 30 3614-M 13 December 2001 to 13 December 2008

Macau 29 15524-M 16 November 2002 to 16 November 2009

Macau 29 N/008038 5 October 2001 to 5 October 2008

Macau 29 N/008030 10 October 2001 to 10 October 2008

Macau 29 15525-M 16 November 2002 to 16 November 2009

– 254 – APPENDIX IX ADDITIONAL INFORMATION

Trademark/ Place of Design registration Class Registration no. Registration period (Note)

Macau 29 N/009981 11 November 2002 to 11 November 2009

Macau 29 9236-M 17 June 2004 to 17 June 2011

Macau 29 3615-M 13 December 2001 to 13 December 2008 30 3616-M 13 December 2001 to 13 December 2008

Macau 29 N/009111 18 April 2002 to 18 April 2009

Macau 29 15523-M 16 November 2002 to 16 November 2009

Macau DESIGN D/000363 6 March 2007 to 6 March 2010

Australia 29 1075708 14 September 2005 to 13 September 2015

Australia 29 A479711 16 January 1995 to 15 January 2009 30 A479710 16 January 1995 to 15 January 2009

Australia 29 858648 27 November 2000 to 26 November 2010

– 255 – APPENDIX IX ADDITIONAL INFORMATION

Trademark/ Place of Design registration Class Registration no. Registration period (Note)

Australia 29 A479713 16 January 1995 to 15 January 2009 30 A479712 16 January 1995 to 15 January 2009

Canada 29 699180 23 October 2007 to 22 October 2022

Canada 29 580706 6 May 2003 to 5 May 2018

Canada 31 306705 7 September 2000 to 6 September 2015

駱駝嘜 Canada 29 420127 26 November 1993 to 25 November 2008

Canada 29 414545 16 July 1993 to 15 July 2008

Japan 29 4278128 28 May 1999 to 27 May 2009 29 & 30 4585156 12 July 2002 to 11 July 2012

Japan 29 4278129 28 May 1999 to 27 May 2009

New Zealand 29 177039 16 January 1995 to 15 January 2009 30 177040 16 January 1995 to 15 January 2009

– 256 – APPENDIX IX ADDITIONAL INFORMATION

Trademark/ Place of Design registration Class Registration no. Registration period (Note)

New Zealand 29 177037 16 January 1995 to 15 January 2009 30 177038 16 January 1995 to 15 January 2009

Portugal 29 228821 14 August 1990 to 14 August 2010 30 228822 14 August 1990 to 14 August 2010

Singapore 29 T05/17176B 15 September 2005 to 14 September 2015

Singapore 29 T90/08281B 4 December 2007 to 3 December 2017

Singapore 29 T90/08283I 4 December 2007 to 3 December 2017 30 T90/08284G 4 December 2007 to 3 December 2017

Taiwan 29 410206 16 August 1998 to 15 August 2008 30 415875 1 October 1998 to 30 September 2008

UK 30 1259422 31 January 2007 to 30 January 2017

UK DESIGN 2009827 21 September 2005 to 20 September 2010

USA 29 1324836 13 March 2005 to 12 March 2015

– 257 – APPENDIX IX ADDITIONAL INFORMATION

Trademark/ Place of Design registration Class Registration no. Registration period (Note)

USA 29 1729617 4 November 2002 to 3 November 2012

Vietnam 29 6080 4 July 2002 to 3 July 2012

Note: Class is applicable to trademarks. According to the 9th edition of the Nice Classification which came into force on 1 January 2007, the specifications for the following classes are as below:

Class 3: Bleaching preparations and other substances for laundry use; cleaning, polishing, scouring and abrasive preparations; soaps; perfumery, essential oils, cosmetics, hair lotions; dentifrices.

Class 16: Paper, cardboard and goods made from these materials, not included in other classes; printed matter; bookbinding material; photographs; stationery; adhesives for stationery or household purposes; artists’ materials; paint brushes; typewriters and office requisites (except furniture); instructional and teaching material (except apparatus); plastic materials for packaging (not included in other classes); printers’ type; printing blocks.

Class 21: Household or kitchen utensils and containers; combs and sponges; brushes (except paint brushes); brush-making materials; articles for cleaning purposes; steelwool; unworked or semi-worked glass (except glass used in building); glassware, porcelain and earthenware not included in other classes.

Class 25: Clothing, footwear, headgear.

Class 28: Games and playthings; gymnastic and sporting articles not included in other classes; decorations for Christmas trees.

Class 29: Meat, fish, poultry and game; meat extracts; preserved, frozen, dried and cooked fruits and vegetables; jellies, jams, compotes; eggs, milk and milk products; edible oils and fats.

Class 30: Coffee, tea, cocoa, sugar, rice, tapioca, sago, artificial coffee; flour and preparations made from cereals, bread, pastry and confectionery, ices; honey, treacle; yeast, baking-powder; salt, mustard; vinegar, sauces (condiments); spices; ice.

Class 31: Agricultural, horticultural and forestry products and grains not included in other classes; live animals; fresh fruits and vegetables; seeds, natural plants and flowers; foodstuffs for animals, malt.

Class 32: Beers; mineral and aerated waters and other non-alcoholic drinks; fruit drinks and fruit juices; syrups and other preparations for making beverages.

Class 35: Advertising; business management; business administration; office functions.

Class 42: Scientific and technological services and research and design relating thereto; industrial analysis and research services; design and development of computer hardware and software.

– 258 – APPENDIX IX ADDITIONAL INFORMATION

(b) Domain Names

As at the Latest Practicable Date, the Company has registered the following domain names, which are material to the business of the Group:

Domain Name Place of Registration Registration Date

www.hophing.com (Note 1) UK 8 April 1997 www.hophing.com.hk (Note 2) Hong Kong 13 November 1996

Notes:

1 Information contained in www.hophing.com does not form part of this document.

2 Information contained in www.hophing.com.hk does not form part of this document.

4. COMPETING INTERESTS A1a(40) Para. 19, As at the Latest Practicable Date, other than transactions disclosed under the heading 3rd Sch., CO “Connected Transactions and Continuing Connected Transactions”, none of the Directors or their respective associate(s) was interested in any business which competes or is likely to compete, either directly or indirectly, with the business of the Group.

5. LITIGATION A1a(52)

None of the members of the Group is engaged in any litigation or arbitration of material importance and there is no litigation or claim of material importance known to the Directors to be pending or threatened by or against any member of the Group.

6. MATERIAL CONTRACTS A1a(52) Para. 17, In the two years immediately preceding the date of this document, the following material 3rd Sch., CO contracts, being material contracts not entered into in the ordinary course of business, were entered into by the Company or its subsidiaries:

(i) the agreement dated 30 August 2006 between HHOH and HIL with regard to transfer of the entire issued ordinary share capital of AMHK and assign the shareholder’s loan in the sum of HK$495,000 due to HHOH by AMHK to HIL for a total consideration of HK$2,585,000.

– 259 – APPENDIX IX ADDITIONAL INFORMATION

(ii) the sale and purchase agreement dated 17 July 2007 between KIL as vendor and Wytak as purchaser with regard to the sale and purchase of a property known as Portion A1 of Front Portion of Factory A on the Upper Ground Floor of Hop Hing Industrial Building, No. 704 Castle Peak Road, Kowloon, Hong Kong for a consideration of HK$2.7 million.

Newco was incorporated in the Cayman Islands on 1 August 2007. Newco has not carried on any business and has not entered into any material contract since the date of its incorporation.

7. INFORMATION ABOUT THE SUBSIDIARIES OF NEWCO A1a(29)(1) Para .29, Upon completion of the Redomicile Proposal, Newco will have the following major 3rd Sch., CO subsidiaries.

Equity interest Issued/ attributable registered to the Place and date of and fully paid Newco Principal Name of subsidiary incorporation share capital Group activities

Hop Hing Development Hong Kong HK$10,000 100% Investment holding Limited 1 April 1977 Hong Hing Food Products Hong Kong HK$2 100% Investment holding Limited 27 October 1998 Hop Hing Holdings Limited Bermuda HK$100 100% Investment holding 23 November 1989 Hop Hing International British Virgin Islands US$1,000 100% Investment holding Limited 24 November 1989 Hop Hing Oil Factory Hong Kong HK$24,000,010 100% Bottling, packaging Limited 24 October 1972 and distribution of edible oils Hop Hing Oil (Holdings) Hong Kong HK$88,241,505 100% Investment holding Limited 19 April 1988

Hop Hing Oil Investment Hong Kong HK$1,000,010 100% Bottling, packaging Limited 5 December 1986 and distribution of edible oils

Hop Hing Oil Procurement Hong Kong HK$2 100% Procurement of Limited 22 May 1990 edible oils

Hop Hing Oil Refinery Hong Kong HK$10,000,000 100% Edible oils refinery Limited 3 March 1989

Hop Hing Oil Trading Hong Kong HK$2 100% Distribution of (2000) Limited 6 August 1991 edible oils

– 260 – APPENDIX IX ADDITIONAL INFORMATION

Equity interest Issued/ attributable registered to the Place and date of and fully paid Newco Principal Name of subsidiary incorporation share capital Group activities

Hop Hing Oil Terminals British Virgin Islands US$1,385,941 100% Investment holding (Guangzhou) Limited 17 February 1994

Hop Hing Oil Terminals British Virgin Islands US$4,034,699 100% Investment holding (Pan Yu) Limited 17 February 1994

Knight Investment Limited Hong Kong HK$22 100% Property holding 24 January 1991

Lapidus (1985) Limited Hong Kong HK$12 100% Barge ownership 17 September 1985

Monitor Ltd. British Virgin Islands US$1 100% Trademark holding 3 October 1988

Panyu Hop Hing Oils & PRC HK$75,000,000 100% Bottling, packaging Fats Co. Ltd. 26 December 1995 and distribution of edible oils

Panyu Kwong Hing PRC HK$50,000,000 100% Blending and Packaging Company, 18 January 1995 distribution of Limited edible oils

Pinghu Hop Hing Vegetable PRC US$1,400,000 51% Edible oils refinery Oils Company, Limited 17 March 1993

Sino Food Products Company Hong Kong HK$10 100% Distribution of (Holdings) Limited 21 March 1980 edible oils

Top Charter Holdings British Virgin Islands US$1 100% Production of Limited 8 March 2000 edible oils

8. PRELIMINARY EXPENSES A1a(20)(1) Para. 15, The estimated preliminary expenses of the Newco are approximately HK$1 million and are 3rd Sch., CO payable by the Company.

9. PROMOTERS A1a(8)(2) Para. 16, Save as disclosed in this circular, no amount or benefit has been paid or given to the 3rd Sch., CO promoters in connection with the Proposals or related transactions described in this circular within the two years preceding the date of this circular.

– 261 – APPENDIX IX ADDITIONAL INFORMATION

10. QUALIFICATION OF EXPERTS

The following are the qualifications of the experts who have given opinions or advices which are contained in this document:

CIMB-GK A licensed corporation under the SFO permitted to engage in Type 1 (dealing in securities), Type 4 (advising on securities) and Type 6 (advising on corporate finance) of the regulated activities as defined in the SFO

Ernst & Young Certified Public Accountants A1a(4) Para. 43, Grandall Legal Group (Shenzhen) Legal advisers to PRC law 3rd Sch., CO

DTZ Debenham Tie Leung Limited Independent property valuers Para. 46, 3rd Sch., CO Appleby Legal advisers on Bermuda and Cayman Islands laws

11. CONSENTS

Each of CIMB-GK, Ernst & Young, Grandall Legal Group (Shenzhen), DTZ Debenham Tie A1a(9)(2) Leung Limited and Appleby has given and has not withdrawn its written consent to the issue of S.342B, this document with the inclusion therein of its letter or report, as the case may be, and/or reference 3rd Sch., CO to its name, in the form and context in which it appears.

12. MISCELLANEOUS

(a) The registered office of the Company is at Canon’s Court, 22 Victoria Street, Hamilton A1a(36) HM 12, Bermuda. The principal place of business of the Company is at Units E & F, 2/F., Hop Hing Building, 9 Ping Tong Street East, Tong Yan San Tsuen, Yuen Long, New Territories, Hong Kong.

(b) The secretary of the Company is Mr. Wong Kwok Ying. He is a certified public A1a(42) accountant (practising) in Hong Kong.

(c) The Company’s qualified accountant is Mr. Wong Kwok Ying. He is a certified A1a(42) public accountant (practising) in Hong Kong.

(d) The Registrar is Computershare Hong Kong Investor Services Limited of 46th Floor, Hopewell Centre, 183 Queen’s Road East, Hong Kong.

– 262 – APPENDIX IX ADDITIONAL INFORMATION

(e) As at the Latest Practicable Date, none of the experts named in the section headed A1a(9)(1) “Qualification of experts” in this Appendix, any of their respective holding companies, or any of their respective subsidiaries was beneficially interested, directly or indirectly, in any Shares; and none of them had the right (whether legally enforceable or not) to subscribe for or nominate any persons to subscribe for securities in any member of the Group.

(f) As at the Latest Practicable Date, save as disclosed in this document, none of the A1a(47)(1) Directors or the experts named in the section headed “Qualification of experts” in this Appendix has any direct or indirect interest in the promotion of, or in any assets which have been, within the two years immediately preceding the date of this document, acquired or disposed of by or leased to, any member of the Group, or are proposed to be acquired or disposed of by or leased to any member of the Group.

(g) Save as disclosed in this circular, none of the Directors is materially interested in any A1a(47)(2) contract or arrangement subsisting as at the date of this document which is significant in relation to the business of the Group taken as a whole.

(h) There are no founder or management shares in the Company, Newco or any of their A1a(24) respective subsidiaries. There are also no deferred shares in the Company and Newco, Para. 4 but certain of their subsidiaries have deferred shares. 3rd Sch., CO

(i) As at the Latest Practicable Date, no authorized debentures of the Company and its subsidiaries have been issued.

(j) The estimated costs and expenses arising from the implementation of the Redomicile Para. 4 Proposal are approximately HK$5 million and will be payable by the Company. 3rd Sch., CO

(k) The English text of this document and the forms of proxy for the Court Meeting, the A1a(20)(2) SGM and the Warrantholders’ Meeting shall prevail over their Chinese text in the case of any inconsistency.

– 263 – APPENDIX IX ADDITIONAL INFORMATION

13. DOCUMENTS AVAILABLE FOR INSPECTION R19.10(6)

Copies of the following documents will be available for inspection at Units E & F, 2/F, Hop S. 342(1) Hing Building, 9 Ping Tong Street East, Tong Yan San Tsuen, Yuen Long, New Territories, Hong (a), CO Kong during normal business hours on any Business Day from the date of this document until the earlier of the Effective Date or the date on which the Scheme lapses:

(a) the memorandum and articles of association of Newco; A1a(53)(1)

(b) the memorandum of association and the Bye-laws of the Company; A1a(53)(1)

(c) the audited consolidated financial statements of the Group for each of the three A1a(53)(4) financial years ended 31 December 2006;

(d) the full version of the letters and valuation certificates from DTZ Debenham Tie A1a(53)(3) Leung Limited, the text of which is set out in Appendix IV to this document;

(e) the rules of the Newco Share Option Scheme;

(f) the letter of advice, together with a copy of the Cayman Companies Law, as referred A1a(53)(2) to in paragraph (4) of Appendix VI; R19.05(6)(a)(ii)

(g) the material contracts as set out in paragraph (6) of this Appendix; and

(h) the letters of consent as referred to in paragraph (11) of this Appendix.

– 264 – SCHEME OF ARRANGEMENT

IN THE SUPREME COURT OF BERMUDA CIVIL JURISDICTION 2008: NO. 40

IN THE MATTER OF HOP HING HOLDINGS LIMITED

AND IN THE MATTER OF SECTION 99 OF THE COMPANIES ACT 1981

Scheme of Arrangement

Between

HOP HING HOLDINGS LIMITED

and

Holders of Scheme Shares (as hereinafter defined)

PRELIMINARY

(A) In this Scheme of Arrangement, unless inconsistent with the subject or context, the following expressions shall have the meanings respectively set opposite them:

“Business Day” a day that is not a Saturday, Sunday or public holiday in Hong Kong

“Company” Hop Hing Holdings Limited, an exempted company incorporated in Bermuda with limited liability and the Shares of which are listed on the Main Board

“Court” the Supreme Court of Bermuda

“Effective Date” the date upon which the Scheme, if approved by the Court becomes effective, which is also the day on which an office copy of the order of the Court sanctioning the Scheme under Section 99 of the Companies Act shall have been delivered to the Registrar of Companies for registration in accordance with Clause 6 of this Scheme

“holder” a registered holder and includes a person entitled by transmission to be registered as such and joint holders

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“Hong Kong” the Hong Kong Special Administrative Region of the People’s Republic of China

“Newco” Hop Hing Group Holdings Limited, an exempted company incorporated in the Cayman Islands with limited liability and which will become the new holding company of the Group on the Effective Date, and the shares of which will be listed on the Main Board by way of introduction

“Newco Share(s)” ordinary share(s) of HK$0.10 each in the share capital of Newco

“Record Time” currently expected to be 4:30 p.m. (Hong Kong time) on the Business Day immediately preceding the Effective Date

“Register” the register of members of the Company

“Scheme” this scheme of arrangement in its present form or with or subject to any modification thereof or addition thereto or conditions approved or imposed by the Court

“Scheme Shares” issued Share(s) which are subject to the Scheme

“Share(s)” ordinary share(s) of HK$0.01 each in the capital of the Company

“HK$” Hong Kong dollars

(B) The present authorised share capital of the Company consists of US$12,000 divided into 120,000 shares with a par value of US$0.10 each (of which none are currently in issue) and HK$80,000,000 divided into 800,000,000 Shares of which 435,875,692 Shares have been issued and are fully paid.

(C) Newco is incorporated in Cayman Islands with limited liability under the Companies Law (2007 Revision) with an authorised share capital of HK$380,000. It is proposed that the authorised share capital of Newco be increased to HK$80,000,000.

(D) At the date hereof, Newco does not beneficially own any Shares.

(E) The primary purpose of this Scheme is that the Company will become a direct wholly- owned subsidiary of Newco and the holders of Scheme Shares will become shareholders of Newco.

(F) In consideration of and exchange for the cancellation and extinguishment of each of the Scheme Shares, on the Effective Date, all holders of Scheme Shares shall be entitled to receive one Newco Share for every Share held.

(G) Newco has agreed to appear by Counsel at the hearing of the petition to sanction this Scheme and to undertake to the Court to be bound thereby and to execute and do and procure to be executed and done all such documents, acts and things as may be necessary or desirable to be executed or done by it for the purpose of giving effect to this Scheme.

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THE SCHEME

PART I

SCHEME PARTICULARS

1. On the Effective Date:

(a) simultaneous with each other:

(i) all the Scheme Shares (as defined in the Scheme) shall be cancelled and extinguished and the issued share capital of the Company shall be reduced accordingly;

(ii) 1,000 new Shares shall be allotted and issued simultaneously, credited as fully paid, to Newco; and

(iii) the authorised share capital of the Company shall be reduced so that the authorised share capital shall comprise HK$100,000 divided into 1,000,000 shares; and

(b) in consideration of the cancellation and extinguishment of the Scheme Shares, the holders of the Scheme Shares (whose names appear in the Register at the Record Time) shall receive the Newco Shares credited as fully-paid, on the basis of one (1) Newco Share for every one (1) Scheme Share held as at the Record Time.

PART II

GENERAL APPLICATION

2. The Newco Shares in issue and to be issued shall be fully paid or credited as fully paid and rank pari passu in all respects with each other, including as to dividends, voting rights and return of capital or other distributions that may be declared, paid or made.

3. (a) Not later than seven (7) Business Days after the Effective Date, Newco shall send or cause to be sent to the holders of Newco Shares certificates representing the appropriate number of Newco Shares, in registered form, to such holders pursuant to Clause 1(b) above.

(b) Unless indicated otherwise in writing to the branch share registrar and transfer office of Newco in Hong Kong, Computershare Hong Kong Investor Services Limited, at 46th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong, all such share certificates shall be sent by prepaid post (or by prepaid air-mail if the holder of Newco Shares is situated outside Hong Kong) addressed to the holders of Newco

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Shares at their respective addresses as appearing in the Register at the Record Time or, in the case of joint holders, at the address appearing in such Register at such time, of that one of the joint holders whose name stands first in such Register in respect of the relevant joint holding or to the other persons entitled thereto or, in the case of holders of Newco Shares, situated in Malaysia, notice will be sent by pre-paid airmail to them informing them to change their registered addresses to addresses in Hong Kong or other jurisdiction where the issue of Newco Shares is not restricted by any regulatory bodies or to collect their certificates of Newco Shares in Hong Kong.

(c) Share certificates shall be delivered at the risk of addressees and none of Newco, the Company or any persons nominated by them to carry out such delivery shall be responsible for any loss or delay in transmission.

(d) On or after the day being six (6) calendar months after the posting of the share certificates pursuant to Clause 3(b) above, Newco shall have the right to sell those Newco Shares, the certificates of which have been returned, and shall place all monies represented thereby in a deposit account in Newco’s name with a licensed bank in Hong Kong selected by Newco. Newco shall hold such monies until the expiration of six (6) years from the Effective Date and shall prior to such date make payments to persons who satisfy Newco that they are respectively entitled thereto. Any payments made by Newco hereunder shall include any interest accrued on the sums to which the respective persons are entitled pursuant to Clause 1(b) calculated at the annual rate prevailing from time to time at the licensed bank in which the monies are deposited, subject, if applicable, to the deduction of interest, tax or any withholding tax or any other deduction required by law. Newco shall exercise its absolute discretion in determining whether or not it is satisfied that any person is so entitled or not so entitled, as the case may be, which determination shall be conclusive and binding upon all persons claiming an interest in the relevant monies.

(e) On the expiration of six (6) years from the Effective Date, Newco shall be released from any further obligation to make any payments under this Scheme and Newco shall keep the balance (if any) of the sums then standing to the credit of the deposit account referred to in Clause 3(d) above including accrued interest subject, if applicable, to the deduction of interest, tax or any withholding tax or any other deduction required by law and subject to the deduction of any expenses.

(f) Clause 3(e) above shall take effect subject to any prohibition or condition imposed by law.

– 268 – SCHEME OF ARRANGEMENT

4. Subject to the despatch of the share certificates by Newco for the appropriate number of new Newco Shares, each instrument of transfer and certificate validly subsisting at the Record Time in respect of a transfer or holding, respectively, of any number of the Shares shall, on the Effective Date, cease to be valid for any purpose as an instrument of transfer or a certificate for the Shares and every holder of such certificates shall be bound on the request of Newco to deliver up to the Company the certificates for his or her existing shareholdings in the Company. Each valid instrument of transfer for the Shares existing at the Record Time shall, instead, be a valid instrument of transfer in respect of the relevant number of new Newco Shares.

5. All mandates or other instructions to the Company in force at the Record Time relating to the Shares shall on the Effective Date cease to be valid and effective mandates or instructions.

6. This Scheme shall become effective when it is sanctioned (with or without modification(s)) by the Court and an office copy of the order of the Court shall have been registered by the Registrar of Companies in Bermuda.

7. Unless this Scheme shall have become effective as aforesaid on or before 30 September 2008 or such later date, if any, as the Court may allow, this Scheme shall lapse.

8. The Company and Newco may jointly consent for and on behalf of all concerned to any modification of or addition to this Scheme or to any condition which the Court may see fit to approve or impose.

9. All costs, charges and expenses of and incidental to this Scheme and the costs of carrying the same into effect shall be borne by Newco.

Dated 14 March 2008

– 269 – NOTICE OF THE COURT MEETING

IN THE SUPREME COURT OF BERMUDA CIVIL JURISDICTION 2008: NO. 40

IN THE MATTER OF HOP HING HOLDINGS LIMITED

AND IN THE MATTER OF SECTION 99 OF THE COMPANIES ACT 1981

NOTICE OF COURT MEETING OF THE HOLDERS OF SCHEME SHARES

NOTICE IS HEREBY GIVEN that, by an Order dated 6 March 2008, made in the above matter, the Supreme Court of Bermuda (the “Court”) has directed a meeting to be convened of registered holders (the “Scheme Shareholders”) of issued shares of HK$0.10 each (the “Scheme Shares”) in Hop Hing Holdings Limited (the “Company”) for the purposes of considering and, if thought fit, approving (with or without modification), a Scheme of Arrangement (the “Scheme of Arrangement”) proposed to be made between the Company and the Scheme Shareholders and that such meeting will be held at 11:00 a.m. on Monday, 7 April 2008 at Units E & F, 2/F, Hop Hing Building, 9 Ping Tong Street East, Tong Yan San Tsuen, Yuen Long, New Territories, Hong Kong, at which place and time all the Scheme Shareholders are requested to attend.

A copy of a printed composite document containing the Scheme of Arrangement, notice of the said meeting and the Explanatory Statement required to be furnished pursuant to Section 100 of the above-mentioned Act together with a pink Form of Proxy have been or will be posted to every shareholder of the Company including the Scheme Shareholders having a registered address in the register of members of the Company. Additional copies of the said documents can be obtained by any person entitled to attend the said meeting during usual business hours on any day prior to the day appointed for the said meeting (other than a Saturday, a Sunday or a statutory holiday in Bermuda or Hong Kong as the case may be):

(i) at the registered office of the Company in Bermuda situate at Canon’s Court, 22 Victoria Street, Hamilton HM 12, Bermuda;

(ii) at the office of the branch share registrar of the Company in Hong Kong, namely Computershare Hong Kong Investor Services Limited, situate at 46/F., Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong; and

– 270 – NOTICE OF THE COURT MEETING

(iii) at the Hong Kong office of the Company’s Bermuda attorneys, namely Appleby, situate at 5511, The Center, 99 Queen’s Road Central, Hong Kong or at 8/F, Bank of America Tower, 12 Harcourt Road, Central, Hong Kong,

and can also be seen on display at the principal place of business of the Company in Hong Kong at Units E & F., 2/F., Hop Hing Building, 9 Ping Tong Street East, Tong Yan San Tsuen, Yuen Long, New Territories, Hong Kong.

The Scheme Shareholders may vote in person at the said meeting or they may appoint another person, whether a shareholder of the Company or not, as their proxy to attend and vote in their stead.

In the case of joint holders of the Scheme Shares, the vote of the senior who tenders a vote, whether in person or by proxy, will be accepted to the exclusion of the vote(s) of the other joint holder(s), and for this purpose, seniority will be determined by the order in which the names of the holders stand in the register of members of the Company in respect of the relevant joint holding.

It is requested that forms appointing proxies be lodged at the office of the branch share registrar of the Company in Hong Kong as stated above not less than 48 hours before the time appointed for the said meeting but if the forms of proxy are not so lodged, they may be handed to the Chairman of the meeting at the said meeting.

By the said Order, the Court has appointed Mr. Hung Hak Hip, Peter, the non-executive chairman of the Company, or failing him, Mr. Wong Kwok Ying, an executive director of the Company, or failing both of them, any other director of the Company, to act as Chairman of the said meeting and has directed the Chairman to report the results thereof to the Court.

The Scheme of Arrangement will be subject to the subsequent approval of the Court.

Dated this 14 March, 2008

Appleby Canon’s Court, 22 Victoria Street Hamilton HM 12, Bermuda Attorneys for the Company

– 271 – NOTICE OF THE SGM

HOP HING HOLDINGS LIMITED A1a(1) (incorporated in Bermuda with limited liability) (Stock Code: 47)

NOTICE IS HEREBY GIVEN that a special general meeting (the “SGM”) of Hop Hing Holdings Limited (the “Company”) will be held at Units E & F, 2nd Floor, Hop Hing Building, 9 Ping Tong Street East, Tong Yan San Tsuen, Yuen Long, New Territories, Hong Kong on Monday, 7 April 2008 at 11:30 a.m. (or as soon thereafter as the meeting of shareholders of the Company convened in accordance with the direction of the Supreme Court of Bermuda shall have been concluded or adjourned) for the purpose of considering and, if thought fit, passing, with or without modifications, the following special resolution of the Company:

SPECIAL RESOLUTION

“THAT, conditional upon the Listing Committee of the Stock Exchange approving the listing of, and granting permission to deal in, ordinary shares of HK$0.10 each in the issued and proposed issued share capital of Newco (as defined in the Scheme hereinafter mentioned):

(a) the scheme of arrangement dated 14 March 2008 (the “Scheme”) between the Company and the holders of the Scheme Shares (as defined in the Scheme) as at the Record Time (as defined in the Scheme), in the form of the print contained in the circular dated 14 March 2008 (the “Scheme Document”) which has been produced to this meeting and for the purpose of identification has been marked “A” and signed by the Chairman of this meeting, with any modification thereof or addition thereto or subject to any condition(s) approved or imposed by the Court (as defined in the Scheme) be and is hereby approved;

(b) the Warrant Proposal (as defined and described in the Scheme Document) be and is hereby approved;

– 272 – NOTICE OF THE SGM

(c) for the purpose of giving effect to the Scheme, on the Effective Date (as defined in the Scheme), simultaneously with each other:

(i) all the Scheme Shares (as defined in the Scheme) shall be cancelled and extinguished and the issued share capital of the Company shall be reduced accordingly;

(ii) 1,000 new Shares (as defined in the Scheme) shall be allotted and issued simultaneously, credited as fully paid, to Newco; and

(iii) the authorised share capital of the Company shall be reduced so that the authorised share capital shall comprise HK$100,000 divided into 1,000,000 Shares held by Newco solely; and

(d) the share option scheme (the “Share Option Scheme”) of the Company adopted pursuant to a resolution of the Company passed on 25 June 2004 be and is hereby terminated in accordance with Clause 14.1 of the Share Option Scheme; and

(e) that the directors of the Company be and are hereby authorized to do all such acts and things as they may, in their absolute discretion, deem fit to effect, implement and complete any of the foregoing including, without limitation, the giving, on behalf of the Company, of consent to any modification of, or addition to, the Scheme which the Court may see fit to impose.”

Yours faithfully, By Order of the Board Hop Hing Holdings Limited

Wong Kwok Ying Company Secretary

Hong Kong, 14 March 2008

– 273 – NOTICE OF THE SGM

Head office and principal place of business: Registered office: Units E & F, 2nd Floor, Canon’s Court, Hop Hing Building, 22 Victoria Street, 9 Ping Tong Street East, Hamilton HM12, Tong Yan San Tsuen, Bermuda Yuen Long, New Territories, Hong Kong

Notes:

1. A member of the Company entitled to attend and vote at the SGM is entitled to appoint another person as his proxy to attend and vote in his stead. A member who is the holder of two or more Shares may appoint more than one proxy to represent him and vote on his behalf at the SGM. A proxy need not be a member of the Company.

2. In order to be valid, the form of proxy enclosed herewith must be deposited at the Company’s branch share registrars, Computershare Hong Kong Investor Services Limited, located at 46th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong, together with the power or attorney or other authority (if any) under which it is signed or a notarially certified copy of such power of attorney or authority, not later than 48 hours before the time appointed for holding the SGM or any adjournment thereof.

3. Where there are joint holders of any Share, any one of such persons may vote at the SGM either personally or by proxy, in respect of such Share as if he were solely entitled thereto, but if more than one of such joint holders be present at the SGM personally or by proxy, the vote of the senior who tenders a vote, whether in person or by proxy, shall be accepted to the exclusion of the votes of the other joint holders, and for this purpose seniority shall be determined by the order in which the names stand in the register of members of the Company in respect of such joint holding.

4. Completion and return of the form of proxy will not preclude a member from attending the SGM and voting in person, if he so wishes. In the event of a member who has lodged a form of proxy attending the SGM, his form of proxy will be deemed to have been revoked.

– 274 – NOTICE OF THE WARRANTHOLDERS’ MEETING

HOP HING HOLDINGS LIMITED (incorporated in Bermuda with limited liability) (Stock Code: 47)

NOTICE IS HEREBY GIVEN that a meeting of the holders of Warrants (as defined in the scheme document of the Company (as hereinafter defined) dated 14 March 2008) of Hop Hing Holdings Limited (the “Company”) will be held at Units E & F, 2nd Floor, Hop Hing Building, 9 Ping Tong Street East, Tong Yan San Tsuen, Yuen Long, New Territories, Hong Kong on Monday, 7 April 2008 at 12:00 noon (or as soon thereafter as the Special General Meeting of the Company convened at the same place and day shall have been concluded or adjourned) for the purpose of considering and, if thought fit, passing, with or without modifications, the following resolution as a special resolution:

SPECIAL RESOLUTION

“THAT, conditional upon the Listing Committee of the Stock Exchange approving the listing of, and granting permission to deal in, ordinary shares of HK$0.10 each in the issued share capital of Newco:

(a) conditionally upon the scheme of arrangement dated 14 March 2008 (the “Scheme”) between the Company and holders of the Scheme Shares (as defined in the Scheme) as at the Record Time (as defined in the Scheme), in the form of the print contained in the circular which has been produced to this meeting and for the purpose of identification marked “A” and signed by the chairman of this meeting, with any modification thereof or addition thereto or subject to any conditions approved or imposed by the Court (as defined in the Scheme), the warrant proposal set out below (the “Warrant Proposal”) be and is hereby approved;

(b) each and every alteration or abrogation of the rights attached to the Warrants which is or may be involved in the Warrant Proposal be and is hereby noted and approved; and

(c) that the directors of the Company be and are hereby authorized to do all such acts and things as they may, in their absolute discretion, deem fit to effect, implement and complete any of the foregoing.

– 275 – NOTICE OF THE WARRANTHOLDERS’ MEETING

Warrant Proposal

1. Upon the Scheme become effective, the Warrants shall be cancelled and, in consideration of such cancellation, the holders of Warrants whose names appear in the register of holders of Warrants at the Record Time (as defined in the Scheme) shall, subject to paragraph 4 of this Warrant Proposal, receive for every Warrant then held one new warrant (the “Newco Warrants”) carrying the right to subscribe for shares (“Newco Shares”) in the capital of Hop Hing Group Holdings Limited (“Newco”) at a subscription price of HK$0.25 per share, subject to adjustment, at any time on or before 30 April 2009. A proof of the Warrant instrument in draft containing the terms and conditions of Newco Warrants has been produced to this meeting and for the purpose of identification marked “B” and signed by the Chairman hereof.

2. With effect from 4:00 p.m. on Friday, 11 April 2008, the subscription rights conferred by the Warrants then outstanding shall not be capable of exercise and shall so remain until the earlier of the cancellation of the Warrants pursuant to paragraph 1 of this Warrant Proposal and the date on which the Scheme is withdrawn or lapses. If there shall have been or shall be any exercise or purported exercise after 4:00 p.m. on Friday, 11 April 2008 of the subscription rights represented by any Warrant, such exercise or purported exercise shall be ineffective and the Company shall not be obliged to allot or issue any shares in the capital of the Company in satisfaction thereof.

3. Any exercise of the subscription rights attached to the Warrants during the period commencing at the time of the passing of the special resolution as set out in the notice of the Warrantholder’s meeting dated 14 March 2008 and expiring at 4:00 p.m. on Friday, 11 April 2008 shall be deemed to constitute the unconditional and irrevocable consent to the Scheme on the part of the person entitled to be allotted and issued shares of the Company as a result of such exercise of subscription rights.

4. No holder of any Warrant shall be entitled to a fraction of a Newco Warrant but all such fractions to which, but for this paragraph 4 of this Warrant Proposal, any such holder would have become entitled shall be aggregated and issued to a person nominated by Newco who shall sell the same and the net proceeds of such sale shall be paid to Newco for its own benefit.

5. All instructions to the Company in force at 10:00 a.m. on the Effective Date (as defined in the Scheme) relating to the Warrants shall, unless and until revoked, be deemed as from the Effective Date to be valid and subsisting instructions to Newco in relation to the relevant number of Newco Warrants to be issued by Newco pursuant to this Warrant Proposal.

– 276 – NOTICE OF THE WARRANTHOLDERS’ MEETING

6. Each certificate validly subsisting at the Record Time in respect of a holding of any number of Warrants shall on the Effective Date cease to be valid for any purpose as a certificate for the Warrants and from and after the Effective Date shall instead have effect for all purposes as if it were a certificate duly issued by Newco for the same number of Newco Warrants to be issued by Newco upon and subject to the terms and conditions attaching to Newco Warrants.

7. A valid instrument of transfer relating to a transfer of any number of Warrants effected before the Effective Date, which is not registered in the Company’s register of warrantholders before that date, shall be deemed as of that date to be a valid instrument of transfer in respect of the same number of Newco Warrants to be issued by Newco upon and subject to the terms and conditions attaching to the Newco Warrants.

8. Save as mentioned above or as set out in the Scheme, the commercial terms and conditions of the Newco Warrants shall be the same as those of the Warrants.”

Yours faithfully, By Order of the Board Hop Hing Holdings Limited

Wong Kwok Ying Company Secretary

Hong Kong, 14 March 2008

Head office and principal place of business: Registered office: Units E & F, 2nd Floor, Canon’s Court, Hop Hing Building, 22 Victoria Street, 9 Ping Tong Street East, Hamilton HM12, Tong Yan San Tsuen, Bermuda Yuen Long, New Territories, Hong Kong

– 277 – NOTICE OF THE WARRANTHOLDERS’ MEETING

Notes:

1. A holder of Warrants entitled to attend and vote at the meeting is entitled to appoint another person as his proxy to attend and vote in his stead. A holder of Warrants consisting of two or more Warrants may appoint more than one proxy to represent him and vote on his behalf at the meeting. A proxy need not be a holder of Warrants.

2. In order to be valid, the form of proxy enclosed herewith must be deposited at the Company’s branch share registrars, Computershare Hong Kong Investor Services Limited, located at 46th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong, together with the power or attorney or other authority (if any) under which it is signed or notarially certified copy of such power of attorney or authority, not later than 48 hours before the time appointed for holding the meeting or any adjournment thereof.

3. Where there are joint holders of Warrants, any one of such persons may vote at the meeting either personally or by proxy, in respect of such Warrants as if he were solely entitled thereto, but if more than one of such joint holders be present at the meeting personally or by proxy, the vote of the senior who tenders a vote, whether in person or by proxy, shall be accepted to the exclusion of the votes of the other joint holders, and for this purpose seniority shall be determined by the order in which the names stand in the register of warrantholders of the Company in respect of such joint holding.

4. Completion and return of the form of proxy will not preclude a holder of Warrants from attending the meeting and voting in person, if he so wishes. In the event of a holder of Warrants who has lodged a form of proxy attending the meeting, his form of proxy will be deemed to have been revoked.

– 278 –