The Circular Is Important and Requires Your Immediate Attention

THE CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt as to any aspect of this circular or as to the action to be taken, you should consult a 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 AMVIG Holdings Limited, you should at once hand this circular and the accompanying form of proxy to the purchaser or the transferee or to the bank, licensed securities dealer or registered institution in securities or other agent through whom the sale or transfer was effected for transmission to the purchaser or the transferee.

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

(incorporated in the Cayman Islands with limited liability) (stock code: 2300)

(i) DISCLOSEABLE AND CONNECTED TRANSACTION INVOLVING ACQUISITION OF THE REMAINING 45% EQUITY INTERESTS IN FAMOUS PLUS GROUP LIMITED; (ii) MAJOR AND CONNECTED TRANSACTION INVOLVING DISPOSAL OF BRILLIANT CIRCLE HOLDINGS INTERNATIONAL LIMITED; (iii) PROPOSED OFF-MARKET SHARE REPURCHASE; AND (iv) APPLICATION FOR WHITEWASH WAIVER

Financial adviser to AMVIG Holdings Limited

Optima Capital Limited

Independent financial adviser to the Independent Board Committee and the Independent Shareholders

Capitalised terms used in this cover have the same meanings as those defined in the section headed “Definitions” in this circular.

A letter of advice from the Independent Board Committee is set out on page 26 of this circular. A letter of advice from Access Capital, the independent financial adviser, containing its opinion and advice to the Independent Board Committee and the Independent Shareholders in relation to the Transactions is set out on pages 27 to 56 of this circular.

A notice convening the EGM to be held at Room 03-04, 18th Floor, Li Po Chun Chambers, No.189 Des Voeux Road Central, Hong Kong on Friday, 12 February 2010 at 10:00 a.m. is set out on pages 145 to 147 of this circular. A form of proxy for use at the EGM is also enclosed with this circular. Whether or not you are able to attend the meeting, you are requested to complete the accompanying form of proxy in accordance with the instructions printed thereon and return it to the Company’s branch share registrar and transfer office in Hong Kong, Tricor Investor Services Limited at 26/F., Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong, as soon as possible but in any event not less than 48 hours before the time appointed for the holding of the meeting or any adjourned meeting (as the case may be). Completion and return of the form of proxy shall not preclude you from attending and voting in person at the meeting or any adjourned meeting (as the case may be) should you so wish.

20 January 2010 * For identification purpose only CONTENTS

Page

Definitions ...... 1

Letter from the Board ...... 6

Letter from the Independent Board Committee ...... 26

Letter from Access Capital...... 27

Appendix I — Financial information of the Group ...... 57

Appendix II — Unaudited pro forma financial information of the Resulting Group...... 123

Appendix III — General information ...... 134

Notice of EGM...... 145

– i – DEFINITIONS

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

“2007 Acquisition” the acquisition of the BC Group from Mr. Tsoi pursuant to the 2007 BC Agreement which was completed on 31 October 2007

“2007 BC Agreement” the sale and purchase agreement dated 13 June 2007 between Mr. Tsoi and AMVIG Group (as supplemented) in relation to the 2007 Acquisition

“Access Capital” Access Capital Limited, a corporation licensed to carry on type 1 (dealing in securities), type 4 (advising on securities), type 6 (advising on corporate finance) and type 9 (asset management) regulated activities under the SFO, and the independent financial adviser to the Independent Board Committee and the Independent Shareholders on the Transactions

“Acquisition” the proposed acquisition of the FP Shares pursuant to the terms and conditions of the FP Agreement

“acting in concert” has the meaning ascribed to it under the Takeovers Code

“Amcor” Amcor Limited, a company incorporated in Australia and the issued shares of which are listed on the Australian Stock Exchange Limited

“Amcor Concert Group” Amcor, its associates and parties acting in concert with it

“Ample Capital” Ample Capital Limited, a corporation licensed to carry on type 1 (dealing in securities), type 6 (advising on corporate finance) and type 9 (asset management) regulated activities under the SFO and the administrator of the Scheme appointed by the Board

“AMVIG Group” AMVIG Group Limited, a company incorporated in the British Virgin Islands which is a direct wholly-owned subsidiary of the Company

“Announcement” the announcement of the Company dated 30 December 2009 in relation to the Transactions

“associates” has the meaning ascribed to it under the Listing Rules

“BC Agreement” the conditional sale and purchase agreement dated 22 December 2009 entered into between AMVIG Group and Mr. Tsoi in relation to the Disposal

– 1 – DEFINITIONS

“BC Completion” completion of the BC Agreement in accordance with the terms and conditions therein

“BC Group” Brilliant Circle, its subsidiaries and associated company

“BC Loan” all debts owing or incurred by Brilliant Circle to AMVIG Group as at BC Completion

“BC Share” one share of US$1.00 in the issued share capital of Brilliant Circle, representing the entire issued share capital thereof

“Board” the board of Directors

“Brilliant Circle” Brilliant Circle Holdings International Limited, a company incorporated in the British Virgin Islands which is an indirect wholly-owned subsidiary of the Company before BC Completion

“Business Day” a day (other than a Saturday and Sunday) on which licensed banks are generally open for business in Hong Kong throughout their normal business hours

“Changde Goldroc”Changde Goldroc Rotogravure Printing Co., Ltd., an associated company of Brilliant Circle

“Companies Law” Companies Law (Cap. 22 of the Cayman Islands)

“Company” AMVIG Holdings Limited, a company incorporated in the Cayman Islands and the issued Shares of which are listed on the Main Board of the Stock Exchange

“connected person” has the meaning ascribed to it under the Listing Rules

“Director(s)” the director(s) of the Company

“Disposal”the sale of the BC Share and the BC Loan by AMVIG Group to Mr. Tsoi pursuant to the terms and conditions of the BC Agreement

“Dongguan KWG” Dongguan KWG Colour Printing Co. Ltd. (東莞智源彩印有限公司), a wholly foreign-owned enterprise in the PRC and a wholly-owned subsidiary of Famous Plus

“Dragon Hill” Dragon Hill Group Limited, an investment holding company incorporated in the British Virgin Islands, being the vendor under the FP Agreement

– 2 – DEFINITIONS

“Dragon Hill Concert Group” Dragon Hill, its associates and parties acting in concert with it

“EGM” an extraordinary general meeting of the Company to be convened for the Independent Shareholders to consider and, if thought fit, to approve the Transactions

“Executive” the Executive Director of the Corporate Finance Division of the SFC or any of his delegates

“Famous Plus” Famous Plus Group Limited, a company incorporated in Hong Kong which is owned as to 55% by World Grand and 45% by Dragon Hill before FP Completion

“FP Agreement” the conditional sale and purchase agreement dated 22 December 2009 entered into between World Grand and Dragon Hill in relation to the Acquisition

“FP Completion” completion of the FP Agreement in accordance with the terms and conditions therein

“FP Group” Famous Plus and its subsidiary (i.e. Dongguan KWG)

“FP Shares” 45 ordinary shares of HK$1.00 each in the capital of Famous Plus, representing 45% of the issued share capital thereof

“Group” the Company and its subsidiaries

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

“Independent Board Committee” an independent committee of the Board comprising all the three independent non-executive Directors, established for the purpose of advising and giving recommendation to the Independent Shareholders on the Transactions

“Independent Shareholder(s)” Shareholder(s) other than (i) the Amcor Concert Group, (ii) the Tsoi Concert Group, (iii) the Dragon Hill Concert Group, and (iv) those who are involved in, or interested in, the Transactions

“Last Trading Day” 22 December 2009, being the last trading day of the Shares on the Stock Exchange immediately before the issue of the Announcement

– 3 – DEFINITIONS

“Latest Practicable Date” 18 January 2010, being the latest practicable date prior to the printing of this circular for the purpose of ascertaining certain information for inclusion in this circular

“Listing Rules” the Rules Governing the Listing of Securities on the Stock Exchange

“Mr. Tsoi” Mr. Tsoi Tak, a substantial Shareholder, being the purchaser under the BC Agreement

“PRC” the People’s Republic of China which, for the purpose of this circular, excludes Hong Kong, the Macau Special Administrative Region of the People’s Republic of China and Taiwan

“Previous Proposal” the proposed sale of the BC Share by AMVIG Group to Mr. Tsoi pursuant to the terms and conditions of the sale and purchase agreement dated 10 September 2009 entered into between AMVIG Group and Mr. Tsoi together with all debts owing or incurred by Brilliant Circle to AMVIG Group as at completion thereof, the details of which are disclosed in the announcement and circular of the Company dated 17 September 2009 and 21 October 2009 respectively

“Relevant Period” the period commencing six months prior to 22 December 2009, being the date of the BC Agreement, up to and including the Latest Practicable Date

“Repurchases Code” the Hong Kong Code on Share Repurchases

“Repurchase Price” the proposed repurchase price of HK$7.00 per Repurchase Share

“Repurchase Shares” 166,814,000 Shares to be transferred by Mr. Tsoi at the direction of AMVIG Group to the Company for cancellation at BC Completion as part of the consideration payable by Mr. Tsoi to AMVIG Group for the Disposal pursuant to the terms and conditions of the BC Agreement, and each a “Repurchase Share”

“Resulting Group” the Company and its subsidiaries immediately after BC Completion and FP Completion

“Scheme” the employees’ share award scheme adopted by the Company on 13 June 2007 and as clarified on 30 June 2008

“SFC” Securities and Futures Commission of Hong Kong

“SFO” the Securities and Futures Ordinance (Cap. 571 of the Laws of Hong Kong)

– 4 – DEFINITIONS

“Share Repurchase” the repurchase of the Repurchase Shares by the Company from Mr. Tsoi for cancellation pursuant to the terms and conditions of the BC Agreement

“Share(s)” ordinary share(s) of par value HK$0.01 each in the issued share capital of the Company

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

“Stock Exchange” The Stock Exchange of Hong Kong Limited

“substantial Shareholder” has the meaning ascribed to it under the Listing Rules

“Takeovers Code” the Hong Kong Code on Takeovers and Mergers

“Transactions” together, the Acquisition, the Disposal, the Share Repurchase and the Whitewash Waiver

“Tsoi Concert Group” Mr. Tsoi, his associates and parties acting in concert with him

“Whitewash Waiver” a waiver of the obligation of the Amcor Concert Group to make a mandatory general offer for all securities of the Company (other than those already owned or agreed to be acquired by it) as a result of the deemed acquisition in voting rights caused by the Share Repurchase in accordance with Note 1 on dispensations from Rule 26 of the Takeovers Code by the Executive

“World Grand” World Grand Holdings Limited, a company incorporated in Hong Kong with limited liability and an indirect wholly-owned subsidiary of the Company

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

“RMB” Renminbi, the lawful currency of the PRC

“US$” United States dollars, the lawful currency of United States of America

For illustration purposes, all amounts in RMB in this circular have been translated into HK$ at the exchange rate of RMB1: HK$1.15.

– 5 – LETTER FROM THE BOARD

(incorporated in the Cayman Islands with limited liability) (stock code: 2300)

Executive Directors: Registered Office: Mr. Chan Chew Keak, Billy (Chairman) Century Yard Mr. Chan Sai Wai (Vice-Chairman) Cricket Square Mr. Ng Sai Kit Hutchins Drive Mr. Ge Su P.O. Box 2681 GT Mr. Lee Cheuk Yin, Dannis George Town Grand Cayman Non-executive Directors: Cayman Islands Mr. David John Cleveland Hodge British West Indies Mr. Jerzy Czubak Head office and Independent non-executive Directors: principal place of business Mr. Tay Ah Kee, Keith in Hong Kong: Mr. Au Yeung Tin Wah, Ellis Room 03-04, 18th Floor Mr. Oh Choon Gan, Eric Li Po Chun Chambers No.189 Des Voeux Road Central Hong Kong

20 January 2010 To the Shareholders

Dear Sir or Madam,

A. BACKGROUND AND INTRODUCTION References are made to the announcements of the Company dated 17 September 2009 and 19 November 2009 and the circular of the Company dated 21 October 2009 in relation to the Previous Proposal. An extraordinary general meeting was held by the Company on 19 November

* For identification purpose only

– 6 – LETTER FROM THE BOARD

2009 to seek independent Shareholders’ approval of the Previous Proposal. As mentioned in the announcement of the Company dated 19 November 2009, since the number of votes for the resolution as regards the Previous Proposal was slightly below the requisite 75% of the total number of votes cast on the poll at the extraordinary general meeting held on 19 November 2009, the Previous Proposal was unable to proceed.

Subsequently, the Board has identified an investment opportunity relating to the Acquisition. In order to finance the Acquisition, the Board wishes to put forward to the Independent Shareholders the Acquisition in conjunction with the Disposal. Accordingly, on 22 December 2009, World Grand entered into the FP Agreement with Dragon Hill in relation to the Acquisition, and AMVIG Group entered into the BC Agreement with Mr. Tsoi in relation to the Disposal. The Disposal is principally under the same terms as those under the Previous Proposal except that under the current proposal, the Acquisition and the Disposal are inter-conditional.

The purposes of this circular are to provide you with, among other things, (i) details of the Acquisition and the Disposal; (ii) the letter from the Independent Board Committee giving its recommendation to the Independent Shareholders on the Transactions; (iii) the letter from Access Capital containing its advice to the Independent Board Committee and the Independent Shareholders on the Transactions; (iv) the financial information of the Group and the pro forma financial information of the Resulting Group; (v) the notice of the EGM; and (vi) other information as required under the Listing Rules, the Takeovers Code and the Repurchases Code.

B. THE FP AGREEMENT

Date:

22 December 2009

Parties:

(1) Dragon Hill (as vendor); and

(2) World Grand (as purchaser).

Dragon Hill is the substantial shareholder of Famous Plus, being a non-wholly-owned subsidiary of the Company. As such, Dragon Hill is a connected person of the Company. However, Dragon Hill and its ultimate beneficial owner do not have any relationship with Mr. Tsoi and his associates and Dragon Hill is not acting in concert with Mr. Tsoi or Amcor or their respective concert parties. The principal activity of Dragon Hill is investment holding.

Assets to be acquired:

World Grand has conditionally agreed to acquire the FP Shares, representing 45% equity interests in Famous Plus, from Dragon Hill free from all encumbrances together with all rights attaching thereto including but not limited to all dividends paid, declared or made in respect thereof at any time on or after the date of FP Completion.

– 7 – LETTER FROM THE BOARD

Consideration:

The aggregate consideration for the Acquisition is RMB670 million (equivalent to approximately HK$770.5 million), which shall be satisfied by the Group in cash to Dragon Hill in the following manner:

(1) RMB150 million (equivalent to approximately HK$172.5 million) shall be paid upon FP Completion;

(2) subject to FP Completion, RMB106.66 million (equivalent to approximately HK$122.66 million) shall be paid on or before 31 December 2010;

(3) subject to FP Completion, RMB206.67 million (equivalent to approximately HK$237.67 million) shall be paid on or before 31 December 2011; and

(4) subject to FP Completion, RMB206.67 million (equivalent to approximately HK$237.67 million) shall be paid on or before 31 December 2012.

Basis of the consideration:

The consideration for the Acquisition has been negotiated between the parties on an arm’s length basis and taking into account the historical results, the business growth and the prospects of the FP Group. As mentioned in the paragraph headed “Information on the FP Group” below, the FP Group has demonstrated significant growth in the first half of year 2009. The FP Group had profit after tax of HK$167.6 million during the six months ended 30 June 2009, which is very close to its 2008 full year profit after tax of HK$168.3 million. The consideration for the Acquisition represents approximately 10.2 times of 45% of the 2008 full-year unaudited profit after tax of the FP Group and approximately 10.2 times of 45% of the 2009 half-year unaudited profit after tax of the FP Group. Taking into account the business growth and profitability of the FP Group, the Directors consider that the aforementioned price-to-earnings ratios as represented by the consideration present an attractive investment opportunity. The Company intends to finance the consideration for the Acquisition by the proceeds from the Disposal.

Conditions precedent:

The FP Agreement is conditional upon the satisfaction or waiver (as applicable) of the following conditions:

(1) the Independent Shareholders passing at the EGM the resolutions approving the FP Agreement and the transactions contemplated thereunder;

(2) the representations, undertakings and warranties provided by Dragon Hill under the FP Agreement remaining true and accurate in all material respects;

(3) the Disposal becoming unconditional in all respects; and

(4) all other necessary consents, authorisations, licences and approvals for or in connection with the sale and purchase of the FP Shares having been obtained.

– 8 – LETTER FROM THE BOARD

World Grand may at any time waive in writing the conditions set out in (2) and/or (3) above. If any of the conditions set out above has not been satisfied or waived (as the case may be) at or before 12:00 noon on 31 March 2010 or such later date as World Grand may agree, the FP Agreement shall cease and determine and neither party shall have any obligations or liabilities under the FP Agreement save for any antecedent breaches of the terms thereof.

Completion:

FP Completion shall take place on the seventh Business Day after all the conditions precedent to the FP Agreement have been fulfilled or waived (as the case may be), being the date when BC Completion is expected to take place.

Upon FP Completion, Famous Plus will become an indirect wholly-owned subsidiary of the Company.

C. INFORMATION ON THE FP GROUP

Famous Plus was set up by World Grand and Dragon Hill as a minority shareholder in late 2007 and is an indirect 55%-owned subsidiary of the Company. Famous Plus is an investment holding company with its principal asset being its investment in Dongguan KWG. Dongguan KWG commenced its business in cigarette packaging printing in Dongguan, the PRC in early 2008. Dongguan KWG focuses on producing high-end products to Guangdong Tobacco Group, which is a top-tier tobacco manufacturer in the PRC. The business license of Dongguan KWG has a long tenure with a expiration date in February 2032.

The following is a summary of the unaudited financial information of the FP Group prepared based on generally accepted accounting principles in Hong Kong, as extracted from the audited consolidated financial statements of the Company for the years ended 31 December 2007 and 2008 and the unaudited consolidated financial statements of the Company for the six months ended 30 June 2009 which are disclosed in the Company’s annual reports and interim report of the respective years or period: For the For the year six months ended 31 December ended 30 June 2007 2008 2009 HK$’ million HK$’ million HK$’ million (unaudited) (unaudited) (unaudited)

Turnover — 363.0 381.9

(Loss)/Profit before tax (6.4) 176.9 176.9

(Loss)/Profit after tax (6.4) 168.3 167.6

According to the unaudited management accounts of the FP Group as at 30 June 2009 as extracted from the unaudited consolidated financial statements of the Company for the six months ended 30 June 2009 as disclosed in the Company’s 2009 interim report, the unaudited consolidated net asset value of the FP Group attributable to its shareholders was approximately HK$201.2 million. – 9 – LETTER FROM THE BOARD

D. THE BC AGREEMENT

Date:

22 December 2009

Parties:

(1) Mr. Tsoi (as purchaser); and

(2) AMVIG Group (as vendor).

As at the Latest Practicable Date, Mr. Tsoi held 166,814,000 Shares, representing approximately 15.30% of the total issued share capital of the Company, and is therefore a substantial Shareholder. Mr. Tsoi is also a director of companies within the BC Group. To the best knowledge, information and belief of the Directors, Mr. Tsoi is an entrepreneur with investments in printing and properties related businesses and is the founder of the BC Group and the chairman of CT Holdings (International) Limited, a company whose issued shares are listed on the Main Board of the Stock Exchange under stock code: 1008.

Assets to be disposed of:

Pursuant to the BC Agreement, Mr. Tsoi has conditionally agreed to acquire and AMVIG Group has conditionally agreed to sell:

(1) the BC Share, representing the entire issued share capital of Brilliant Circle; and

(2) the BC Loan, being all debts owing or incurred by Brilliant Circle to AMVIG Group as at BC Completion.

As at the date of the BC Agreement, Brilliant Circle was indebted to AMVIG Group in the sum of approximately HK$215,000,000.

Consideration:

The aggregate consideration for the Disposal is HK$2,048,000,000, which shall be satisfied in the following manner:

(1) the sum of HK$155,500,000 shall be paid by Mr. Tsoi to AMVIG Group in cash upon signing of the BC Agreement by Mr. Tsoi paying to AMVIG Group’s nominee in the PRC in the sum of RMB138,000,000 as deposit, and Mr. Tsoi shall by 4:00 p.m. on 31 March 2010 pay the sum of HK$155,500,000 to AMVIG Group in HK$ in cash by a cashier order drawn by a licensed bank in Hong Kong in favour or to the order of AMVIG Group whereupon AMVIG Group will procure its nominee to immediately refund or otherwise pay to Mr. Tsoi or to his order the sum of RMB138,000,000 received by the nominee upon the signing of the BC Agreement without interest; and

– 10 – LETTER FROM THE BOARD

(2) the remaining sum of HK$1,892,500,000 shall be settled by Mr. Tsoi at BC Completion by (i) transferring to the Company the Repurchase Shares for repurchase and cancellation at the Repurchase Price to set off the sum of HK$1,167,698,000; and (ii) paying the remaining balance of HK$724,802,000 to AMVIG Group in cash by a cashier order drawn by a licensed bank in Hong Kong in favour or to the order of AMVIG Group.

Basis for the consideration:

The Group acquired the BC Group from Mr. Tsoi under the 2007 Acquisition at the consideration of HK$1,555,500,000 with HK$155,500,000 satisfied by the payment of cash and the balance of HK$1,400,000,000 satisfied by the issue of consideration Shares at an issue price of HK$7.00 each. Completion of the 2007 Acquisition took place on 31 October 2007. Details of the 2007 BC Agreement are set out in the announcement and circular of the Company dated 20 June 2007 and 7 September 2007 respectively.

The consideration for the Disposal has been agreed at HK$2,048,000,000 and it has been negotiated between the parties on an arm’s length basis and taking into account the consideration under the 2007 BC Agreement, the post acquisition profit generated by the BC Group, the future prospects and earnings capability of the BC Group, the face value of the BC Loan which is expected to remain at approximately HK$215,000,000 at BC Completion, and the fact that upon BC Completion, the 2007 BC Agreement shall be terminated and AMVIG Group and Mr. Tsoi shall cease to have any obligations and liabilities thereunder.

The Repurchase Price has been agreed at HK$7.00 per Repurchase Share which is the same as the issue price of the consideration Shares issued by the Company pursuant to the 2007 BC Agreement. The Repurchase Price has been determined in accordance with the basic principle agreed by the parties for the Disposal, which is to reinstate the position of the Company prior to the 2007 Acquisition with the post acquisition profits and investment cost recouped. Therefore, the Board considers that it is not relevant to compare the Repurchase Price with the net asset value per Share of approximately HK$5.0 as at 30 June 2009 or the recent Share price (which ranged from HK$3.04 to HK$6.5 in the last six months prior to the Latest Practicable Date). The consideration for the Disposal comprised cash portion of HK$880,302,000 and the repurchase of 166,814,000 Shares, while the Group had paid cash of HK$155,500,000 and had issued 200,000,000 new Shares under the 2007 Acquisition. The cash to be received by the Group under the Disposal is substantially greater than the cash paid by the Group when it acquired the BC Group in 2007. The number of Shares held by Mr. Tsoi available for repurchase by the Company (i.e. the 166,814,000 Repurchase Shares) falls short of the number of Shares issued by the Company (i.e. 200,000,000 Shares) as part of the consideration under the 2007 Acquisition by 33,186,000 Shares. Nevertheless, even if the Company were to apply part of the cash proceeds from the Disposal to acquire 33,186,000 Shares on the market at the prevailing market price of HK$3.59 per Share as at the Latest Practicable Date to fully reinstate the shareholding position, the Company still has net cash proceeds of HK$761,164,260, which is in excess of the cash outlay of HK$155,500,000 paid by the Company under the 2007 Acquisition by HK$605,664,260. Further, the Board also considers that the recent market price of the Shares is of less relevance in assessing the consideration for the Disposal or the Repurchase Price

– 11 – LETTER FROM THE BOARD because the Share Repurchase, as with the issue of new Shares as part of the consideration for the 2007 Acquisition, has no material effect on the Group’s financial position or cashflow, save that the Share Repurchase would increase the pro rata interest of the Shareholders in the Company and would bring up the earnings per Share and net asset value per Share of the Company in the long run. Taking into account (i) the investment cost of the BC Group of HK$1,555,500,000; and (ii) the profit before tax of the BC Group during the period subsequent to the completion of the 2007 Acquisition on 31 October 2007 and up to 30 June 2009 of approximately HK$484.7 million in total, the consideration for the Disposal of HK$2,048,000,000 would allow the Group to recoup the post-acquisition profit and investment cost in the BC Group and to recognise a gain on the Disposal. Based on the above, the Board considers that the consideration for the Disposal and the Repurchase Price to be fair and reasonable. Please also refer to the paragraph headed “Reasons for the Transactions” below for details of the rationale of the Transactions.

Conditions precedent:

The BC Agreement is conditional upon the satisfaction or waiver (as applicable) of each of the following conditions:

(1) the Executive having granted and not having withdrawn (a) his approval of the Share Repurchase under Rule 2 of the Repurchases Code; and (b) the Whitewash Waiver, and all the conditions (if any) of such approval and/or waiver having been satisfied;

(2) the approval of (a) the BC Agreement and the transactions contemplated thereunder (including but not limited to the Share Repurchase) by at least three-fourths of the Independent Shareholders present in person or by proxy at the EGM by poll; and (b) the Whitewash Waiver by a simple majority of the Independent Shareholders present in person or by proxy at the EGM by poll, in accordance with the applicable requirements of the Repurchases Code, Takeovers Code, Listing Rules, Companies Laws and other applicable laws and regulations;

(3) the Company having sufficient reserves to effect the Share Repurchase;

(4) the representations, undertakings and warranties provided by AMVIG Group under the BC Agreement remaining true and accurate in all material respects;

(5) all other necessary consents, authorisations, licenses and approvals for or in connection with the sale and purchase of the BC Share and the BC Loan and the Share Repurchase having been obtained; and

(6) completion of the FP Agreement in accordance with its terms and conditions having taken place contemporaneously with the BC Completion.

The conditions above are incapable of being waived by AMVIG Group or Mr. Tsoi (save and except for the condition under paragraph (4) of this sub-section which can be waived by Mr. Tsoi and the condition under paragraph (6) of this sub-section which can be waived by AMVIG Group at any time before BC Completion in writing). If the conditions set out above have not

– 12 – LETTER FROM THE BOARD been satisfied or waived (as applicable) at or before 12:00 noon on 31 March 2010, or such later date as AMVIG Group and Mr. Tsoi may agree in writing, the BC Agreement shall cease and determine (save and except for the provisions in relation to confidentiality and announcement shall continue to have full force and effect) in which event the deposit of RMB138,000,000 shall be refunded or otherwise paid to Mr. Tsoi, without interest, within 14 days from the date of said termination and neither party shall have any obligations and liabilities towards each other under the BC Agreement save for AMVIG Group’s obligations to refund or pay the deposit of RMB138,000,000 to Mr. Tsoi and any antecedent breaches of the terms thereof.

Dividend declared by the Company and profit and loss of the BC Group after 1 July 2009

Irrespective that BC Completion will (subject to all the conditions precedent to the BC Agreement having been fulfilled or waived as applicable) take place after 1 July 2009, Mr. Tsoi shall, subject to BC Completion, commence to bear all profits and losses, and be responsible for all assets and liabilities, of the BC Group, and be responsible for all transactions entered into by the BC Group, with effect from and including 1 July 2009. From the date of completion of the 2007 BC Agreement to the Latest Practicable Date, Brilliant Circle has not declared or paid any dividends. Mr. Tsoi shall not be entitled to any dividend on any Repurchase Shares declared by the Company after 1 July 2009, all of which shall (to the extent paid to Mr. Tsoi) be held, pending BC Completion, on trust by Mr. Tsoi to be paid in immediate available funds to AMVIG Group on BC Completion.

Bank confirmation

Mr. Tsoi has delivered to AMVIG Group a confirmation issued by a bank acceptable to AMVIG Group confirming that it has agreed to grant to a company owned by Mr. Tsoi a loan facility for the amount of RMB690,000,000 for the purpose of the acquisition of the BC Share.

Completion

BC Completion shall take place on the date falling on the seventh Business Day after all the conditions precedent to the BC Agreement have been fulfilled or waived (as applicable), or such other date as may be agreed by the parties in writing.

Upon BC Completion, Brilliant Circle will cease to be a subsidiary of the Company and the Company will cease to have any interest in the BC Group.

– 13 – LETTER FROM THE BOARD

E. INFORMATION ON THE BC GROUP

Brilliant Circle is an investment holding company incorporated on 29 January 1999. The BC Group is principally engaged in printing high quality cigarette packages in Hunan, Hubei, Anhui, Shenzhen and Guizhou, the PRC.

The existing group structure of the BC Group is as follows:

The following is a summary of the unaudited financial information of the BC Group prepared based on generally accepted accounting principles in Hong Kong, as extracted from the audited consolidated financial statements of the Company for the years ended 31 December 2007 and 2008 and the unaudited consolidated financial statements of the Company for the six months ended 30 June 2009 which are disclosed in the Company’s annual reports and interim report of the respective years or period:

For the For the year six months ended 31 December ended 30 June 2007 2008 2009 HK$’ million HK$’ million HK$’ million (unaudited) (unaudited) (unaudited)

Profit before tax 264.5 306.9 51.7

Profit after tax 241.2 256.8 32.9

– 14 – LETTER FROM THE BOARD

According to the unaudited management accounts of the BC Group as at 30 June 2009 as extracted from the unaudited consolidated financial statements of the Company for the six months ended 30 June 2009 as disclosed in the Company’s 2009 interim report, the unaudited consolidated net asset value of the BC Group was approximately HK$676,143,000, of which approximately HK$599,882,000 was attributable to the Company and approximately HK$76,261,000 was attributable to the minority interests. According to the unaudited consolidated accounts of the Group as at 30 June 2009, the carrying value of the assets of the Group attributable to the Shareholders which are subject to the Disposal (including, among other things, net assets of the BC Group and goodwill) amounted to approximately HK$2,037,727,000 as at 30 June 2009.

F. REASONS FOR THE TRANSACTIONS

The Group is principally engaged in the printing of high quality cigarette packaging and manufacturing of transfer paper and laser film in the PRC.

The principal asset of Famous Plus is its investment in Dongguan KWG, which commenced its operations in cigarette packaging printing in Dongguan, the PRC since early 2008. Since its commencement of operations, Dongguan KWG recorded remarkable results. As disclosed in the section headed “Information on the FP Group” above, the FP Group recorded unaudited net profit after tax of approximately HK$168.3 million for the year ended 31 December 2008. The business of the FP Group continued to grow, recording unaudited net profit after tax of approximately HK$167.6 million for the six months ended 30 June 2009. After nearly two successful years of operations and having considered Dongguan KWG’s focus on high-end packaging products and its long tenure of business license with expiration date in February 2032, the Board is confident that the prospects of the FP Group is promising and it would be in the interests of the Company and the Shareholders as a whole to increase the Group’s equity stake in Famous Plus with a view to enhancing the earnings of the Group and bringing value to the Shareholders.

As mentioned in the 2009 interim report of the Company, the profit margin of the BC Group has been deteriorating and in particular, contribution from the BC Group’s major profit contributor, the associated interest in Changde Goldroc, has dropped significantly mainly because it has experienced margin squeeze on its products, as tobacco groups actively reshuffled their product mix during the first half of 2009. In addition, the BC Group incurred more expenses to maintain its market share during the period. The Group considers that there is an increasing risk that earnings of the BC Group may continue to be depressed.

The State Tobacco Monopoly Administration of the PRC has in 2004 promulgated policies aiming at consolidating the tobacco production industry and promoting overall quality of tobacco products in the PRC. As a result, the number of tobacco brands and producers has been decreasing, with smaller players and less popular brands being squeezed out of the market. The Group has been informed by the management of Changde Goldroc that the Chinese partner may not renew the license when it is due to expire in April 2010 taking into account the relevant governmental policies. If the licence of Changde Goldroc cannot be renewed, Changde Goldroc may be forced to close down and a significant write-down in goodwill relating to the BC Group

– 15 – LETTER FROM THE BOARD may be required. As disclosed in the paragraph headed “Information on the BC Group” above, the unaudited net profit after tax of the BC Group for the six months ended 30 June 2009 was approximately HK$32.9 million, only about 12.8% of the profit for the preceding financial year ended 31 December 2008. In light of this, the Company proposed in September 2009 to dispose of the BC Group to Mr. Tsoi under the Previous Proposal on terms substantially identical to the terms of the BC Agreement. The Previous Proposal also involved repurchase of Shares from Mr. Tsoi and Amcor applying for a whitewash waiver. On 19 November 2009, the Company held an extraordinary general meeting to seek independent Shareholders’ approval of the Previous Proposal. The resolution relating to the whitewash waiver was duly approved by more than 50% of the votes casted, while the number of votes casted for the resolution regarding the repurchase of Shares from Mr. Tsoi was 71.35%, which is slightly below the requisite 75% under the Repurchases Code. Accordingly, the Previous Proposal was not able to proceed. Details of the Previous Proposal are set out in the announcements of the Company dated 17 September 2009 and 19 November 2009 and the circular of the Company dated 21 October 2009.

Considering on one hand the merits of the Acquisition as described above and the cash required to proceed with the Acquisition and, on the other, the deteriorating prospects of the BC Group, the Board considers it in the best interests of the Company and the Shareholders as a whole if it could realise its investment in the BC Group and redeploy the sales proceeds for the Acquisition. In view of the deteriorating profitability and prospects of the BC Group and the risk of non-renewal of the licence of Changde Goldroc as mentioned above, the Board maintains the view that the Disposal would be in the interests of the Company and the Shareholders as a whole, despite the Shareholders’ support for the Previous Proposal had fallen short of the requisite approval level by a small margin. Pursuant to the FP Agreement and the BC Agreement, the Acquisition and the Disposal are inter-conditional. Although the Group currently has a decent amount of cash reserve, the inter-conditionality of the Transactions would enable the Company to secure extra funding from the proceeds of the Disposal to finance the Acquisition, without undermining the existing internal resources of the Group or putting pressure on the liquidity or working capital sufficiency of the Group. Having the proceeds from the Disposal to finance the Acquisition, the Group will continue to maintain a strong balance sheet for growth and meeting operation needs and challenges. In the circumstances, the Board considers it appropriate to put forward the opportunity in the Acquisition in conjunction with the Disposal to the Independent Shareholders for approval.

The profit guarantee pursuant to the 2007 BC Agreement has been met by the BC Group for the first full year following the 2007 Acquisition. The Directors consider that based on the performance of the BC Group for the six months ended 30 June 2009, there is an increasing risk that the profit guarantee for the second full year following the 2007 Acquisition will not be met. Upon BC Completion, the 2007 BC Agreement shall be terminated, and AMVIG Group and Mr. Tsoi shall cease to have any obligations and liabilities thereunder. The Company acknowledges its right to claim for compensation under the 2007 BC Agreement if the profit guarantee given by Mr. Tsoi is not met. However, the Company expects that it would take time to determine and agree with Mr. Tsoi the amount of compensation, if any, under the profit guarantee and finally enforce the arrangement and receive the cash compensation. In addition,

– 16 – LETTER FROM THE BOARD

Mr. Tsoi, being the founder of the BC Group and a key person among the management of the BC Group, is instrumental to the success of the business of the BC Group. The Company maintains the view that pursuing a claim over Mr. Tsoi under the terms of the 2007 BC Agreement would jeopardise the mutual trust and partnership between the Company and Mr. Tsoi and is detrimental to the morale of the management team and future performance of the BC Group. On balance, the Directors consider the Disposal to be a prudent and strategically sound decision which enables the Company to achieve an exit at acceptable terms, recoup the entire investment costs in the BC Group, realise the post acquisition profit contributions from the BC Group and avoid the potential impairment of the goodwill of the BC Group. The Disposal would also provide additional funding for the Group to proceed with the Acquisition.

It is estimated that the proceeds from the Disposal (net of expenses directly attributable to the Disposal) would amount to approximately HK$860 million. It is intended that approximately HK$172.5 million would be reserved for the payment of the initial consideration for the Acquisition upon FP Completion. The balance of approximately HK$687.5 million would be, depending on the future cash flow of the Group in the coming years, used to finance the remaining balance of the consideration for the Acquisition (which amounts to approximately HK$598 million, payable in three installments in the coming three years). The remaining balance of the proceeds from the Disposal would be applied by the Group for the repayment of external debts of the Group and/or as general working capital of the Group.

Taking into account (i) the profitable track record of the FP Group; (ii) the growth prospects of the FP Group and the ability of the FP Group to bring immediate contribution to the results of the Group; (iii) that the Disposal would generate the fund required to finance the Acquisition; (iv) the consideration for the Disposal being in excess of the original purchase price of the BC Group pursuant to the 2007 Acquisition; (v) the cash proceeds from the Disposal of HK$880,302,000 being substantially in excess of the cash payment of HK$155,500,000 for the 2007 Acquisition; and (vi) the prospects of the BC Group being deteriorating as described above, the Directors consider that the Transactions are in the interests of the Company and the Shareholders as a whole and the terms of the Acquisition and the Disposal (including the consideration for the Acquisition and the Disposal and the terms of the Share Repurchase) are fair and reasonable.

G. FINANCIAL IMPACT OF THE TRANSACTIONS

The Acquisition and the Disposal

After FP Completion, Famous Plus will become an indirect wholly-owned subsidiary of the Company and the Group will be able to capture 100% of the equity interests in and results of Famous Plus without sharing any interests or profit with minority shareholder. After BC Completion, the Group will no longer have any equity interest in Brilliant Circle and Brilliant Circle will cease to be a subsidiary of the Company.

– 17 – LETTER FROM THE BOARD

As at 30 June 2009, the Group’s share of the BC Group’s net assets together with goodwill relating to the BC Group amounted to approximately HK$2,037,727,000 and the exchange reserve arisen from translation of the BC Group’s financial statements amounted to approximately HK$140,889,000. As the consideration for the Disposal comprises cash and the Repurchase Shares, the value of the consideration for the Disposal for the purpose of accounting, irrespective of the consideration for the Disposal as stated in the BC Agreement, is taken to approximate the carrying value of the net assets of the BC Group attributable to the Group subject to the Disposal. Upon BC Completion, the exchange reserve from translation of the BC Group’s financial statements (which amounted to approximately HK$140,889,000 as at 30 June 2009) will be recognised as a gain in the profit and loss account of the Group. After netting off expenses directly attributable to the Transactions which includes regulatory fees, advisory fees, legal fees, accounting fees, and other professional fees of approximately HK$20,000,000, the net gain on the Disposal is estimated to be approximately HK$120,889,000 (calculated as HK$140,889,000 minus HK$20,000,000). The Directors confirm that the basis of the computation of such gain arising from the Disposal is in accordance with the accounting policies of the Group. The auditor of the Company has checked the consistency of the basis of calculation of the gain on the Disposal with the accounting policies of the Group in accordance with Hong Kong Standard on Related Services 4400 “Engagements to Perform Agreed-upon Procedures Regarding Financial Information” issued by the Hong Kong Institute of Certified Public Accountants (the “HKICPA”). The work of the auditor did not involve independent examination of any of the underlying financial information in the calculation of the gain on the Disposal and did not constitute an assurance engagement performed in accordance with Hong Kong Standards on Auditing, Hong Kong Standards on Review Engagements or Hong Kong Standards on Assurance Engagements issued by the HKICPA. However, the actual amount of gain or loss eventually to be recognised in the consolidated accounts of the Company will depend on the exchange reserves in respect of the BC Group as at the date of the BC Completion. As shown in the unaudited pro forma financial information of the Resulting Group set out in Appendix II to this circular, the Group would recognise a gain on the Disposal of approximately HK$98,363,000, which is computed assuming the Transactions had been completed on 1 January 2009 and based on the net assets, goodwill, and exchange reserves in respect of the BC Group as at 1 January 2009.

Financial position and earnings per Share

Based on the unaudited pro forma financial information of the Resulting Group set out in Appendix II to this circular, the Group’s financial position would be affected as follows:

(1) Total assets and total liabilities

Both the total assets and total liabilities of the Group would decease as a result of the Transactions, mainly due to the exclusion of the total assets and total liabilities of the BC Group, netted off with the increase in cash reserves from the sales proceeds, the increase in goodwill arising from the Acquisition, the accounting for the outstanding consideration payable to Dragon Hill for the Acquisition and the direct expenses relating to the Transactions.

– 18 – LETTER FROM THE BOARD

(2) Net asset value per Share

The Group’s net asset value per Share would decrease as a result of the Transactions principally due to the reduction in the issued share capital and reserve of the Company resulting from the cancellation of the Repurchase Shares. Assuming the Transactions had taken place on 30 June 2009, the Group’s net asset value per Share as at 30 June 2009 would have decreased moderately by 12% from approximately HK$5.0 to HK$4.4.

(3) Net tangible asset value per Share

The net tangible asset value per Share would decrease moderately by approximately 23.1% from HK$1.3 to HK$1.0 as a result of the Transactions assuming the Transactions had taken place on 30 June 2009, mainly due to the exclusion of net tangible assets of the BC Group, netted off by the recognition of the goodwill arising from the Acquisition.

(4) Gearing

Because of the cash proceeds from the Disposal, netted off with the consideration for the Acquisition to be paid upon FP Completion and the exclusion of interest-bearing borrowings of the BC Group, cash balance will increase by HK$606,185,000 and total interest-bearing borrowings will be significantly reduced upon completion of the Transactions. Assuming the Transactions had taken place on 30 June 2009, the Group’s gearing (measured by total interest-bearing borrowings less cash and cash equivalent as a percentage of equity) would have decreased from 13% as at 30 June 2009 to a net cash position.

(5) Working capital

The Group’s working capital (current assets minus current liabilities) as at 30 June 2009 would have increased significantly by approximately HK$603,633,000, from approximately HK$160,017,000 to approximately HK$763,650,000.

(6) Earnings per Share

Assuming that the Transactions had taken place on 1 January 2009, the Group’s earnings per Share for the six months ended 30 June 2009 would have increased from approximately HK18.6 cents to approximately HK36.8 cents, mainly because of the increase in profit attributable to the owners of the Company as a result of the Acquisition and the decrease in the number of Shares as a result of the Share Repurchase.

– 19 – LETTER FROM THE BOARD

Share Repurchase

A redemption of shares by a Cayman Islands company is subject to compliance with the requirements of the Companies Law, which, among other things, provides that a redemption or purchase of shares may be made (to the extent of the par value of such shares) out of profit or the proceeds of a fresh issue of shares made for the purpose of the redemption or purchase or, out of capital, provided that the company is able to pay its debts as they fall due in the ordinary course of business and the redemption or purchase is authorised by its articles of association. Any premium payable on a redemption or purchase may be made out of profits, the company’s share premium account or out of capital, provided that the company is able to pay its debts as they fall due in the ordinary course of business and the redemption or purchase is authorised by its articles of association. Redeemed or purchased shares shall be treated as cancelled and the amount of such company’s issued share capital shall be diminished by the nominal value of those shares accordingly; but a redemption or purchase of shares of such company is not to be taken as reducing the amount of the company’s authorised share capital.

In accordance with the Companies Law, the Repurchase Shares will be repurchased by the Company out of the capital and share premium accounts of the Company. This means that the Company will need to have sufficient reserves in the form of capital and/or share premium in its accounts to effect the Share Repurchase. Upon BC Completion, Mr. Tsoi shall transfer to the Company the Repurchase Shares for cancellation without any cash outflow from the Company, whereupon the carrying value of the BC Group and the BC Loan in the Company’s account will be credited whilst the capital and share premium accounts of the Company will be debited. The Directors are satisfied that the Company has sufficient reserves to effect the Share Repurchase and the Company will be able to pay its debts as they fall due in the ordinary course of business. The Repurchase Shares will be cancelled after repurchase.

H. FINANCIAL AND TRADING PROSPECTS OF THE GROUP

Following completion of the Acquisition, the Group will have an entire shareholding in Famous Plus. Taking into consideration the strong profitability of Famous Plus, it is expected that the Group’s earnings will be enhanced. Besides, following completion of the Disposal, the Group will have a strengthened balance sheet due to the reduction in goodwill and borrowings. As set out in the section headed “Financial impact of the Transactions” above and based on the unaudited pro forma financial information of the Resulting Group as set out in Appendix II to this circular, although it is expected there would be a moderate decrease in net asset value per Share as a result of the Transactions, the gearing level of the Resulting Group would be improved and the working capital and earnings per Share of the Resulting Group would increase significantly.

– 20 – LETTER FROM THE BOARD

It is intended that the Group will continue to engage in the printing of high quality cigarette packages and manufacturing of transfer paper and laser film in the PRC. The Amcor Concert Group has no intention to make any material change to the business or continued employment of the employees of the Group or to redeploy the fixed assets of the Group. The Amcor Concert Group also intends that the Company will remain listed on the Stock Exchange after completion of the Transactions. The Company shall continue to meet the public float requirements under Rule 8.08 of the Listing Rules. The Company has no intention to rely upon section 168B of the Companies Ordinance (Cap. 32 of the Laws of Hong Kong) or comparable provision of any applicable law to buy out the minority Shareholders.

H. EFFECTS ON SHAREHOLDING STRUCTURE OF THE COMPANY

The following table sets out the shareholding structure of the Company as at the Latest Practicable Date and immediately upon completion of the Transactions:

Immediately upon As at the completion of Latest Practicable Date the Transactions Number of Number of Shares % Shares %

Amcor Concert Group (Note 1) 424,520,000 38.95 424,520,000 45.99 Tsoi Concert Group (Note 2) 166,814,000 15.30 — — Certain directors of the Company and its subsidiaries (Note 3) 85,592,000 7.86 85,592,000 9.27 Public Shareholders 413,035,000 37.89 413,035,000 44.74

Total 1,089,961,000 100.00 923,147,000 100.00

Notes:

1. The 424,520,000 Shares were held by Amcor Fibre Packaging-Asia Pte Limited, which is a subsidiary of Amcor Packaging (Asia) Pty Limited, which in turn is a subsidiary of Amcor.

2. The 166,814,000 Shares were held by Mr. Tsoi.

3. The 85,592,000 Shares were held as to 32,928,000 Shares (representing 3.02% of the issued share capital of the Company as at the Latest Practicable Date) by a company wholly owned by Mr. Chan Sai Wai; 24,696,000 Shares (representing 2.27% of the issued share capital of the Company as at the Latest Practicable Date) by a company wholly owned by Mr. Ng Sai Kit; 24,696,000 Shares (representing 2.27% of the issued share capital of the Company as at the Latest Practicable Date) by a company wholly owned by Mr. Hui Tin Kung who is a director of certain subsidiaries of the Company (including World Grand); and 3,272,000 Shares (representing 0.30% of the issued share capital of the Company as at the Latest Practicable Date) by Mr. Lee Cheuk Yin, Dannis.

– 21 – LETTER FROM THE BOARD

Following BC Completion, the Repurchase Shares will be cancelled and the number of Shares in issue following the Share Repurchase will be reduced from 1,089,961,000 (being the number of issued Shares as at the Latest Practicable Date) to 923,147,000. Mr. Tsoi will cease to hold any Shares. Not less than 25% of the issued Shares will remain in public hands.

The Group has no outstanding warrants, options, convertible securities or other derivatives convertible into Shares, and no share or loan capital of the Group has been put under option or agreed conditionally or unconditionally to be put under option and no other conversion right affecting the Shares or other derivatives in respect of securities which are being offered for or which carry voting rights have been issued or granted or agreed conditionally or unconditionally to be issued or granted.

J. REGULATORY REQUIREMENTS

Listing Rules

The Acquisition constitutes a discloseable and connected transaction of the Company under the Listing Rules by virtue of Dragon Hill being a substantial shareholder of Famous Plus and thus a connected person of the Company. The Acquisition is therefore subject to the approval by the Independent Shareholders at the EGM by way of poll.

The Disposal constitutes a major and connected transaction of the Company under the Listing Rules by virtue of Mr. Tsoi being a substantial Shareholder and a director of companies within the BC Group and thus a connected person of the Company. The Disposal is therefore subject to the approval by the Independent Shareholders at the EGM by way of poll.

Repurchases Code

The Share Repurchase constitutes an off-market share repurchase by the Company under the Repurchases Code. The Company has made an application to the Executive for approval of the Share Repurchase pursuant to Rule 2 of the Repurchases Code. The Executive’s approval, if granted, will normally be conditional upon, among other things, approval of the Share Repurchase by at least three-fourths of the votes cast on a poll by the Independent Shareholders present in person or by proxy at the EGM.

Takeovers Code

If a Shareholder’s proportionate interest in the voting rights of the Company increases as a result of the Share Repurchase, such increase will be treated as an acquisition of voting rights under Rule 32 of the Takeovers Code. As at the Latest Practicable Date, the Amcor Concert Group was interested in 424,520,000 Shares, representing approximately 38.95% of the issued share capital of the Company. Save for the aforesaid, the Amcor Concert Group was not interested in any other securities issued by the Company. Assuming there are no alterations to the existing shareholdings of the Amcor Concert Group in the Company and the issued share capital of the Company from the Latest Practicable Date to BC Completion other than the cancellation of the Repurchase Shares, immediately upon BC Completion, the aggregate shareholding of the Amcor Concert Group will be increased from approximately 38.95% to approximately 45.99% of the then reduced issued share capital of the Company as a result of the Share Repurchase. In the

– 22 – LETTER FROM THE BOARD circumstances, an obligation on the part of the Amcor Concert Group to make a mandatory general offer for all the Shares not already owned or agreed to be acquired by the Amcor Concert Group may arise as a result of the Share Repurchase. An application has been made by Amcor to the Executive for the Whitewash Waiver. The Executive has agreed to, subject to the approval by the Independent Shareholders at the EGM, to grant the Whitewash Waiver.

Paragraph 3 of Schedule VI of the Takeovers Code provides that the Executive will normally not grant a whitewash waiver if there occurs any disqualifying transaction for such waiver. Disqualifying transactions include, among others, a situation where the person seeking a whitewash waiver or any person acting in concert with him has acquired voting rights in a company in the 6 months immediately prior to the announcement of the proposal but subsequent to negotiations, discussions or the reaching of understandings or agreements with the directors of such company in relation to the proposal. The Company has received a confirmation from Amcor confirming that the Amcor Concert Group has not dealt in the Shares during the Relevant Period.

As at the Latest Practicable Date,

(1) there was no outstanding derivatives in respect of securities in the Company entered into by the Amcor Concert Group;

(2) there was no arrangement (whether by way of option, indemnity or otherwise) in relation to the shares of Amcor or the Company and which might be material to the Whitewash Waiver or the Share Repurchase;

(3) there were no agreements or arrangements to which Amcor is a party which relate to the circumstances in which it may or may not invoke or seek to invoke a pre-condition or a condition to the Whitewash Waiver or the Share Repurchase; and

(4) there were no relevant securities (as defined in Note 4 to Rule 22 of the Takeovers Code) in the Company which the Amcor Concert Group has borrowed or lent.

Voting

As at the Latest Practicable Date, the Amcor Concert Group held 424,520,000 Shares, representing approximately 38.95% of the issued share capital of the Company. As at the Latest Practicable Date, the Tsoi Concert Group held 166,814,000 Shares, representing approximately 15.30% of the issued share capital of the Company. Save for these holdings, none of the members of the Amcor Concert Group, the Tsoi Concert Group or the Dragon Hill Concert Group held any Shares as at the Latest Practicable Date. By reason of the requirements of the Repurchases Code, the Takeovers Code and the Listing Rules, the Amcor Concert Group, the Tsoi Concert Group and the Dragon Hill Concert Group will abstain from voting in the EGM.

As at the Latest Practicable Date:

(1) the Amcor Concert Group and the Tsoi Concert Group controlled or were entitled to exercise control over the voting rights in respect of their respective Shares;

– 23 – LETTER FROM THE BOARD

(2) (a) there were no voting trust or other agreement or arrangement or understanding (other than an outright sale) entered into by or binding upon the Amcor Concert Group or the Tsoi Concert Group; and (b) there were no obligation or entitlement of the Amcor Concert Group or the Tsoi Concert Group, whereby it has or may have temporarily or permanently passed control over the exercise of the voting right in respect of its Shares to a third party, either generally or on a case-by-case basis; and

(3) there were no discrepancy between the beneficial shareholding interest in the Company of the Amcor Concert Group and the Tsoi Concert Group and the number of Shares in respect of which it would control or would be entitled to exercise control over the voting right at the EGM.

The Company has adopted the Scheme to recognise the contributions by the employees selected by the Board (the “Selected Employees”) and to give incentives thereto in order to retain them for the continual operation and development of the Group and to attract suitable personnel for further development of the Group. The operation of the Scheme is to assist the Selected Employees to acquire a determined number of Shares through the financial assistance of the Company, subject to the conditions imposed by the Board at its discretion. Details of the Scheme are set out in the announcement of the Company dated 20 June 2007 and the interim report of the Company for the six months ended 30 June 2008. As at the Latest Practicable Date, 28,484,000 Shares (representing approximately 2.61% of the issued share capital of the Company) were managed by Ample Capital, which has been appointed by the Board as the administrator of the Scheme, for the benefit of the Selected Employees. Pursuant to the terms of the Scheme, neither the Company, Ample Capital nor the Selected Employees shall have any voting rights to these 28,484,000 Shares.

Save for the above mentioned parties, no other Shareholder is required to abstain from voting on the resolutions approving the Transactions. Voting on all the resolutions to be put forward at the EGM will be conducted by way of poll.

K. EGM

A notice convening the EGM of the Company to be held at Room 03-04, 18th Floor, Li Po Chun Chambers, No.189 Des Voeux Road Central, Hong Kong on Friday, 12 February 2010 at 10:00 a.m. is set out on pages 145 to 147 of this circular. The purpose of the EGM is to consider and, if thought fit, approve the resolutions approving the Transactions.

A form of proxy for use at the EGM is enclosed with this circular. Such form is also available at the website of the Stock Exchange at www.hkex.com.hk. Whether or not you are able to attend the EGM, you are requested to complete the accompanying form of proxy in accordance with the instructions printed thereon and return it to the Company’s branch share registrar and transfer office in Hong Kong, Tricor Investor Services Limited at 26/F., Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong, as soon as possible but in any event not less than 48 hours before the time appointed for the holding of the meeting or any adjourned meeting (as the case may be). Completion and return of the form of proxy shall not preclude you from attending and voting at the meeting or any adjourned meeting (as the case may be) should you so wish.

– 24 – LETTER FROM THE BOARD

L. INDEPENDENT BOARD COMMITTEE AND INDEPENDENT FINANCIAL ADVISER

The Independent Board Committee has been established to consider the Transactions and to give recommendation to the Independent Shareholders on the voting as regards the Transactions. The two non-executive Directors are currently holding offices with Amcor. Since Amcor is applying for the Whitewash Waiver, the Company considers it prudent not to include the two non-executive Directors in the Independent Board Committee to avoid any potential conflict of interests. Access Capital has been appointed as the independent financial adviser to advise the Independent Board Committee and the Independent Shareholders in this regard and such appointment has been approved by the Independent Board Committee.

M. RECOMMENDATION

The Directors, including the independent non-executive Directors whose advice is set out in the letter from the Independent Board Committee on page 26 of this circular, consider that the terms of the Transactions are fair and reasonable and in the interests of the Company and the Shareholders as a whole and therefore recommend the Independent Shareholders to vote in favour of all the relevant resolutions to be proposed at the EGM to approve the Transactions.

You are advised to read carefully the letter from the Independent Board Committee on page 26 of this circular. The Independent Board Committee, having taken into account the advice of Access Capital, the text of which is set out on pages 27 to 56 of this circular, considers that the terms of the Transactions are fair and reasonable so far as the Independent Shareholders are concerned, and the Transactions are in the interests of the Company and the Shareholders as a whole. Accordingly, the Independent Board Committee recommends the Independent Shareholders to vote in favour of all the resolutions to be proposed at the EGM to approve the Transactions. In considering the resolutions to be proposed at the EGM in relation to the Transactions, Independent Shareholders should bear in mind the requisite 75% approval threshold under the Repurchases Code and that the FP Agreement and the BC Agreement are inter-conditional, even though the resolutions at the EGM are being proposed as ordinary resolutions of the Company.

N. ADDITIONAL INFORMATION

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

Yours faithfully For and on behalf of the Board Chan Chew Keak, Billy Chairman

– 25 – LETTER FROM THE INDEPENDENT BOARD COMMITTEE

The following is the text of a letter from the Independent Board Committee setting out its recommendation to the Independent Shareholders in relation to the Transactions:

(incorporated in the Cayman Islands with limited liability) (stock code: 2300)

20 January 2010

To the Independent Shareholders

Dear Sir or Madam,

We refer to the circular of the Company dated 20 January 2010 (the “Circular”), of which this letter forms part. Unless specified otherwise, capitalised terms used herein shall have the same meanings as those defined in the Circular.

We have been appointed as the Independent Board Committee to consider the terms of the Transactions and to advise you as to whether, in our opinion, such terms are fair and reasonable so far as the Company and the Independent Shareholders are concerned and the Transactions are in the interests of the Company and the Shareholders as a whole.

Access Capital has been appointed as the independent financial adviser to advise us in this regard. Details of their independent advice, together with the principal factors and reasons they have taken into consideration, are set out on pages 27 to 56 of the Circular.

Having considered the terms of the Transactions (including the Acquisition, the Disposal, the Share Repurchase and the Whitewash Waiver) and the independent advice of Access Capital in relation thereto, we are of the opinion that the terms of the Transactions are fair and reasonable so far as the Independent Shareholders are concerned, and the Transactions are in the interests of the Company and the Shareholders as a whole. We therefore recommend that you vote in favour of the resolutions to be proposed at the EGM to approve the Transactions.

Yours faithfully, Independent Board Committee Mr. Tay Ah Kee, Keith Mr. Au Yeung Tin Wah, Ellis Mr. Oh Choon Gan, Eric Independent non-executive Directors

* For identification purpose only

– 26 – LETTER FROM ACCESS CAPITAL

Set out below is the text of the letter of advice from Access Capital Limited to the Independent Board Committee and the Independent Shareholders prepared for inclusion in this circular.

Suite 606, 6th Floor Bank of America Tower 12 Harcourt Road Central Hong Kong

20 January 2010

To the Independent Board Committee and the Independent Shareholders of AMVIG Holdings Limited

Dear Sirs,

I. INTRODUCTION

We refer to our appointment as the independent financial adviser to the Independent Board Committee and the Independent Shareholders in respect of the Transactions, including the Acquisition, the Disposal, the Share Repurchase and the Whitewash Waiver, details of which are set out in the circular to the Shareholders dated 20 January 2010 (the “Circular”), of which this letter forms part. This letter contains our advice to the Independent Board Committee and the Independent Shareholders in respect of the Transactions. Unless otherwise stated, terms defined in the Circular have the same meanings in this letter.

On 22 December 2009, World Grand, an indirect wholly-owned subsidiary of the Company, entered into the FP Agreement with Dragon Hill, pursuant to which Dragon Hill has conditionally agreed to sell and World Grand has conditionally agreed to purchase the FP Shares, representing 45% of the issued share capital of Famous Plus, for a cash consideration of RMB670 million (equivalent to approximately HK$770.5 million).

– 27 – LETTER FROM ACCESS CAPITAL

On 22 December 2009, AMVIG Group, being a direct wholly-owned subsidiary of the Company, and Mr. Tsoi entered into the BC Agreement pursuant to which Mr. Tsoi has conditionally agreed to purchase the BC Share and the BC Loan from AMVIG Group at a total consideration of HK$2,048,000,000. The consideration shall be satisfied by Mr. Tsoi both in cash and by transferring to the Company the Repurchase Shares for repurchase and cancellation subject to the terms and upon fulfillment of the conditions of the BC Agreement.

As at the Latest Practicable Date, the Amcor Concert Group was interested in a total of 424,520,000 Shares, representing approximately 38.95% of the issued share capital of the Company. Assuming there are no alterations to the existing shareholdings of the Amcor Concert Group in the Company and the issued share capital of the Company from the Latest Practicable Date to BC Completion other than the cancellation of the Repurchase Shares, immediately upon BC Completion, the aggregate shareholding of the Amcor Concert Group will be increased to approximately 45.99% of the then reduced issued share capital of the Company as a result of the Share Repurchase. In the circumstances, an obligation on the part of the Amcor Concert Group to make a mandatory general offer for all the Shares not already owned or agreed to be acquired by the Amcor Concert Group may arise as a result of the Share Repurchase. An application has been made by Amcor to the Executive for the Whitewash Waiver. Subject to the approval by the Independent Shareholders at the EGM by way of poll, the Executive has agreed to grant the Whitewash Waiver.

As at the Latest Practicable Date, the Tsoi Concert Group held 166,814,000 Shares, representing approximately 15.30% of the issued share capital of the Company. Save for these holdings, none of the members of the Amcor Concert Group, the Tsoi Concert Group or the Dragon Hill Concert Group held any Shares as at the Latest Practicable Date. By reason of the requirements of the Repurchases Code, the Takeovers Code and the Listing Rules, the Amcor Concert Group, the Tsoi Concert Group and the Dragon Hill Concert Group will abstain from voting in the EGM. Save for these parties, to the best of the knowledge, information and belief of the Directors after having made all reasonable enquiries, no other Shareholder is required to abstain from voting on the resolutions approving the Transactions.

– 28 – LETTER FROM ACCESS CAPITAL

II. THE INDEPENDENT BOARD COMMITTEE

The Board currently consists of ten Directors, namely Mr. Chan Chew Keak, Billy, Mr. Chan Sai Wai, Mr. Ng Sai Kit, Mr. Ge Su and Mr. Lee Cheuk Yin, Dannis as executive Directors, Mr. David John Cleveland Hodge and Mr. Jerzy Czubak as non-executive Directors, and Mr. Tay Ah Kee, Keith, Mr. Au Yeung Tin Wah, Ellis and Mr. Oh Choon Gan, Eric as independent non- executive Directors.

The Independent Board Committee, comprising all of the independent non-executive Directors, has been established for the purpose of advising the Independent Shareholders on the terms of the Transactions. The two non-executive Directors are currently holding offices with Amcor. Since Amcor is applying for the Whitewash Waiver, the Company considers it prudent not to include them in the Independent Board Committee to avoid any potential conflict of interests. Each of Mr. Tay Ah Kee, Keith, Mr. Au Yeung Tin Wah, Ellis and Mr. Oh Choon Gan, Eric has confirmed that he does not have any direct or indirect conflict of interest in the Transactions and the Whitewash Waiver. Based on such confirmation, we consider that all three independent non-executive Directors are eligible to be members of the Independent Board Committee to advise the Independent Shareholders in respect of the Transactions.

As the independent financial adviser to the Independent Board Committee and the Independent Shareholders, our role is to give an independent opinion to the Independent Board Committee and the Independent Shareholders as to whether or not the Transactions are fair and reasonable and in the interests of the Company and the Shareholders as a whole, and how the Independent Shareholders should vote in respect of the resolutions to approve the Transactions at the EGM.

III. BASIS OF OUR OPINION

In formulating our advice, we have relied solely on the statements, information, opinions and representations contained in the Circular and the information and representations provided to us by the Company and/or the Directors. We have assumed that all such statements, information, opinions and representations contained or referred to in the Circular or otherwise provided or made or given by the Company and/or its senior management staff and/or the Directors and for which it is/they are solely responsible were true and accurate and valid at the time they were made and given and continue to be true and valid as at the date of the Circular. We have assumed that all the opinions and representations made or provided by the Directors and/or the senior management staff of the Company contained in the Circular have been reasonably made after due and careful enquiry. We have also sought and obtained confirmation from the Company and/or its senior management staff and/or the Directors that no material facts have been omitted from the information provided and referred to in the Circular.

– 29 – LETTER FROM ACCESS CAPITAL

We consider that we have reviewed all information and documents which are made available to us to enable us to reach an informed view and to justify our reliance on the information provided so as to provide a reasonable basis for our advice. We have no reason to doubt the truth, accuracy and completeness of the statements, information, opinions and representations provided to us by the Company and/or its senior management staff and/or the Directors and their respective advisers or to believe that material information has been withheld or omitted from the information provided to us or referred to in the aforesaid documents. We have not, however, carried out any independent verification of the information provided, nor have we conducted any independent investigation into the business and affairs of the Group or the BC Group.

IV. PRINCIPAL FACTORS CONSIDERED

In formulating our opinion regarding the Transactions, we have taken into consideration the following principal factors:

1. Background and rationale of the Transactions

(a) The Previous Proposal

As mentioned in the Letter from the Board, the Company proposed in September 2009 to dispose of the BC Group to Mr. Tsoi under the Previous Proposal on terms substantially identical to the terms of the Disposal under the BC Agreement, which also involved repurchase of Shares from Mr. Tsoi and Amcor applying for a whitewash waiver. Details of the Previous Proposal were set out in the Company’s announcement dated 17 September 2009, and in the circular to Shareholders dated 21 October 2009, incorporating our opinion to the Independent Board Committee and the Independent Shareholders (the “October Circular”).

On 19 November 2009, the Company held an extraordinary general meeting to seek the independent Shareholders’ approval of the Previous Proposal. The ordinary resolution relating to the whitewash waiver was duly approved by more than 50% of the votes casted, while the number of votes casted for the ordinary resolution regarding the repurchase of Shares from Mr. Tsoi (the “Repurchase Resolution”) was 71.35%, which is slightly below the requisite 75% approval under the Repurchases Code. Accordingly, the Previous Proposal was not able to proceed.

Based on the Company’s announcement on the results of the Repurchase Resolution, the votes casted represented approximately 76% of the Shares eligible to vote. The Company is not in a position to comment if a higher turnout of the votes held by the Independent Shareholders would necessarily attain the above-mentioned 75% approval threshold under the Repurchase Code. In considering the resolutions to be proposed at the EGM in relation to the Transactions, Independent Shareholders should bear in mind the requisite 75% approval threshold under the Repurchase Code and that the FP Agreement and the BC Agreement are inter-conditional, even though the resolutions at the EGM are being proposed as ordinary resolutions of the Company.

– 30 – LETTER FROM ACCESS CAPITAL

With the background of the Previous Proposal and as set out in the Letter from the Board, the Board has considered the increasing risk that earnings of the BC Group may continue to be depressed and the risk of non-renewal of the license of Changde Goldroc when it expires in April 2010. A failure to renew the license could result in a significant provision for impairment in the carrying value of goodwill relating to the BC Group.

We understand from the Company that based on information presently available, the Board considers that the BC Agreement, which contains terms substantially identical to those under the Previous Proposal, represents a second chance for the Company to realize the benefits offered under the Previous Proposal. In addition, the cash receivable under the BC Agreement would well cover the aggregate cash outlay of the Acquisition. The Board therefore considers it appropriate to put forward the proposals in relation to the Disposal and the Acquisition for consideration by the Independent Shareholders.

In the following, we shall address the factors and considerations relevant to the Transactions, which include the re-examination, and where appropriate, updating of the issues and considerations relevant to the Previous Proposal as set out in the October Circular.

(b) Recent developments within the tobacco industry in China

As mentioned in the October Circular and the Letter from the Board under the section headed “Reasons for the Transactions”, in 2004 the State Tobacco Monopoly Administration of the PRC promulgated policies aimed at consolidating the tobacco production industry and promoting overall quality of tobacco products in the PRC. By improving tobacco quality, the policy seeks to (a) maximize tobacco taxes (which are mostly levied as a percentage of cigarette sales value); (b) address concerns in relation to health risks by controlling volume growth through elimination of low-priced cigarette brands of lower quality which pose greater health risks to smokers; and (c) nurture the strongest and the most efficient tobacco enterprises in order to compete with foreign tobacco enterprises in the future.

This industry rationalization policy has resulted in the consolidation of several tobacco enterprises, the elimination of many smaller and weaker tobacco companies, as well as the divestment by tobacco groups of non-cigarette manufacturing businesses. Tobacco-related operations, such as cigarette packaging printing which operate through business licenses from the tobacco groups, are exposed to the risks of the non-renewal of business licenses by the tobacco groups which may seek to assume the relevant business under its total ownership in efforts to comply with the consolidation process. This consolidation process is still ongoing.

– 31 – LETTER FROM ACCESS CAPITAL

The management of the Company considers that the Group is well placed to benefit from such rationalization and consolidation, whilst recognizing the challenges and risks under the transforming landscape of the industry. One of such risks includes the reduction of available business licenses which are subject to periodic applications for renewal. As noted in the October Circular, the Group incurred a loss in 2008 as a result of the deregistration of Changde Jinfurong following its failure to renew its license, despite the fact that its production plant was fully compliant with all regulatory requirements. As further stated in the October Circular and the Letter from the Board, the licence for Changde Goldroc, which is also located in the Hunan Province and a 49% owned associate of the BC Group, is due to expire in April 2010. The Group has been informed by the management of Changde Goldroc that the Chinese partner intends not to renew the licence in partnership with the Company in light of the consolidation policies. Substantial efforts have been made by the management of the Group to procure the renewal of the licence. However, up to the Latest Practicable Date, no positive feedback from the authorities has been received and the Company further confirmed that there has been no further progress on the Company’s effort in renewing the license. Accordingly, the management of the Company considers that there is an increasing risk that the licence of Changde Goldroc will not be renewed when it expires in April 2010 and that Changde Goldroc will be forced to close down as a result.

In parallel with the industry trend of consolidation and rationalization, the Group continues to actively seek acquisition opportunities in strengthening its business base. We understand from the management that the Group considers that the Acquisition, which involves the purchase of the 45% minority interest in the FP Group thus consolidating the Group’s majority ownership to total ownership of the FP Group, a cigarette packaging printing company exhibiting strong profit growth, to be consistent with the Group’s business development strategy.

The Group is principally engaged in the printing of high quality cigarette packaging and manufacturing of transfer paper and laser film in the PRC. As stated in the Company’s annual report for the year ended 31 December 2008 (the “2008 Annual Report”) and the Company’s interim report for the six months ended 30 June 2009 (the “2009 Interim Report”), for each of the years ended 31 December 2007 and 2008 and six months ended 30 June 2009 (the “2009 Interim”), approximately 85.8%, 89.6% and 96.0%, respectively, of the Group’s turnover was derived from the printing of cigarette packages, while other turnover was generated from the manufacturing of transfer/laminated paper and laser film.

– 32 – LETTER FROM ACCESS CAPITAL

Set out below is a summary of the Group’s operating results and financial position extracted from the Company’s published interim and annual reports:

For the year For the six months ended 31 December ended 30 June 2007 2008 2008 2009 HK’000 HK’000 HK’000 HK’000 (Audited) (Audited) (Unaudited) (Unaudited)

Turnover: Printing of cigarette packages 1,830,536 2,796,994 1,223,033 1,629,245 Manufacturing of transfer/laminated paper and laser film 301,785 325,890 252,225 67,916

2,132,321 3,122,884 1,475,258 1,697,161

Gross profit 689,484 1,031,491 477,081 581,265 Other income 53,331 85,816 29,832 11,654 Share of profit of associates 71,152 172,878 77,483 43,019 Profit before tax 467,947 770,230 350,925 387,048 Profit for the year/period 399,903 623,070 299,908 311,634 Attributable to: Owners of the Company 353,837 467,303 235,055 202,191 Minority interests 46,066 155,767 64,853 109,443

As at 31 December As at 30 June 2007 2008 2009 HK’000 HK’000 HK’000 (Audited) (Audited) (Unaudited)

Non-current assets 4,660,299 6,048,838 6,052,082

Current assets 2,123,536 2,308,902 2,368,270

Total assets 6,783,835 8,357,740 8,420,352

Non-current liabilities 1,340,532 911,068 408,676

Current liabilities 1,350,697 1,871,458 2,208,253

Total liabilities 2,691,229 2,782,526 2,616,929

Net current assets 772,839 437,444 160,017

Total equity 4,092,606 5,575,214 5,803,423

– 33 – LETTER FROM ACCESS CAPITAL

For the year ended 31 December 2008, the Group recorded a turnover of approximately HK$3,122,884,000, representing an increase of approximately 46.5% from the turnover in 2007 of approximately HK$2,132,321,000. The Group recorded a profit attributable to equity holders of approximately HK$467,303,000, representing an increase of approximately 32.1% from the profit attributable to owners of the Company of approximately HK$353,837,000 for the year ended 31 December 2007. As stated in the 2008 Annual Report, the increase was due to a combination of factors, including organic growth in business, the inclusion of full year’s results of the BC Group and the contribution of the post-acquisition results of Hangzhou Weicheng Printing Company Limited (“Hangzhou Weicheng”).

For the six months ended 30 June 2009, the turnover of the Group was approximately HK$1,697,161,000, an increase of approximately 15.0% over the turnover of approximately HK$1,475,258,000 for the six months ended 30 June 2008. As explained in the 2009 Interim Report, such increase was mainly due to the organic growth in sales and the inclusion of the operating results of Hangzhou Weicheng.

The Group recorded a profit attributable to owners of the Company of approximately HK$202,191,000 for the six months ended 30 June 2009, representing a decrease of approximately 14.0% from the profit attributable to owners of the Company of approximately HK$235,055,000 for the six months ended 30 June 2008. As further stated in the 2009 Interim Report, the decrease was mainly caused by the additional expenses incurred by the BC Group to maintain its market share and the disappointing results of Changde Goldroc.

As stated in the 2009 Interim Report, due to the deterioration of the BC Group’s profit margin and the substantially lower contribution from its major profit generator, the associated interest in Changde Goldroc, the management of the Group is examining alternatives to address these issues to ensure that the Group continues to maximize value for Shareholders. In this connection, the Group proposed to dispose of its interest in the BC Group in September 2009 under the Previous Proposal.

– 34 – LETTER FROM ACCESS CAPITAL

2. The Acquisition

(a) Information on the FP Group

Famous Plus is an investment holding company which in turn is 55% owned by World Grand, an indirect wholly-owned subsidiary of the Company. The FP Group, through its wholly-owned subsidiary, Dongguan KWG, is engaged in cigarette packaging printing in Dongguan. The following is a summary of the unaudited financial information of the FP Group prepared based on generally accepted accounting principles in Hong Kong.

For the For the year six months ended 31 December ended 30 June 2007 2008 2009 HK$’ million HK$’ million HK$’ million (Unaudited) (Unaudited) (Unaudited)

Turnover — 363.0 381.9 (Loss)/Profit before tax (6.4) 176.9 176.9 (Loss)/Profit after tax (6.4) 168.3 167.6

According to the unaudited management accounts of the FP Group as at 30 June 2009 as extracted from the unaudited consolidated financial statements of the Company for the six months ended 30 June 2009 as disclosed in the 2009 Interim Report, the unaudited consolidated net asset value of the FP Group attributable to its shareholders was approximately HK$201.2 million.

As advised by the management of the Group, the FP Group focuses on producing high-end products to Guangdong Tobacco Group, which is a top-tier tobacco manufacturer in the PRC, and attains profit margin higher than the other operations of the Group. The business license of Dongguan KWG has a long tenure with a expiration date in February 2032. As Dongguan KWG is now currently one of the major suppliers of key brands in Guangdong Tobacco Group, the management of the Group is confident that the business with Guangdong Tobacco Group will be sustainable upon the Acquisition.

– 35 – LETTER FROM ACCESS CAPITAL

(b) Principal terms of the FP Agreement

Consideration

Pursuant to the terms of the FP Agreement, the Company has conditionally agreed to acquire and Dragon Hill has conditionally agreed to dispose of the FP Shares, representing 45% of the issued share capital of Famous Plus at a cash consideration of RMB670 million (equivalent to approximately HK$770.5 million). The consideration will be settled as follows:

(i) RMB150 million (equivalent to approximately HK$172.5 million) shall be paid by the Group to Dragon Hill upon FP Completion;

(ii) subject to FP Completion, RMB106.66 million (equivalent to HK$122.66 million) shall be paid by the Group to Dragon Hill on or before 31 December 2010;

(iii) subject to FP Completion, RMB206.67 million (equivalent to HK$237.67 million) shall be paid by the Group to Dragon Hill on or before 31 December 2011; and

(iv) subject to FP Completion, RMB206.67 million (equivalent to HK$237.67 million) shall be paid by the Group to Dragon Hill on or before 31 December 2012.

Conditions precedent

Completion of the Acquisition is conditional upon the fulfillment of the following conditions:

(i) the Independent Shareholders passing at the EGM the resolutions approving the FP Agreement and the transactions contemplated thereunder;

(ii) the representations, undertakings and warranties provided by Dragon Hill under the FP Agreement remaining true and accurate in all material respects;

(iii) the Disposal becoming unconditional in all respects; and

(iv) all other necessary consents, authorisations, licences and approvals for or in connection with the sale and purchase of the FP Shares having been obtained.

World Grand may at any time waive in writing the conditions set out in (ii) and/or (iii) above. If any of the conditions set out above has not been satisfied or waived (as the case may be) at or before 12:00 noon on 31 March 2010 or such later date as World Grand may agree, the FP Agreement shall cease and determine and neither party shall have any obligations or liabilities under the FP Agreement save for any antecedent breaches of the terms thereof.

– 36 – LETTER FROM ACCESS CAPITAL

It is the Group’s commitment to maintain its growth momentum by both organic growth and inorganic growth. By implementing a dual growth strategy of integration and targeted acquisition, the Group has successfully grown into a market leader. By applying the sale proceeds from the Disposal to finance the Acquisition, the Group will continue to have a strong balance sheet and thus the flexibility for growth in these two avenues. Given that part of the net proceeds of the Disposal will be utilised for the Acquisition, we consider that the Acquisition and the Disposal are inter-conditional and in turn, are fair and reasonable and in the interests of the Company and Shareholders as a whole.

As mentioned in the Letter from the Board, the Acquisition was determined by arm’s length negotiations between the parties having regard to a number of factors including the historical results, the business growth and prospects of the FP Group. The consideration of HK$770.5 million to acquire 45% of the FP Group (hence representing an attributable valuation of the FP Group of approximately HK$1,712.2 million). Based on this ascribed valuation, the following sets out the effective price-earning ratio (“PER”) applicable to the Acquisition:

Year ended Six months 31 December 2008 ended 30 June 2009

Profit after taxation HK$168.3 million HK$167.6 million Effective PER 10.2 times 10.2 times

For the purpose of assessing the consideration, we have sought to review and compare the PER of Hong Kong listed companies which are principally engaged in the operation of cigarette packaging printing. Apart from the Company itself, only one suitable comparable exists, being Kith Holdings Limited (“Kith”), which derived the majority of its profit from the printing of tobacco packaging products in the PRC.

PER Market (based on capitalisation the unaudited as at results for the Latest the six months Practicable ended 30 June Comparable company Stock code Date 2009) (million)

Kith Holdings Limited 1201 HK$732.1 24.4 times The Company 2300 HK$3,913.0 19.4 times

Source: Website of the Stock Exchange of Hong Kong Limited and Company’s interim report

– 37 – LETTER FROM ACCESS CAPITAL

As at the Latest Practicable Date, the PER of Kith was approximately 24.4 times (based on the unaudited profit attributable to the owners of Kith) of HK$30,048,000 for the six months ended 30 June 2009 and the market capitalisation of its shares was approximately HK$732.1 million as the Latest Practicable Date. Correspondingly, the PER of the Company was approximately 19.4 times (based on the unaudited interim profit of the Group attributable to Shareholders of HK$202,191,000 and the Company’s market capitalisation of approximately HK$3,913.0 million as at the Latest Practicable Date.

The effective PER of approximately 10.2 times the unaudited profit after tax of the FP Group for the six months ended 30 June 2009 is therefore substantially lower than the above-mentioned PER applicable to Kith (24.4 times) and that of the Company (19.4 times) respectively based on their unaudited results for the six months ended 30 June 2009.

The implementation of the Acquisition would give rise to an amount of goodwill of approximately HK$671.2 million, and would have a corresponding dilution effect on the net tangible asset backing of the Group. However, having considered the FP Group’s satisfactory profit track record, the management’s confidence in the sustainability of the business relationship with Guangdong Tobacco Group and the long tenure of the business license of Dongguan KWG, the Directors are of the view that the above-mentioned acquisition goodwill is well supported by the underlying earning capacity of the FP Group. We were advised by the Company that Dongguan KWG focuses on high-end cigarette packaging printing products which has, to date, delivered consistently profitable performances. Accordingly, the Directors are of the view that the consideration for the Acquisition is fair and reasonable and the Acquisition is in the long term interests of the Company.

3. The Disposal

(a) Information on the BC Group

Pursuant to the 2007 BC Agreement, the Company acquired from Mr. Tsoi the BC Group at a total consideration of HK$1,555,500,000 with HK$155,500,000 satisfied by the payment of cash and the balance by the issue of 200,000,000 Shares to Mr. Tsoi at the subscription price of HK$7.00 per Share. Mr. Tsoi has been a substantial Shareholder since the completion of the 2007 BC Agreement and he is also a director of Brilliant Circle, its subsidiaries and associated company.

– 38 – LETTER FROM ACCESS CAPITAL

Mr. Tsoi is an entrepreneur with investments in printing and properties related businesses and is the founder of the BC Group and the chairman of a Main Board listed company, CT Holdings (International) Limited (Stock Code: 1008). Since the Company and Brilliant Circle are in the same business, the management of the Company became acquainted with Mr. Tsoi since late 2004.

The existing group structure of the BC Group is as follows:

The following is a summary of the unaudited financial information of the BC Group prepared based on generally accepted accounting principles in Hong Kong:

For the year For the year For the ended ended six months 31 December 31 December ended 2007 2008 30 June 2009 HK$’ million HK$’ million HK$’ million (Unaudited) (Unaudited) (Unaudited)

Profit before tax 264.5 306.9 51.7 Profit after tax 241.2 256.8 32.9

– 39 – LETTER FROM ACCESS CAPITAL

According to the unaudited management accounts of the BC Group as at 30 June 2009, the unaudited consolidated net asset value of the BC Group was approximately HK$676,143,000, of which approximately HK$599,882,000 was attributable to the Company and approximately HK$76,261,000 was attributable to minority interests. According to the unaudited consolidated accounts of the Group as at 30 June 2009, the carrying value of the assets of the Group (including goodwill) attributable to the Shareholders which are subject to the Disposal amounted to approximately HK$2,037,727,000.

(b) Principal terms of the BC Agreement

Pursuant to the BC Agreement, Mr. Tsoi has conditionally agreed to acquire and AMVIG Group has conditionally agreed to sell (1) the BC Share, representing the entire issued share capital of Brilliant Circle; and (2) the BC Loan, being all debts owing or incurred by Brilliant Circle to AMVIG Group as at BC Completion for an aggregate consideration for the Disposal of HK$2,048,000,000.

The aggregate consideration for the Disposal is HK$2,048,000,000, which shall be satisfied in the following manner:

– 40 – LETTER FROM ACCESS CAPITAL

The profit after tax and before minority interests of the BC Group has decreased significantly in the six months ended 30 June 2009 to approximately HK$32,911,000 as compared with the 2008 full year figure of approximately HK$256,797,000, which included a contribution from Changde Goldroc of approximately HK$105,128,000.

As mentioned in the October Circular, the contribution from the BC Group’s major contributor, the associated interest in Changde Goldroc, has dropped significantly from approximately HK$52,364,000 in the first half of 2008 to approximately HK$15,377,000 in the first half of 2009. This decrease was due to margin squeeze on its products in the period. We also understood from the management of the Company that the performance of the rest of the BC Group also experienced significant deterioration as the business, which mainly focus on mid to low end products, is generally susceptible to the effect of price pressure resulted from increased competition and product mix reshuffled by tobacco groups. In addition, more expenses were incurred during the first half of 2009 to maintain market share.

Set out in the following is a summary of the relative contribution of the BC Group to the overall profitability of the Group for the year ended 31 December 2008 and the six months ended 30 June 2008 and 30 June 2009 respectively:

Table A

For the For the For the year six months six months ended ended ended 31 December 2008 % 30 June 2008 % 30 June 2009 % (HK$’ million) (HK$’ million) (HK$’ million)

BC Group 256.8 41.2 121.9 40.6 32.9 10.6 Rest of the Group 366.3 58.8 178.0 59.4 278.7 89.4 Consolidated profit after tax and before minority interest 623.1 100.0 299.9 100.0 311.6 100.0

As shown in the above table, the share of net profit contribution of the BC Group to the Group has shrunk considerably from approximately 41.2% in the year ended 31 December 2008 to approximately 10.6% in the six months ended 30 June 2009.

– 41 – LETTER FROM ACCESS CAPITAL

Of the HK$32.9 million 2009 half-year profit generated by the BC Group, Changde Goldroc (an associate of the BC Group) contributed approximately 46.8% or HK$15.4 million. Compounding the Group’s concern over the significant reduction of the profitability of the BC Group lies the additional uncertainty over the prospective renewal of the license of Changde Goldroc which is due to expire in April 2010. As pointed out in the Letter from the Board, despite substantial efforts made by the Group to procure the renewal of the license, no positive feedback from the relevant authorities has yet been received. The Group has also been informed by the management of Changde Goldroc that the Chinese partner intends not to renew the business license of Changde Goldroc in partnership with the Company in light of the consolidation policy. The Company also confirms that there has been no further progress on its efforts to seek renewal of the license since the publication of the October Circular.

In the event that the license of Changde Goldroc cannot be renewed and is forced to deregister, the Company considers that the profitability and the long-term viability of the BC Group would be materially hampered and the Group’s goodwill on the investment in the BC Group would have to be impaired.

(d) Marketability of the BC Group

As mentioned in the October Circular, Mr. Tsoi, being the management of the BC Group, is a willing buyer with detailed knowledge of the business and operations of the BC Group. As with any typical management buy-out situation, the willingness of the target’s existing management to compete for ownership of the business could inhibit the interest from potential external buyers. The Company considered that a sale to Mr. Tsoi could be negotiated more effectively and more expeditiously than with any other third parties, who would likely require a wider scope of vendor’s warranties or protective covenants and undertakings, and to conduct intensive due diligence work with the active co-operation of the management of the BC Group. That said, the Company has advised that discussions with Mr. Tsoi in relation to the Disposal commenced in April 2009 and were concluded only after a series of difficult and drawn out negotiations. As part of these negotiations, the Company, sought to leverage off the terms of the 2007 BC Agreement in particular, Mr. Tsoi’s profit guarantee obligations, as detailed below, without which, the Company may not be able to achieve the terms agreed under the Disposal.

In spite of the inability to reach the requisite approval for the Repurchase Resolution under the Previous Proposal at the extraordinary general meeting on 19 November 2009, Mr. Tsoi remains a committed purchaser and offered to complete the Disposal without any significant variation to the original terms of the disposal agreement as set out in the October Circular. Without Mr. Tsoi’s continued interest, the Company may need to embark upon a fresh search for a prospective third party buyer which, if any, given the weakening performance of the BC Group, may subsequently lead to difficult and protracted negotiations without any guarantee of outcome. The Disposal to Mr. Tsoi therefore offers the Company and Shareholders a second opportunity to lock-in value from the divestment of the Group’s interest in the BC Group.

– 42 – LETTER FROM ACCESS CAPITAL

Against this background of significant decrease in profitability of the BC Group in the 2009 Interim, the uncertainty as to whether the BC Group can return to its past level of profitability before the 2009 Interim, the inherent uncertainties with regard to the renewal of the license of Changde Goldroc and the potential and real risk of impairment of goodwill, the Company considers that it would be prudent and a strategically sound decision to dispose of the BC Group to Mr. Tsoi on commercial terms that are acceptable to the Company and enable the Group to focus further on its high-end products business.

4. Strategic perspectives behind the terms of the Disposal

We have discussed with the Company the strategic factors considered in arriving at the terms of the Disposal, which are summarized below.

(a) A unique window of opportunity to divest its investment in the BC Group

With the background of the significant decrease in profitability of the BC Group for the six months ended 30 June 2009 and the risk of non-renewal of the business license of Changde Goldroc which could potentially cause fundamental uncertainties in the long-term viability of the BC Group, the Company considers that the Disposal represents a unique window of opportunity for the Group to divest its interest in the BC Group. The Disposal would also allow the Company to re-position itself free of any legacy and possible future business risks associated with the BC Group. It would also free up management resources and strengthen the Company’s financial and liquidity positions as well as placed it in a position to pursue other investment opportunities.

Taking into account the limited marketability of the BC Group, the disappointing financial results of the BC Group for the six months ended 30 June 2009 and the view of the Group that there is an increasing risk that earnings of the BC Group may continue to be depressed, we agree with the Company that the Disposal provides an opportunity to achieve its divestment of the BC Group.

(b) Position with the profit guarantee

As set out in the section headed “Recent profitability of and uncertainties in the prospects of the BC Group” above, the Company considers that the goodwill on the investment in the BC Group will have to be impaired if the license of Changde Goldroc cannot be renewed and is forced to deregister, which will have a significant adverse impact on the profitability and the long-term viability of the BC Group. As stated in the Letter from the Board, under the terms of the 2007 BC Agreement, the Company has the right to claim for compensation if the profit guarantee is not met. However, the Company expects that, in order to complete the audit of the BC Group and agree with Mr. Tsoi the amount of compensation, if any, under the profit guarantee and to enforce the claim and to recover the due amounts, would involve a considerable amount of resources and time, beside creating conflicts between the Company’s management and the management of the BC Group which would sour the relationship in the future.

– 43 – LETTER FROM ACCESS CAPITAL

Under such circumstances, the eventual compensation that the Company may be entitled to claim under the profit guarantee, if crystallized, and which could be successfully enforced and collected, may be partly or wholly negated by the future impairment of the goodwill value of the Company’s investment in the BC Group, which stood at approximately HK$1,553,985,000 as at 30 June 2009. By which time, the Company would have missed the opportunity to implement the Disposal. The Company also believes that any profit guarantee claim against Mr. Tsoi would jeopardize the mutual trust and partnership between the Company and Mr. Tsoi, and would serve to undermine the morale of the BC Group’s management team and the future performance of the BC Group.

Instead of implementing the Disposal, the Company acknowledges that it could continue with its ownership of the BC Group. In the event that the profitability of the BC Group is not recovered and consequently crystallizing a legal claim by the Group under the profit guarantee, the Group would stand to receive the relevant compensation under the profit guarantee, provided that such compensation can be honoured and settled. However, as the Company relies on the management of the BC Group (being Mr. Tsoi) to actively manage the business of the BC Group, there is no assurance whether the longer term performance of the BC Group would be satisfactory after the expiry of the profit guarantee period in September 2010, irrespective of whether the Company may or may not be able to invoke any claim under the profit guarantee.

As pointed out in the October Circular, the Company is not in a position to speculate on the amount of the possible compensation, and how the possible compensation, after netting off with the impairment loss of goodwill, would compare with the consideration for the Disposal, nor can it predict with certainty that any such compensation, if crystallized and determined, will be received, and if so, whether in part or in full. However and given the deteriorating performance of the BC Group, the Company has been able to rely on the terms of the 2007 BC Agreement, in particular the profit guarantee obligations, in order to successfully negotiate the terms of the Disposal with Mr. Tsoi.

We understand that these factors reinforced the Company’s view that the disposal of the BC Group at commercially acceptable terms is a strategically sound and prudent decision, and has allowed the Board to discharge its duties in safeguarding the interests of the Company and the Shareholders. Having considered the above- mentioned factors, we concur with the view of the Company.

– 44 – LETTER FROM ACCESS CAPITAL

5. Assessment of the terms of the Disposal

(a) The overall principle behind the determination of the terms of the Disposal

As stated in the Letter from the Board, the terms of the Disposal were designed with the objective of reinstating the Group to its position prior to the 2007 Acquisition. The terms therefore seek to recoup the original investment costs in the BC Group as well as its post acquisition profits including and up to 30 June 2009.

Based on the principle set out in the above paragraph, the following sets out the respective considerations of the BC Group under the 2007 BC Agreement and the BC Agreement.

Table B

2007 BC Agreement The BC Agreement

Number of Shares involved 200,000,000 166,814,000 Issue price/Cancellation Price HK$7 HK$7

Total value of Shares involved HK$1,400,000,000 HK$1,167,698,000 Cash Consideration HK$155,500,000 HK$880,302,000 Total consideration value HK$1,555,500,000 HK$2,048,000,000

Compare with:—

Cost of investment HK$1,555,500,000 Carrying value of BC Group HK$2,037,727,000

– 45 – LETTER FROM ACCESS CAPITAL

(b) Analysis of the terms of the Share Repurchase

The Repurchase Price

As stated in the Letter from the Board, the Repurchase Price is set at HK$7.00 per Repurchase Share under the BC Agreement. The Repurchase Price has been agreed between the parties with reference to the following factors:

(i) the subscription price of the consideration shares issued by the Company pursuant to the 2007 BC Agreement;

(ii) the carrying value of the BC Group in the accounts of the Company as at 30 June 2009; and

(iii) the future prospects of the Group.

As noted in the Letter from the Board, the Company’s overall principle behind the determination of the terms of the Disposal is to seek to reinstate the Company to its position prior to the 2007 Acquisition. In this regard, the structure of the Disposal sought to achieve this objective. Under the Disposal, the consideration receivable comprises of Shares and cash as set out in Table B. The cash element under the Disposal is significantly more than the cash paid under the 2007 Acquisition while the number of Shares to be transferred to the Company for cancellation is less than the number of Shares issued under the 2007 Acquisition. Conceptually, and assuming that the Company was and able to acquire sufficient Shares in the market at the prevailing share price (for example at HK$3.59 as at the Latest Practicable Date), the requisite amount of cash outlay would be HK$119,137,740. Under this scenario, the Company would have reinstated its position in Shares issued and cash paid under the 2007 Acquisition, and would have retained a theoretical incremental amount of net cash of HK$605,664,260.

– 46 – LETTER FROM ACCESS CAPITAL

The following sets out the calculation in relation to the preceding paragraph:

SHARES (Units)

Shares issued under the 2007 Acquisition 200,000,000

Less: Shares to be settled under the Share Repurchase (166,814,000)

Shares that the Company may purchase in order to equal the number of Shares issued under the 2007 Acquisition (the “Shortfall Shares”) 33,186,000

CASH (HK$)

Share price as at the Latest Practicable Date 3.59

Ascribed value of the Shortfall Shares based on the Share price as at the Latest Practicable Date* 119,137,740

Amount of cash receivable under the Disposal 880,302,000

Less: (1) Amount of cash paid under the 2007 Acquisition (155,500,000)

(2) Ascribed value of the Shortfall Shares as above* (119,137,740)

Theoretical net incremental cash 605,664,260

As illustrated in Table B, the Company has adopted the same price of HK$7 per Share for the purpose of the issue price of the consideration shares under the 2007 BC Agreement and the Repurchase Shares under the BC Agreement. The Company considers it appropriate to adopt the same price for both transactions as they are both related to the same subject matter, with fundamental implications to the Group’s prospect underscored by both transactions. In addition, under the 2007 BC Agreement, the goodwill on the BC Group was largely financed by the share premium attributable to the consideration shares issued under the 2007 BC Agreement. As such, the Company considers it appropriate to deploy the share premium reserve created under the 2007 BC Agreement for the elimination of the goodwill under the BC Agreement.

– 47 – LETTER FROM ACCESS CAPITAL

Shareholders should note that the Repurchase Price of HK$7.0 corresponds closely to the average closing price of HK$6.9 per Share for the two years up to and including the last trading date preceding the announcement of the Previous Proposal in September 2009 being the first time that the proposed sale of the Group’s interest in the BC Group was first announced, which is in all material aspects identical to the current proposal, (a period commenced shortly before the completion of the 2007 BC Agreement on 31 October 2007 — “Post BC Acquisition Average Price”) although it represents a premium to the various referenced yardsticks in the Letter from the Board, details of which are set out in page 11 of this Circular.

Having considered the rationale of the Disposal, which is to reinstate the Company to its position prior to the 2007 Acquisition, the Board is of the view that it would not be appropriate to determine the Repurchase Price solely on the closing Share price on the last trading date before the announcement of the Previous Proposal or the Disposal, and it is fair and reasonable to fix the Repurchase Price with reference to a longer horizon share price such as the Post BC Acquisition Average Price as mentioned above. In this regard, we are of the view that such Repurchase Price is, nevertheless, only one of the terms of the Transactions and that completion of each of the Disposal, the Share Repurchase and the Whitewash Waiver is inter- conditional upon one another. It is not appropriate or practicable to evaluate the Repurchase Price of HK$7.0 on a stand alone basis without taking into account factors such as the rationale for the Disposal and the magnitude of the consideration. In assessing the merits of the Disposal, it is necessary to contemplate all the components of the Disposal as a whole. Having considered the above, including the terms of the Disposal and the financial effects as a result of the completion of the Disposal, the Share Repurchase and the Whitewash Waiver (details of which are set out in the section headed “Expected financial and other effects of the Transactions” below), we are of the view that the terms of the Disposal as a whole are fair and reasonable as far as the Independent Shareholders are concerned.

– 48 – LETTER FROM ACCESS CAPITAL

The following sets out our assessment of the possible effects of the Disposal. It should be noted that irrespective of the timing of the BC Completion, Mr Tsoi shall, subject to the BC Completion, commence to bear all profits and losses, and be responsible for all assets and liabilities of the BC Group, and be responsible for all transactions entered into by the BC Group, with effect from and including 1 July 2009.

Asset backing per Share

As derived from the “Unaudited pro forma financial information of the Resulting Group” as set out in section B(i) and B(ii) of the Appendix II of the Circular, the Disposal would result in the following changes in the unaudited net asset value (“NAV”) and unaudited net tangible asset value (“NTAV”) of the Group, assuming completion of the Transactions had taken place on 30 June 2009, taking into account of the reduced number of the Shares in issue after the Share Repurchase:

Table C

Immediately following the completion of the Disposal and the Share As at 30 June 2009 Repurchase % change

NAV attributable to equity holders HK$5,450,622,000 HK$4,058,197,000 Unaudited NAV attributable to equity holders per Share HK$5.0 HK$4.4 -12.0% NTAV attributable to equity holders HK$1,457,852,000 HK$1,619,412,000 Unaudited NTAV attributable to equity holders per Share HK$1.3 HK$1.8 +38.5%

Earnings per Share

As derived from the “Unaudited pro forma financial information of the Resulting Group” as set out in section C of Appendix II of the Circular, the Disposal and the Share Repurchase would result in the following changes in the earnings per Share positions of the Group, as if the Transactions had taken place on 1 January 2009.

– 49 – LETTER FROM ACCESS CAPITAL

Table D

The Group Repurchase The Group Shares (excluding eliminated the BC Group) under after the Disposal eliminating the Repurchase Shares under the Disposal % change

Number of issued Shares 1,089,961,000 166,814,000 923,147,000 -15.3% (note) Unaudited consolidated profit after taxation and minority interests for the six months ended 30 June 2009 HK$202,191,000 HK$20,294,000 HK$181,897,000 Earnings per Share HK$0.186 HK$0.197 +6.2% Add: Gain on the Disposal HK$98,363,000 Less: direct expenses related to the Transactions HK$(20,000,000) HK$260,260,000 Pro forma earnings per Share HK$0.186 HK$0.282 +51.6%

Note: Being the total number of issued shares as at 31 December 2008 and 30 June 2009.

Implied return on net assets employed/carrying value of investment

In addition, the following table sets out the relative return on assets employed by each group, based on the unaudited profit after taxation and minority interests of the Group (excluding the BC Group) and the BC Group for the six months ended 30 June 2009, the corresponding NAV of the Group (excluding the BC Group) and the carrying value of the Group’s investment in the BC Group.

– 50 – LETTER FROM ACCESS CAPITAL

Table E

The Group BC Group (excluding BC Group) (approximately)

Unaudited consolidated profit after taxation and minority interests for the six months ended 30 June 2009 HK$181,897,000 HK$20,294,000 Unaudited NAV/carry value of investment HK$4,058,197,000 HK$2,038,000,000 Rate of return 4.48% 1.00%

Based on the analysis set out in Table C, the Disposal would result in an enhancement in NTAV per Share of approximately 38.5% and a corresponding dilution in NAV per Share of approximately 12.0% which is largely attributable to the elimination of the goodwill of the BC Group. However and as mentioned above, Shareholders should also note that in the event that the license of Changde Goldroc cannot be renewed and is forced to deregister, the Company considers that the profitability and the long-term viability of the BC Group would be materially hampered and, under the circumstances, the carrying value of the goodwill on the investment in the BC Group may, in any event, need to be written down. The Company therefore considers that the effect would streamline the balance sheet of the Group into one that is supported by the remaining business of the Group and their earnings potential.

With regard to the earning capacity of the Group, Table D illustrates that the Disposal would result in a moderate enhancement in earnings per Share of approximately 6.2%. The effect on enhancement of earnings per Share would increase to approximately 51.6% after incorporating the accounting gain on the Disposal and the direct expenses relating to the Transactions as explained under section C of Appendix II of the Circular.

Table E further compares the rate of return on the net asset base of the BC Group and the Group (excluding the BC Group), which indicated that the return on the BC Group is considerably lower than the rest of the Group.

– 51 – LETTER FROM ACCESS CAPITAL

In summary, the above analysis indicated that the implementation of the Share Repurchase and the Disposal as a whole would result in, on a pro forma basis, enhancements in the NTAV per Share and the earning per Share position of the Group. As stated in the Letter from the Board under the heading of “Financial and trading prospect of the Group”, the Board expects that after completion of the Transactions, the Group will continue to be the market leader in the PRC tobacco packaging industry and allow it to focus on the high-end and more profitable segment of the industry. The Board also expects that with a strengthened balance sheet, the Group will be in a strong position to continue to grow. Having considered the possible financial effects, we concur with the view of the Directors that the Disposal (including the Share Repurchase) is in the long-term interests of the Company and the Shareholders as a whole and that the terms of the Disposal are fair and reasonable.

As a means of cross checking and notwithstanding the narrow marketability in the disposal of the Company’s interest of the BC Group and the background of Mr. Tsoi, we have conducted a comparison exercise using (a) the market value attributable to the underlying Repurchase Shares and cash consideration under the Disposal; and (b) the unaudited consolidated results of the BC Group attributable to the Company for the six months ended 30 June 2009.

Table F

Share price as at 18 January 2010, being the Latest Practicable Date HK$3.59 Number of Shares under the Share Repurchase 166,814,000 Valuation of Shares HK$598,862,260 Cash Consideration under the Disposal HK$880,302,000 Total consideration HK$1,479,164,260

Unaudited consolidated results of the BC Group attributable to the Company for the six months ended 30 June 2009 HK$20,294,000 Price-to-six months earnings multiple (“PE Multiple”) 72.9 times

For illustration purposes only, using this hypothetical comparison, the attributable PE Multiple under the Disposal is approximately 72.9 times.

– 52 – LETTER FROM ACCESS CAPITAL

This multiple is considerably higher than the current PE Multiple of the Group of:

(a) 19.4 times (based on the unaudited consolidated profit of the Group attributable to the owners of the Company for the six months ended 30 June 2009 of approximately HK$202,191,000 and the market capitalisation of the Company as at the Latest Practicable Date of approximately HK$3,913.0 million); and

(b) 24.4 times times (based on the unaudited profit attributable to the owners of Kith) of HK$30,048,000 for the six months ended 30 June 2009 and the market capitalisation of its shares of approximately HK$732.1 million as at the Latest Practicable Date.

The Directors are of the view that it would not be practicable to conceive that the Group would be able to attract any serious third party buyer who could be prepared to pay a price based on the PER of the BC Group as ascribed. In negotiating the terms of the Disposal, the Company was able to leverage on the terms of the 2007 Acquisition including the underlying obligations of the profit guarantee, which despite its contingency, has allowed the Group to successfully negotiate the terms of the Disposal.

We therefore concur with the view of the Board that the terms of the Disposal were negotiated on a commercial basis and are fair and reasonable and in the long term interests of the Group and the Shareholders as a whole.

6. Expected financial and other effects of the Transactions

Financial position

(a) Net tangible asset value and net asset positions

Based on the unaudited pro forma financial information of the Resulting Group set out in Appendix II of this circular, as if the Transactions had taken place and had been paid in full on 30 June 2009, the effect on the Group’s net asset positions as follows:

The Group’s NAV per Share would decrease principally due to the reduction in the issued share capital and reserve of the Company resulted from the cancellation of the Repurchase Shares. The Group’s NAV per Share as at 30 June 2009 would have decreased from approximately HK$5.0 to HK$4.4.

– 53 – LETTER FROM ACCESS CAPITAL

As mentioned earlier in this letter, the implementation of the Acquisition would give rise to an amount of goodwill of approximately HK$671.2 million, and would have a corresponding dilution effect on the net tangible asset backing of the Group. Having considered the satisfactory profit track record and the management’s perception on the sustainability of the business relationship with Guangdong Tobacco Group and the long tenure of the business license of Dongguan KWG, the Directors are of the view that the above-mentioned acquisition goodwill is well supported by the underlying earning capacity of the FP Group. Assuming the implementation of the Disposal and the Acquisition, the goodwill of the Group will decrease from approximately HK$3,992.8 million to HK$3,110.0 million after taking into account the net effect from (i) the increase of approximately HK$671.2 million as a result of the Acquisition; and (ii) the decrease of approximately HK$1,554.0 million as a result of the Disposal (representing the amount of goodwill arising from the 2007 Acquisition as recorded on the consolidated balance sheet of the Group as at 30 June 2009), the Company’s NTAV per Share will reduce from HK$1.3 to HK$1.0.

(b) Gearing and working capital

Proceeds from the Disposal, net of expenses directly attributable to the Disposal, are estimated to amount to approximately HK$860 million. It is intended that approximately HK$172.5 million would be reserved for the first installment payment of the consideration payable for the Acquisition upon the FP Completion. The balance of approximately HK$687.5 million would be, depending upon the future cash flow of the Group in the coming years, used to finance the remaining balance of the consideration for the Acquisition, or be applied by the Group for the repayment of external debts of the Group and/or as general working capital of the Group as appropriate. Furthermore, with the cash proceeds from the Disposal and part of the proceeds reserved for the first installment payment under the Acquisition, and the exclusion of interest-bearing borrowings included in the BC Group, the Group’s cash balance will increase by HK$606,185,000 and total interest-bearing borrowings will be significantly reduced. The Group’s gearing (measured by total interest-bearing bank borrowings less cash and cash equivalent as a percentage of equity) as at 30 June 2009 would have decreased from 13% to a net cash position. Correspondingly, the Group’s working capital (current assets minus current liabilities) as at 30 June 2009 would have increased by approximately HK$603,633,000, from HK$160,017,000 to HK$763,650,000.

Following completion of the Acquisition, the Company’s equity interests in Famous Plus will increase to 100%, and its financial results will continue to be consolidated into the group accounts of the Company.

As shown in the section headed “Financial impact of the Transactions” in the Letter from the Board, upon the BC Completion, the exchange reserve from translation

– 54 – LETTER FROM ACCESS CAPITAL

of the BC Group’s financial statements of approximately HK$140,889,000 will be recognised as a gain in the profit and loss account of the Group. After netting off expenses directly attributable to the Transactions which includes regulatory fees, advisory fees, legal fees, accounting fees, and other professional fees of approximately HK$20,000,000, the net gain to be realised on the Transactions is estimated to be approximately HK$120,889,000.

(d) Earnings per Share

As shown on the unaudited pro forma financial information of the Resulting Group set out in Appendix II to this circular, assuming that the Transactions had taken place on 1 January 2009, the Group’s earnings per Share for the six months ended 30 June 2009 would have increased from approximately HK18.6 cents to approximately HK36.8 cents.

Effect on shareholdings

As a result of the cancellation of the Repurchase Shares under the Share Repurchase, Mr. Tsoi will cease to hold any Shares and the number of Shares in issue will be reduced from 1,089,961,000 (being the number of issued Shares as at the Latest Practicable Date) to 923,147,000. Accordingly, the shareholding percentage of all remaining Shareholders in the Company would be enhanced by approximately 18.1%.

V. THE WHITEWASH WAIVER

As a result of the Disposal and the Share Repurchase and assuming there are no changes in the shareholdings of the Amcor Concert Group and the issued share capital of the Company from the Latest Practicable Date to BC Completion other than the cancellation of the Repurchase Shares, immediately upon BC Completion, the percentage shareholding of the Amcor Concert Group will be increased from approximately 38.95% of the issued share capital as at the Latest Practicable Date to approximately 45.99% of the reduced issued share capital of the Company upon BC Completion as a result of the Share Repurchase. In the circumstances, an obligation on the part of the Amcor Concert Group to make a general offer for all the Shares not already owned or agreed to be acquired by the Amcor Concert Group may arise as a result of the Share Repurchase. An application has been made by Amcor to the Executive for the Whitewash Waiver pursuant to Note 1 on Dispensations from Rule 26 of the Takeovers Code to exempt it from the above-mentioned obligation to make the general offer. The Executive has agreed to, subject to the approval of the Independent Shareholders at the EGM by way of poll, grant the Whitewash Waiver. It is one of the conditions of the BC Agreement that the Whitewash Waiver is granted by the Executive and approved by the Independent Shareholders at the EGM. If the Whitewash Waiver is not granted by the Executive or not approved by the Independent Shareholders, the BC Agreement will not become unconditional and cannot proceed.

Based on our analysis of the terms of the Transactions, the background of the Company and the 2007 Acquisition, the business and financial performance and future prospects of the BC Group, the terms of the Disposal and the expected financial effects of the Transactions as set out

– 55 – LETTER FROM ACCESS CAPITAL

above, we consider that the Transactions are in the long-term interests of the Company and the Shareholders as a whole and is fair and reasonable as far as the Independent Shareholders are concerned. If the Whitewash Waiver is not granted by the Executive or if the Whitewash Waiver is not approved by the Independent Shareholders, the BC Agreement will be terminated in accordance with its terms and the Company will lose all the benefits that are expected to be brought by the successful completion of the Transactions.

VI. RECOMMENDATION

In formulating our recommendation to the Independent Board Committee and the Independent Shareholders, we have considered the above principal factors and reasons, in particular, the following:—

— the satisfactory profit track record and the prospects of the FP Group;

— the substantial deterioration in the financial performance of the BC Group and the inherent uncertainties with regard to the future prospects of the BC Group;

— the Disposal represents a unique window of opportunity and is a prudent and strategically sound decision to protect the interest of the Group;

— our assessment on the terms of the Acquisition, the Disposal and the Share Repurchase; and

— the expected financial effects of the Transactions on the Group and the resultant improvement to the Group’s liquidity position;

Based on the above, we are of the opinion that the Transactions (including the Acquisition, the Disposal, the Share Repurchase and the Whitewash Waiver) are on normal commercial terms, in the ordinary and usual course of business fair and reasonable and in the interests of the Company and the Shareholders as a whole. Accordingly, we would advise the Independent Board Committee and the Independent Shareholders that the Independent Shareholders should vote in favour of the relevant resolution(s) to approve the Transactions at the EGM.

Yours faithfully, For and on behalf of ACCESS CAPITAL LIMITED

Ambrose Lam Jimmy Chung Principal Director Principal Director

– 56 – APPENDIX I FINANCIAL INFORMATION OF THE GROUP

1. FINANCIAL SUMMARY

The following is a summary of the audited consolidated results and assets and liabilities of the Group for the three years ended 31 December 2006, 2007 and 2008 respectively and the unaudited consolidated results and assets and liabilities of the Company for the six months ended 30 June 2008 and 2009, as extracted from each of the relevant annual reports and interim reports of the Company.

For the six months ended 30 June For the year ended 31 December 2009 2008 2008 2007 2006 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 (unaudited) (unaudited) (audited) (audited) (audited and restated) Turnover 1,697,161 1,475,258 3,122,884 2,132,321 1,122,574 Cost of goods sold (1,115,896) (998,177) (2,091,393) (1,442,837) (758,408)

Gross profit 581,265 477,081 1,031,491 689,484 364,166 Other income 11,654 29,832 85,816 53,331 29,540 Selling and distribution costs (79,381) (82,017) (206,940) (157,013) (44,744) Administrative expenses (126,715) (101,118) (198,165) (156,316) (93,215) Other operating expenses (7,476) (3,357) (22,248) (8,372) (12,751) Non-operating expenses — (16,531) (29,747) — — Finance costs (35,318) (30,448) (62,855) (24,319) (14,842) Share of profit of associates 43,019 77,483 172,878 71,152 69,608

Profit before tax 387,048 350,925 770,230 467,947 297,762 Income tax expenses (75,414) (51,017) (147,160) (68,044) (30,423)

Profit for the period/year 311,634 299,908 623,070 399,903 267,339

Attributable to: — Owners of the Company 202,191 235,055 467,303 353,837 250,347 — Minority interests 109,443 64,853 155,767 46,066 16,992

311,634 299,908 623,070 399,903 267,339

Earning per share — Basic (HK cents) (Note 1) 18.6 24.0 46.0 43.4 34.8

Dividend — 93,964 140,832 141,680 100,310

Dividend per share (HK cents) — 8.9 13.2 15.9 12.8

As at 30 June As at 31 December 2009 2008 2007 2006 HK$’000 HK$’000 HK$’000 HK$’000 (unaudited) (audited) (audited) (audited and restated) ASSETS AND LIABILITIES Total assets 8,420,352 8,357,740 6,783,835 2,823,837 Total liabilities (2,616,929) (2,782,526) (2,691,229) (526,590)

5,803,423 5,575,214 4,092,606 2,297,247

Equity attributable to owners of the Company 5,450,622 5,275,412 3,835,416 2,174,756 Minority interests 352,801 299,802 257,190 122,491

5,803,423 5,575,214 4,092,606 2,297,247

– 57 – APPENDIX I FINANCIAL INFORMATION OF THE GROUP

Notes:

(1) The calculation of basic earnings per Share is based on the profit for the year ended and the weighted average number of Shares in issue during the year.

(2) The auditors of the Company, RSM Nelson Wheeler, had issued unqualified opinion on the consolidated financial statements of the Group for each of the three years ended 31 December 2006, 2007 and 2008.

(3) There were no extraordinary or exceptional items during each of the three years ended 31 December 2006, 2007 and 2008 and each of the six months ended 30 June 2008 and 2009.

– 58 – APPENDIX I FINANCIAL INFORMATION OF THE GROUP

2. AUDITED FINANCIAL STATEMENTS

Set out below is the audited consolidated income statement, consolidated balance sheet, consolidated statement of changes in equity, consolidated cash flow statement and notes to the financial statements of the Company as extracted from pages 86 to 184 of the annual report of the Company for the year ended 31 December 2008. References to page number in this appendix are to the page numbers of such annual report of the Company.

CONSOLIDATED INCOME STATEMENT For the year ended 31 December 2008

2008 2007 Note HK$’000 HK$’000

Turnover 6 3,122,884 2,132,321 Cost of goods sold (2,091,393) (1,442,837)

Gross profit 1,031,491 689,484 Other income 6 85,816 53,331 Selling and distribution costs (206,940) (157,013) Administrative expenses (198,165) (156,316) Other operating expenses (22,248) (8,372) Non-operating expenses 7 (29,747) — Finance costs 8 (62,855) (24,319) Share of profit of associates 172,878 71,152

Profit before tax 9 770,230 467,947 Income tax expenses 12 (147,160) (68,044)

Profit for the year 623,070 399,903

Attributable to: Equity holders of the Company 467,303 353,837 Minority interests 155,767 46,066

Earnings per share — basic (HK cents) 13(a) 46.0 43.4 — diluted (HK cents) 13(b) N/A N/A

Dividends 14 140,832 141,680

– 59 – APPENDIX I FINANCIAL INFORMATION OF THE GROUP

CONSOLIDATED BALANCE SHEET At 31 December 2008

2008 2007 Note HK$’000 HK$’000

ASSETS Non-current assets Property, plant and equipment 15 1,306,618 1,153,872 Prepaid land lease payments 16 51,685 41,357 Goodwill 17 3,955,617 2,751,773 Interests in associates 18 373,350 321,209 Financial assets at fair value through profit or loss 19 5,658 320,050 Loan receivables 20 305,211 — Available-for-sale financial asset 21 1,557 1,481 Other financial assets 28 655 19,734 Other assets 48,487 50,823

6,048,838 4,660,299

Current assets Inventories 22 378,693 316,182 Trade and other receivables 23 873,050 834,224 Prepaid land lease payments 16 1,345 1,045 Prepayments and deposits 54,357 64,078 Other financial assets 28 4,511 23,056 Pledged bank deposits 24 98,047 73,913 Bank and cash balances 24 898,899 811,038

2,308,902 2,123,536

Total assets 8,357,740 6,783,835

EQUITY Capital and reserves Share capital 30 10,900 9,775 Reserves 31 5,264,512 3,825,641

Equity attributable to equity holders of the Company 5,275,412 3,835,416 Minority interests 299,802 257,190

Total equity 5,575,214 4,092,606

– 60 – APPENDIX I FINANCIAL INFORMATION OF THE GROUP

CONSOLIDATED BALANCE SHEET (continued) At 31 December 2008

2008 2007 Note HK$’000 HK$’000

LIABILITIES Non-current liabilities Bank borrowings 26 796,883 1,083,049 Obligations under finance leases 27 18,633 34,834 Other financial liabilities 28 27,290 190,812 Deferred tax liabilities 29 68,262 31,837

911,068 1,340,532

Current liabilities Trade and other payables 25 923,479 947,857 Current tax liabilities 35,989 28,417 Current portion of bank borrowings 26 842,491 355,962 Current portion of obligations under finance leases 27 16,103 18,461 Other financial liabilities 28 53,396 —

1,871,458 1,350,697

Total liabilities 2,782,526 2,691,229

Total equity and liabilities 8,357,740 6,783,835

Net current assets 437,444 772,839

Total assets less current liabilities 6,486,282 5,433,138

– 61 – APPENDIX I FINANCIAL INFORMATION OF THE GROUP

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY For the year ended 31 December 2008

Attributable to equity holders of the Company Share Share Exchange Revaluation Hedging Retained Statutory Minority Total capital premium reserve reserve reserve profits reserves 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 2007 7,837 1,661,610 33,027 8,010 — 429,178 35,094 2,174,756 122,491 2,297,247

Translation differences — — 283,333 — — — — 283,333 12,940 296,273 Loss on cash flow hedges ————(138,906 ) — — (138,906 ) — (138,906 )

Net income recognised directly in equity — — 283,333 — (138,906 ) — — 144,427 12,940 157,367 Profit for the year —————353,837 — 353,837 46,066 399,903 Transfer to profit or loss on cash flow hedge (Note 28) ————(13,429 ) — — (13,429 ) — (13,429 )

Total recognised income and expense for the year ——283,333 — (152,335 ) 353,837 — 484,835 59,006 543,841

Transfer from retained profits — Group —————(58,600 ) 58,600 — — — — Associates —————(7,002 ) 7,002 — — — Repurchases of shares (Note 30(c)) (62 ) (69,118 ) — — — — — (69,180 ) — (69,180 ) Dividend paid for 2006 (Note 14) —————(100,310 ) — (100,310 ) — (100,310 ) Dividend paid for 2007 (Note 14) —————(54,685 ) — (54,685 ) — (54,685 ) Dividend paid to minority interests ————————(18,665 ) (18,665 ) Acquisition of subsidiaries ————————94,358 94,358 Issue of new shares (Note 30(b)) 2,000 1,398,000 — — — — — 1,400,000 — 1,400,000

1,938 1,328,882 — — — (220,597 ) 65,602 1,175,825 75,693 1,251,518

At 31 December 2007 9,775 2,990,492 316,360 8,010 (152,335 ) 562,418 100,696 3,835,416 257,190 4,092,606

Translation differences — — 166,138 — — — — 166,138 13,372 179,510 Gain on cash flow hedges ————72,502 — — 72,502 — 72,502

Net income recognised directly in equity — — 166,138 — 72,502 — — 238,640 13,372 252,012 Profit for the year —————467,303 — 467,303 155,767 623,070 Share issue expenses (Note 30(d)) — (1,438 ) — — — — — (1,438 ) — (1,438 ) Transfer to profit or loss on cash flow hedge (Note 28) ————17,773 — — 17,773 — 17,773

Total recognised income and expense for the year — (1,438 ) 166,138 — 90,275 467,303 — 722,278 169,139 891,417

Transfer from retained profits — Group —————(38,398 ) 38,398 — — — — Associates —————(13,793 ) 13,793 — — — Dividend paid for 2007 (Note 14) —————(86,995 ) — (86,995 ) — (86,995 ) Dividend paid for 2008 (Note 14) —————(93,964 ) — (93,964 ) — (93,964 ) Dividend paid to minority interests ————————(116,311 ) (116,311 ) De-registration of a subsidiary — — (1,331 ) — — — — (1,331 ) (10,216 ) (11,547 ) Issue of new shares (Note 30(d)&(e)) 1,125 898,883 — — — — — 900,008 — 900,008

1,125 898,883 (1,331 ) — — (233,150 ) 52,191 717,718 (126,527 ) 591,191

At 31 December 2008 10,900 3,887,937 481,167 8,010 (62,060 ) 796,571 152,887 5,275,412 299,802 5,575,214

– 62 – APPENDIX I FINANCIAL INFORMATION OF THE GROUP

CONSOLIDATED CASH FLOW STATEMENT For the year ended 31 December 2008 2008 2007 HK$’000 HK$’000 CASH FLOWS FROM OPERATING ACTIVITIES Profit before tax 770,230 467,947 Adjustments for: Share of profit of associates (172,878) (71,152) Finance costs 62,855 24,319 Impairment losses on receivables 14,686 7,718 Write down of inventories 14,633 2,827 Depreciation 135,437 70,259 Loss on disposals of property, plant and equipment 5,528 2,210 Interest income (20,623) (13,850) Amortisation of prepaid land lease payments 1,185 545 Fair value loss/(gains) on financial assets at fair value through profit or loss 1,067 (14,164) Loss on de-recognition of financial assets at fair value through profit or loss 16,531 — Loss on de-registration of a subsidiary 13,216 — Unrealised profit on closing inventories sold to associates, net (1,203) (1,850) Operating profit before working capital changes 840,664 474,809 (Increase)/decrease in inventories (53,857) 46,478 Decrease/(increase) in trade and other receivables 51,786 (158,672) (Increase)/decrease in prepayments and deposits (25,846) 25,707 (Decrease)/increase in trade and other payables (265,331) 71,636 Cash generated from operations 547,416 459,958 Income taxes paid (112,580) (55,255) Net cash generated from operating activities 434,836 404,703 CASH FLOWS FROM INVESTING ACTIVITIES Increase in pledged bank deposits (24,134) (2,814) Purchases of property, plant and equipment and prepaid land lease payments (125,367) (213,038) Payments of deposits for other assets (12,473) (42,405) Dividend received from associates 131,440 45,258 Proceeds from disposals of property, plant and equipment and prepaid land lease payments 8,391 7,124 Payment to minority interests on de-registration of a subsidiary (10,216) — Interest received 20,623 13,850 Acquisition of subsidiaries (Note 17) (698,007) (121,412) Acquisition of subsidiaries in prior year (149,061) (51,940) Purchase of available-for-sale financial asset — (1,481) Purchases of financial asset at fair value through profit or loss — (305,886) Net cash used in investing activities (858,804) (672,744)

– 63 – APPENDIX I FINANCIAL INFORMATION OF THE GROUP

CONSOLIDATED CASH FLOW STATEMENT (continued) For the year ended 31 December 2008

2008 2007 HK$’000 HK$’000

CASH FLOWS FROM FINANCING ACTIVITIES

Payment for repurchases of shares — (69,180) Proceeds from issue of shares 700,002 — Share issue expenses paid (1,438) — Bank borrowings repaid (427,191) (119,261) Bank borrowings raised 618,643 1,116,890 Payment of obligations under finance leases (18,559) (33,320) Interest paid (66,328) (23,150) Finance leases charges paid (1,921) (1,169) Dividend paid to equity holders of the Company (180,959) (154,995) Dividend paid to minority shareholders (116,311) (18,665)

Net cash generated from financing activities 505,938 697,150

NET INCREASE IN CASH AND CASH EQUIVALENTS 81,970 429,109

Effect of foreign exchange rate changes 5,891 44,966

CASH AND CASH EQUIVALENTS AT 1 JANUARY 811,038 336,963

CASH AND CASH EQUIVALENTS AT 31 DECEMBER 898,899 811,038

ANALYSIS OF CASH AND CASH EQUIVALENTS

Bank and cash balances 898,899 811,038

– 64 – APPENDIX I FINANCIAL INFORMATION OF THE GROUP

NOTES TO THE FINANCIAL STATEMENTS

1. GENERAL INFORMATION

The Company was incorporated as an exempted company with limited liability in the Cayman Islands on 27 November 2003 under the Companies Law of Cayman Islands. The address of its registered office is Century Yard, Cricket Square, Hutchins Drive, P.O. Box 2681 GT, George Town, Grand Cayman, Cayman Islands, British West Indies. The address of its principal place of business is Room 1803-04, 18/F, Li Po Chun Chambers, No. 189 Des Voeux Road Central, Hong Kong. The Company’s shares are listed on the Main Board of The Stock Exchange of Hong Kong Limited (the “Stock Exchange”).

The Company is an investment holding company. The principal activities of its subsidiaries are set out in Note 37 to the financial statements.

2. ADOPTION OF NEW AND REVISED HONG KONG FINANCIAL REPORTING STANDARDS

In the current year, the Group has adopted all the new and revised Hong Kong Financial Reporting Standards (“HKFRSs”) issued by the Hong Kong Institute of Certified Public Accountants that are relevant to its operations and effective for its accounting year beginning on 1 January 2008. HKFRSs comprise Hong Kong Financial Reporting Standards; Hong Kong Accounting Standards; and Interpretations. The adoption of these new and revised HKFRSs did not result in substantial changes to the Group’s accounting polices and amounts reported for the current year and prior years.

The Group has not applied the new HKFRSs that have been issued but are not yet effective. The Group has already commenced an assessment of the impact of these new HKFRSs but is not yet in a position to state whether these new HKFRSs would have a material impact on its results of operations and financial position.

3. SIGNIFICANT ACCOUNTING POLICIES

These financial statements have been prepared in accordance with HKFRSs, accounting principles generally accepted in Hong Kong and the applicable disclosures required by the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Listing Rules”) and by the Hong Kong Companies Ordinance.

These financial statements have been prepared under the historical cost convention, as modified by the revaluation of certain financial instruments, which are revalued at fair value as explained in the accounting policies set out below.

The preparation of financial statements in conformity with HKFRSs requires the use of certain key assumptions and estimates. It also requires the directors to exercise their judgements in the process of applying the accounting policies. The areas involving critical judgements and areas where assumptions and estimates are significant to these financial statements, are disclosed in Note 4 to the financial statements.

The significant accounting policies applied in the preparation of these financial statements are set out below.

– 65 – APPENDIX I FINANCIAL INFORMATION OF THE GROUP

3. SIGNIFICANT ACCOUNTING POLICIES (continued)

(a) Consolidation

The consolidated financial statements include the financial statements of the Company and its subsidiaries made up to 31 December. Subsidiaries are entities over which the Group has control. Control is the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group has control.

Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases.

The gain or loss on the disposal of a subsidiary represents the difference between the proceeds of the sale and the Group’s share of its net assets together with any goodwill relating to the subsidiary which was not previously charged or recognised in the consolidated income statement and also any related accumulated exchange reserve.

Inter-company transactions, balances and unrealised profits on transactions between Group companies are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.

Minority interests represent the interests of minority shareholders in the operating results and net assets of subsidiaries. Minority interests are presented in the consolidated balance sheet and consolidated statement of changes in equity within equity. Minority interests are presented in the consolidated income statement as an allocation of profit or loss for the year between minority and shareholders of the Company. Losses applicable to the minority in excess of the minority’s interests in the subsidiary’s equity are allocated against the interests of the Group except to the extent that the minority has a binding obligation and is able to make an additional investment to cover the losses. If the subsidiary subsequently reports profits, such profits are allocated to the interests of the Group until the minority’s share of losses previously absorbed by the Group has been recovered.

(b) Business combination and goodwill

The purchase method of accounting is used to account for the acquisition of subsidiaries by the Group. The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition. Identifiable assets, liabilities and contingent liabilities of the subsidiary in an acquisition are measured at their fair values at the acquisition date.

The excess of the cost of acquisition over the Group’s share of the net fair value of the subsidiary’s identifiable assets, liabilities and contingent liabilities is recorded as goodwill. Any excess of the Group’s share of the net fair value of the identifiable assets, liabilities and contingent liabilities over the cost of acquisition is recognised in the consolidated income statement.

Goodwill is tested annually for impairment and carried at cost less accumulated impairment losses. Impairment losses of goodwill are recognised in the consolidated income statement and are not subsequently reversed. Goodwill is allocated to cash-generating units for the purpose of impairment testing.

The interests of minority shareholders in the subsidiary are initially measured at the minority’s proportion of the net fair value of the subsidiary’s identifiable assets, liabilities and contingent liabilities at the acquisition date.

– 66 – APPENDIX I FINANCIAL INFORMATION OF THE GROUP

3. SIGNIFICANT ACCOUNTING POLICIES (continued)

Associates are entities over which the Group has significant influence. Significant influence is the power to participate in the financial and operating policies of an entity but is not control or joint control over those policies. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group has significant influence.

Investment in an associate is accounted for in the consolidated financial statements by the equity method of accounting and is initially recognised at cost. Identifiable assets, liabilities and contingent liabilities of the associate in an acquisition are measured at their fair values at the acquisition date. The excess of the cost of acquisition over the Group’s share of the net fair value of the associate’s identifiable assets, liabilities and contingent liabilities is recorded as goodwill. The goodwill is included within the carrying amount of the investment and is assessed for impairment as part of the investment. Any excess of the Group’s share of the net fair value of the identifiable assets, liabilities and contingent liabilities over the cost of acquisition is recognised in the consolidated income statement.

The Group’s share of an associate’s post-acquisition profits or losses is recognised in the consolidated income statement, and its share of the post-acquisition movements in reserves is recognised in the consolidated reserves. The cumulative post-acquisition movements are adjusted against the carrying amount of the investment. When the Group’s share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the associate. If the associate subsequently reports profits, the Group resumes recognised its share of those profits only after its share of the profits equals the share of losses not recognised.

The gain or loss on the disposal of an associate represents the difference between the proceeds of the sale and the Group’s share of its net assets together with any goodwill relating to the associate which was not previously charged or recognised in the consolidated income statement and also any related accumulated exchange reserve.

Unrealised profits on transactions between the Group and its associates are eliminated to the extent of the Group’s interests in the associates. Unrealised losses are also eliminated unless transaction provides evidence of an impairment of the asset transferred. Accounting policies of associates have been changed where necessary to ensure consistency with the policies adopted by the Group.

(d) Foreign currency translation

(i) Functional and presentation currency

Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (the “functional currency”). The consolidated financial statements are presented in HK$, which is the Company’s presentation currency. The functional currency of the Company is Renminbi (“RMB”).

(ii) Transactions and balances in each entity’s financial statements

Transactions in foreign currencies are translated into the functional currency using the exchange rates prevailing on the transaction dates. Monetary assets and liabilities in foreign currencies are translated at the rates ruling on the balance sheet date. Profits and losses resulting from this translation policy are included in the income statement.

– 67 – APPENDIX I FINANCIAL INFORMATION OF THE GROUP

3. SIGNIFICANT ACCOUNTING POLICIES (continued)

(d) Foreign currency translation (continued)

(ii) Transactions and balances in each entity’s financial statements (continued)

Translation differences on non-monetary items, such as equity instruments classified as financial assets at fair value through profit or loss, are reported as part of the fair value gain or loss. Translation differences on non-monetary items, such as equity instruments classified as available-for-sale financial assets, are included in the revaluation reserve in equity.

(iii) Translation on consolidation

The results and financial position of all the Group entities that have a functional currency different from the Company’s presentation currency are translated into the Company’s presentation currency as follows:

—Assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet;

— Income and expenses for each income statement are translated at average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the exchange rates on the transaction dates); and

—All resulting exchange differences are recognised in the exchange reserve.

On consolidation, exchange differences arising from the translation of the net investment in foreign entities and of borrowings are recognised in the exchange reserve. When a foreign operation is sold, such exchange differences are recognised in the consolidated income statement as part of the gain or loss on disposal.

Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate.

(e) Impairment of assets

At each balance sheet date, the Group reviews the carrying amounts of its tangible and intangible assets except goodwill, inventories, financial assets at fair value through profit or loss and other financial assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of any impairment loss. Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash- generating unit to which the asset belongs.

Recoverable amount is the higher of fair value less costs to sell and value in use. 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.

If the recoverable amount of an asset or cash-generating unit is estimated to be less than its carrying amount, the carrying amount of the asset or cash-generating unit is reduced to its recoverable amount. An impairment loss is recognised immediately in the income statement, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.

– 68 – APPENDIX I FINANCIAL INFORMATION OF THE GROUP

3. SIGNIFICANT ACCOUNTING POLICIES (continued)

(e) Impairment of assets (continued)

Where an impairment loss subsequently reverses, the carrying amount of the asset or cash-generating unit is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined (net of amortisation or depreciation) had no impairment loss been recognised for the asset or cash-generating unit in prior years. A reversal of an impairment loss is recognised immediately in the income statement, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.

(f) Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable and is recognised when it is probable that the economic benefits will flow to the Group and the amount of revenue can be measured reliably.

Revenue from the sales of manufactured goods are recognised on the transfer of significant risks and rewards of ownership, which generally coincides with the time when the goods are delivered and the title has passed to the customers.

Interest income is recognised on a time-proportion basis using the effective interest method.

(g) Government grants

A government grant is recognised when there is reasonable assurance that the Group will comply with the conditions attaching to it and that the grant will be received.

Government grants that become receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to the Group with no future related costs are recognised as income in the period in which they become receivable.

(h) Borrowing costs

All borrowing costs are recognised in the income statement in the period in which they are incurred.

(i) Research and development expenditure

Expenditure on research activities is recognised as an expense in the period in which it is incurred.

(j) Employee benefits

(i) Employee leave entitlements

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

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

– 69 – APPENDIX I FINANCIAL INFORMATION OF THE GROUP

3. SIGNIFICANT ACCOUNTING POLICIES (continued)

(j) Employee benefits (continued)

(ii) Pension obligations

The Group contributes to defined contribution retirement schemes which are available to all employees. Contributions to the schemes by the Group and employees are calculated as a percentage of employees’ basic salaries. The retirement benefit scheme cost charged to the income statement represents contributions payable by the Group to the funds.

(iii) Termination benefits

Termination benefits are recognised when, and only when, the Group demonstrably commits itself to terminate employment or to provide benefits as a result of voluntary redundancy by having a detailed formal plan which is without realistic possibility of withdrawal.

(k) Taxation

Income tax represents the sum of current tax and deferred tax.

The tax currently payable is based on taxable profit for the year. Taxable profit differs from profits as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date.

Deferred tax is recognised on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences, unused tax losses or unused tax credits can be utilized. Such assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.

Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and associates, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.

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 profits will be available to allow all or part of the asset to be recovered.

Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised, based on tax rates that have been enacted or substantively enacted by the balance sheet date. Deferred tax is charged or credited to the income statement, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis.

– 70 – APPENDIX I FINANCIAL INFORMATION OF THE GROUP

3. SIGNIFICANT ACCOUNTING POLICIES (continued)

(l) Property, plant and equipment

Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses.

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. All other repairs and maintenance are expensed in the income statement during the financial period in which they are incurred.

Depreciation of property, plant and equipment is calculated at rates sufficient to write off their cost less their residual values over the estimated useful lives on a straight-line basis. The principal useful lives are as follows:

Buildings 20 years Leasehold improvements 2 - 20 years Plant and machinery 5 - 15 years Office equipment 5 years Motor vehicles 5 years

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

Construction in progress represents buildings under construction and plant and machinery pending installation, and is stated at cost less impairment losses. Depreciation begins when the relevant assets are available for use.

The gain or loss on disposal of property, plant and equipment is the difference between the net sales proceeds and the carrying amount of the relevant assets, and is recognised in the income statement.

(m) Inventories

Inventories are stated at the lower of cost and net realised value. Cost is determined using the weighted average basis. The cost of finished goods and work in progress comprises raw materials, direct labour and an appropriate proportion of all production overhead expenditure, and where appropriate, subcontracting charges. Net realised value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and the estimated costs necessary to make the sale.

(n) Recognition and derecognition of financial instruments

Financial assets and financial liabilities are recognised in the balance sheet when the Group becomes a party to the contractual provisions of the instruments.

Financial assets are derecognised when the contractual rights to receive cash flows from the assets expire; the Group transfers substantially all the risks and rewards of ownership of the assets; or the Group neither transfers nor retains substantially all the risks and rewards of ownership of the assets but has not retained control on the assets. On derecognition of a financial asset, the difference between the asset’s carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss that had been recognised directly in equity is recognised in the income statement.

– 71 – APPENDIX I FINANCIAL INFORMATION OF THE GROUP

3. SIGNIFICANT ACCOUNTING POLICIES (continued)

(n) Recognition and derecognition of financial instruments (continued)

Financial liabilities are derecognised when the obligation specified in the relevant contract is discharged, cancelled or expires. The difference between the carrying amount of the financial liability recognised and the consideration paid is recognised in the income statement.

(o) Investments

Investments are recognised and derecognised on a trade date basis where the purchase or sale of an investment is under a contract whose terms require delivery of the investment within the timeframe established by the market concerned, and are initially measured at fair value, plus directly attributable transaction costs except in the case of financial assets at fair value through profit or loss.

(i) Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss are either investments held for trading or designated as at fair value through profit or loss upon initial recognition. These investments are subsequently measured at fair value. Gains or losses arising from changes in fair value of these investments are recognised in the income statement.

(ii) Available-for-sale financial assets

Available-for-sale financial assets are non-derivative financial assets not classified as trade and other receivables, held-to-maturity investments or financial assets at fair value through profit or loss. Available-for-sale financial assets are subsequently measured at fair value. Gains or losses arising from changes in fair value of these investments are recognised directly in equity, until the investments are disposed of or are determined to be impaired, at which time the cumulative gains or losses previously recognised in equity are recognised in the income statement.

Impairment losses recognised in the income statement for equity investments classified as available-for-sale financial assets are not subsequently reversed through the income statement. Impairment losses recognised in the income statement for debt instruments classified as available-for-sale financial assets are subsequently reversed and recognised in the income statement if an increase in the fair value of the instruments can be objectively related to an event occurring after the recognition of the impairment loss.

For available-for-sale equity investments that do not have a quoted market price in a active market and whose fair value cannot be reliably measured and derivatives that are linked to and must be settled by delivery of such unquoted equity instruments, they are measured at cost less any identified impairment losses at each balance sheet date subsequent to initial recognition.

(p) Trade and other receivables

Trade and other receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market and are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less allowance for impairment. An allowance for impairment of trade and other receivables is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of receivables. The amount of the allowance is the difference between the receivables’ carrying amount and the present value of estimated future cash flows, discounted at the effective interest rate computed at initial recognition. The amount of the allowance is recognised in the income statement.

– 72 – APPENDIX I FINANCIAL INFORMATION OF THE GROUP

3. SIGNIFICANT ACCOUNTING POLICIES (continued)

(p) Trade and other receivables (continued)

Impairment losses are reversed in subsequent periods and recognised in the income statement when an increase in the receivables’ recoverable amount can be related objectively to an event occurring after the impairment was recognised, subject to the restriction that the carrying amount of the receivables at the date the impairment is reversed shall not exceed what the amortised cost would have been had the impairment not been recognised.

(q) Cash and cash equivalents

For the purpose of the cash flow statement, cash and cash equivalents represent cash at bank and on hand, demand deposits with banks and other financial institutions, and short term highly liquid investments which are readily convertible into known amounts of cash and subject to an insignificant risk of change in value. Bank overdrafts which are repayable on demand and form an integral part of the Group’s cash management are also included as a component of cash and cash equivalents.

(r) Financial liabilities and equity instruments

Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability and an equity instrument under HKFRSs. An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities. The accounting policies adopted for specific financial liabilities and equity instruments are set out in (s) to (u) below.

(s) Trade and other payables

Trade and other payables are stated initially at their fair value and 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.

(t) Borrowings

Borrowings are recognised initially at fair value, net of transaction costs incurred, and subsequently measured at amortised cost using the effective interest method.

Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the balance sheet date.

(u) Equity instruments

Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs.

(v) Derivative financial instruments and hedge accounting

Derivatives are initially recognised at fair value on the contract date and are subsequently measured at fair value.

The Group designates the derivatives as hedges of a particular risk associated with a recognised liability or a highly probable forecast transaction.

– 73 – APPENDIX I FINANCIAL INFORMATION OF THE GROUP

3. SIGNIFICANT ACCOUNTING POLICIES (continued)

(v) Derivative financial instruments and hedge accounting (continued)

Changes in the fair value of derivatives that are designated and effective as cash flow hedges are recognised directly in equity. Any ineffective portion is recognised immediately in the income statement. The Group’s policy with respect to hedging the foreign currency risk of a firm commitment is to designate the hedging relationship as a cash flow hedge.

If the cash flow hedge of a firm commitment or forecasted transaction results in the recognition of a non-financial asset or a liability, then, at the time the asset or liability is recognised, the associated gains or losses on the derivative that had previously been recognised in equity are included in the initial measurement of the asset or liability.

For hedges that do not result in the recognition of a non-financial asset or a liability, amounts deferred in equity are recognised in the income statement in the same period in which the hedged item affects the income statement.

Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated, or exercised, or the hedge no longer qualifies for hedge accounting. At that time, for forecast transactions, any cumulative gain or loss on the hedging instrument recognised in equity is retained in equity until the forecasted transaction occurs. If a hedged transaction is no longer expected to occur, the net cumulative gain or loss recognised in equity is transferred to the income statement for the period.

(w) Leases

(i) Operating leases

Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Lease payments (net of any incentives received from the lessor) are expensed in the income statement on a straight-line basis over the lease term.

(ii) Finance leases

Leases that substantially transfer to the Group all the risks and rewards of ownership of assets are accounted for as finance leases. At the commencement of the lease term, a finance lease is capitalised at the lower of the fair value of the leased asset and the present value of the minimum lease payments, each determined at the inception of the lease.

The corresponding liability to the lessor is included in the balance sheet as obligation under finance leases. Lease payments are apportioned between the finance charge and the reduction of the outstanding liability. The finance charge is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability.

Assets under finance leases are depreciated the same as owned assets over their estimated useful lives.

– 74 – APPENDIX I FINANCIAL INFORMATION OF THE GROUP

3. SIGNIFICANT ACCOUNTING POLICIES (continued)

(x) Provisions and contingent liabilities

Provisions are recognised for liabilities of uncertain timing or amount when the Group has a present legal or constructive obligation arising as a result of a past event, it is probable that an outflow of economic benefits will be required to settle the obligation and a reliable estimate can be made. Where the time value of money is material, provisions are stated at the present value of the expenditures expected to settle the obligation.

Where it is not probable that an outflow of economic benefits will be required, or the amount cannot be estimated reliably, the obligation is disclosed as a contingent liability, unless the probability of outflow is remote. Possible obligations, whose existence will only be confirmed by the occurrence or non-occurrence of one or more future events are also disclosed as contingent liabilities unless the probability of outflow is remote.

(y) Related parties

A party is related to the Group if:

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

(ii) the party is an associate;

(iii) the party is a joint venture;

(iv) the party is a member of the key management personnel of the Company or its parent;

(v) the party is a close member of the family of any individual referred to in (i) or (iv);

(vi) 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 (iv) or (v); or

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

(z) Segment reporting

A segment is a distinguishable component of the Group that is engaged either in providing products and services (business segment), or in providing products or services within a particular economic environment (geographical segment), which is subject to risks and rewards that are different from those of other segments.

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

– 75 – APPENDIX I FINANCIAL INFORMATION OF THE GROUP

3. SIGNIFICANT ACCOUNTING POLICIES (continued)

(z) Segment reporting (continued)

Segment revenue, expenses, results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis to the segment. Unallocated costs mainly represent corporate expenses. Segment assets consist primarily of property, plant and equipment, prepaid land lease payments, other assets, inventories, trade and other receivables, prepayments and deposits, pledged bank deposits and bank and cash balances. Segment liabilities exclude primarily obligation under financial leases and other financial liabilities.

Segment revenue, expenses, assets and liabilities are determined before intra-group balances and intra-group transactions are eliminated as part of the consolidation process, except to the extent that such intra-group balances and transactions are between Group enterprises within a single segment. Inter-segment pricing is based similar terms as those available to other external parties.

Segment capital expenditure is the total cost incurred during the period to acquire segment assets (both tangible and intangible) that are expected to be used for more than one period.

(aa) Events after the balance sheet date

Events after the balance sheet date that provide additional information about the Group’s position at the balance sheet date or those that indicate the going concern assumption is not appropriate are adjusting events and are reflected in the financial statements. Events after the balance sheet date that are not adjusting events are disclosed in the notes to the financial statements when material.

4. CRITICAL JUDGEMENTS AND KEY ESTIMATES

Key sources of estimation uncertainty

The key assumptions concerning the future, and other key sources of estimation uncertainty at the balance sheet date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are discussed below.

(a) Property, plant and equipment and depreciation

The Group determines the estimated useful lives and residual values, and related depreciation charges for the Group’s property, plant and equipment. This estimate is based on the historical experience of the actual useful lives and residual values of property, plant and equipment of similar nature and functions. Management will revise the depreciation charge where useful lives or residual values are different to those previously estimated, or it will write-off or write-down technically obsolete or non-strategic assets that have been abandoned or sold.

(b) Impairment of goodwill

Determining whether goodwill is impaired requires an estimation of the value in use of the cash- generating unit to which goodwill has been allocated. The value in use calculation requires the Group to estimate the future cash flows expected to arise from the cash-generating unit and a suitable discount rate in order to calculate present value. The carrying amount of goodwill at the balance sheet date was approximately HK$3,955,617,000. Details of the Group’s goodwill are stated in Note 17 to the financial statements.

– 76 – APPENDIX I FINANCIAL INFORMATION OF THE GROUP

4. CRITICAL JUDGEMENTS AND KEY ESTIMATES (continued)

Key sources of estimation uncertainty (continued)

The Group makes impairment loss on receivables based on assessments of the recoverability of the trade and other receivables and loan receivables, including the current creditworthiness, the past collection history and securities (if any) of each debtor. Impairments arise where events or changes in circumstances indicate that the balances may not be collectible. The identification of impairment loss on receivables requires the use of judgement and estimates. Where the actual result is different from the original estimate, such difference will impact the carrying value of the trade and other receivables and loan receivables and impairment loss on receivables in the year in which such estimate has been changed.

(d) Allowance for inventories and net realisable value of inventories

Allowance for inventories is made based on the aging and estimated net realised value of inventories. The assessment of the allowance amount involves judgement and estimates. Where the actual outcome in future is different from the original estimate, such difference will impact the carrying value of inventories and write-down/write-back in the year in which such estimate has been changed.

Net realised value of inventories is the estimated selling price in the ordinary course of business, less estimated costs of completion and selling expense. These estimates are based on the current market condition and the historical experience of manufacturing and selling products of similar nature. It could change significantly as a result of changes in customer taste and competitor actions in response to the severe market environment. The Group will reassess the estimates by each balance sheet date.

(e) Fair value of derivatives

As disclosed in Note 28 to the financial statements, the assumptions for determining the fair value of derivatives are made based on quoted market rates adjusted for specific features of the instrument.

(f) Income taxes

Significant estimates are required in determining the provisions for income taxes and deferred tax. There are many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made.

– 77 – APPENDIX I FINANCIAL INFORMATION OF THE GROUP

5. FINANCIAL RISK MANAGEMENT

The Group’s activities expose it to a variety of financial risks, including foreign currency risk, price risk, credit risk, liquidity risk and interest rate risk. The Group’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise the potential adverse effects on the Group’s financial performance. The directors have established management policies, guidelines and control procedures to manage the Group’s exposure to such risks.

(a) Foreign currency risk

The Group has certain exposure to foreign currency risk as some of its business transactions, assets and liabilities are denominated in currencies other than the functional currency of respective Group entities, such as HK$ and USD. The Group had entered into currency swaps to hedge its exposure to foreign currency risk arising from certain of its HK$ and USD bank borrowings (Notes 26 and 28). The Group currently does not have a foreign currency hedging policy in respect of other foreign currency transactions, assets and liabilities. The Group will monitor its foreign currency exposure closely and will consider hedging other significant foreign currency exposure should the need arise.

At 31 December 2008, if the RMB had weakened 7% (2007: 7%) against HK$ and USD with all other variables held constant, the impact on profit after tax and other component of the equity are summarised in the following table. The sensitivity analysis includes outstanding foreign currency denominated monetary items and currency swaps designated as cash flow hedges and adjusts their translation at the year end for a 7% (2007: 7%) change in foreign currency rates. A positive number indicates an increase in profit and other equity. If the RMB had strengthened 7% (2007: 7%) against HK$ and USD with all other variables held constant, there would be an equal and opposite impact on profit after tax and other component of the equity, and the balances below would be negative.

Impact of HK$ Impact of USD 2008 2007 2008 2007 HK$’000 HK$’000 HK$’000 HK$’000

Profit after tax 22,038(i) 21,328 (i) 6,667(i) 3,451 (i) Other equity 31,258(ii) 33,011 (ii) 46,485(ii) 48,652 (ii)

(i) This is mainly a result of the foreign exchange gain on financial assets at fair value through profit or loss, loan receivable, bank and cash balances, trade and other payables, bank borrowings and obligations under finance leases denominated in HK$ and USD not subject to cash flow hedges at year end.

(ii) This mainly arises from the changes in fair value of derivative instruments designated as cash flow hedges in relation to the Group’s bank borrowings.

(b) Price risk

The Group’s equity investments classified as financial assets at fair value through profit or loss which are measured at fair value at each balance sheet date and expose the Group to equity security price risk.

The sensitivity analyses below have been determined based on the exposure to equity price risk at the balance sheet date.

If the prices had been 5% higher/lower, the Group’s profit after tax for the year ended 31 December 2008 would be increased/decreased by approximately HK$283,000 (2007: HK$16,002,000) as a result of the changes in fair value of financial assets at fair value through profit or loss.

– 78 – APPENDIX I FINANCIAL INFORMATION OF THE GROUP

5. FINANCIAL RISK MANAGEMENT (continued)

The carrying amount of the bank and cash balances including pledged bank deposits, trade and other receivables, deposits and investments and loan receivables included in the consolidated balance sheet represents the Group’s maximum exposure to credit risk in relation to the Group’s financial assets.

The Group has no significant concentration of credit risk, with exposure spread over a number of counterparties and customers.

The Group’s credit risk is primarily attributable to its trade receivables. The Group has policies in place and the exposure to credit risk is managed through the application of credit approvals, credit limits and monitoring process. The Group’s senior management performs on-going credit evaluation and regularly reviews the recoverable amount of each individual trade debt regularly to ensure that adequate impairment losses are recognised for irrecoverable debts.

The credit risk on bank and cash balances is limited because the counterparties are mainly banks with high credit-ratings assigned by international credit-rating agencies.

Loan receivable from employees as disclosed in Note 20 to the financial statements will be repaid when the shares awarded to the employees, which are held by an administrator appointed by the Company, are disposed of. The Group’s senior management performed regular review on the recoverable amount of loan receivables to ensure that adequate impairment losses are recognised.

(d) Liquidity risk

The Group’s policy is to regularly monitor current and expected liquidity requirements to ensure that it maintains sufficient reserve of cash to meet its liquidity requirements in the short and longer term.

The maturity analysis of the Group’s financial liabilities is as follows:

Less than Between Between 1 year 1 and 2 years 2 and 5 years HK$’000 HK$’000 HK$’000

At 31 December 2008 Bank borrowings 896,250 725,092 93,177 Obligations under finance lease 17,151 11,964 7,289 Trade and other payables 923,479 — — Other financial liabilities 53,396 27,290 —

At 31 December 2007 Bank borrowings 355,962 493,970 589,079 Obligations under finance lease 18,461 16,001 18,833 Trade and other payables 947,857 — — Other financial liabilities — 77,438 113,374

– 79 – APPENDIX I FINANCIAL INFORMATION OF THE GROUP

5. FINANCIAL RISK MANAGEMENT (continued)

(e) Interest rate risk

The Group’s exposure to interest-rate risk arises from its bank deposits and bank borrowings and obligations under finance leases. The Group’s bank deposits and bank borrowings of approximately HK$494,952,000 (2007: HK$538,584,000) and of approximately HK$22,565,000 (2007: Nil) respectively bear interests at fixed interest rates and therefore are subject to fair value interest rate risks. The Directors consider the Group’s exposure to interest rate risk on bank deposits and bank borrowings is not significant as interest bearing bank balances and bank borrowings are within short maturity period.

The Group’s cash flow interest rate risk primarily relates to variable-rate bank borrowings and obligations under finance leases. The Group had entered into interest rate swaps to hedge against cash flow interest rate risk of certain bank borrowings (Notes 26 and 28). The critical terms of these interest rate swaps are similar to those of hedged bank borrowings. These interest rate swaps are designated as effective cash flow hedges of interest rate risk.

At 31 December 2008, if the interest rate had been 100 basis point (2007: 100 basis point) lower, with all other variables held constant, the impact on profit after tax and other component of the equity are summarised in the following table. The sensitivity analysis includes outstanding bank borrowings, obligations under finance leases and interest rate swaps designated as cash flow hedges and adjusts the respective interest rates at the year end of 100 basis point (2007: 100 basics point) A positive number indicates an increase in profit and other equity. If the interest rate had been 100 basis point (2007: 100 basis point) higher, with all other variables held constant, there would be an equal and opposite impact on profit after tax and other component of the equity, and the balances below would be negative.

2008 2007 HK$’000 HK$’000

Profit after tax 5,114(i) 3,613(i) Other equity (13,806)(ii) (23,031)(ii)

(i) This is mainly a result of the decrease in interest expenses on bank borrowings and obligations under finance leases not subject to cash flow hedges at year end.

(ii) This mainly arises from the changes in fair value of derivative instruments designated as cash flow hedges in relation to the Group’s bank borrowings.

(f) Fair values

The carrying amounts of the Group’s financial assets and financial liabilities as reflected in the consolidated balance sheet approximate their respective fair values.

– 80 – APPENDIX I FINANCIAL INFORMATION OF THE GROUP

6. TURNOVER AND OTHER INCOME

The Group is principally engaged in the printing of cigarette packages and manufacturing of transfer/ laminated paper and laser film. An analysis of the Group’s turnover and other income is as follows:

2008 2007 HK$’000 HK$’000

Turnover Cigarette packages 2,796,994 1,830,536 Transfer/laminated paper and laser film 325,890 301,785

3,122,884 2,132,321

Other income Gain on sales of paper 14,148 4,683 Gain on sales of scrapped materials 15,951 5,529 Interest income 20,623 13,850 Compensation received 1,804 1,056 Commission income — 4,769 Fair value gains on financial assets at fair value through profit or loss — 14,164 Government grants received 4,373 4,359 Exchange gain, net 23,230 1,194 Sundry income 5,687 3,727

85,816 53,331

7. NON-OPERATING EXPENSES

2008 2007 HK$’000 HK$’000

Loss on de-recognition of financial assets at fair value through profit or loss (Note 20) 16,531 — Loss on de-registration of a subsidiary 13,216 —

29,747 —

8. FINANCE COSTS

2008 2007 HK$’000 HK$’000

Interest on bank borrowings 74,672 37,381 Finance lease charges 1,921 1,169

76,593 38,550 Fair value gain on interest-rate swaps: Cash flow hedge (transfer from equity) (Note 28) (13,738) (14,231)

62,855 24,319

– 81 – APPENDIX I FINANCIAL INFORMATION OF THE GROUP

9. PROFIT BEFORE TAX

The Group’s profit before tax is stated after charging the followings:

2008 2007 HK$’000 HK$’000

Auditors’ remuneration — current 3,700 3,500 — under-provision in prior year — 200 3,700 3,700

Impairment losses on receivables — trade receivables 1,764 648 — other receivables 12,922 7,070 14,686 7,718 Write down of inventories 14,633 2,827 Cost of inventories sold (Note a) 2,091,393 1,442,837 Depreciation 135,437 70,259 Loss on disposals of property, plant and equipment 5,528 2,210 Operating lease rentals in respect of land, buildings and equipment 27,229 15,767 Staff costs including directors’ emoluments — Salaries, bonuses and allowances 247,553 159,089 — Retirement benefit scheme contributions 11,099 8,506 — Cash-settled share-based payments (reversal)/expense (7,258) 7,258 251,394 174,853 Research and development costs 6,789 6,376 Fair value loss on financial assets at fair value through profit or loss 1,067 — Loss on de-recognition of financial assets at fair value through profit or loss 16,531 — Loss on de-registration of a subsidiary 13,216 —

Notes:

(a) Cost of inventories sold includes the following which are included in the respective amounts disclosed separately above for the year:

2008 2007 HK$’000 HK$’000

Operating lease rentals 17,833 8,568 Staff costs 156,064 91,258 Depreciation 116,256 61,146 Research and development costs 5,065 6,170 Write down of inventories 14,633 2,827

– 82 – APPENDIX I FINANCIAL INFORMATION OF THE GROUP

10. DIRECTORS’ AND SENIOR EXECUTIVES’ EMOLUMENTS

Directors’ emoluments disclosed pursuant to the Listing Rules and Section 161 of the Hong Kong Companies Ordinance are as follows:

2008 2007 HK$’000 HK$’000

Fees Executive directors 491 491 Non-executive directors 892 842 Independent non-executive directors 2,210 2,210

Other emoluments Executive directors — Basic salaries, allowances and benefits in kind 8,150 10,580 — Retirement benefits scheme contributions 36 63

11,779 14,186

The emoluments of each Director for the years ended 31 December 2008 and 2007 are set out below:

Retirement Salaries benefits and other Discretionary scheme Fees benefits bonus contributions Total HK$’000 HK$’000 HK$’000 HK$’000 HK$’000

Name of Director

Mr. Chan Chew Keak, Billy 491 — — — 491 Mr. Chan Sai Wai — 2,000 1,200 12 3,212 Mr. Ng Sai Kit — 1,500 900 12 2,412 Mr. Lee Cheuk Yin, Dannis — 1,650 900 12 2,562 Mr. David John Cleveland Hodge 437 — — — 437 Mr. Saw Kee Team, Alan 376 — — — 376 Mr. Jerzy Czubak (Note a) 79 — — — 79 Mr. Tay Ah Kee, Keith 754 — — — 754 Mr. Au Yeung Tin Wah, Ellis 729 — — — 729 Mr. Oh Choon Gan, Eric 727 — — — 727

Total for 2008 3,593 5,150 3,000 36 11,779

– 83 – APPENDIX I FINANCIAL INFORMATION OF THE GROUP

10. DIRECTORS’ AND SENIOR EXECUTIVES’ EMOLUMENTS (continued)

Retirement Salaries benefits and other Discretionary scheme Fees benefits bonus contributions Total HK$’000 HK$’000 HK$’000 HK$’000 HK$’000

Name of Director

Mr. Chan Chew Keak, Billy 491 — — — 491 Mr. Chan Sai Wai — 2,000 2,400 12 4,412 Mr. Ng Sai Kit — 1,500 1,800 12 3,312 Mr. Li Wei Bo (Note b) — 616 — 27 643 Mr. Li Shui Dang (Note c) — 514 — — 514 Mr. Lee Cheuk Yin, Dannis — 1,250 500 12 1,762 Mr. David John Cleveland Hodge 437 — — — 437 Mr. Peter Roderick Downing (Note d) 197 — — — 197 Mr. Saw Kee Team, Alan (Note e) 208 — — — 208 Mr. Tay Ah Kee, Keith 754 — — — 754 Mr. Au Yeung Tin Wah, Ellis 729 — — — 729 Mr. Oh Choon Gan, Eric 727 — — — 727

Total for 2007 3,543 5,880 4,700 63 14,186

Notes: (a) Appointed on 16 October 2008

(b) Retired on 30 April 2007

(d) Resigned on 13 June 2007

(e) Appointed on 13 June 2007

The five highest paid individuals in the Group during the year include three (2007: five) directors whose emoluments are reflected in the analysis presented above. The emoluments of the remaining two (2007: Nil) individuals are set out below:

2008 2007 HK$’000 HK$’000

Basic salaries and other benefits 2,649 — Discretionary bonus 950 — Retirement benefits scheme contributions 24 —

3,623 —

– 84 – APPENDIX I FINANCIAL INFORMATION OF THE GROUP

10. DIRECTORS’ AND SENIOR EXECUTIVES’ EMOLUMENTS (continued)

The emoluments fell within the following bands:

Number of individuals 2008 2007

Nil to HK$1,000,000 — — HK$1,000,000 to HK$2,000,000 1 — HK$2,000,000 to HK$3,000,000 1 —

There was no arrangement under which a Director waived or agreed to waive any emoluments during the year. In addition, no emoluments were paid by the Group to any of the Directors or the highest paid individuals as an inducement to join or upon joining the Group, or as compensation for loss of office.

11. RETIREMENT BENEFITS SCHEMES

The Group operates a mandatory provident fund scheme (the “MPF Scheme”) under the Hong Kong Mandatory Provident Fund Schemes Ordinance for all qualifying employees in Hong Kong. The Group’s contributions to the MPF Scheme are calculated at 5% of the salaries and wages subject to a monthly maximum amount of HK$1,000 per employee and vest fully with employees when contributed into MPF Scheme.

The employees of the Group’s subsidiaries established in the People’s Republic of China (“PRC”) are members of a central pension scheme operated by the local municipal government. These subsidiaries are required to contribute certain percentage of the employees’ basic salaries and wages to the central pension scheme to fund the retirement benefits. The local municipal government undertakes to assume the retirement benefits obligations of all existing and future retired employees of these subsidiaries. The only obligation of these subsidiaries with respect to the central pension scheme is to meet the required contributions under the scheme.

12. INCOME TAX EXPENSES

2008 2007 HK$’000 HK$’000

Hong Kong Profits Tax 1,019 5 PRC corporate income tax — current 116,746 70,158 — over provision in prior year (981) (264) Withholding tax (Note 29) 33,406 — Other deferred tax (Note 29) (3,030) (1,855)

147,160 68,044

Hong Kong Profits Tax is provided at 16.5% (2007: 17.5%) based on the estimated assessable profit for the year ended 31 December 2008.

On 16 March 2007, the National People’s Congress approved the Corporate Income Tax Law of the PRC (“New CIT Law”), which became effective from 1 January 2008. Under the New CIT Law, the standard corporate income tax rate is 25%, replacing the previous applicable rate of 33%.

– 85 – APPENDIX I FINANCIAL INFORMATION OF THE GROUP

12. INCOME TAX EXPENSES (continued)

On 26 December 2007, the State of Council of the PRC passed an “Notice on the Implementation of Corporation Income Tax Transition Preferential Treatment” (“Notice on Transition Period”) Guofa (2007) No. 39 (“Circular 39”) which sets out details of how existing preferential income tax rates will be adjusted to the 25% standard rate under the New CIT Law. According to the Notice on Transition Period, certain PRC enterprises of the Group with tax holiday not fully utilized will be allowed to continue to receive benefits of the full exemption from a reduction in income tax rate until expiry of the tax holiday, after which, the 25% standard rate under the New CIT Law will apply.

Circular 39 also states that the existing preferential income tax rate of 18% in 2008 pertaining to certain subsidiaries will be adjusted to the standard rate of 25% in 2012 progressively.

The relevant tax rates for the Group’s PRC subsidiaries before the tax holiday range from 15% to 25% (2007: 15% to 24%).

Further under the New CIT Law, from 1 January 2008, non-resident enterprises without an establishment or place of business in the PRC or which have an establishment or place of business in the PRC but whose relevant income is not effectively connected with the establishment or a place of business in the PRC, will be subject to withholding tax at the rate of 10% (unless reduced by treaty) on various types of passive income such as dividend derived from sources within the PRC. As the entire Group’s foreign-invested enterprises are directly or indirectly wholly or partial owned by a Hong Kong incorporated subsidiary, a rate of 5% is applicable to the calculation of this withholding tax on dividend according to Comprehensive Arrangement for the Avoidance of Double Taxation on Income and Prevention of Fiscal Evasion between PRC and Hong Kong, and Guoshihan (2009) No.81.

According to the notice Cai Shui {2008} No.1 released by the Ministry of Finance and the State Administration of Taxation, distributions of the pre-2008 retained profits of a foreign-invested enterprise to a foreign investor in 2008 or after are exempt from withholding tax. Accordingly, the retained profits at 31 December 2007 in the Group’s foreign-invested enterprises’ books and accounts will not be subject to withholding tax on dividend at 5% on future distribution.

A reconciliation between the income tax expenses and the product of profit before tax multiplied by the applicable tax rate is as follows:

2008 2007 HK$’000 HK$’000

Profit before tax 770,230 467,947

Tax at applicable tax rate of 25% (2007: 15%) 192,558 70,192 Tax effect of share of profit of associates (43,220) (10,673) Tax effect of non-taxable income (8,783) (2,505) Tax effect of non-deductible expenses 65,602 34,006 Tax effect of unrecognised temporary differences 1,227 (1,345) Tax effect of unused tax losses not recognised 5,159 7,003 Tax effect of tax concession and tax refund (90,419) (38,955) Over provision in prior year (981) (264) Withholding tax 33,406 — Effect of different tax rates of subsidiaries operating in other jurisdiction (7,389) 10,585

Income tax expenses 147,160 68,044

– 86 – APPENDIX I FINANCIAL INFORMATION OF THE GROUP

13. EARNINGS PER SHARE

(a) Basic earnings per share is calculated based on the Group’s profit attributable to the equity holders of the Company for the year of approximately HK$467,303,000 (2007: HK$353,837,000) and the weighted average number of shares of approximately 1,015,902,000 ordinary shares in issue during the year (2007: 814,684,000 shares).

(b)No diluted earnings per share are presented as the Company did not have any potentially diluted ordinary shares for the years ended 31 December 2008 and 2007.

14. DIVIDENDS

The dividends paid during the year ended 31 December 2008 were HK$86,995,000, being final dividend of HK8.9 cents per share for year 2007 and HK$93,964,000, being interim dividend of HK8.9 cents per share for year 2008. The dividends paid during the year ended 31 December 2007 were HK$100,310,000, being final dividend of HK12.8 cents per share for year 2006 and HK$54,685,000, being interim dividend of HK7 cents per share for year 2007. A final dividend of HK4.3 cents per share in respect of 2008, amounted to approximately HK$46,868,000 is proposed by the board of Directors and subject to approval by the shareholders at the Annual General Meeting to be held on 26 May 2009. The proposed final dividends are not recognised as liabilities at 31 December 2008.

2008 2007 HK$’000 HK$’000

Interim dividend paid of HK8.9 cents (2007: HK7.0 cents) per share 93,964 54,685

Proposed final dividend of HK4.3 cents (2007: HK8.9 cents) per share 46,868 86,995

140,832 141,680

– 87 – APPENDIX I FINANCIAL INFORMATION OF THE GROUP

15. PROPERTY, PLANT AND EQUIPMENT

Leasehold Plant and Office Motor Construction Buildings improvements machinery equipment vehicles in progress Total HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000

Cost At 1 January 2007 22,940 8,876 500,815 16,189 13,634 — 562,454 Acquisition of subsidiaries 100,492 — 313,949 16,024 6,160 12,273 448,898 Additions 1,416 446 131,081 2,384 4,842 108,918 249,087 Transfer 4,191 183 13,440 124 193 (18,131) — Disposals/write off (1,565) (15) (9,944) (2,098) (5,798) (527) (19,947) Exchange differences 4,881 614 56,987 1,440 1,032 3,329 68,283

At 31 December 2007 132,355 10,104 1,006,328 34,063 20,063 105,862 1,308,775

Acquisition of subsidiaries (Note 17) 12,780 — 51,759 896 2,486 1,023 68,944 Additions 357 33,565 35,915 4,584 6,525 95,244 176,190 Transfer 59,254 3,250 98,936 6,520 — (167,960) — Disposals/write off — (6,444) (11,393) (1,653) (2,407) — (21,897) Exchange differences 6,909 583 49,985 1,519 935 5,067 64,998

At 31 December 2008 211,655 41,058 1,231,530 45,929 27,602 39,236 1,597,010

Accumulated depreciation At 1 January 2007 1,120 2,454 68,037 7,582 7,530 — 86,723 Charge for the year 2,352 1,693 59,487 3,700 3,027 — 70,259 Disposals/write off (124) — (3,314) (1,709) (5,466) — (10,613) Exchange differences 152 226 7,271 525 360 — 8,534

At 31 December 2007 3,500 4,373 131,481 10,098 5,451 — 154,903

Charge for the year 8,900 2,933 111,623 7,205 4,776 — 135,437 Disposals/write off (99) (3,692) (2,761) (876) (550) — (7,978) Exchange differences 215 184 6,923 431 277 — 8,030

At 31 December 2008 12,516 3,798 247,266 16,858 9,954 — 290,392

Carrying amount At 31 December 2008 199,139 37,260 984,264 29,071 17,648 39,236 1,306,618

At 31 December 2007 128,855 5,731 874,847 23,965 14,612 105,862 1,153,872

The Group’s buildings are situated in the PRC.

At 31 December 2008, the carrying amounts of property, plant and equipment held by the Group under finance leases were approximately HK$128,069,000 (2007: HK$148,279,000) (Note 27). The Group’s property, plant and equipment with carrying amount of approximately HK$328,886,000 (2007: HK$64,310,000) were pledged as security for the Group’s banking facilities (Note 33) as at 31 December 2008.

– 88 – APPENDIX I FINANCIAL INFORMATION OF THE GROUP

15. PROPERTY, PLANT AND EQUIPMENT (continued)

The Group’s total minimum lease payments under non-cancellable operating leases are receivable as follows:

2008 2007 HK$’000 HK$’000

Within one year 2,998 2,443 In the second to fifth years, inclusive 7,391 — After five years 14,782 —

25,171 2,443

The Group leased out certain buildings to a related company under operating leases. The average lease term is 14 years (2007: 1 year). All leases are on a fixed rental basis and do not include contingent rentals.

16. PREPAID LAND LEASE PAYMENTS

2008 2007 HK$’000 HK$’000

At 1 January 42,402 13,117 Acquisition of subsidiaries (Note 17) 9,704 27,727 Additions — 211 Amortisation of prepaid land lease payments (1,185) (545) Exchange differences 2,109 1,892

At 31 December 53,030 42,402 Current portion (1,345) (1,045)

Non-current portion 51,685 41,357

The Group’s prepaid land lease payments represent payments for land use rights in the PRC under medium term leases.

The Group’s prepaid land lease payments with carrying amount of approximately HK$29,486,000 were pledged as security for the Group’s banking facilities (Note 33) as at 31 December 2008.

17. GOODWILL

HK$’000

At 1 January 2007 1,276,615 Acquisition of subsidiaries 1,293,183 Exchange differences 181,975

At 31 December 2007 2,751,773 Adjustment to fair value of net assets of subsidiaries acquired in prior year 149,061 Acquisition of subsidiaries 938,670 Release on de-registration of a subsidiary (21,500) Exchange differences 137,613

At 31 December 2008 3,955,617

– 89 – APPENDIX I FINANCIAL INFORMATION OF THE GROUP

17. GOODWILL (continued)

During 2008 the Group acquired the entire issued share capital of Purple Art Limited (“Purple Art”), which directly owned 100% equity interest in Hangzhou Weicheng Printing Co. Limited (“HZ Weicheng”) at a total consideration of RMB350,000,000 (equivalent to approximately HK$400,006,000) which was satisfied as to approximately HK$200,006,000 by the allotment and issue of 34,189,000 new shares of HK$0.01 each of the Company at an issue price of HK$5.85 per share (Note 30(e)) and as to the balance by cash. The adoption of HK$5.85 per share as the fair value of shares issued by the Company at the date of exchange was based on a fair value assessment made by the board of Directors, taking into consideration all aspects of the acquisition and significant factors influencing the negotiations. The board of Directors considered the published price of the Company’s shares at the date of exchange is not a suitable indicator of fair value of the shares issued for the acquisition due to the thinness of the market of the Company’s issued shares.

The Group also acquired a 25% equity interest in Sure Rise Group Limited (“Sure Rise”), and a 49% equity interest in Smart Apex Group Limited (“Smart Apex”) at a consideration of RMB290,000,000 (equivalent to approximately HK$330,632,000) and approximately HK$311,321,000 respectively.

The net assets acquired from the various transactions, and the goodwill arising, are as follows:

Acquiree’s carrying amount before Fair value combination adjustments Fair value HK$’000 HK$’000 HK$’000

Net assets acquired: Property, plant and equipment (Note 15) 54,761 14,183 68,944 Interest in an associate 146 — 146 Prepaid land lease payments (Note 16) —9,704 9,704 Inventories 25,671 (2,384) 23,287 Trade and other receivables 105,298 — 105,298 Prepayments and deposits 1,350 — 1,350 Bank and cash balances 150,977 — 150,977 Trade and other payables (240,953) — (240,953) Current tax liabilities (2,833) — (2,833) Deferred tax liabilities (Note 29) —(5,600) (5,600)

NET ASSETS 94,417 15,903 110,320 Goodwill on acquisition 938,670

Total consideration 1,048,990

Total consideration, satisfied by Share consideration 200,006 Cash consideration 841,953 Direct cost relating to the acquisition 7,031

1,048,990

Net cash outflow arising on acquisition Cash consideration paid (841,953) Direct cost relating to the acquisition (7,031) Bank and cash balances acquired 150,977

(698,007)

– 90 – APPENDIX I FINANCIAL INFORMATION OF THE GROUP

17. GOODWILL (continued)

The new subsidiaries and associates contributed approximately HK$91,142,000 to the Group’s turnover and approximately HK$19,389,000 to the Group’s profit after tax for the period between the date of acquisition and the balance sheet date.

If the acquisitions had been completed on 1 January 2008, total Group turnover would have been increased by approximately HK$213,841,000 and profit after tax for the year would have been increased by approximately HK$45,027,000. The proforma information is for illustrative purposes only and is not necessarily an indicative turnover and results of operations of the Group that actually would have been achieved had the acquisition been completed on 1 January 2008, nor is it intended to be a projection of future results.

Goodwill acquired in a business combination is allocated, at acquisition, to the cash generating units (“CGUs”) that are expected to benefit from that business combination. Before recognition of impairment losses, the carrying amount of goodwill had been allocated as follows:

2008 2007 HK$’000 HK$’000

Printing of cigarette packages Qingdao Leigh-Mardon Packaging Co., Ltd. (“Qingdao LMPP”) 202,812 192,997 Beijing Leigh-Mardon Pacific Packaging Co., Ltd. (“Beijing LMPP”) 50,230 47,799 World Grand Holdings Limited (“World Grand”) and Kunming World Grand Colour Printing Co., Ltd. (“Kunming World Grand”) 1,235,667 1,175,866 Xiangfan Jinfeihuan Colour Packing Co., Ltd. (“XF Jinfeihuan”) 68,923 59,141 Shenzhen Guilian Printing Limited (“SZ Guilian”) and Shenzhen Kecai Printing Co., Ltd. (“SZ Kecai”) 615,193 527,875 Bengbu Jinhuangshan Rotogravure Printing Co., Ltd. (“BB Jinhuangshan”) 204,085 175,118 Changde Goldroc Rotogravure Printing Co., Ltd. (“CD Goldroc”) 630,142 540,702 HZ Weicheng, Sure Rise and Smart Apex 936,085 —

3,943,137 2,719,498

Manufacturing of transfer/laminated paper and laser film Xian Great Sky Laser Hologram Co., Ltd. (“Xian Hologram”) 1,150 1,094 Zhaotong Antong Package Material Co., Ltd. (“ZT Antong”) 11,330 10,864 Changde Jinfurong Aluminum Foil Packing Material Co., Ltd. — 20,317

12,480 32,275

3,955,617 2,751,773

The recoverable amounts of the CGUs are determined from value in use calculations. The key assumptions for the value in use calculations are those regarding the discount rates, growth rates and budgeted gross margin and turnover during the period. The Group estimates discount rates using pre-tax rates that reflect current market assessments of the time value of money and the risks specific to the CGUs. Budgeted gross margin and turnover are based on past practices and expectations on market development.

– 91 – APPENDIX I FINANCIAL INFORMATION OF THE GROUP

17. GOODWILL (continued)

The Group prepares cash flow forecasts derived from the most recent financial budgets approved by the directors for the next five years with the residual period using the growth rate of range from 2% to 5% (2007: 5%).

The rate used to discount the forecast cash flows are as follows:

2008 2007

Printing of cigarette packages 13.4% 14.3% Manufacturing of transfer/laminated paper and laser film 13.4% 14.3%

18. INTERESTS IN ASSOCIATES

2008 2007 HK$’000 HK$’000

Unlisted investments in the PRC: Share of net assets 373,350 321,209

Details of the Group’s associates at 31 December 2008 are as follows:

Percentage Place of Particulars of of interest incorporation/ registered held/profit Principal Name operation capital sharing activities

Nanjing Sanlong PRC US$2,100,000 48%/48% Printing of Packing Co., Ltd cigarette (“NJ Sanlong”) packages

CD Goldroc PRC RMB163,052,000 48.85%/45% Printing of cigarette packages

Sure Rise BVI US$100 25%/25% Investment holding

Smart Apex BVI US$100 49%/49% Technology supporting

– 92 – APPENDIX I FINANCIAL INFORMATION OF THE GROUP

18. INTERESTS IN ASSOCIATES (continued)

Summarised financial information in respect of the Group’s associates is set out below:

Assets Liabilities Equity Revenue Profit HK$’000 HK$’000 HK$’000 HK$’000 HK$’000

2008 100 per cent 1,301,696 (480,865) 820,831 1,708,676 373,426 Group’s effective interest 574,216 (200,866) 373,350 776,148 172,878

2007 100 per cent 1,009,829 (315,091) 694,738 646,733 152,317 Group’s effective interest 470,906 (149,697) 321,209 303,593 71,152

19. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS

2008 2007 HK$’000 HK$’000

Equity securities, at fair value Listed in Hong Kong — 313,324 Listed outside Hong Kong 5,658 6,726

Market value of listed securities 5,658 320,050

The above financial assets are designated as at fair value through profit or loss on initial recognition.

The fair values of listed securities are based on current bid prices.

20. LOAN RECEIVABLES

On 13 June 2007, the Company adopted an employees’ share award scheme (the “Scheme”) under which shares (the “Awarded Shares”) of the Company may be awarded to certain employees of the Group (the “Selected Employees”) in accordance with the terms and conditions imposed by the Board of the Company. The Scheme is valid and effective for a term of 10 years commencing on 13 June 2007. Pursuant to the rules of the Scheme, an administrator has been appointed to administer the Scheme and hold the Awarded Shares. On or after the vesting date, the Selected Employees shall be entitled to sell in whole or in part of his/her Awarded Shares through the administrator and receive the gain on the disposal of his/her Awarded Shares, being the excess of sales proceeds over the acquisition costs of the Awarded Shares purchased by the Company, together with the related income attributable to the Awarded Shares disposed. Accordingly, fair vale of the Awarded Shares of approximately HK$313,324,000 was recognised by the Group as at 31 December 2007.

In June 2008, the Company made clarifications with the Selected Employees on certain terms and operation mechanism of the Scheme. In summary:

(a) Neither the Company, the administrator nor the Selected Employees shall have any voting rights to the Company’s shares purchased by the administrator to the Scheme.

(b)All the beneficial interests and risks of the shares purchased under the Scheme are designated to the Selected Employees upon the purchase of the Company’s shares.

(c) The funds made available by the Company to the administrator (the “Fund”) for purchases of Company’s shares in accordance with the Scheme are advances made by the Company to the Selected Employees.

– 93 – APPENDIX I FINANCIAL INFORMATION OF THE GROUP

20. LOAN RECEIVABLES (continued)

After the aforementioned clarifications, the Company considered that the Fund made by the Company to assist the Selected Employees to purchase the Awarded Shares should be accounted for as loan receivables from the Selected Employees. The loan receivables, bear interest at average fixed rates of approximately 3.5% per annum and will be repaid when the Awarded Shares are disposed of. Any gain or loss on disposal of the Awarded Shares shall be accounted to or borne by the Selected Employees. Accordingly, the Fund was de-recognised as financial assets at fair value through profit or loss and loan receivables are recognised when the clarified Scheme became effective and as a result a net loss of approximately HK$16,531,000 was recognised during current year.

21. AVAILABLE-FOR-SALE FINANCIAL ASSET

Available-for-sale financial asset represents a club membership in the PRC.

As no quoted market prices in an active market is available, the available-for-sale financial asset is carrying at cost less any identified impairment.

22. INVENTORIES

2008 2007 HK$’000 HK$’000

Raw materials 196,788 158,853 Work in progress 74,209 47,793 Finished goods 107,696 109,536

378,693 316,182

23. TRADE AND OTHER RECEIVABLES

The general credit terms of the Group granted to its trade customers range from one month to three months. The Group seeks to maintain strict control over its outstanding receivables. Overdue balances are reviewed regularly by the senior management. An aging analysis of trade receivables, based on the invoice date, net of allowances, is as follows:

2008 2007 HK$’000 HK$’000

Current to 30 days 427,489 398,716 31 to 90 days 133,908 236,111 Over 90 days 40,702 113,618

Trade receivables 602,099 748,445 Bills receivables (Note 33) 152,066 58,758 Other receivables 118,885 27,021

873,050 834,224

– 94 – APPENDIX I FINANCIAL INFORMATION OF THE GROUP

23. TRADE AND OTHER RECEIVABLES (continued)

An analysis of allowance for estimated irrecoverable trade receivables is as follows:—

HK$’000

At 1 January 2007 218 Allowance for the year 648 Exchange differences 43

At 31 December 2007 909 Allowance for the year 1,764 Write off (1,860) Exchange differences 73

At 31 December 2008 886

As of 31 December 2008, trade receivables of HK$40,702,000 (2007: HK$113,618,000) were past due but not impaired. These relate to a number of independent customers for whom there is no recent history of default. An aging analysis of these trade receivables is as follows:

2008 2007 HK$’000 HK$’000

Up to 6 months 31,428 109,688 Over 6 months 9,274 3,930

40,702 113,618

At 31 December 2008, bill receivables of approximately HK$18,502,000 (2007: Nil) were pledged to banks to secure banking facilities granted to the Group (Note 33).

24. PLEDGED BANK DEPOSITS AND BANK AND CASH BALANCES

The bank deposits of approximately HK$494,952,000 (2007: HK$538,584,000) carry fixed interest rates ranged from 0.1% to 4.1% (2007: 1.5% to 4.2%) and therefore are subject to fair value interest rate risk. The Group’s pledged bank deposits represented deposits pledged to banks to secure banking facilities granted to the Group (Note 33).

Included in the pledged bank deposits and bank and cash balances is an amount of approximately HK$553,386,000 as at 31 December 2008 (2007: HK$340,907,000) denominated in RMB. Conversion of RMB into foreign currencies is subject to the PRC’s Foreign Exchange Control Regulations and Administration of Settlement, Sale and Payment of Foreign Exchange Regulations.

– 95 – APPENDIX I FINANCIAL INFORMATION OF THE GROUP

25. TRADE AND OTHER PAYABLES

An aging analysis of trade payables, based on the date of invoices, is as follows:

2008 2007 HK$’000 HK$’000

Current to 30 days 296,765 180,736 31 to 90 days 157,563 123,427 Over 90 days 13,445 39,717

Trade payables 467,773 343,880 Bills payables — secured 118,576 127,206 Other payables 337,130 476,771

923,479 947,857

26. BANK BORROWINGS

2008 2007 HK$’000 HK$’000

Bank loans 1,639,374 1,438,905 Bank overdrafts — 106

1,639,374 1,439,011

Secured (Note 33) 513,180 368,590 Unsecured 1,126,194 1,070,421

1,639,374 1,439,011

The borrowings are repayable as follows:— On demand or within one year 842,491 355,962 In the second year 706,774 493,970 In the third to fifth years, inclusive 90,109 589,079

1,639,374 1,439,011 Less: Amount due for settlement within 12 months (shown under current liabilities) (842,491) (355,962)

Amount due for settlement after 12 months 796,883 1,083,049

– 96 – APPENDIX I FINANCIAL INFORMATION OF THE GROUP

26. BANK BORROWINGS (continued)

The carrying amounts of the Group’s borrowings are denominated in the following currencies:—

HK$ RMB USD EUR Total HK$’000 HK$’000 HK$’000 HK$’000 HK$’000

2008 Bank loans 629,435 377,786 621,732 10,421 1,639,374

2007 Bank loans 457,957 356,631 624,317 — 1,438,905 Bank overdrafts 106 — — — 106

458,063 356,631 624,317 — 1,439,011

The ranges of effective interest rates at 31 December were as follows:

2008 2007

Bank loans 2.75% - 8.32% 4.25% - 8.02% Bank overdrafts — 7.00%

Bank borrowings of approximately HK$22,565,000 (2007: Nil) are arranged at fixed interest rate thus exposing the Group to fair value interest rate risk. Bank borrowings of approximately HK$1,616,809,000 (2007: HK$1,439,011,000) are arranged at floating rates, thus exposing the Group to cash flow interest rate risk. The Group has entered into currency and interest rate swaps to exchange USD loans of approximately HK$621,732,000 and HK$ loans of HK$430,000,000 to RMB loans and to exchange variable rate interest of these loans to fixed rate interest in order to hedge against the cash flow currency and interest rate risks (Note 28).

27. OBLIGATIONS UNDER FINANCE LEASES

Present value Minimum lease of minimum payments lease payments 2008 2007 2008 2007 HK$’000 HK$’000 HK$’000 HK$’000

Within one year 17,151 21,060 16,103 18,461 In the second to fifth years, inclusive 19,253 37,241 18,633 34,834

36,404 58,301 34,736 53,295

Less: future finance charges (1,668) (5,006) N/A N/A

Present value of lease obligations 34,736 53,295 34,736 53,295

Less: Amount due for settlement within 12 months (shown under current liabilities) (16,103) (18,461)

Amount due for settlement after 12 months 18,633 34,834

– 97 – APPENDIX I FINANCIAL INFORMATION OF THE GROUP

27. OBLIGATIONS UNDER FINANCE LEASES (continued)

The lease terms range from 2 to 5 years.

At 31 December 2008, the average effective borrowing rate was 4.0% (2007: 5.5%). All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.

The Group’s obligations under finance leases are effectively secured as the rights to the leased assets (Note 15) revert to the lessor in the event of default and guarantees executed by two subsidiaries. All finance lease obligations are denominated in HK$.

28. OTHER FINANCIAL ASSETS/(LIABILITIES)

Current Non-current 2008 2007 2008 2007 HK$’000 HK$’000 HK$’000 HK$’000

Derivatives under hedge accounting

Cash flow hedges — Interest rate swaps 4,511 23,056 655 19,734

Cash flow hedges — Foreign currency swaps (53,396) — (27,290) (190,812)

Interest rate swaps:

The Group used interest rate swaps to minimise its exposure to cash flow risk of certain of its variable rate HK$ and USD bank borrowings by swapping the borrowings from variable rates to fixed rates. The interest rate swaps and the corresponding borrowings have the same terms and the Directors consider that the interest rate swaps are highly effective hedging instruments. Major terms of the interest rate swaps are set out below:

Notional amount Maturity Swaps

USD20,000,000 semi-annually from May 2008 USD 6 months Libor + 0.93% for 2.75% to May 2010 USD17,000,000 semi-annually from May 2008 USD 6 months Libor + 0.93% for 2.85% to May 2010 USD40,000,000 semi-annually from May 2008 USD 6 months Libor + 0.93% for 3.25% to May 2010 USD3,000,000 semi-annually from May 2008 USD 6 months Libor + 0.93% for 2.85% to May 2010 HK$273,000,000 semi-annually from February 2008 HK$ 6 months Hibor + 0.93% for 2.85% to August 2010 HK$157,000,000 semi-annually from February 2008 HK$ 6 months Hibor + 0.93% for 0.30% to August 2010

At the balance sheet date, fair value gain of approximately HK$3,073,000 (2007: HK$37,675,000) have been deferred in equity and are expected to release to the consolidated income statement at various dates in the coming two years after the balance sheet date, the period in which the repayment of bank interests are expected to occur.

– 98 – APPENDIX I FINANCIAL INFORMATION OF THE GROUP

28. OTHER FINANCIAL ASSETS/(LIABILITIES) (continued)

The fair values of interest rate swaps are measured at the present value of future cash flows estimated and discounted based on the applicable yield curves derived from quoted interest rates.

Foreign currency swaps:

At the balance sheet date, the Group had the following foreign exchanges swaps designated as highly effective hedging instruments in order to manage the Group’s foreign currency exposure in relation to certain foreign currency bank borrowings.

The terms of the foreign exchange swaps have been negotiated to match the terms of the respective designated hedged items.

Major terms of these contracts are as follows:

Notional amount Maturity Swaps

USD20,000,000 2009-2010 USD1/RMB7.6589 USD17,000,000 2009-2010 USD1/RMB7.6602 USD40,000,000 2009-2010 USD1/RMB7.6284 USD3,000,000 2009-2010 USD1/RMB7.6070 HK$273,000,000 2009-2010 HK$1/RMB0.9732 HK$157,000,000 2009-2010 HK$1/RMB0.9540

At the balance sheet date, fair value loss of approximately HK$65,133,000 (2007: HK$190,010,000) have been deferred in equity and are expected to be released to the consolidated income statement at various dates in the coming two years after the balance sheet date, the period in which the repayment of bank borrowings are expected to occur.

The fair values of foreign currency swaps are measured using quoted forward exchange rates and yield curves derived from quoted interest rates matching maturities of the contracts.

During the year, gains and losses transferred from equity to profit or loss are included in the following line items in the consolidated income statement:

2008 2007 HK$’000 HK$’000

Other income (31,511) (802) Finance costs (Note 8) 13,738 14,231

(17,773) 13,429

– 99 – APPENDIX I FINANCIAL INFORMATION OF THE GROUP

29. DEFERRED TAX LIABILITIES

The following are the major deferred tax liabilities recognised by the Group.

Revaluation Accelerated of property tax plant and Interests in Withholding depreciation equipment associates tax Total HK$’000 HK$’000 HK$’000 HK$’000 HK$’000

At 1 January 2007 — 17,726 — — 17,726 Acquisition of subsidiaries 132 8,883 6,672 — 15,687 Credit to income statement — (1,855) — — (1,855) Exchange differences — 279 — — 279

At 31 December 2007 132 25,033 6,672 — 31,837 Acquisition of subsidiaries (Note 17) — 5,600 — — 5,600 Charge/(credit) to income statement 15 (3,045) — 33,406 30,376 Exchange differences — 449 — — 449

At 31 December 2008 147 28,037 6,672 33,406 68,262

30. SHARE CAPITAL

Number of Shares Amount Note ’000 HK$’000

Authorised: Ordinary shares of HK$0.01 each At 1 January and 31 December 2007 1,000,000 10,000 Increase in authorised share capital (a) 1,000,000 10,000

At 31 December 2008 2,000,000 20,000

Issued and fully paid: Ordinary shares of HK$0.01 each At 1 January 2007 783,670 7,837 Issue of new shares (b) 200,000 2,000 Cancellation upon repurchase of shares (c) (6,198) (62)

At 31 December 2007 977,472 9,775

Issue of new shares (d) 78,300 783 (e) 34,189 342

At 31 December 2008 1,089,961 10,900

– 100 – APPENDIX I FINANCIAL INFORMATION OF THE GROUP

30. SHARE CAPITAL (continued)

Notes:

(a) On 15 May 2008, the authorised share capital of the Company was increased from HK$10,000,000 to HK$20,000,000 by the creation of additional 1,000,000,000 new shares of HK$0.01 each.

(b) On 31 October 2007, 200,000,000 new ordinary shares of HK$0.01 each were issued at HK$7.0 per share as part of the consideration for acquisition of 100% shareholding of Brilliant Circle Holdings International Limited (“Brilliant Circle”). The premium on the issue of shares of approximately HK1,398,000,000 was credited to the Company’s share premium account.

(c) During the year ended 31 December 2007, the Company repurchased on the Stock Exchange a total of 6,198,000 ordinary shares of the Company at an aggregate consideration of HK$69,180,000. All of these shares were cancelled. The premium payable on repurchases of shares was charged to the share premium account.

(d) Pursuant to a shares subscription agreement dated 20 June 2008, the subscriber, Amcor Fibre Packaging-Asia Pte Limited, subscribed for 78,300,000 new shares of HK$0.01 each at a subscription price of HK$8.94 per share on 31 July 2008. The premium on the issue of shares of approximately HK$699,219,000 was credited to the Company’s share premium account, net of share issue expenses of HK$1,438,000.

(e) On 31 October 2008, 34,189,000 new ordinary shares of HK$0.01 each were issued at HK$5.85 per share as part of the consideration for acquisition of 100% shareholding of Purple Art (Note 17). The premium on the issue of shares of approximately HK$199,664,000 was credited to the Company’s share premium account.

(f) All shares, both issued and unissued, rank pari passu in all respects at 31 December 2008.

The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern and to maximise the return to the shareholders through the optimisation of the debt and equity balance.

The Group sets the amount of capital in proportion to risk. The Group manages the capital structure and makes adjustments to it in the light of changes in economic conditions and the risk characteristics of the underlying assets. In order to maintain or adjust the capital structure, the Group may adjust the payment of dividends, issue new shares, buy-back shares, raise new debts, redeem existing debts or sell assets to reduce debts.

The Group monitors capital on the basis of the debt-to-adjusted capital ratio. This ratio is calculated as net debt divided by adjusted capital. Net debt is calculated as total borrowings (as detailed in Notes 26 and 27) less cash and cash equivalents. Adjusted capital comprises all components of equity (i.e. share capital, share premium, minority interests, retained earnings and other reserves) other than debit amounts recognised in equity relating to cash flow hedges.

During 2008, the Group’s strategy, which was unchanged from 2007, was to maintain a capital structure with a lowest weighted average cost of capital. The debt-to-adjusted capital at 31 December 2008 and at 31 December 2007 were 13.8% and 16.0%, respectively.

– 101 – APPENDIX I FINANCIAL INFORMATION OF THE GROUP

30. SHARE CAPITAL (continued)

2008 2007 HK$’000 HK$’000

Total borrowings 1,674,110 1,492,306 Less: cash and cash equivalents (898,899) (811,038)

Net debt 775,211 681,268

Total equity 5,575,214 4,092,606 Add: debit amounts recognised in equity relating to cash flow hedges 62,060 152,335

Adjusted capital 5,637,274 4,244,941

Debt-to-adjusted capital 13.8% 16.0%

The decrease in debt-to-adjusted capital was primarily due to expansion in equity base through shares placement during the year and continuous growth of operating results.

The externally imposed capital requirements of the Group is to maintain a total borrowings to consolidated tangible net worth not higher than 1:1 (2007: 1:1) on 31 December 2008 in accordance with the bank covenant imposed. As at 31 December 2008, ratio for total debt to consolidated tangible net worth was 0.99:1 (2007: 0.99:1).

31. RESERVES

Nature and purpose of reserves

(i) Share premium account

Under the Companies Law of the Cayman Islands, the funds in the share premium account of the Company are distributable to the shareholders of the Company provided that immediately following the date on which the dividend is proposed to be distributed, the Company will be in a position to pay off its debts as they fall due in the ordinary course of business.

(ii) Exchange reserve

The exchange reserve comprises all foreign exchange differences arising from the translation of the financial statements of foreign operations. The reserve is dealt with in accordance with the accounting policies set out in Note 3(D) (iii) to the financial statements.

(iii) Hedging reserve

The hedging reserve comprises the effective portion of the cumulative net change in the fair value of hedging instruments used in cash flow hedges pending subsequent recognition of the hedged cash flows in accordance with the accounting policy adopted for cash flow hedges in Note 3(V) to the financial statements.

(iv) Statutory reserves

The statutory reserves, which are non-distributable, are appropriated from the profit after taxation of the Group’s PRC subsidiaries under the applicable laws and regulations in the PRC.

– 102 – APPENDIX I FINANCIAL INFORMATION OF THE GROUP

32. RELATED PARTY TRANSACTIONS

Save as disclosed elsewhere in these financial statements, the Group had the following material related party transactions during the year:

2008 2007 HK$’000 HK$’000

Sales to associates 369,135 219,946 Purchases from an associate 47,648 801 Purchases from related companies 89,043 2,919 Rental income received from a related company 2,697 512 Consultancy fee income received from an associate 17,342 —

Notes:

(a) The sales to associates and purchases from an associate and related companies were made under normal commercial terms.

(b) Rental income received is determined by mutually agreed term between the related company and the Group.

(d) An office premises occupied by the Group was provided by a related company at no cost.

(e) A substantial shareholder and/or his family member has beneficial interests in the abovesaid related companies.

At balance sheet date, the following balances with related parties were included in:

2008 2007 HK$’000 HK$’000

Trade and other receivables: Associates 63,236 78,435

Trade and other payables: Associates 83,591 69,604 A substantial shareholder 5,990 42,537

The amounts due from associates are unsecured, interest free and repayable within 90 days.

The amounts due to associates and a substantial shareholder are unsecured, interest free and have no fixed term of repayment.

33. BANKING FACILITIES

As at 31 December 2008, banking facilities of the Group are mainly secured by the charge over certain bank deposits (Note 24); property, plant and equipment (Note 15); prepaid land lease payments (Note 16), bills receivable (Note 23); corporate guarantees given by the Company, certain subsidiaries, an associate and a company beneficially owned by a substantial shareholder; personal guarantees executed by a substantial shareholder and his family members and a property held by a substantial shareholder of the Company.

At as 31 December 2007, banking facilities of the Group are mainly secured by the charge over certain bank deposits of the Group (Note 24); property, plant and equipment (Note 15); corporate guarantees given by the Company, an associate and a company beneficially owned by a substantial shareholder; personal guarantees executed by a substantial shareholder and his family members and a property held by a substantial shareholder of the Company.

– 103 – APPENDIX I FINANCIAL INFORMATION OF THE GROUP

34. COMMITMENTS

As at 31 December 2008, the Group had the following commitments:

a. Operating lease commitments

The Group leases certain of its office and factory premises under operating lease arrangements. The original lease terms for the office and factory premises range from one year to fifteen years.

Total future minimum lease payments under non-cancellable operating leases are as follows:

2008 2007 HK$’000 HK$’000

Within one year 21,319 21,098 In the second to fifth years, inclusive 70,374 70,597 After five years 105,488 123,645

197,181 215,340

b. Capital commitments

2008 2007 HK$’000 HK$’000

Contracted but not provided for: Acquisition of property, plant and equipment 70,790 33,024

35. CONTINGENT LIABILITIES

At 31 December 2008, the Group did not have any significant contingent liabilities (2007: Nil).

– 104 – APPENDIX I FINANCIAL INFORMATION OF THE GROUP

36. SEGMENT INFORMATION

Primary reporting format - business segments

Manufacturing of Printing of transfer/laminated paper Corporate and cigarette packages and laser film unallocated Elimination Consolidated 2008 2007 2008 2007 2008 2007 2008 2007 2008 2007 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000

REVENUE External sales 2,796,994 1,830,536 325,890 301,785 — — — — 3,122,884 2,132,321 Inter-segment sales 99,437 8,770 134,018 128,443 — — (233,455 ) (137,213 ) — —

Total 2,896,431 1,839,306 459,908 430,228 — — (233,455 ) (137,213 ) 3,122,884 2,132,321

RESULTS Segment results 633,714 389,240 11,214 43,766 — — — — 644,928 433,006

Unallocated expenses (70,537 ) (65,223 ) Other income 85,816 53,331 Finance costs (62,855 ) (24,319 ) Share of profit of associates 172,229 71,152 — — 649 — — — 172,878 71,152 Income tax expenses (147,160 ) (68,044 )

Profit for the year 623,070 399,903

ASSETS Segment assets 2,607,031 2,234,222 450,755 417,501 — — — — 3,057,786 2,651,723 Interests in associates 372,555 321,209 — — 795 — — — 373,350 321,209 Unallocated assets 4,926,604 3,810,903

Consolidated total assets 8,357,740 6,783,835

LIABILITIES Segment liabilities 1,243,254 921,996 90,274 162,590 — — — — 1,333,528 1,084,586 Unallocated liabilities 1,448,998 1,606,643

Consolidated total liabilities 2,782,526 2,691,229

OTHER INFORMATION Capital expenditure 115,123 238,408 57,186 8,377 3,881 2,513 — — 176,190 249,298 Depreciation and amortisation 112,197 53,168 18,715 13,601 5,710 4,035 — — 136,622 70,804 Impairment losses on receivables — 5,707 1,975 1,991 12,711 20 — — 14,686 7,718 Write down of inventories 995 2,960 13,638 (133 ) — — — — 14,633 2,827 Other non-cash expenses other than depreciation and amortisation 5,528 2,210 13,216 — 17,598 — — — 36,342 2,210

Secondary reporting format - geographical segments

Over 90% of the Group’s revenue and assets are derived from customers and operations based in the PRC and accordingly, no further analysis of the Group’s geographical segment is disclosed.

– 105 – APPENDIX I FINANCIAL INFORMATION OF THE GROUP

37. PRINCIPAL SUBSIDIARIES

Issued and Percentage of Place of fully paid-up ownership incorporation/ share capital/ interest/profit registration registered sharing Principal Name and operation capital Direct Indirect activities

AMVIG Group Limited British Virgin Ordinary HK$1,000 100% — Investment holding Islands (“BVI”) AMVIG Investment Limited Hong Kong Ordinary — 100% Investment holding HK$6,060,100 BB Jinhuangshan (Note a) PRC Registered capital — 52.64% Printing of cigarette USD7,622,800 /37.64% packages BCPPL BVI Ordinary USD10,000 — 100% Investment holding Beijing LMPP (Note b) PRC Registered capital — 83% Printing of cigarette USD13,000,000 packages Bellgate International Limited BVI Ordinary — 100% Investment holding HK$509,040,001 Brilliant Circle Development Hong Kong Ordinary — 100% Investment holding Limited HK$2,000,000 Brilliant Circle BVI Ordinary USD1 — 100% Investment holding Charm Profit Holdings Limited Hong Kong Ordinary HK$1 — 100% Investment holding Dongguan AMVIG Industrial PRC Registered capital — 100% Printing of cigarette Co., Ltd. (“Dongguan AMVIG”) USD15,000,000 packages and (Note c) manufacturing of transfer/laminated paper Dongguan KWG Colour Printing PRC Registered capital — 55% Printing of cigarette Co., Ltd # (“DG KWG”) (Note d) HK$40,000,000 packages Famous Plus Group Limited Hong Kong Ordinary HK$100 — 55% Investment holding Glory Express International Limited Hong Kong Ordinary HK$2 — 100% Investment holding HZ Weicheng (Note e) PRC Registered Capital — 100% Printing of cigarette USD10,000,000 packages Kunming World Grand (Note f) PRC Registered capital — 100% Printing of cigarette USD7,500,000 packages Leigh-Mardon Pacific Singapore Ordinary — 100% Investment holding Packaging Pte Ltd. SG$85,495,870 Mattie Hologram (Note g) PRC Registered capital — 100% Manufacturing of EURO3,000,000 laser film Mega Vision Enterprises Limited BVI Ordinary USD1 — 100% Investment holding Qingdao LMPP (Note h) PRC Registered capital — 60% Printing of cigarette USD15,515,000 packages SZ Guilian (Note i) PRC Registered capital — 100% Investment holding HK$9,600,000

SZ Kecai # (note j) PRC Registered capital — 99.31%/99% Printing of cigarette RMB144,870,000 packages

– 106 – APPENDIX I FINANCIAL INFORMATION OF THE GROUP

37. PRINCIPAL SUBSIDIARIES (continued)

Issued and Percentage of Place of fully paid-up ownership incorporation/ share capital/ interest/profit registration registered sharing Principal Name and operation capital Direct Indirect activities

Union Virtue International Limited BVI Ordinary USD1 — 100% Investment holding Victory Honest (Holdings) Limited Hong Kong Ordinary HK$1 — 100% Investment holding World Grand Hong Kong Ordinary — 100% Investment holding HK$13,333,333 XF Jinfeihuan (Note k) PRC Registered capital — 79.6% Printing of cigarette USD3,000,000 packages

Xian Hologram # (Note l) PRC Registered capital — 51% Manufacturing of RMB7,140,000 laser film ZT Antong # (Note m) PRC Registered capital — 80%/ 51% Manufacturing of USD1,000,000 transfer/laminated paper

Notes:

(a) BB Jinhuangshan is a sino-foreign equity joint venture enterprise with an operating period of 21 years commencing from 22 October 1997.

(b) Beijing LMPP is a sino-foreign equity joint venture enterprise with an operating period of 50 years commencing from 12 May 1995.

(c) Dongguan AMVIG is a wholly foreign-owned enterprise with an operating period of 50 years commencing from 23 February 1993.

(d) DG KWG is a wholly foreign-owned enterprise with an operating period of 25 years commencing from 15 February 2007.

(e) HZ Weicheng is a wholly foreign-owned enterprise with an operating period of 30 years commencing from 30 March 1996.

(f) Kunming World Grand is a wholly foreign-owned enterprise with an operating period of 20 years commencing from 7 March 2002.

(g) Mattie Hologram is a wholly foreign-owned enterprise with an operating period of 50 years commencing from 21 June 2004.

(h) Qingdao LMPP is a sino-foreign equity joint venture enterprise with an operating period of 30 years commencing from 19 May 1993.

(i) SZ Guilian is a wholly foreign-owned enterprise with an operating period of 20 years commencing from 22 December 1990.

(j) SZ Kecai is a sino-foreign equity joint venture enterprise with an operating period of 10 years commencing from 21 July 2003.

(k) XF Jinfeihuan is a sino-foreign equity joint venture enterprise with an operating period of 15 years commencing from 31 July 2000.

(l) Xian Hologram is a sino-foreign equity joint venture enterprise with an operating period of 10 years commencing from 12 April 2000.

(m) ZT Antong is a sino-foreign equity joint venture enterprise with an operating period of 10 years commencing from 19 May 2001.

# The English names of this company represents management’s best efforts at translating the Chinese names of these companies as no English names have been registered.

38. APPROVAL OF FINANCIAL STATEMENTS

The financial statements were approved and authorised for issue by the Board of Directors on 7 April 2009.

– 107 – APPENDIX I FINANCIAL INFORMATION OF THE GROUP

3. UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

Set out below is the unaudited consolidated interim financial statements and notes thereon of the Company as extracted from pages 20 to 38 of the interim report of the Company for the six months ended 30 June 2009. References to page number in this appendix are to the page numbers of such interim report of the Company. The Board did not recommend any payment of interim dividend for the six months ended 30 June 2009 (six months ended 30 June 2008: HK8.9 cents per Share, HK$93,964,000 in total). There were no extraordinary or exceptional items during each of the six months ended 30 June 2008 and 2009.

CONDENSED CONSOLIDATED INCOME STATEMENT For the six months ended 30 June 2009 For the six months ended 30 June 2009 2008 (Unaudited) (Unaudited) Note HK$’000 HK$’000

Turnover 2 1,697,161 1,475,258 Cost of goods sold (1,115,896) (998,177)

Gross profit 581,265 477,081

Other income 11,654 29,832 Selling and distribution costs (79,381) (82,017) Administrative expenses (126,715) (101,118) Other operating expenses (7,476) (3,357) Non-operating expenses – (16,531) Finance costs 3 (35,318) (30,448) Share of profit of associates 43,019 77,483

Profit before tax 4 387,048 350,925

Income tax expenses 5 (75,414) (51,017)

Profit for the period 311,634 299,908

Attributable to: Owners of the Company 202,191 235,055 Minority interests 109,443 64,853

311,634 299,908

Earnings per share – basic (HK cents) 6(a) 18.6 24.0

– diluted (HK cents) 6(b) N/A N/A

– 108 – APPENDIX I FINANCIAL INFORMATION OF THE GROUP

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME For the six months ended 30 June 2009

For the six months ended 30 June 2009 2008 (Unaudited) (Unaudited) HK$’000 HK$’000

Profit for the period 311,634 299,908

Other comprehensive income: Exchange differences on translating foreign operations 61,826 297,617 Loss on cash flow hedges (39,247) (22,322)

Other comprehensive income for the period, net of tax 22,579 275,295

Total comprehensive income for the period 334,213 575,203

Attributable to: Owners of the Company 222,078 492,969 Minority interests 112,135 82,234

334,213 575,203

– 109 – APPENDIX I FINANCIAL INFORMATION OF THE GROUP

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION At 30 June 2009 30 June 31 December 2009 2008 (Unaudited) (Audited) Note HK$’000 HK$’000

ASSETS Non-current assets Property, plant and equipment 8 1,280,546 1,306,618 Prepaid land lease payments 51,211 51,685 Goodwill 3,992,770 3,955,617 Interests in associates 319,419 373,350 Financial assets at fair value through profit or loss 9 5,909 5,658 Loan receivables 308,019 305,211 Available-for-sale financial assets 1,569 1,557 Other financial assets 553 655 Other assets 92,086 48,487

6,052,082 6,048,838

Current assets Inventories 377,149 378,693 Trade and other receivables 10 994,471 873,050 Prepaid land lease payments 1,321 1,345 Prepayments and deposits 114,901 54,357 Other financial assets – 4,511 Pledged bank deposits 68,767 98,047 Bank and cash balances 811,661 898,899

2,368,270 2,308,902

Total assets 8,420,352 8,357,740

EQUITY Capital and reserves Share capital 11 10,900 10,900 Reserves 5,439,722 5,264,512

Equity attributable to owners of the Company 5,450,622 5,275,412 Minority interests 352,801 299,802

Total equity 5,803,423 5,575,214

– 110 – APPENDIX I FINANCIAL INFORMATION OF THE GROUP

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION (continued) At 30 June 2009

30 June 31 December 2009 2008 (Unaudited) (Audited) Note HK$’000 HK$’000

LIABILITIES Non-current liabilities Bank borrowings 305,301 796,883 Obligations under finance leases 51 18,633 Other financial liabilities 17,489 27,290 Deferred tax liabilities 85,835 68,262

408,676 911,068

Current liabilities Trade and other payables 12 835,482 923,479 Current tax liabilities 31,954 35,989 Current portion of bank borrowings 1,250,361 842,491 Current portion of obligations under finance leases 51 16,103 Other financial liabilities 90,405 53,396

2,208,253 1,871,458

Total liabilities 2,616,929 2,782,526

TOTAL EQUITY AND LIABILITIES 8,420,352 8,357,740

Net current assets 160,017 437,444

Total assets less current liabilities 6,212,099 6,486,282

– 111 – APPENDIX I FINANCIAL INFORMATION OF THE GROUP

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY For the six months ended 30 June 2009

Attributable to owners of the Company

(Unaudited) Share Share Exchange Revaluation Hedging Retained Statutory Minority Total capital premium reserve reserve reserve profits reserves 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 2009 10,900 3,887,937 481,167 8,010 (62,060 ) 796,571 152,887 5,275,412 299,802 5,575,214

Total comprehensive income for the period – – 59,134 – (39,247 ) 202,191 – 222,078 112,135 334,213

Transfer from retained profits – – – – – (2,758 ) 2,758 – – –

Dividend paid for 2008 (Note 7(b)) –––––(46,868 ) – (46,868 ) – (46,868 )

Dividend paid to minority interests – – – – ––––(59,136 ) (59,136 )

Changes in equity for the period – – 59,134 – (39,247 ) 152,565 2,758 175,210 52,999 228,209

At 30 June 2009 10,900 3,887,937 540,301 8,010 (101,307 ) 949,136 155,645 5,450,622 352,801 5,803,423

For the six months ended 30 June 2008

Attributable to owners of the Company

At 1 January 2008 9,775 2,990,492 316,360 8,010 (152,335 ) 562,418 100,696 3,835,416 257,190 4,092,606

Total comprehensive income for the period – – 280,236 – (22,322 ) 235,055 – 492,969 82,234 575,203

Transfer from retained profits – – – – – (7,016 ) 7,016 – – –

Dividend paid for 2007 (Note 7(b)) –––––(86,995 ) – (86,995 ) – (86,995 )

Dividend paid to minority interests – – – – ––––(52,219 ) (52,219 )

Changes in equity for the period – – 280,236 – (22,322 ) 141,044 7,016 405,974 30,015 435,989

At 30 June 2008 9,775 2,990,492 596,596 8,010 (174,657 ) 703,462 107,712 4,241,390 287,205 4,528,595

– 112 – APPENDIX I FINANCIAL INFORMATION OF THE GROUP

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOW For the six months ended 30 June 2009

For the six months ended 30 June 2009 2008 (Unaudited) (Unaudited) HK$’000 HK$’000

NET CASH GENERATED FROM OPERATING ACTIVITIES 121,074 137,144

NET CASH GENERATED FROM/ (USED IN) INVESTING ACTIVITIES 51,311 (289,397)

NET CASH USED IN FINANCING ACTIVITIES (266,029) (207,701)

NET DECREASE IN CASH AND CASH EQUIVALENTS (93,644) (359,954)

Exchange differences arising on consolidation 6,406 39,653

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 898,899 811,038

CASH AND CASH EQUIVALENTS AT END OF PERIOD 811,661 490,737

ANALYSIS OF THE BALANCES OF CASH AND CASH EQUIVALENTS

BANK AND CASH BALANCES 811,661 490,737

– 113 – APPENDIX I FINANCIAL INFORMATION OF THE GROUP

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. BASIS OF PREPARATION AND PRINCIPAL ACCOUNTING POLICIES

These condensed consolidated financial statements have been prepared in accordance with the applicable disclosure requirements of Appendix 16 to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited and with the Hong Kong Accounting Standard 34 “Interim Financial Reporting” (“HKAS 34”) issued by the Hong Kong Institute of Certified Public Accountants (“HKICPA”).

The preparation of an interim financial report in conformity with HKAS 34 requires management to make judgments, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses on a year to date basis. Actual results may differ from these estimates.

This interim financial report contains condensed consolidated financial statements and selected explanatory notes. The notes include an explanation of events and transactions that are significant to an understanding of the changes in the financial position and performance of the Group since the annual financial statements for the year ended 31 December 2008. The condensed consolidated financial statements and notes thereon do not include all of the information required for full set of financial statements prepared in accordance with Hong Kong Financial Reporting Standards (“HKFRSs”, which term collectively includes Hong Kong Financial Reporting Standards (“HKFRS”), Hong Kong Accounting Standards (“HKAS”) and Interpretations).

The condensed consolidated financial statements have been prepared under the historical cost basis, except for certain financial assets and liabilities which are stated at their fair value.

The accounting policies and methods of computation adopted in the preparation of these condensed consolidated financial statements are consistent with those used in the preparation of the audited financial statements of the Group for the year ended 31 December 2008, except for the adoption of certain HKFRSs which are adopted for the first time in the current period.

So far the Group has concluded that the adoption of these new and revised HKFRSs, to the extent that they are relevant to the Group and which are expected to be reflected in the annual financial statements for the year ending 31 December 2009, would not have a significant impact on the Group’s results of operations and financial position.

Among these new standards and interpretations, HKAS 1 (Revised) “Presentation of Financial Statements” is expected to materially change the presentation of the Group’s financial statements. The amendments affect the presentation of owner changes in equity and introduce a statement of comprehensive income. The Group will have the option of presenting items of income and expenses and components of other comprehensive income either in a single statement of comprehensive income with subtotals, or in two separate statements (a separate income statement followed by a statement of comprehensive income). The amendment does not affect the financial position or results of the Group but will give rise to additional disclosures.

The Group has adopted HKFRS 8, “Operating Segments”, effective from 1 January 2009. HKFRS 8 requires operating segments to be identified on the basis of internal reports about components of the Group that are regularly reviewed by the chief operating decision maker in order to allocate resources to the segment and to assess its performance. In contrast, the predecessor standard (HKAS 14 “Segment Reporting”) required an entity to identify two sets of segments (business and geographical), using a risks and returns approach, with the entity’s “system of internal financial reporting to key management personnel” serving only as the starting point for the identification of such segments.

– 114 – APPENDIX I FINANCIAL INFORMATION OF THE GROUP

1. BASIS OF PREPARATION AND PRINCIPAL ACCOUNTING POLICIES (continued)

In the past, the Group’s primary reporting format was business segments. The application of HKFRS 8 has not resulted in a redesignation of the Group’s reportable segments as compared with the primary reportable segments determined in accordance with HKAS 14. Nor has the adoption of HKFRS 8 changed the basis of measurement of segment profit or loss.

The Group has not early applied those new and revised HKFRSs that have been issued but are not yet effective. The Directors anticipate that all of these pronouncements will be adopted in the Group’s accounting policies for the first period beginning after the effective date of the pronouncements.

2. TURNOVER AND SEGMENTAL INFORMATION

The Group’s operating segments under HKFRS 8 are as follows:

–Printing of cigarette packages –Manufacturing of transfer paper and laser film

The following is an analysis of the Group’s revenue by operating segments:

Manufacturing Printing of cigarette of transfer paper packages and laser film Eliminations Total For the six months For the six months For the six months For the six months ended 30 June ended 30 June ended 30 June ended 30 June 2009 2008 2009 2008 2009 2008 2009 2008 (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000

Revenue

External revenue 1,629,245 1,223,033 67,916 252,225 – – 1,697,161 1,475,258 Inter-segment revenue 112,488 42,799 62,301 39,575 (174,789) (82,374) – –

Total revenue 1,741,733 1,265,832 130,217 291,800 (174,789) (82,374) 1,697,161 1,475,258

Segment profit 457,406 308,227 2,762 25,245 (2,028) (2,475) 458,140 330,997

Corporate expenses (90,447) (56,939)

Corporate income 11,654 29,832

Finance costs (35,318) (30,448)

Share of profit of associates 43,019 77,483 43,019 77,483

Profit before tax 387,048 350,925

30 June 31 December 30 June 31 December 30 June 31 December 30 June 31 December 2009 2008 2009 2008 2009 2008 2009 2008 (Unaudited) (Audited) (Unaudited) (Audited) (Unaudited) (Audited) (Unaudited) (Audited) HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000

Segment assets

Segment assets 3,265,490 2,979,586 410,273 450,755 – – 3,675,763 3,430,341 Unallocated assets 4,744,589 4,927,399

Consolidated total assets 8,420,352 8,357,740

– 115 – APPENDIX I FINANCIAL INFORMATION OF THE GROUP

3. FINANCE COSTS

For the six months ended 30 June 2009 2008 (Unaudited) (Unaudited) HK$’000 HK$’000

Interest on bank borrowings 35,378 39,752 Finance lease charges 449 1,070

35,827 40,822 Fair value gain on interest-rate swaps: Cash flow hedge (transfer from equity) (509) (10,374)

35,318 30,448

4. PROFIT BEFORE TAX

The Group’s profit before tax is stated after charging/(crediting) the following:

For the six months ended 30 June 2009 2008 (Unaudited) (Unaudited) HK$’000 HK$’000

Interest income (5,718) (8,667) Directors’ emoluments 4,514 4,346 Cost of inventories sold (Note) 1,115,896 998,177 Depreciation and amortization 82,871 65,739 Loss on disposal of property, plant and equipment 106 2,343 Write down of inventories 527 1,018 Impairment loss/(reversal of impairment loss) on other receivables 7,164 (8) Loss on de-recognition of financial assets at fair value through profit or loss – 16,531

Note:

Cost of inventories sold includes the following which are included in the respective amounts disclosed separately above for the interim period:

For the six months ended 30 June 2009 2008 (Unaudited) (Unaudited) HK$’000 HK$’000

Depreciation 62,773 46,294 Write down of inventories 278 1,018

– 116 – APPENDIX I FINANCIAL INFORMATION OF THE GROUP

5. INCOME TAX EXPENSES

For the six months ended 30 June 2009 2008 (Unaudited) (Unaudited) HK$’000 HK$’000

PRC enterprise income tax – current 55,849 56,060 – under/(over) provision in prior year 29 (1,933) – tax refund – (1,506) Withholding tax 20,953 – Other deferred tax (1,417) (1,604)

75,414 51,017

No provision for Hong Kong Profits Tax has been made as the Group had no assessable profit in Hong Kong. The provision for the People’s Republic of China (“PRC”) income tax is calculated based on the statutory income tax rates according to the relevant income tax laws and regulations in the PRC, mainly depending on the places of establishment and the industries engaged in.

6. EARNINGS PER SHARE

(a) Basic earnings per share is calculated based on the Group’s unaudited profit attributable to owners of the Company for the six months ended 30 June 2009 of HK$202,191,000 (30 June 2008: HK$235,055,000) and the weighted average number of shares of 1,089,961,000 ordinary shares in issue during the period ended 30 June 2009 (30 June 2008: 977,472,000 shares).

(b)Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares in issue to assume conversion of potentially dilutive ordinary shares. There were no potentially dilutive ordinary shares as at 30 June 2009 and 30 June 2008.

7. DIVIDENDS

(a) Dividends attributable to the interim period:

For the six months ended 30 June 2009 2008 (Unaudited) (Unaudited) HK$’000 HK$’000

Proposed interim dividend (2008: HK8.9 cents per share) – 93,964

The Board has resolved not to declare an interim dividend for the Reporting Period.

The interim dividend for the six months ended 30 June 2008 had not been recognised as a liability at the balance sheet date.

– 117 – APPENDIX I FINANCIAL INFORMATION OF THE GROUP

7. DIVIDENDS (continued)

(b) Dividends attributable to the previous financial year, approved and paid during the interim period:

For the six months ended 30 June 2009 2008 (Unaudited) (Unaudited) HK$’000 HK$’000

Final dividend in respect of the financial year ended 31 December 2008, approved and paid during the following interim period, of HK4.3 cents per share (year ended 31 December 2007: HK8.9 cents per share) 46,868 86,995

8. PROPERTY, PLANT AND EQUIPMENT

The Group spent HK$37,617,000 on the construction in progress, and HK$6,843,000 in additions to its existing manufacturing plant in order to upgrade its manufacturing facilities.

9. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS

30 June 31 December 2009 2008 (Unaudited) (Audited) HK$’000 HK$’000

Equity securities, at fair value Listed outside Hong Kong 5,909 5,658

Market value of listed securities 5,909 5,658

The above financial assets are designated as at fair value through profit or loss on initial recognition.

The fair values of listed securities are based on current bid prices.

– 118 – APPENDIX I FINANCIAL INFORMATION OF THE GROUP

10. TRADE AND OTHER RECEIVABLES

The general credit terms of the Group granted to its trade customers range from one month to three months. The Group seeks to maintain strict control over its outstanding receivables. Overdue balances are reviewed regularly by the senior management. The aging analysis of trade receivables, based on the invoice date, net of allowances, is as follows:

30 June 31 December 2009 2008 (Unaudited) (Audited) HK$’000 HK$’000

Current to 30 days 391,270 427,489 31 to 90 days 175,801 133,908 Over 90 days 37,028 40,702

Trade receivables 604,099 602,099 Bills receivables 132,383 152,066 Other receivables 257,989 118,885

994,471 873,050

11. SHARE CAPITAL

Number of Shares Amount Note ’000 HK$’000

Authorised: Ordinary shares of HK$0.01 each At 31 December 2008 and 30 June 2009 2,000,000 20,000

Issued and fully paid: Ordinary shares of HK$0.01 each At 1 January 2008 977,472 9,775 Issue of new shares (a) 78,300 783 (b) 34,189 342

At 31 December 2008 and 30 June 2009 1,089,961 10,900

Notes:

(a) Pursuant to a shares subscription agreement dated 20 June 2008, the subscriber, Amcor Fibre Packaging-Asia Pte Limited, subscribed for 78,300,000 new shares of HK$0.01 each at a subscription price of HK$8.94 per share on 31 July 2008. The premium on the issue of shares of HK$699,219,000 was credited to the Company’s share premium account, net of share issue expenses of HK$1,438,000.

(b) On 31 October 2008, 34,189,000 new ordinary shares of HK$0.01 each were issued at HK$5.85 per share as part of the consideration for acquisition of 100% shareholding of Purple Art Limited. The premium on the issue of shares of HK$199,664,000 was credited to the Company’s share premium account.

– 119 – APPENDIX I FINANCIAL INFORMATION OF THE GROUP

12. TRADE AND OTHER PAYABLES

The aging analysis of trade payables, based on the date of invoices, is as follows:

30 June 31 December 2009 2008 (Unaudited) (Audited) HK$’000 HK$’000

Current to 30 days 238,652 296,765 31 to 90 days 144,181 157,563 Over 90 days 92,597 13,445

Trade payables 475,430 467,773 Bills payables – secured 124,795 118,576 Other payables 235,257 337,130

835,482 923,479

13. RELATED PARTY TRANSACTIONS

During the period, the Group had the following material related party transactions:

For the six months ended 30 June 2009 2008 (Unaudited) (Unaudited) HK$’000 HK$’000

Sales to an associate 46,355 193,337 Purchases from an associate 80,217 14 Purchases from related companies – 87,263 Rental income received from a related company 1,031 1,263 Consultancy fee income received from an associate 34,926 –

Notes:

(a) The sales to an associate and purchases from an associate and related companies were made under normal commercial terms and conditions that would also be available to unrelated third parties.

(b) Rental income received is determined by mutually agreed term between the related company and the Group.

(d) A substantial shareholder and/or his family member has beneficial interests in the above said related companies.

– 120 – APPENDIX I FINANCIAL INFORMATION OF THE GROUP

13. RELATED PARTY TRANSACTIONS (continued)

At balance sheet date, the following balances with related parties included in:

30 June 31 December 2009 2008 (Unaudited) (Audited) HK$’000 HK$’000

Trade and other receivables: Associates 88,649 63,236

Trade and other payables: Associates 96,605 83,591 A substantial shareholder – 5,990

The amounts due from associates are trade in nature, unsecured, interest free and repayable within 90 days.

The amounts due to associates and a substantial shareholder are trade in nature, unsecured, interest free and payable within 90 days.

14. CAPITAL COMMITMENTS

30 June 31 December 2009 2008 (Unaudited) (Audited) HK$’000 HK$’000

Authorized and contracted but not provided for: Acquisition of property, plant and equipment 48,361 70,790

15. CONTINGENT LIABILITIES

At 30 June 2009, the Group did not have any significant contingent liabilities (31 December 2008: Nil).

– 121 – APPENDIX I FINANCIAL INFORMATION OF THE GROUP

4. INDEBTEDNESS

As at the close of business on 30 November 2009, being the latest practicable date for the purpose of ascertaining the indebtedness of the Group prior to the printing of this circular, the Group had total outstanding borrowings of approximately HK$1,509,197,000, comprising secured borrowings of approximately HK$1,195,499,000, unsecured borrowings of approximately HK$311,421,000 and obligations under finance leases of approximately HK$2,277,000.

The Group’s borrowings were secured by the charge over certain prepaid land lease payments, certain trade receivables and certain property, plant and equipment of the Group and corporate guarantees given by certain companies of the Group.

Save as aforesaid and apart from intra-group liabilities and normal trade payables, the Group did not have any debt securities, any other outstanding loan capital, any other borrowings or indebtedness in the nature of borrowings including bank overdrafts and any liabilities under acceptances (other than normal trade bills) or other similar indebtedness, acceptance credit, debentures, mortgages, charges, finance lease or hire purchase commitments, guarantees or other material contingent liabilities at the close of business on 30 November 2009.

The Directors have confirmed that there has been no material change in the indebtedness of the Group since 30 November 2009.

5. MATERIAL CHANGE

As mentioned in the 2009 interim report of the Company and the paragraph headed “Reasons for the Transactions” in the letter from the Board contained in this circular, the performance of the BC Group during the first half of 2009 has been deteriorating and, in particular, the contribution from Changde Goldroc, which is an associated company of the BC Group and one of the major profit contributors of the BC Group, has substantially decreased. This was mainly because Changde Goldroc experienced margin squeeze on its products as tobacco groups actively reshuffled its product mix and that the BC Group had incurred more expenses to maintain its market share. In addition, the management of the Company considers that there is an increasing risk that the licence of Changde Goldroc will not be renewed when it expires in April 2010.

Save as disclosed above, the Directors confirm that there are no material changes in the financial or trading position or outlook of the Group since 31 December 2008 (being the date to which the latest published audited consolidated financial statements of the Group were made up) up to and including the Latest Practicable Date.

6. WORKING CAPITAL STATEMENT

The Directors are of the opinion that after taking into account the financial resources and banking facilities available to the Group, the Group will have sufficient working capital to satisfy its present requirements and the requirements in the next 12 months.

– 122 – APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE RESULTING GROUP

A. UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF FINANCIAL POSITION

The following unaudited pro forma consolidated statement of financial position of the Resulting Group has been prepared to illustrate the effect of the sale of the BC Share and the BC Loan (the “Disposal”), the Share Repurchase and the Acquisition (altogether referred to as the “Transactions”) might have affected the financial information of the Group.

The unaudited pro forma consolidated statement of financial position of the Resulting Group is prepared based on the unaudited consolidated statement of financial position of the Group as at 30 June 2009 as extracted from the unaudited consolidated interim financial statements of the Group for the six months ended 30 June 2009 set out in section 3 of Appendix I to this circular as if the Transactions had been completed on 30 June 2009.

The unaudited pro forma consolidated statement of financial position of the Resulting Group is prepared based on a number of assumptions, estimates, uncertainties and currently available information, and is provided for illustrative purposes only. Accordingly, as a result of its nature, it may not give a true picture of the actual financial position of the Group that would have been attained had the Transactions actually occurred on 30 June 2009. Furthermore, the unaudited pro forma consolidated statement of financial position does not purport to predict the Group’s future financial position.

The unaudited pro forma consolidated statement of financial position should be read in conjunction with the financial information of the Group as set out in Appendix I and other financial information included elsewhere in this circular.

– 123 – APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE RESULTING GROUP

Unaudited Unaudited pro forma consolidated consolidated statement of statement of financial financial position of position the Group of the as at 30 June Pro forma Resulting 2009 adjustments Group HK$’000 HK$’000 Notes HK$’000 ASSETS Non-current assets Property, plant and equipment 1,280,546 (507,819) (1) 772,727 Prepaid land lease payments 51,211 (28,503) (1) 22,708 Goodwill 3,992,770 (1,553,985) (1) 3,110,027 671,242 (5) Interests in associates 319,419 (213,303) (1) 106,116 Financial assets at fair value through profit or loss 5,909 5,909 Loan receivables 308,019 308,019 Available-for-sale financial assets 1,569 1,569 Other financial assets 553 553 Other assets 92,086 (1,495) (1) 90,591 6,052,082 4,418,219 Current assets Inventories 377,149 (100,919) (1) 276,230 Trade and other receivables 994,471 (188,339) (1) 591,132 (215,000) (2) Prepaid land lease payments 1,321 (640) (1) 681 Prepayments and deposits 114,901 (52,162) (1) 62,739 Pledged bank deposits 68,767 (53,543) (1) 15,224 Bank and cash balances 811,661 (101,617) (1) 1,417,846 880,302 (2) (172,500) (5) 2,368,270 2,363,852 Total assets 8,420,352 6,782,071

EQUITY Capital and reserves Share capital 10,900 (1,668) (3) 9,232 Reserves 5,439,722 (1,370,757) (3) 4,048,965 (20,000) (4) Equity attributable to owners of the Company 5,450,622 4,058,197 Minority interests 352,801 (83,562) (1) 169,981 (99,258) (5) Total equity 5,803,423 4,228,178

– 124 – APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE RESULTING GROUP

LIABILITIES Non-current liabilities Other payables — 598,000 (5) 598,000 Bank borrowings 305,301 (20,707) (1) 284,594 Obligations under finance leases 51 (51) (1) — Other financial liabilities 17,489 17,489 Deferred tax liabilities 85,835 (32,227) (1) 53,608

408,676 953,691

Current liabilities Trade and other payables 835,482 (279,294) (1) 576,188 20,000 (4) Current tax liabilities 31,954 (9,792) (1) 22,162 Current portion of bank borrowings 1,250,361 (338,914) (1) 911,447 Current portion of obligations under finance leases 51 (51) (1) — Other financial liabilities 90,405 90,405

2,208,253 1,600,202

Total liabilities 2,616,929 2,553,893

Total equity and liabilities 8,420,352 6,782,071

Net current assets 160,017 763,650

Total assets less current liabilities 6,212,099 5,181,869

– 125 – APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE RESULTING GROUP

1. The adjustment represents the exclusion of the net assets (including goodwill) of the BC Group from the unaudited consolidated statement of financial position of the Group as at 30 June 2009.

2. The adjustment represents the cash consideration of HK$880,302,000 for the Disposal and the elimination of the BC Loan as at 30 June 2009.

3. The adjustment represents the cancellation of the Repurchase Shares.

4. The adjustment represents accrual of costs directly attributable to the Transactions.

5. The adjustment represents the recognition of goodwill as a result of the Acquisition as if the Acquisition had been taken place on 30 June 2009.

Goodwill of HK$671,242,000 represents the excess of the consideration of RMB670,000,000 (equivalent to approximately HK$770,500,000) for the Acquisition over the carrying value of the minority interests’ share of the identifiable net assets of the FP Group of HK$99,258,000 as at 30 June 2009. The consideration of the Acquisition will be satisfied by cash of which (i) RMB150,000,000 (equivalent to approximately HK$172,500,000) shall be paid by the Group upon the completion of the FP Agreement; (ii) RMB106,660,000 (equivalent to approximately HK$122,660,000), RMB206,670,000 (equivalent to approximately HK$237,670,000) and RMB206,670,000 (equivalent to approximately HK$237,670,000) shall be paid on or before 31 December 2010, 2011 and 2012 respectively.

– 126 – APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE RESULTING GROUP

B. UNAUDITED PRO FORMA STATEMENTS OF ADJUSTED CONSOLIDATED NET ASSETS AND NET TANGIBLE ASSETS

The unaudited pro forma statements of adjusted consolidated net assets and net tangible assets of the Resulting Group are set out below to illustrate the effects of the Transactions on the consolidated net assets and net tangible assets of the Group as if the Transactions had taken place on 30 June 2009.

The unaudited pro forma statements of adjusted consolidated net assets and net tangible assets of the Resulting Group have been prepared for illustrative purposes only, based on the judgements and assumptions of the Directors, and because of their hypothetical nature, may not give a true picture of the financial position of the Group following the Transactions.

The following unaudited pro forma statements of adjusted consolidated net assets and net tangible assets of the Group are based on the unaudited consolidated net assets and net tangible assets of the Group as at 30 June 2009, adjusted as described below:

– 127 – APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE RESULTING GROUP

(i) UNAUDITED PRO FORMA STATEMENT OF ADJUSTED CONSOLIDATED NET ASSETS

Unaudited consolidated Unaudited Less: Add: Cash Unaudited pro net asset value consolidated the carrying consideration Unaudited pro forma per Share net asset value value of of BC Share forma consolidated attributable attributable the Group’s after netting consolidated net asset value to owners of to owners of interest in off direct net asset value per Share the Company the Company the BC Group expenses attributable to attributable to as at 30 June as at 30 June as at 30 June related to the owners of the owners of the 2009 2009 2009 Transactions Company Company HK$ HK$’000 HK$’000 HK$’000 HK$’000 HK$ (Note 1) (Note 1) (Note 2) (Note 3) (Note 4)

5.0 5,450,622 (2,037,727) 645,302 4,058,197 4.4

1. The unaudited consolidated net asset value per Share attributable to owners of the Company is calculated based on the unaudited consolidated net asset value attributable to owners of the Company of HK$5,450,622,000 and 1,089,961,000 Shares in issue as at 30 June 2009. The figures are extracted from the unaudited consolidated interim financial statements of the Group for the six months ended 30 June 2009 as set out in section 3 of Appendix I to this circular.

2. The adjustment represents the exclusion of the net assets (including goodwill) of the BC Group from the unaudited consolidated statement of financial position of the Group as at 30 June 2009 as if the Disposal had been completed on 30 June 2009.

3. The adjustment represents the cash consideration for the Disposal of HK$880,302,000 net off the BC Loan of HK$215,000,000 and costs directly attributable to the Transactions of HK$20,000,000.

4. The unaudited pro forma consolidated net asset value per Share attributable to owners of the Company is calculated based on the unaudited pro forma consolidated net asset value attributable to owners of the Company of HK$4,058,197,000 assuming the Transactions had been completed on 30 June 2009 and 923,147,000 Shares was in issue, being 1,089,961,000 Shares in issue as at 30 June 2009 less 166,814,000 Repurchase Shares assuming the Repurchase Shares had been cancelled on 30 June 2009.

5. The Acquisition has no effect on the consolidated net asset value per Share attributable to the owners of the Company. Therefore, no adjustment for the Acquisition is required on the unaudited pro forma statement of adjusted consolidated net assets.

– 128 – APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE RESULTING GROUP

(ii) UNAUDITED PRO FORMA STATEMENT OF ADJUSTED CONSOLIDATED NET TANGIBLE ASSETS

Less: Unaudited the carrying consolidated Unaudited value of the Unaudited net tangible consolidated Group’s Add: cash Unaudited pro forma asset value net tangible interest in consideration Less: pro forma consolidated per Share asset value the BC Group of BC Share intangible consolidated net tangible attributable to attributable to excluding after netting assets net tangible asset value owners of the owners of the intangible off direct arising on the asset value per Share Company as Company as assets as expenses Acquisition attributable attributable at 30 June at 30 June at 30 June related to the as at 30 June to owners of to owners of 2009 2009 2009 Transactions 2009 the Company the Company HK$ HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$ (Note 1) (Note 1) (Note 2) (Note 3) (Note 4) (Note 5)

1.3 1,457,852 (483,742) 645,302 (671,242) 948,170 1.0

1. The unaudited consolidated net tangible asset value per Share attributable to owners of the Company is calculated based on the unaudited consolidated net tangible asset value attributable to owners of the Company of HK$1,457,852,000 (the unaudited consolidated net asset value of the Company of HK$5,450,622,000 less goodwill of HK$3,992,770,000) and 1,089,961,000 Shares in issue as at 30 June 2009. The figures are extracted from the unaudited consolidated interim financial statements of the Group for the six months ended 30 June 2009 as set out in section 3 of Appendix I to this circular.

2. The amount represents the carrying value of the Group’s interest in the BC Group of HK2,037,727,000 less goodwill arising from acquisition of the BC Group of HK$1,553,985,000 as at 30 June 2009.

3. The adjustment represents the cash consideration for the Disposal of HK$880,302,000 net off to the BC Loan of HK$215,000,000 and costs directly attributable to the Transactions of HK$20,000,000.

4. The adjustment represents the exclusion of goodwill arising from the Acquisition of HK$671,242,000 as at 30 June 2009.

5. The unaudited pro forma consolidated net tangible asset value per Share attributable to owners of the Company is calculated based on the unaudited pro forma consolidated net tangible asset value attributable to owners of the Company of HK$948,170,000 assuming the Transactions had been completed on 30 June 2009 and 923,147,000 Shares was in issue, being 1,089,961,000 Shares in issue as at 30 June 2009 less 166,814,000 Repurchase Shares assuming the Repurchase Shares had been cancelled on 30 June 2009.

– 129 – APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE RESULTING GROUP

C. UNAUDITED PRO FORMA STATEMENT OF ADJUSTED EARNINGS PER SHARE ATTRIBUTABLE TO THE OWNERS OF THE COMPANY

The unaudited pro forma statement of adjusted earnings per Share attributable to the owners of the Company are set out below to illustrate the effects of the Transactions on the earnings per Share attributable to the owners of the Company as if the Transactions had taken place on 1 January 2009.

The unaudited pro forma statement of adjusted earnings per Share attributable to the owners of the Company have been prepared for illustrative purposes only, based on the judgements and assumptions of the Directors, and because of their hypothetical nature, may not give a true picture of the results of operation of the Group following the Transactions.

The following unaudited pro forma statement of adjusted earnings per Share attributable to the owners of the Company as at 1 January 2009, adjusted as described below:

Less: Add: unaudited unaudited Unaudited Unaudited consolidated consolidated earnings consolidated profit of profit of per Share profit the BC Group the FP Group attributable to attributable to attributable to attributable to Unaudited the owners of the owners of the owners of the minority Divided by pro forma the Company the Company the Company interests the weighted earnings for the for the for the for the Less: direct average per Share six months six months six months six months expenses Add: gain number attributable to ended ended ended ended related to the on the of Shares the owners of 30 June 2009 30 June 2009 30 June 2009 30 June 2009 Transactions Disposal in issue the Company HK cents HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 ’000 HK cents (Note 1) (Note 1) (Note 2) (Note 3) (Note 4) (Note 5) (Note 6) (Note 6)

18.6 202,191 (20,294) 79,611 (20,000) 98,363 923,147 36.8

– 130 – APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE RESULTING GROUP

1. The unaudited earnings per Share attributable to the owners of the Company is calculated based on the unaudited consolidated profit attributable to the owners of the Company of HK$202,191,000 and the weighted average number of Shares in issue of 1,089,961,000 during the six months ended 30 June 2009. The figures are extracted from the unaudited consolidated interim financial statements of the Group for the six months ended 30 June 2009 as set out in section 3 of Appendix I to this circular.

2. The adjustment represents the exclusion of the operating results of the BC Group as if the Disposal had been completed on 1 January 2009.

3. The adjustment represents the inclusion of the operating results of the FP Group shared by the minority interests of the FP Group as if the Acquisition had been completed on 1 January 2009.

4. The adjustment represents costs directly attributable to the Transactions.

5. The adjustment represents the gain on the Disposal, being the difference of the proceeds of the sale of the BC Share of HK$1,974,906,000 and the Group’s share of the net assets of the BC Group as at 31 December 2008 of HK$445,233,000 together with the goodwill relating to the BC Group as at 31 December 2008 of HK$1,529,673,000, which was not previously charged or recognised in the consolidated income statement and also any related accumulated exchange reserve as at 31 December 2008 of HK$98,363,000. As the consideration for the Disposal comprises cash and the Repurchase Shares, the value of the consideration for the purpose of accounting, irrespective of the value of the sale proceeds as stated in the BC Agreement, is taken to approximate the carrying value of the net assets of the BC Group attributable to the Group subject to the Disposal.

6. Assuming the Repurchases Shares had been cancelled on 1 January 2009, the weighted average number of Shares in issue would have been 923,147,000 during the six months ended 30 June 2009.

– 131 – APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE RESULTING GROUP

ACCOUNTANTS’ REPORT ON UNAUDITED PRO FORMA FINANCIAL INFORMATION

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

29th Floor Caroline Centre Lee Gardens Two 28 Yun Ping Road Hong Kong

20 January 2010

The Board of Directors AMVIG Holdings Limited

Dear Sirs,

We report on the unaudited pro forma consolidated statement of financial position, the unaudited pro forma statements of adjusted consolidated net assets and net tangible assets and the unaudited pro forma statement of adjusted earnings per Share attributable to the owners of the Company (the “Unaudited Pro Forma Financial Information”) of AMVIG Holdings Limited (the “Company”) and its subsidiaries (hereinafter collectively referred to as the “Group”), which has been prepared by the Directors, for illustrative purposes only, to provide information about how the proposed disposal of 100% equity interest in Brilliant Circle Holdings International Limited (“Brilliant Circle”) and the debts owing or incurred by Brilliant Circle and its subsidiaries to the Group as at 30 June 2009, the proposed repurchase of 166,814,000 Shares and the proposed acquisition of the remaining 45% equity interest in Famous Plus Group Limited might have affected the financial information of the Group presented, for inclusion in Appendix II to the circular of the Company dated 20 January 2010 (the “Circular”). The basis of preparation of the Unaudited Pro Forma Financial Information is set out on pages 123 to 131 to the Circular.

Respective Responsibilities of Directors and Reporting Accountants

It is the responsibilities solely of the Directors to prepare the Unaudited Pro Forma Financial Information in accordance with paragraph 29 of Chapter 4 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Listing Rules”) and with reference to Accounting Guideline 7 “Preparation of Pro Forma Financial Information for Inclusion in Investment Circulars” issued by the Hong Kong Institute of Certified Public Accountants (the “HKICPA”).

It is our responsibility to form an opinion, as required by paragraph 29(7) of Chapter 4 of the Listing Rules, on the Unaudited Pro Forma Financial Information and to report our opinion to you. We do not accept any responsibility for any reports previously given by us on any financial information used in the compilation of the Unaudited Pro Forma Financial Information beyond that owed to those to whom those reports were addressed by us at the dates of their issue.

– 132 – APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE RESULTING GROUP

Basis of opinion

We conducted our engagement in accordance with Hong Kong Standard on Investment Circular Reporting Engagements 300 “Accountants’ Reports on Pro Forma Financial Information in Investment Circulars” issued by the HKICPA. Our work consisted primarily of comparing the unadjusted financial information with source documents, considering the evidence supporting the adjustments and discussing the Unaudited Pro Forma Financial Information with the Directors. The engagement did not involve independent examination of any of the underlying financial information.

We planned and performed our work so as to obtain the information and explanations we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the Unaudited Pro Forma Financial Information has been properly compiled by the Directors on the basis stated, that such basis is consistent with the accounting policies of the Group and that the adjustments are appropriate for the purposes of the Unaudited Pro Forma Financial Information as disclosed pursuant to paragraph 29(1) of Chapter 4 of the Listing Rules.

The Unaudited Pro Forma Financial Information is for illustrative purposes only, based on the judgements and assumptions of the Directors, and, because of its hypothetical nature, does not provide any assurance or indication that any event will take place in the future and may not be indicative of:

• the financial position of the Group as at 30 June 2009 or any future date; or

•the results of the Group for the period ended 30 June 2009 or any future periods.

Opinion

In our opinion:

(a) the Unaudited Pro Forma Financial Information has been properly compiled by the Directors on the basis stated;

(b) such basis is consistent with the accounting policies of the Group; and

(c) the adjustments are appropriate for the purposes of the Unaudited Pro Forma Financial Information as disclosed pursuant to paragraph 29(1) of Chapter 4 of the Listing Rules.

Yours faithfully,

RSM Nelson Wheeler Certified Public Accountants Hong Kong

– 133 – APPENDIX III GENERAL INFORMATION

1. RESPONSIBILITY STATEMENT

This circular includes particulars given in compliance with the Listing Rules, the Share Repurchase Code and the Takeovers Code for the purpose of giving information with regard to the Group. The Directors jointly and severally accept full responsibility for the accuracy of the information contained in this circular and confirm, having made all reasonable enquiries, that to the best of their knowledge, opinion expressed in this circular have been arrived at after due and careful consideration and there are no other facts not contained in this circular, the omission of which would make any statement in this circular misleading.

2. SHARE CAPITAL

The authorised and issued share capital of the Company as at the Latest Practicable Date and immediately upon completion of the Transactions will be as follows:

Authorised: HK$

2,000,000,000 Shares 20,000,000

Issued and fully paid:

1,089,961,000 Shares as at the Latest Practicable Date 10,899,610

(166,814,000) Shares to be repurchased and cancelled (1,668,140) pursuant to the Share Repurchase

923,147,000 Shares immediately upon completion 9,231,470 of the Transactions

All the issued Shares rank pari passu with each other in all respects including the rights as to voting, dividends and return of capital.

There had been no re-organisation of capital of the Company during the two financial years immediately preceding the date of the Announcement.

On 31 July 2008, 78,300,000 new Shares were issued at HK$8.94 each to Amcor Fibre Packaging-Asia Pte Limited pursuant to a subscription agreement dated 20 June 2008. The net proceeds from this subscription amounted to approximately HK$699,000,000.

On 31 October 2008, 34,189,000 new Shares were issued at HK$5.85 each to Raydak International Limited to settle HK$200,006,000 out of the total consideration of RMB350,000,000 (equivalent to approximately HK$400,006,000) for the acquisition of the entire issued share capital of Purple Art Limited pursuant to the sale and purchase agreement dated 31 May 2008 and the supplemental agreement dated 22 October 2008.

– 134 – APPENDIX III GENERAL INFORMATION

2. SHARE CAPITAL (continued)

Save as disclosed above, there has been no other issuance of new Shares during the two-year period immediately preceding the date of the Announcement.

Since 31 December 2008, the date to which the latest audited financial statements of the Company were made up, and up to the Latest Practicable Date, the Company has not issued any new Shares and has not repurchased any Shares.

During the 12 months immediately preceding the date of the Announcement and up to the Latest Practicable Date, the Company has not repurchased any Shares.

The Company declared total dividends to the Shareholders in the amount of HK15.9 cents per Share and HK13.2 cents per Share for the years ended 31 December 2007 and 2008 respectively. The Directors are of the view that the amount of any dividends to be declared in the future will depend on, among other things, the Group’s results of operations, cash flows and financial condition, operating and capital requirements, the amount of distributable profits based on the generally accepted accounting principles in Hong Kong, the applicable laws and regulations and all other relevant factors. The Company has no plan or intention to alter its present dividend policy.

The Company did not have any share options, warrants and other convertible securities or rights affecting the Shares as at the Latest Practicable Date.

3. MARKET PRICES

The table below shows the closing price of the Shares on the Stock Exchange on (i) the end of each calendar months during the Relevant Period; (ii) the Last Trading Day; and (iii) the Latest Practicable Date:

Closing price Date per Share HK$

30 June 2009 5.00 31 July 2009 6.20 31 August 2009 5.22 30 September 2009 3.21 31 October 2009 3.40 30 November 2009 3.08 22 December 2009, being the Last Trading Day 3.28 31 December 2009 3.19 Latest Practicable Date 3.59

The highest and lowest closing prices per Share recorded on the Stock Exchange during the Relevant Period were HK$6.50 and HK$3.04 on 27 July 2009 and 27 November 2009 respectively.

– 135 – APPENDIX III GENERAL INFORMATION

4. DISCLOSURE OF INTERESTS

(a) Director’s interests and short positions in the securities of the Company and its associated corporations

As at the Latest Practicable Date, the following Directors had or were deemed to have interests or short positions in the shares, underlying shares or debentures of the Company and its associated corporations (within the meaning of Part XV of the SFO) (i) which were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests or short positions which they were taken or deemed to have under such provision of the SFO); or (ii) which were required, pursuant to section 352 of the SFO, to be entered in the register referred to therein; or (iii) which were required to be notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Companies contained in the Listing Rules:

Approximate percentage of No. of issued share Name of Director Nature of interest Shares held Position capital

Mr. Chan Sai Wai (Note 1) Interest of 32,928,000 Long 3.02% controlled corporation

Mr. Ng Sai Kit (Note 2) Interest of 24,696,000 Long 2.27% controlled corporation

Mr. Lee Cheuk Yin, Dannis Beneficial owner 3,272,000 Long 0.30%

Notes:

1. These Shares are held by Oriental Honour Limited, the entire issued share capital of which is beneficially owned by Mr. Chan Sai Wai.

2. These Shares are held by Joy Benefit Limited, the entire issued share capital of which is beneficially owned by Mr. Ng Sai Kit.

Save as disclosed above, as at the Latest Practicable Date, none of the Directors nor the 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 and its associated corporations (within the meaning of Part XV of the SFO) (i) which were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests or short positions which they were taken or deemed to have under such provision of the SFO); or (ii) which were required, pursuant to section 352 of the SFO, to be entered in the register referred to therein; or (iii) which were required to be notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Companies contained in the Listing Rules.

– 136 – APPENDIX III GENERAL INFORMATION

4. DISCLOSURE OF INTERESTS (continued)

(b) Persons who have an interest or short position which is discloseable under Divisions 2 and 3 of Part XV of the SFO

So far as is known to the Directors and the chief executive of the Company, as at the Latest Practicable Date, the following persons (not being Directors or chief executive of the Company) had, or were deemed 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:

Approximate percentage of issued share Name of Shareholder No. of Shares held Position capital

Amcor Limited (Note) 424,520,000 Long 45.99%

Amcor Packaging (Asia) 424,520,000 Long 45.99% Pty Limited (Note)

Amcor Fibre Packaging-Asia 424,520,000 Long 45.99% Pte Limited (Note)

Mr. Tsoi Tak 166,814,000 Long 15.30%

JP Morgan Chase & Co. 87,045,816 Long 7.99%

23,579,816 Lending pool 2.16%

Mondrian Investment Partners Limited 54,654,000 Long 5.01%

Note: The 424,520,000 Shares are held by Amcor Fibre Packaging-Asia Pte Limited, which is a subsidiary of Amcor Packaging (Asia) Pty Limited, which is in turn a subsidiary of Amcor.

Save as disclosed above, as at the Latest Practicable Date, the Directors were not aware of any other person (other than the Directors and the chief executive of the Company) who had, or was deemed to have, interests or short positions in the Shares or underlying Shares (including any interests in options in respect of such capital), 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.

– 137 – APPENDIX III GENERAL INFORMATION

4. DISCLOSURE OF INTERESTS (continued)

So far as is known to the Directors and the chief executive of the Company, as at the Latest Practicable Date, the following persons 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 member of the Group:

Approximate percentage of Equity interest shareholding in held in the members the members Name of shareholder of the Group Position of the Group

China National Tobacco US$2,210,000 in the registered Long 17% Corporation, Beijing Company capital of Beijing Leigh-Mardon Pacific Packaging Co., Limited

Etsong Tobacco (Group) US$6,206,000 in the registered Long 40% Corporation Limited capital of Qingdao Leigh-Mardon Packaging Co., Limited

Xian Great Sky Science & RMB3,498,600 in the registered Long 49% Technology Co., Ltd. capital of Xian Great Sky Laser 西安大天科技股份有限公司 Hologram Co., Ltd. (西安大天激光圖像有限公司)

Dragon Hill Group Limited 45 shares of HK$1.00 each in the Long 45% share capital of Famous Plus Group Limited

Xiangfan Cigarette Factory US$612,000 in the registered Long 20.4% capital of Xiangfan Jinfeihuan Colour Packing Co., Ltd.

Zhaotong Longquan Industrial US$200,000 in the registered Long 20% Development Co., Ltd. capital of Zhaotong Antong Package Material Co., Ltd.

Antai Investment Co., Ltd. US$2,983,680 in the registered Long 47.36% capital of Bengbu Jinhuangshan Rotogravure Printing Co., Ltd.

Save as disclosed above, as at the Latest Practicable Date, the Directors were not aware of any other person who was directly or indirectly interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any member of the Group.

– 138 – APPENDIX III GENERAL INFORMATION

4. DISCLOSURE OF INTERESTS (continued) (d) Director’s interests in competing business, assets, contracts or arrangements As at the Latest Practicable Date, (i) none of the Directors or their respective associates had any interest in a business which competes or is likely to compete, either directly or indirectly, with the business of the Group; (ii) none of the Directors was materially interested in any contract or arrangement subsisting as at the Latest Practicable Date which was significant in relation to the business of the Group; (iii) none of the Directors had any direct or indirect interest in any assets which had been acquired, disposed of by or leased to, or which were proposed to be acquired, disposed of by or leased to, any member of the Group since 31 December 2008, being the date to which the latest published audited consolidated financial statements of the Group were made up; (iv) none of the Directors had a material personal interest in any material contract entered into by Amcor; and (v) save for the 32,928,000 Shares (representing approximately 3.02% of the issued share capital of the Company) beneficially owned by Mr. Chan Sai Wai through Oriental Honour Limited, the 24,696,000 Shares (representing approximately 2.27% of the issued share capital of the Company) beneficially owned by Mr. Ng Sai Kit through Joy Benefit Limited, and the 3,272,000 Shares (representing approximately 0.30% of the issued share capital of the Company) beneficially owned by Mr. Lee Cheuk Yin, Dannis as disclosed in the sub-section headed “Director’s interests and short positions in the securities of the Company and its associated corporations” above, none of the Directors or any persons acting in concert with them were interested in any Shares, convertible securities, warrants, options or derivatives of the Company. (e) Interests in the Amcor Concert Group As at the Latest Practicable Date, the Group had no beneficial interest in the share capital of any members of the Amcor Concert Group nor had it dealt in any shares of any of them during the Relevant Period. Save for (i) Mr. Chan Chew Keak, Billy (the Chairman and Chief Executive Officer of the Company, an executive Director and the managing director of Amcor Asia (a subsidiary of Amcor)) who was interested in 40,000 shares, 50,000 partly paid shares and 993,877 options and similar rights in the share capital of Amcor; (ii) Mr. David John Cleveland Hodge (a non-executive Director having worked for the Amcor Concert Group for more than 13 years responsible for various corporate and business development) who was interested in 1,445 shares and 276,672 options and similar rights in the share capital of Amcor; and (iii) Mr. Jerzy Czubak (a non-executive Director having worked for the Amcor Concert Group for more than 14 years responsible for setting up and management of production plants and various investment projects in Europe and Russia) who was interested in 30,100 shares and 159,921 options and similar rights in the share capital of Amcor, none of the Directors had any beneficial interest in the share capital of any members of the Amcor Concert Group nor had they dealt in any shares in any members of the Amcor Concert Group during the Relevant Period.

– 139 – APPENDIX III GENERAL INFORMATION

4. DISCLOSURE OF INTERESTS (continued)

(e) Interests in the Amcor Concert Group (continued)

As at the Latest Practicable Date, none of RSM Nelson Wheeler and Access Capital was beneficially interested in the share capital of any members of the Amcor Concert Group, nor had they dealt in any shares of any of them during the Relevant Period.

The Company had no shares in Amcor as at the Latest Practicable Date, and had not dealt for value in the shares of Amcor during the Relevant Period. (f) Others

(a) As at the Latest Practicable Date, save for a total of 424,520,000 Shares (representing approximately 38.95% of the issued share capital of the Company) held by Amcor Fibre Packaging-Asia Pte Limited (being an indirect wholly-owned subsidiary of Amcor), none of Amcor, directors of Amcor, or members of the Amcor Concert Group owned or controlled any Shares, convertible securities, warrants, options or derivatives of the Company.

(b) None of Amcor, directors of Amcor, or members of the Amcor Concert Group had dealt for value in any Shares, convertible securities, warrants, options or derivatives of the Company during the Relevant Period. (c) On 24 September 2009, Mr. Chan Sai Wai and Mr. Ng Sai Kit respectively disposed of 4,704,000 Shares and 3,528,000 Shares at the price of HK$3.5 per Share. Save for the aforesaid, none of the Directors or any persons acting in concert with them had dealt for value in any Shares, convertible securities, warrants, options or derivatives of the Company during the Relevant Period.

(d) As at the Latest Practicable Date, there was no agreement, arrangement or understanding between the Amcor Concert Group and other persons in relation to the transfer, charge or pledge of the Shares owned by the Amcor Concert Group. (e) As at the Latest Practicable Date, no Shares were acquired or would be acquired in pursuance of the Transactions. (f) As at the Latest Practicable Date, the Amcor Concert Group had no arrangement of the kind referred to in Note 8 to Rule 22 of the Takeovers Code with any person. (g) As at the Latest Practicable Date, no person had any arrangement of the kind referred to in Note 8 to Rule 22 of the Takeovers Code with the Company or with any person who is an associate of the Company by virtue of classes (1), (2), (3) and (4) of the definition of “associate” in the Takeovers Code.

(h) As at the Latest Practicable Date, none of (i) the subsidiaries of the Company; (ii) the pension fund of the Company or of a subsidiary of the Company; and (iii) any advisers to the Company (as specified in class (2) of the definition of “associate” under the Takeovers Code) had any interest in the Shares, convertible securities, warrants, options or derivatives of the Company and none of them had dealt for value in any securities of the Company during the Relevant Period.

– 140 – APPENDIX III GENERAL INFORMATION

4. DISCLOSURE OF INTERESTS (continued)

(f) Others (continued)

(i) As at the Latest Practicable Date, no person had irrevocably committed themselves to vote for or against the resolutions to be proposed at the EGM in relation to the Transactions (including the Whitewash Waiver).

(j) No benefit will be given to any Director as compensation for loss of office in any members of the Group or otherwise in connection with the Transactions (including the Whitewash Waiver). (k) As at the Latest Practicable Date, there was no agreement or arrangement between any Director and any other person which is conditional on or dependent upon the outcome of the Transactions (including the Whitewash Waiver) or otherwise connected with the Transactions (including the Whitewash Waiver).

(l) As at the Latest Practicable Date, no agreement, arrangement or understanding (including any compensation arrangement) existed between the Amcor Concert Group and any of the Directors, recent Directors, Shareholders or recent Shareholders having any connection with or dependence upon the Transactions (including the Whitewash Waiver).

(m)As at the Latest Practicable Date, none of the members of the Amcor Concert Group, the Company, the Directors or any persons acting in concert with any of them had borrowed or lent any Shares save for any borrowed shares which have been either on-lent or sold. (n) As at the Latest Practicable Date, 28,484,000 Shares (representing approximately 2.61% of the issued share capital of the Company) were managed by Ample Capital for the benefit of certain employees of the Group under the Scheme. Pursuant to the terms of the Scheme, neither the Company, Ample Capital nor the relevant employees shall have any voting rights to these 28,484,000 Shares. Save as the aforesaid, as at the Latest Practicable Date, no shareholding in the Company was managed on a discretionary basis by fund managers connected with the Company. Ample Capital had not dealt for value in any Shares, convertible securities, warrants, options or derivatives of the Company during the Relevant Period.

(o) Mr. Chan Sai Wai, Mr. Ng Sai Kit and Mr. Lee Cheuk Yin, Dannis have advised that they intend to vote in favour of the resolutions to be proposed at the EGM in relation to the Transactions in respect of all of their own beneficial shareholdings in the Company (being an aggregate of 60,896,000 Shares, representing approximately 5.59% of the issued share capital of the Company). As at the Latest Practicable Date, save for Mr. Chan Sai Wai, Mr. Ng Sai Kit and Mr. Lee Cheuk Yin, Dannis, the other Directors did not have any Shares and thus will not be entitled to vote at the EGM. By reason of the requirements of the Repurchases Code, the Takeovers Code and the Listing Rules, the Amcor Concert Group, the Tsoi Concert Group and the Dragon Hill Concert Group will abstain from voting in the EGM.

– 141 – APPENDIX III GENERAL INFORMATION

5. MATERIAL CONTRACTS

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

(a) the sale and purchase agreement dated 31 May 2008 and the supplemental agreement dated 22 October 2008 entered into between AMVIG Group Limited as purchaser, the Company as issuer and Raydak International Limited as vendor in relation to the acquisition of the entire issued share capital of Purple Art Limited at a total consideration of RMB350,000,000;

(b) the subscription agreement dated 20 June 2008 and entered into between the Company and Amcor Fibre Packaging-Asia Pte Limited in relation to the subscription for 78,300,000 new Shares by Amcor Fibre Packaging-Asia Pte Limited at the subscription price of HK$8.94 per Share;

(c) the sale and purchase agreement dated 10 September 2009 entered into between AMVIG Group and Mr. Tsoi in relation to the Previous Proposal;

(d) the FP Agreement; and

(e) the BC Agreement.

6. LITIGATION AND CLAIMS

As at the Latest Practicable Date, neither the Company nor any other member of the Group is engaged in any litigation, claim or arbitration of material importance and no litigation, claim or arbitration of material importance is known to the Directors to be pending or threatened against any member of the Group.

7. SERVICE CONTRACT

As at the Latest Practicable Date, none of the Directors had any existing or proposed service contract with the Company or any of its subsidiaries or associated companies which (i) has been entered into or amended within 6 months before the date of the Announcement; or (ii) is continuous contract with a notice period of 12 months or more; or (iii) is fixed term contract with more than 12 months to run irrespective of the notice period; or (iv) is not determinable by the employer within one year without payment of compensation (other than statutory compensation).

8. EXPERTS’ QUALIFICATIONS AND CONSENTS

RSM Nelson Wheeler (“RSM”) is a firm of certified public accountants which has provided its opinion contained in this circular.

Access Capital is a corporation licensed to carry on type 1 (dealing in securities), type 4 (advising on securities), type 6 (advising on corporate finance) and type 9 (asset management) regulated activities under the SFO which has provided its opinion contained in this circular.

– 142 – APPENDIX III GENERAL INFORMATION

8. EXPERTS’ QUALIFICATIONS AND CONSENTS (continued)

Each of RSM and Access Capital has given and has not withdrawn its written consent to the issue of this circular with the inclusion herein of its letter and/or references to its name in the form and context in which they respectively appear.

As at the Latest Practicable Date, none of RSM and Access Capital was beneficially interested in the share capital of any member of the Group nor did they have any right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for any Shares, convertible securities, warrants, options or derivatives which carry voting rights in any member of the Group nor did they have any interest, either direct or indirect, in any assets which have been acquired or disposed of by or leased to or are proposed to be acquired or disposed of by or leased to any member of the Group since 31 December 2008, being the date to which the latest published audited financial statements of the Group were made up.

9. MISCELLANEOUS

(a) The registered office of the Company is located at Century Yard, Cricket Square, Hutchins Drive, P. O. Box 2681 GT, George Town, Grand Cayman, Cayman Islands, British West Indies.

(b) The head office and principal place of business of the Company in Hong Kong is located at Room 03-04, 18th Floor, Li Po Chun Chambers, 189 Des Voeux Road Central, Hong Kong.

(c) The company secretary of the Company is Mr. Lee Cheuk Yin, Dannis, who is an associate member of the Hong Kong Institute of Certified Public Accountants.

(d) The Company’s branch share registrar and transfer office in Hong Kong is Tricor Investor Services Limited at 26/F., Tesbury Centre, 28 Queen’s East Road, Wanchai, Hong Kong.

(e) The registered office of Amcor is situated at 109 Burwood Road, Hawthorn, Victoria 3122, Australia.

(f) The directors of Amcor are Mr. Chris Roberts, Mr. Ken MacKenzie, Mr. John Pizzey, Mr. Ern Pope, Mr. Jeremy Sutcliffe, Mr. John Thorn and Mr. Geoff Tomlinson.

(g) RSM is the auditors of the Company, the office of which is situated at 29th Floor, Caroline Centre, Lee Gardens Two, 28 Yun Ping Road, Hong Kong.

(h) Optima Capital Limited is the financial adviser to the Company, the registered office of which is situated at Unit 3618, 36th Floor, Bank of America Tower, 12 Harcourt Road, Hong Kong.

(i) Access Capital is the independent financial adviser to the Independent Board Committee and the Independent Shareholders, the registered office of which is situated at Suite 606, 6th Floor, Bank of America Tower, 12 Harcourt Road, Central, Hong Kong.

(j) The English text of this circular and the accompanying form of proxy shall prevail over the Chinese text in the case of any inconsistency.

– 143 – APPENDIX III GENERAL INFORMATION

10. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be available for inspection (i) during normal business hours (Saturdays and public holidays excepted) from 10:00 a.m. to 12:30 p.m. and from 2:00 p.m. to 5:00 p.m. at the head office and principal place of business of the Company in Hong Kong; (ii) on the website of the Company at www.amvig.com; and (iii) on the website of the SFC at www.sfc.hk from the date of this circular up to and including the date of the EGM:

(a) the memorandum and articles of association of the Company;

(b) the constitution of Amcor;

(d) the letter from the Independent Board Committee, the text of which is set out on page 26 of this circular;

(e) the letter from Access Capital to the Independent Board Committee and the Independent Shareholders, the text of which is set out on pages 27 to 56 of this circular;

(f) the annual reports of the Company for each of the two years ended 31 December 2007 and 2008 and the interim report of the Company for the six months ended 30 June 2009;

(g) the letter issued by RSM in connection with the pro forma financial information, the text of which is set out in Appendix II to this circular;

(h) the 2007 BC Agreement;

(i) the material contracts (including the BC Agreement which contains, among others, the terms and conditions of the Share Repurchase) referred to in the section headed “Material contracts” in this appendix;

(j) the written consents referred to in the section headed “Experts’ qualifications and consents” in this appendix; and

(k) a copy of each circular issued pursuant to the requirements set out in Chapter 14 and/or 14A which has been issued since the date of the latest published audited accounts.

– 144 – NOTICE OF EGM

(incorporated in the Cayman Islands with limited liability) (stock code: 2300)

NOTICE OF EXTRAORDINARY GENERAL MEETING

NOTICE IS HEREBY GIVEN that an extraordinary general meeting (the “EGM”) of AMVIG Holdings Limited (the “Company”) will be held at Room 03-04, 18th Floor, Li Po Chun Chambers, No.189 Des Voeux Road Central, Hong Kong, on Friday, 12 February 2010 at 10:00 a.m. for the purpose of considering and, if thought fit, passing with or without amendments, the following resolutions of the Company:

ORDINARY RESOLUTIONS

1. “THAT

(a) the sale and purchase agreement dated 22 December 2009 (the “FP Agreement”) entered into between World Grand Holdings Limited (“World Grand”), a wholly-owned subsidiary of the Company, and Dragon Hill Group Limited (“Dragon Hill”) in relation to the proposed acquisition by World Grand of the 45 ordinary shares of HK$1.00 each in the issued share capital of Famous Plus Group Limited from Dragon Hill at the consideration of RMB670 million (a copy of the FP Agreement is marked “A” and produced to the EGM and signed by the chairman of the EGM for identification purpose) and the transactions contemplated thereunder be and are hereby approved, confirmed and ratified; and

(b) any one or more directors (the “Directors”) of the Company be and are hereby authorised to do all such acts and things and execute all such documents which they consider necessary, desirable or expedient for the implementation of and giving effect to the FP Agreement and the transactions contemplated thereunder.”

* For identification purpose only

– 145 – NOTICE OF EGM

2. “THAT

(a) the sale and purchase agreement dated 22 December 2009 (the “BC Agreement”) entered into between AMVIG Group Limited (“AMVIG Group”), a wholly-owned subsidiary of the Company, and Mr. Tsoi Tak (“Mr. Tsoi”) in relation to, among other matters, (i) the proposed disposal (the “Disposal”) of the one issued share of US$1.00 (the “BC Share”) in the issued share capital of Brilliant Circle Holdings International Limited (“Brilliant Circle”), being the entire issued share capital of Brilliant Circle, and all debts owing or incurred by Brilliant Circle to AMVIG Group as at the date of completion of the BC Agreement (the “BC Loan”); and (ii) the proposed repurchase and cancellation (the “Share Repurchase”) of the 166,814,000 ordinary shares of HK$0.01 each (the “Repurchase Shares”) in the issued share capital of the Company by the Company from Mr. Tsoi at the proposed repurchase price of HK$7.00 per Repurchase Share, which constitutes an off-market share repurchase by the Company pursuant to Rule 2 of the Hong Kong Code on Share Repurchases, (a copy of which is marked “B” and produced to the EGM and signed by the chairman of the EGM for identification purpose) be and is hereby ratified, confirmed and approved and the Directors be and are hereby authorised to do all such acts and things and execute all such documents which they consider necessary, desirable or expedient for the implementation of and giving effect to the BC Agreement and the transactions contemplated thereunder;

(b) the Disposal and the transactions contemplated thereunder be and are hereby approved and any Director be and is hereby authorised to take all steps necessary, desirable or expedient in his opinion to implement or give effect to the Disposal and the transactions contemplated thereunder; and

(c) the Share Repurchase and the transactions contemplated thereunder be and are hereby approved and any Director be and is hereby authorised to take all steps necessary, desirable or expedient in his opinion to implement or give effect to the Share Repurchase and the transactions contemplated thereunder.”

3. “THAT subject to the passing of the resolutions numbered 1 and 2 above, the terms of the application for a waiver granted or to be granted by the Executive Director of the Corporate Finance Division of the Securities and Futures Commission to Amcor Limited, its associates and parties acting in concert with it (the “Amcor Concert Group”) pursuant to Note 1 on the Dispensations from Rule 26 of the Code on Takeovers and Mergers of Hong Kong from an obligation to make a mandatory general offer for the shares of the Company not already owned by the Amcor Concert Group as a result of the Share Repurchase be and are hereby approved.”

By order of the Board AMVIG Holdings Limited Chan Chew Keak, Billy Chairman

Hong Kong, 20 January 2010

– 146 – NOTICE OF EGM

Registered office: Head office and principal place of business Century Yard in Hong Kong: Cricket Square Room 03-04, 18th Floor Hutchins Drive Li Po Chun Chambers P.O. Box 2681 GT No.189 Des Voeux Road Central George Town Hong Kong Grand Cayman Cayman Islands British West Indies

Notes:

1. A member entitled to attend and vote at the EGM is entitled to appoint one or more proxy to attend and, subject to the provisions of the articles of association of the Company, to vote on his behalf. A proxy need not be a member of the Company but must be present in person at the EGM to represent the member. If more than one proxy is so appointed, the appointment shall specify the number and class of shares in respect of which each such proxy is so appointed.

2. In order to be valid, the form of proxy must be duly completed and signed in accordance with the instructions printed thereon and deposited together with a power of attorney or other authority, if any, under which it is signed, or a certified copy of such power or authority, at the Company’s branch share registrar and transfer office in Hong Kong, Tricor Investor Services Limited at 26/F., Tesbury Centre, 28 Queen’s East Road, Wanchai, Hong Kong, not less than 48 hours before the time appointed for holding the EGM or any adjournment thereof. Completion and return of a form of proxy will not preclude a member from attending in person and voting at the EGM or any adjournment thereof, should he so wish.

3. In the case of joint holders of shares, any one of such holders may vote at the EGM, either personally or by proxy, in respect of such share as if he was solely entitled thereto, but if more than one of such joint holder are present at the EGM personally or by proxy, that one of the said persons so present whose name stands first on the register of members of the Company in respect of such shares shall alone be entitled to vote in respect thereof.

4. Voting on all resolutions at the EGM will be conducted by way of a poll.

5. In considering the resolutions as set out in this notice, independent shareholders of the Company should bear in mind the requisite 75% approval threshold under the relevant regulatory requirements in relation to the Share Repurchase and that the FP Agreement and the BC Agreement are inter-conditional, even though the resolutions as set out in this notice are being proposed as ordinary resolutions of the Company.

– 147 –